DEA Group. Q Results Presentation

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DEA Group Q2 2018 Results Presentation Maria Moræus Hanssen CEO of DEA Deutsche Erdoel AG, Managing Director L1E

1 DEA Group Q Results Presentation Maria Moræus Hanssen CEO of DEA Deutsche Erdoel AG, Managing Director L1E Finance GP GmbH Dmitry Avdeev CFO of DEA Deutsche Erdoel AG, Managing Director L1E Finance GP GmbH August 16 th, 2018

2 Disclaimer Forward-Looking Statements This communication may include projections and other forward-looking: statements within the meaning of applicable securities laws, which are based on current expectations and projections about future events and financial performance. Statements herein, other than statements of historical fact, regarding future events or prospects, are forward-looking statements. The words may, will, should, expect, anticipate, believe, estimate, plan, predict, intend or variations of these words, as well as other statements regarding matters that are not historical fact or regarding future events or prospects, constitute forward-looking statements. L1E Finance GmbH & Co KG (the Company ) has based these forward-looking statements on its current views with respect to future events and financial performance in addition to certain assumptions about the future, some of which are beyond the Company s control. These forward-looking statements involve a number of risks, uncertainties, and assumptions about the Company and its subsidiaries and its investments, including, among other things, the development of its business, trends in its operating industry, and future capital expenditures and acquisitions. In light of these risks, uncertainties and assumptions, actual results may not occur or may differ materially from those predicted in the forward-looking statements and from the past performance of the Company. As a result, you should not rely on these forward-looking statements. Neither the Company nor any other person make any warranties or representations about accuracy, sequence, timeliness or completeness of the content of the presentation or the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any. Non-GAAP and Non-IFRS Financial Measures This communication may contain certain non-gaap and non-ifrs measures and ratios, including for example EBITDAX, net debt, net working capital, coverage ratios and EBITDAX per boe that are not required by, or presented in accordance with, any GAAP or IFRS. The non-gaap and non-ifrs measures and ratios may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under IFRS or any GAAP. Our management uses these measures to measure operating performance and liquidity, in presentations to our Management Board and as a basis for strategic planning and forecasting, as well as monitoring certain aspects of our operating cash flow and liquidity. We present non-gaap and non-ifrs measures and ratios because we believe that they and similar measures are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance and liquidity. Non-GAAP and non-ifrs measures and ratios such as EBITDAX, coverage ratios and EBITDAX per boe are not measurements of our performance or liquidity under IFRS and should not be considered as alternatives to operating profit, profit for the year, capital expenditure or any other performance measures derived in accordance with IFRS or any GAAP or as alternatives to cash flow from operating, investing or financing activities. We present in this communication a reconciliation of each of the non-gaap and non-ifrs measures to the most directly comparable measure calculated and presented in accordance with IFRS and discuss its limitations See note above. Some of the limitations of EBITDAX are: they do not reflect our cash expenditures or future requirements for contractual commitments; they do not reflect changes in, or cash requirements for, our working capital needs; they do not reflect the significant interest expense, or the cash requirements necessary, to service interest or principal payments on our debt; although depreciation and amortization are non cash charges, the assets being depreciated and amortized will often need to be replaced in the future and EBITDAX does not reflect any cash requirements that would be required to make such replacements; they do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and other companies in our industry may calculate these measures differently from the way we do, limiting their usefulness as comparative measures. Because of these limitations, EBITDAX should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. You should compensate for these limitations by relying primarily on our IFRS results and using these non-gaap and non-ifrs measures only to supplement your evaluation of our performance. Page 2

3 Q Highlights Production 126 kboe/d +1% vs. Q Business Development Nova PDO submitted Two licenses in Norway awarded Three DEA operated exploration licenses in Mexico signed EBITDAX Leverage LTM 232 million -7% vs. Q x vs x as of Q Production Costs QHSE $7.0 / boe +4% vs. Q LTIF 0.20 vs as of Q Page 3

4 DEA Group Q Highlights Q Q Production (kboe/d) Realized oil price ($/boe) Realized gas price ($/mcf) Revenue ( m) Production costs ($/boe) Exploration costs ( m) (17) (49) EBITDAX ( m) Net income ( m) (60) 74 Capex ( m) Free cash flow ( m) Net debt ( m) 1,748 1,687 LTM Leverage 1.98x 1.81x P&L and cash flow items were adjusted for discontinued operations Page 4

5 Production and Pricing Commentary Production Profile (kboe/d) Q production was 1 % higher QoQ as production from Ogarrio field offset slightly lower production in Germany Q realized oil price 2 % higher QoQ, as 11% higher Brent prices were offset by hedging results and higher contribution of lower value products such as NGL and LPG in Norway Q realized gas price was $5.8/mcf, 4 % higher QoQ, in line with European gas price development % liquids: % gas: 45% 43% 44% 38% 55% 57% 56% 62% % 39% 39% 40% 62% 61% 61% 60% Q Q Q Q Q Q Q Q Norway Germany/Denmark North Africa Latin America Adjustment of DEA share for Söhlingen Pool due to unitization of shares Realized Oil Price ($/bbl) Realized Gas Price ($/mcf) Q Q Q Q Q Q Q Q Q Q Q Q Quarterly Realized Oil Price Q Quarterly Realized Oil Price Q Q Quarterly Realized Gas Price Q Quarterly Realized Gas Price Page 5

