Origo Exploration AS - Et nytt leteselskap i Stavanger

Origo Exploration AS - Et nytt leteselskap i Stavanger ( Det nye lokale lokomotivet Origo Exploration ) Svein Ilebekk CEO Origo Exploration 15. januar, 2015

Agenda Introduksjon Leting («exploration»); - kort intro Rammebetingelser for leting på Norsk Sokkel Revus Energy, Agora Oil & Gas og Origo Exploration Utfordringer; - er det en fremtid for norsk oljeindustri? 2

Historical and future energy demand (Source: NPD 2010) Source: http://www.paulchefurka.ca/energygap.html

Energy consumption per fuel type (BP Statistical Review of World Energy 2010) Nuclear Energy 5% Hydro Electricity 7% Geothermal, Solar, Wind and Wood 1% Natural Gas 23% Oil 34% Coal 29%

Past and future energy demand (Pareto Conference 2014) 5

North Sea Oil and Gas discoveries What s required to make oil/gas discoveries: Reservoir Source rock and migration Structure

Reservoar (porous media)

Source rock (organic rich material & temperature)

Upward migration of hydrocarbons (from kitchen to structure)

Structure (with top seal to retain hydrocarbons)

Where to look?

North Sea Oil and Gas discoveries Where all these ingredients are in place you may find an oil or gas accumulation; - next step is to drill..

Activity on NCS prior to APA in 2003 Exploration drilling activity low in the periode 2000-2005;- only 15 wells in 2002 and decreasing in the years to come Consolidation creating even bigger companies with less focus on prospects in the mature parts of NCS Few licences awarded in the periode 1997-2002 NCS production profile on rapid decline NPD 2013 NPD 2013 15

NCS exploration and appraisal drilling NPD Sokkelåret 2013 Increased access to acreage in mature areas through APA system (2003) Tax incentives supporting exploration (2005) APA Tax change 16

Awards in APA s 2003-2013 APA 2003-2013 65 58 60 45 43 37 52 40 34 42 38 39 50 42 40 51 48 28 26 19 21 14 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Companies Licences 17

Discovered resources, 1967-2014 (Pareto Conference 2014) - 2014 18

NCS production (NPD Sokkelåret 2013) 19

Oil price development 2000-2015 Agora Origo Revus 21

Revus and Agora discoveries Ca. 1 bill boe gross, 250 mboe net Tybalt 2010 Cladhan 2008 Maria 2010 Knarr 2008 Blåbær 2010 Skarfjell 2012 Grosbeak 2009 Astero 2005 Beta 2010 Edvard Grieg 2007 Edvard Grieg S. 2009 Scolty 2008 Blakeney 2010 Catcher (2010) Varadero (2010) Burgman (2010) Carnaby (2010) Revus Wintershall (Revus portfolio) Agora 22

Revus s and Agora s value creation Revus (2003-2008) Agora (2009-2012) Market cap Total acc. equity injected Revus: PE investors exited at IPO with money multiples of 4.9 and IRR of 398% Agora: PE investors exited with the sale to Cairn with money multiples of 2.9 and IRR of >100% In total: used $375 million of shareholders cash and returned $1.2 billion to investors over 10 years 23

Origo Exploration Norway AS Founded by highly experienced E&P professionals Dr. Andrew R. Armour Chairman Svein Ilebekk CEO Tim Sullivan UK manager Kent Høgseth Exploration manager Ørjan Gjerde CFO Chairman, AGORA Chairman, REVUS CEO, AGORA Exp.mng., REVUS UK Mng., AGORA CEO, REVUS VP Exploration, STATOIL CFO, NORECO CFO, PROSERV CFO, IKM 24

Origo is a new E&P company for Norway and UK CS Founders have extensive experience in starting E&P companies Well funded with up to $525 million in equity (4.1 billion NOK) (BNRI, Riverstone and Temasek) We will focus on exploration in mature areas NCS &UKCS We have already recruited a quality team and initiated the work We target to participate in average 5 wells per year in Norway and UK 25

Oil price dropping and media coverage don t help Oljeprisen stuper; - Nordsjøolje under 50 dollar fatet (Dagbladet 7/1/15) Over 9.000 jobber i oljebransjen forsvinner. De varslede stillingskuttene i oljebransjen har steget fra 4.000 i begynnelsen av september til over 9.000. (E24 8/1/15) Dårlig nytt for John Fredriksen s Seadrill: - 2015 blir ille, men 2016 blir enda verre (E24 6/1/15) 27

Oil price development 1987-2015 135 USD/bbls 28

Balance between demand and supply 29

What s the reason for the drop in oil price? OPEC will not reduce production (E24, 26/11/14) War in the oil market (DN 28/11/14) US oil shale production (Pareto Conference 2014) 30

Oil price development? (DNB Markets 2015) 31

Challenges going forward. Capex constraints in oil companies Lifting cost USD/bbls Exploration/Appraisal wells General reduction in activity Contractors and oil companies downsizing and outsourcing? Oil industry reducing ability to attract future human capital 32

How to mitigate the challenges? Will require close interaction/cooperation between authorities, oil companies and service companies High focus on IOR to increase recovery from producing fields Work smarter; - stimulate innovation and improved/new technology Continous focus on cost effective and safe solutions Tax incentives; - solutions for time critical developments important Don t forget that energy intensive companies in Norway and most countries in the world benefit from lower oil price 33

Is there a future in the NCS?... Yes, but it s more challenging than in previous years... OD s direktør, Bente Nyland, tror på nye 100 år på norsk sokkel (OD 2014) NPD 2013 NPD 2014 Tidligere Statoil-sjef Helge Lund tror oljeprisen vil stige igjen, men mener det er kostnadene for nye oljefelt som blir avgjørende (E24 9/1/15) 34