Annual Report 2009
PA Resources 2009
The year in brief 1
Statement from the CEO 2
Business concept, mission and strategy 4
Business model 6
Geographical focus 8
Operations in three regions 10
Reserves and resources 12
Production and sales 13
The oil market 14
Risks and risk management 16
Sustainable business 18
Employees 21
The shares 22
Corporate governance
Corporate governance report 24
Board of Directors and management 28
Financial reporting 2009
Five-year summary and definitions 31
Administration report 2009 32
Proposed distribution of earnings 37
Financial statements 38
Notes 47
Audit report 74
Information for shareholders 75
Glossary 76
CONTENTS
!
This is a translation of the Swedish Annual Report. In the event of any differences between this translation and the Swedish original, the Swedish version shall prevail.n Shares in North Sea licence farmed out
n UK subsidiary gained environmental certification
4TH QUARTER
n Three exploration licences in the UK relinquished n New SEK 615 million bond loan taken out n Procurement of seismic data in Greenland n PA Resources shares are listed on the Oslo Stock Exchange
(OB Match) and NASDAQ OMX Nordic Exchange in Stock- holm (Mid Cap)
n 26 oil and gas licences in total, of which 7 production licences, 1 development licence and 18 exploration licences n Operator of 12 licences in total, part-owner and partner in
the other licences
n One of Tunisia’s biggest oil producers
n In 2009 an average of 11,200 barrels of oil per day were produced
n 131 employees in Tunisia, Sweden, the Republic of Congo and the UK
n The company is domiciled and headquartered in Stockholm
FACTS IN BRIEF 2009 IN BRIEF
KEY EVENTS duRINg ThE YEAR
PA Resources
in 3 minutes The year in brief
1,964.5
investments, SEK millionEstablished and flexible organisation
PA Resources has more than ten years’ experience as a listed oil and gas company.
Thanks to our short decision paths and flexible organisa- tion, PA Resources is able to acquire, integrate and sell assets and operations quickly.
Considerable opportu- nity for growth in value PA Resources’ licence portfolio has great potential to increase in value. In 2009 new produc- tion was added in the Republic of Congo, the development of a field in Equatorial Guinea was initiated and exploration activities in various countries resulted in significant added oil and gas resources.
Balanced and focused asset portfolio
PA Resources has well diversi- fied oil and gas assets from the three phases of the life cycle: production, develop- ment and exploration. The assets are concentrated in three geographical regions.
Good relations with our host countries PA Resources has established relations with authorities and partners in the countries in which we are active. This cre- ates a competitive advantage for new partnerships and business.
OuR STRENgThS
OuR BuSINESS CONCEPT
PA Resources’ business consists of the acquisition, develop- ment, extraction and divesting of oil and gas reserves, as well as exploration to find new reserves. The production of oil generates an important cash flow that makes possible the investments required to increase the Group’s reserves and thereby its value to shareholders. In geographical terms, PA Resources focuses on three regions: North Africa, West Africa and the North Sea.
