DEA Group. Q Results Presentation

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DEA Group Q1 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 May 17 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 125 kboe/d -5% vs. Q Business Development Ogarrio acquisition completed Three exploration licenses with operatorship in Mexico awarded EBITDAX Leverage LTM 250 million +20% vs. Q x vs x as of Q Production Costs QHSE $6.7 / boe +12% vs. Q LTIF 0.21 vs as of Q Adjusted for discontinued operations 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) (22) (11) EBITDAX ( m) Net income ( m) (29) (35) Capex ( m) Free cash flow ( m) (47) (17) Q Q (2) Net debt ( m) 1,687 1,592 LTM Leverage 1.81x 1.79x P&L and cash flow items were adjusted for discontinued operations (2) Adjusted for discontinued operations Page 4

5 Production and Pricing Commentary Production Profile (kboe/d) Q production 8 % higher QoQ mainly due to resumed production after temporary shut-in of two wells in Norway and production start in Algeria at the end of Additionally, our recently acquired Ogarrio field in Mexico started contributing to the overall production in March 2018 Q realized oil price 10 % higher QoQ, broadly in line with Brent price development % liquids: % gas: 45% 55% % 55% % 44% 38% 57% 56% 62% % 39% 62% 61% % 61% Q realized gas price was $5.6/mcf, 12 % higher QoQ due to seasonally higher gas prices and country mix shifting towards higher-value Norway Q Q Q Q Q Q Q Q Norway Germany/Denmark North Africa Latin America Realized Oil Price ($/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 Including Ogarrio field since March 6 th, 2018 Page 5

6 Revenues and Profitability Commentary Revenues ( million) Q revenues were 5 % higher YoY as lower production volumes were offset by higher commodity prices and positive effect of increase of overlift Q EBITDAX was 20 % higher YoY due to higher revenues, lower cost of sales, lower impairments of receivables, as well as lower tariffs Q unit production costs increased 12% YoY, mainly due to lower output as well as higher workover costs in Norway EBITDAX ( million) Q Q Germany/Denmark North Africa Norway Latin America Average Production Costs ($/boe) % margin 54% 62% Q Q Germany/Denmark Norway North Africa Other Incl. rest of the world and central functions Q Q Page 6

7 Capital Expenditure Commentary Capex Breakdown ( million) Q capital expenditures increased 14 % YOY Norway: Q expenditures were higher by 41 million mainly due to increased development activity in Dvalin and Njord fields. Both developments are progressing in line with the plan Germany/Denmark: Q expenditures were 12 million higher due to drilling campaign in Völkersen in addition to the continuous drilling in Mittelplate 86 North Africa: Q investments were 25 % lower compared to Q1 2017, as Reggane field went into production in December Q Q Germany/Denmark Norway North Africa Page 7

8 Cash Position Development Cashflow Bridge ( million) Ogarrio acquisition payment 162 (209) 129 (202) 82 (47) 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 31/03/18 Page 8

9 Liquidity and Net Debt Source of Liquidity ( million) Net Debt ( million) 101 (2) ,867 2,267 2,367 1,320 (3) 1,779 (3) 1,725 1,686 1,687 (3) Senior Unsecured Notes RBL Overdraft Facilities Cash Available Liquidity Senior Unsecured Notes (3) RBL (drawn) Overdraft Facilities Cash Net Debt 31/03/2018 Nominal value (2) Includes US$50m and 60m unsecured revolving credit facilities (3) Balance sheet amount, net of amortized fees and including accrued interest FX rate used USD/EUR Page 9

10 Hedging Overview Oil (as of March 31 st, 2018) Gas (as of March 31 st, 2018) Volume (mmbbl) Volume (bcf) Hedged Volumes Price ($/boe) Price ($/mcf) % of Target Hedging Volume 100% 100% 65% % of Target Hedging Volume >100% >100% 85% 14% 12% 2% Calculated at the forward rates applicable on March 31 st, 2018 Page 10

11 2018 Guidance Revision 2017 Actual Original Guidance Revised Guidance Production 125kboe/d kboe/d kboe/d EBITDAX 924 million % lower than % - +5 % compared to 2017 (2) Capital Expenditure 838 million % higher than % higher than 2017 Assuming $52-58/bbl for Brent and UK NBP of $ /mcf for 2018 (2) Assuming $62-68/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 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 Q2 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