6 Revenues and Profitability Commentary Q revenues were 3 % lower YoY as higher commodity prices were offset by lower production volumes +1% Revenues ( million) Q EBITDAX was 18 % lower YoY as a one-off effect of reversal of impairments ( 62 million) that contributed to Q EBITDAX was partially compensated by lower overall costs Q unit production costs increased 4% YoY, due to weaker USD m m 2018 Q Q Germany/Denmark Norway North Africa Latin America EBITDAX ( million) Average Production Costs ($/boe) % margin 66% 64% 77% 66% m m 2018 Q Q Q Q Germany/Denmark Norway North Africa Latin America Other Incl. rest of the world and central functions Page 6

7 Capital Expenditure Commentary Q2 and 6m 2018 capital expenditures increased 28% and 21% YOY respectively Norway: 6m 2018 expenditures were 80 million higher YoY mainly due to increased investment activity in the ongoing development projects Dvalin, Njord and Ærfugl 388 Capex Breakdown ( million) Germany/Denmark: 6m 2018 expenditures were 14 million higher YoY due to drilling campaign in Völkersen in addition to the continuous drilling in Mittelplate 177 Latin America: Mexico expenditures amounted to 18 million in Q2 2018, which is mainly associated with the payment of signing bonus of recently acquired exploration blocks North Africa: 6m 2018 investments were 32 million lower YoY, as Reggane development is now complete m m 2018 Q Q Germany/Denmark Norway North Africa Latin America Other Incl. rest of the world, central functions and investment property Page 7

8 Cash Position Development YTD Cashflow Bridge ( million) 350 (393) Ogarrio acquisition payment 129 (202) (43) Cash 01/01/18 Cash Flow from Operations Cash Flow from Investment Activities Free Cash Flow Cash Flow from Financing Equity Contribution for Ogarrio Acquisition Cash Flow from M&A Cash Flow from Discontinued Operations Cash 30/06/18 Page 8

9 Liquidity and Net Debt Sources of Liquidity ( million) Net Debt ( million) 103 (2) (3) ,973 2,373 2,476 1,908 1,354 (4) (3) 1,753 1,748 1, (4) Senior Unsecured Notes RBL Overdraft Facilities Cash Available Liquidity Senior Unsecured Notes (3) RBL (drawn) Overdraft Facilities Cash Net Debt 30/06/2018 Nominal value (2) Includes US$50m and 60m unsecured revolving credit facilities (3) Available amount reduced due to drawn $100m letter of credit to cover Ogarrio final payment that is due in 2019 (4) Balance sheet amount, net of amortized fees and including accrued interest FX rate used USD/EUR Page 9

10 Hedging Overview Oil (as of June 30 th, 2018) Gas (as of June 30 th, 2018) Volume (mmbbl) Volume (bcf) Hedged Volumes Price ($/boe) Price ($/mcf) % of Target Hedging Volume 100% 100% 100% 55% 42% % of Target Hedging Volume >100% >100% 85% 14% 12% 4% Calculated at the exchange forward rates applicable on June 30 th, 2018 Page 10

11 2018 Guidance Revision Previous Guidance Revised Guidance Production kboe/d (2017 Actual: 125 kboe/d) kboe/d EBITDAX -5 % - +5 % compared to 2017 (2017 Actual: 924 million) +5 % % compared to 2017 (2) Capital Expenditure % higher than 2017 (2017 Actual: 838 million) % higher than 2017 Assuming $62-68/bbl for Brent and UK NBP of $ /mcf for 2018 (2) Assuming $70-76/bbl for Brent and UK NBP of $ /mcf for 2018 Page 11

12 Definitions DEA Group DEA Group consists of L1E Finance GmbH & Co. KG and its subsidiaries Free cash flow EBITDAX Free cash flow comprises of cash flows from operating activities and from investing activities, but excludes cash flows from/for acquisitions and excludes cash flows from discontinued operations EBITDAX defined as income before tax, financing costs, exploration expense, DD&A and impairments, acquisitions, disposals, extraordinary items, minority interest, FX gains and losses, pensions, loss or gain in relation to disposal of fixed assets Production Working Interest Production, adjustment of DEA share for Pool Söhlingen from Q2 / 2018 onwards due to unitization of shares Production costs Production costs include G&A allocation but exclude export and processing tariffs, finance items and R&D LTIF Lost Time Incident Frequency (number of Lost Time Incident per 1 million working hours) Capital Expenditure Capex excludes financial asset capex and excludes capex from discontinued operations and acquisitions Realized oil/gas price Includes hedges and physical forward sales Note: Certain numerical figures and percentages set out in this presentation have been subject to rounding adjustments Page 12

DEA Group. Q Results Presentation

DEA Group. Q Results Presentation DEA Group Q1 2018 Results Presentation Maria Moræus Hanssen CEO of DEA Deutsche Erdoel AG, Managing Director L1E Finance GP GmbH Dmitry Avdeev CFO of DEA Deutsche Erdoel AG, Managing Director L1E Finance