n Issue of convertible bonds and shares injected a total of SEK 1,372.1 million n Cash flow from operations amounted to
SEK 142.7 (2,284.2) million
n Investments during the year amounted to SEK 1,964.5 (3,847.5) million
n The maturity of the loan stock was pro- longed and the debt/equity ratio at year- end was 80.4 (74.8) percent
n Operating revenue decreased to SEK 2,112.8 (2,419.9) million, primarily as a result of lower oil prices
n EBITDA for the period amounted to SEK 1,325.9 (1,771.8) million and the EBITDA margin for the year was 62.8 (73.2) percent
1ST QUARTER
n Fully subscribed issue of convertible bonds injected SEK 1,089 million into the Group n Two bond loans repaid
n Three exploration licences in the UK relinquished
2ND QUARTER
n Drilling on Gita exploration well in Denmark completed
n Rights issue of shares injected SEK 283 million n New production well taken into operation on the
Didon field in Tunisia 3RD QUARTER
n Production commenced in the Azurite field in the Republic of Congo
n New oil discoveries in the Turquoise prospect in Mer Profond Sud in the Republic of Congo n Development of the Aseng field in Equatorial
Guinea approved
n Awarded new Schagen licence in the Netherlands
26
oil and gas licences11,200
barrels of oil per day were produced on average in 200978.9 2P million barrels oil equivalents proven and probable reserves
million barrels oil equivalents proven reserves
51.8 1P
OuR FOCuS
NORTH AFRICA RegION
n Tunisia
WeST AFRICA RegION
n Republic of Congo (Brazzaville)
n Equatorial Guinea
NORTH SeA RegION
n United Kingdom
n Denmark
n Netherlands
n Greenland
OuR BuSINESS MOdEL
ACQUISITIONS AND DIVESTITURES
EXPLORATION DEVELOPMENT PRODUCTION
Production commenced in the Azurite field in the Republic of Congo.
REAd MORE ABOuT…
PA Resources at www.paresources.se.
RESULT AND KEY RATIOS
2009 2008 2007
Average oil sale price, USD 59 92 69
Revenue, SEK million 2,112.8 2,419.9 2,793.8
Operating profit, SEK million 429.6 1,395.7 1,833.5
Profit before tax for the period, SEK million 317.5 823,1 947.1
Earnings per share before dilution, SEK 0.08 6,37 6.53
Earnings per share after dilution, SEK 0.08 6.34 6.47
Profit margin, % 15.0 34.0 64.3
Equity per share before dilution, SEK 27.65 32.69 22.92
Return on equity, % 0.3 22.9 33.6
Debt/equity ratio, % 80.4 74.8 64.6
Equity/assets ratio, % 45.8 45.5 49.5
n Shares in North Sea licence farmed out
n UK subsidiary gained environmental certification
4TH QUARTER
n Three exploration licences in the UK relinquished n New SEK 615 million bond loan taken out n Procurement of seismic data in Greenland
2009 IN BRIEF
KEY EVENTS DURING THE YEAR
The year in brief
1,964.5
investments, SEK millionn Issue of convertible bonds and shares injected a total of SEK 1,372.1 million n Cash flow from operations amounted to
SEK 142.7 (2,284.2) million
n Investments during the year amounted to SEK 1,964.5 (3,847.5) million
n The maturity of the loan stock was pro- longed and the debt/equity ratio at year- end was 80.4 (74.8) percent
n Operating revenue decreased to SEK 2,112.8 (2,419.9) million, primarily as a result of lower oil prices
n EBITDA for the period amounted to SEK 1,325.9 (1,771.8) million and the EBITDA margin for the year was 62.8 (73.2) percent
1ST QUARTER
n Fully subscribed issue of convertible bonds injected SEK 1,089 million into the Group n Two bond loans repaid
n Three exploration licences in the UK relinquished
2ND QUARTER
n Drilling on Gita exploration well in Denmark completed
n Rights issue of shares injected SEK 283 million n New production well taken into operation on the
Didon field in Tunisia 3RD QUARTER
n Production commenced in the Azurite field in the Republic of Congo
n New oil discoveries in the Turquoise prospect in Mer Profond Sud in the Republic of Congo n Development of the Aseng field in Equatorial
Guinea approved
n Awarded new Schagen licence in the Netherlands
Production commenced in the Azurite field in the Republic of Congo.
RESULT AND KEY RATIOS
2009 2008 2007
Average oil sale price, USD 59 92 69
Revenue, SEK million 2,112.8 2,419.9 2,793.8
Operating profit, SEK million 429.6 1,395.7 1,833.5
Profit before tax for the period, SEK million 317.5 823,1 947.1
Earnings per share before dilution, SEK 0.08 6,37 6.53
Earnings per share after dilution, SEK 0.08 6.34 6.47
Profit margin, % 15.0 34.0 64.3
Equity per share before dilution, SEK 27.65 32.69 22.92
Return on equity, % 0.3 22.9 33.6
Debt/equity ratio, % 80.4 74.8 64.6
Equity/assets ratio, % 45.8 45.5 49.5
A successful turnaround in production
2009 was a year of challenges. A change in strategy and the recession impacted us in the first half, but the second half of the year saw a positive turnaround. The Group’s production and sales increased, selling prices are moving upward and a number of exciting events are imminent.
Just over a year ago we divested our operations in Norway in order to focus more on those areas with potential to provide significant growth in reserves and production for the future. However, the sale left a temporary gap in production and our main aim in 2009 was to increase production again. Other focal areas were to review the assets, prioritise our investments, improve cost control and continue to work on raising capital. This was particularly important in view of the recession.
I can now report that we have succeeded in our aims – production increased in 2009 thanks to the commissioning of the Azurite field. Financially, we have survived the recession and the future looks considerably brighter!
Increasing oil production
The obvious major event of the year was the start of production in the Azurite field in the Republic of Congo. As a result, the Group’s production increased from an average production of 8,900 barrels per day in the first half of the year to 13,400 per day in the second half. Production will gradually increase further in 2010 as more wells are drilled and taken into operation. Close to Azurite lies the Turquoise Marine prospect, where we made a significant oil discovery in 2009. In 2010 we will drill two appraisal wells in order to estimate the size and spread of the discovery.
Another important event was the development of the Aseng field in Equatorial Guinea, which commenced during the year. A total of 10 produc- tion and injection wells will be drilled in 2010 and 2011. Production is scheduled to start in 2012.
Production in the Didon field in Tunisia de- clined in 2009 due to a changed production profile with lower production levels and certain under- achieving wells. Didon has been PA Resources’
largest producing field for many years, but in the first half of 2010 this role will be taken over by the Azurite field.
Oil price impacted results
2009 was a challenging year for the oil industry, with demand falling by around 1.5 percent, signifi- cantly lower oil prices and poorer cash flow, which in turn resulted in oil production in the world de- creasing by around two percent. We saw a cautious improvement in the economy in the fourth quarter of 2009, however, with higher oil prices. Many predict that demand for oil will increase both in the coming year and in the longer term.
The low oil prices, particularly in the first half of 2009, had a negative impact on our revenue and result. The profit before tax for full-year 2009 was SEK 317.5 (823.1) million. In the second half, however, our selling prices increased again, along with our production and sales. Consequently, I see a bright future ahead of us.
Focus in 2010
The focus has been on increased production and this will remain important to PA Resources in 2010.
However, it is also important for us to increase the company’s reserves and resources. At year-end 2009 proved and probable reserves (2P) amounted to 78.9 (107.5) million barrels of oil equivalents, of which 51.8 (8.9) million barrels were proved reserves (1P). Here I want to point out the value increase in our 2P reserves as they are today 100 percent oil compared to the former 60 percent. In order to increase reserves we will focus more on exploration in the coming years. In total we will drill 10–12 exploration and appraisal wells in 2010. We also hope to be able to move more projects into the development phase.
Perhaps one of our most exciting projects in 2010 is the acquisition of new seismic data for our licence Naternaq Block 8, offshore Western Greenland. In addition, we will follow with great interest other companies’ drilling of exploration wells in nearby licences. This will provide us with better knowledge of the enormous volume of oil that appears to exist off Western Greenland.
Finally, I would like to thank all our employees for
n STATEMENT FROM THE CEO
Financially, we
have survived
the recession
and the future
looks consider-
ably brighter!
STATEMENT FROM THE CEO n
their hard work and commitment during 2009.
Our combined efforts will continue to make the Group successful.
My message to our shareholders and other stakeholders is as follows: in order to increase the value of our assets in the years ahead we will invest in developing the substantial oil and gas resources that we already have thanks to discoveries of oil made previously. We must continue to work on developing fields to put these oil discoveries into production. This will increase our reserves, which is the underlying factor that most affects the value of PA Resources’ assets.
The trend for the Group is clearly positive with increasing production, and we have many exciting projects to look forward to in the coming years.
Welcome to join us on this journey!
Stockholm, March 2010
Ulrik Jansson
n Achieve and maintain a high level of production in the Azurite field in the Republic of Congo.
n Continue development of the Aseng field in Equatorial Guinea and bring more prospects closer to development in the Republic of Congo and Tunisia.
n Drill 10–12 exploration and ap- praisal wells in our three regions.
n Acquire and assess seismic data for Greenland – an exciting licence with great potential.
Ulrik’s To Do lisT 2010 The focus has been on increased
production during the year and this will remain important to PA Resources in 2010. However, it is also important for us to increase the company’s reserves and resources.
Investments (CAPeX) (MSEK)
0 1,000 2,000 3,000 4,000
2006 2007 2008 2009
PrOved And PrObAble reserves (2P) (Million barrels oil equivalents)
0 30 60 90 120 150
0 30 60 90 120 150
2006 2007 2008 2009
n
of which proved reserves (1P)Strategy adds long-term value
PA Resources’ business consists of the acquisition, development, extrac- tion and divesting of oil and gas reserves, as well as exploration to find new reserves. The production of oil generates an important cash flow that makes possible the investments required to increase the Group’s reserves and thereby its value to shareholders. In geographical terms, PA Resources focuses on three regions: North Africa, West Africa and the North Sea.
BUsiNEss CoNCEPT
the Group’s long-term task is to maximise value for its shareholders.
In 2009 we delivered what we promised. We completed our invest- ment programme of around USD 900 million over a two-year period, resulting in production in two regions. Today we produce oil in Tunisia and Republic of Congo, and our next development project in Equato- rial Guinea has been initiated with production planned to start in 2012.
MissioN
n BUSINESS CONCEPT, MISSION AND STRATEGY
sTraTEgy aCHiEVED iN 2009 FoCUs iN 2010
Profitable development of reserves
➜
In order to increase reserves and organicallyincrease the value of its assets, PA Resources must carry out exploration and develop- ment of existing licences and put these into production. This will generate continued strong cash flow as a basis for growth and investments. PA Resources strives to optimise the level of production based on the prevail- ing conditions in our producing fields and on the market. Growth shall also be achieved via acquisitions when opportunities of interest arise. An important part of this strategy is to acquire oil and gas fields that are already producing or are close to being put into production, or to develop minor fields with great potential. PA Resources aims to hold a significant interest in licences in order to be able to influence both investments and operational decisions.
n Production in the Azurite field in the Repub- lic of Congo commenced in August
n Drilling of production and injection wells in the Azurite field
n Development plan for the Aseng field in Equatorial Guinea approved
n A further production well taken into opera- tion on the Didon field in Tunisia
n Reach planned maximum production level on the Azurite field in the Republic of Congo
n Continued development of the Aseng field in Block I in Equatorial Guinea
n Maintain a stable production level during the year
Balanced
asset portfolio ➜
PA Resources focuses on spreading its assets across the three phases of the life cycle: ex- ploration, development and production. The production profiles of producing fields vary depending on conditions in the field in ques- tion. PA Resources also maintains geographi- cal balance in its portfolio by focusing on the three regions of North Africa, West Africa and the North Sea. This focus allows us to acquire greater knowledge and to build valuable business relationships in each region. Our strategy also includes spreading risk through shared ownership. Shared ownership reduces investment costs and can also allow develop- ment to take place more quickly.n Successful drilling campaign in the Tur- quoise prospect in the Republic of Congo, with hydrocarbon discoveries
n Successful drilling at Gita in Denmark de- tects hydrocarbons
n Farm-out of 48 percent working interest in licence P1529 in the UK to Venture Sea Gas Limited, with PA Resources retaining a 32 percent share. The buyer is required to pay 100 percent of the costs of a three-dimen- sional seismic study
n Continued drillings on the Turquoise field in the Republic of Congo to assess the scale of the discovery
n Drilling of appraisal well to gather further information on the Elyssa discovery in Tunisia
n Exploration drilling in the Cobolt prospect on the Mer Profond Sud licence in the Republic of Congo
n Exploration drilling in Block I and in Block H in Equatorial Guinea
n Forthcoming development projects are the Belinda field in Equatorial Guinea and Turquoise in the Republic of Congo
Financing of growth ➜
By a long-term reduction of its debt/equity ratio PA Resources will strengthen its balance sheet and thereby its financial position. A lower debt/equity ratio creates better condi- tions for long-term, flexible financing which, together with the cash flow from produc- tion, enables us to make investments and to continue to grow. PA Resources also strives to minimise its exposure to financial risk in order to cope with difficult times in the financing market. Assets are continually reviewed in the light of value increases and investment plans.n Issue of convertible bonds injected SEK 1,089 million
n Convertibles were converted into shares at 15 percent of nominal value, equivalent to SEK 180 million
n Issue of shares injected SEK 283 million
n USD 125 million credit facility arranged
n Total interest-bearing liabilities excluding convertibles decreased by 14 percent to SEK 3,078.9 million, representing a debt/ equity ratio of 63.7 percent
n Lower investment costs following comple- tion of investment programme
n Further improvements in cash flow with increasing production
n Continue work on financing structure and reducing net debt
11 , 200
barrels per day produced on average
n Exploration 18 n Development 1 n Production 7
n Debt/equity ratio n The convertibles share of
the debt/equity ratio nUmber OF lICenCes
debt/eqUIty rAtIO 2006–2009 (%)
0 20 40 60 80 100
2006 2007 2008 2009
PA Resources also maintains geographical balance in its portfolio by focusing on the three regions of North Africa, West Africa and the North Sea.
BUSINESS CONCEPT, MISSION AND STRATEGY n
sTraTEgy aCHiEVED iN 2009 FoCUs iN 2010
Profitable development of reserves
➜
In order to increase reserves and organicallyincrease the value of its assets, PA Resources must carry out exploration and develop- ment of existing licences and put these into production. This will generate continued strong cash flow as a basis for growth and investments. PA Resources strives to optimise the level of production based on the prevail- ing conditions in our producing fields and on the market. Growth shall also be achieved via acquisitions when opportunities of interest arise. An important part of this strategy is to acquire oil and gas fields that are already producing or are close to being put into production, or to develop minor fields with great potential. PA Resources aims to hold a significant interest in licences in order to be able to influence both investments and operational decisions.
n Production in the Azurite field in the Repub- lic of Congo commenced in August
n Drilling of production and injection wells in the Azurite field
n Development plan for the Aseng field in Equatorial Guinea approved
n A further production well taken into opera- tion on the Didon field in Tunisia
n Reach planned maximum production level on the Azurite field in the Republic of Congo
n Continued development of the Aseng field in Block I in Equatorial Guinea
n Maintain a stable production level during the year
Balanced
asset portfolio ➜
PA Resources focuses on spreading its assets across the three phases of the life cycle: ex- ploration, development and production. The production profiles of producing fields vary depending on conditions in the field in ques- tion. PA Resources also maintains geographi- cal balance in its portfolio by focusing on the three regions of North Africa, West Africa and the North Sea. This focus allows us to acquire greater knowledge and to build valuable business relationships in each region. Our strategy also includes spreading risk through shared ownership. Shared ownership reduces investment costs and can also allow develop- ment to take place more quickly.n Successful drilling campaign in the Tur- quoise prospect in the Republic of Congo, with hydrocarbon discoveries
n Successful drilling at Gita in Denmark de- tects hydrocarbons
n Farm-out of 48 percent working interest in licence P1529 in the UK to Venture Sea Gas Limited, with PA Resources retaining a 32 percent share. The buyer is required to pay 100 percent of the costs of a three-dimen- sional seismic study
n Continued drillings on the Turquoise field in the Republic of Congo to assess the scale of the discovery
n Drilling of appraisal well to gather further information on the Elyssa discovery in Tunisia
n Exploration drilling in the Cobolt prospect on the Mer Profond Sud licence in the Republic of Congo
n Exploration drilling in Block I and in Block H in Equatorial Guinea
n Forthcoming development projects are the Belinda field in Equatorial Guinea and Turquoise in the Republic of Congo
Financing of growth ➜
By a long-term reduction of its debt/equity ratio PA Resources will strengthen its balance sheet and thereby its financial position. A lower debt/equity ratio creates better condi- tions for long-term, flexible financing which, together with the cash flow from produc- tion, enables us to make investments and to continue to grow. PA Resources also strives to minimise its exposure to financial risk in order to cope with difficult times in the financing market. Assets are continually reviewed in the light of value increases and investment plans.n Issue of convertible bonds injected SEK 1,089 million
n Convertibles were converted into shares at 15 percent of nominal value, equivalent to SEK 180 million
n Issue of shares injected SEK 283 million
n USD 125 million credit facility arranged
n Total interest-bearing liabilities excluding convertibles decreased by 14 percent to SEK 3,078.9 million, representing a debt/
equity ratio of 63.7 percent
n Lower investment costs following comple- tion of investment programme
n Further improvements in cash flow with increasing production
n Continue work on financing structure and reducing net debt
Business model creates growth
The business of PA Resources is to carry out exploration, development and production of oil and gas, while at the same time actively managing its asset portfolio through acquisitions and divestitures. The aim of the business model is to increase the value of the assets and generate cash flow. Our geographical focus on three regions has been successful . It has helped the Group succeed in creating long-term growth and sustainable production and revenue.
Pa rEsoUrCEs’ BUsiNEss MoDEl
By pursuing two parallel tracks, PA Resources shall increase the value of the Group’s assets and generate cash flow. The Group shall carry out exploration which results in new discoveries of oil and gas, develop new production facilities and produce crude oil and natural gas. We also actively acquire and divest assets. PA Resources thus operates in the initial phases of the value chain. The Group is not involved in the refining of crude oil into oil products or in the sale of oil products to the end customer.
CHAnGes In OWnersHIP OF lICenCes In 2009
licence Country Interest and description Consolidated/
deconsolidated
Farm-out Marine XIV Republic of Congo Farm-out of 72.5% of exploration licence 06-03-2009
Takeover Licence P1529 UK Takeover of 40% working interest in exploration licence 31-03-2009
Relinquishment Licences P1527, P1528, P1550 UK Relinquishment of all shares in three exploration licences to state 31-03-2009
Award Schagen Netherlands Award of 50% of new exploration licence 19-06-2009
Farm-out Licence P1529 UK Farm-out of 48% of exploration licence 04-09-2009
Relinquishment Licences P1318, P1319, P1336 UK Relinquishment of all shares in three exploration licences to state 22-12-2009
n BUSINESS MODEL
oWNErsHiP CHaNgEs iN 2009
In December 2009 PA Resources AB formed four new wholly-owned subsidiaries, one in Denmark and three in Greenland.
In 2009 the Group signed no agreements concerning the acquisition or sale of companies.
However, an agreement was signed changing the ownership of the exploration licence P1529 in the UK and Marine XIV in the Republic of Congo. In addition, six exploration licences in the UK have been relinquished to the state and one new explo- ration licence was obtained in the Netherlands.
For further information see table below.
ACTIVE MANAGEMENT OF THE ASSET PORTFOLIO
EXPLORATION DEVELOPMENT PRODUCTION
New discoveries of oil and gas are made through exploration activ- ities. Exploration activities increase the Group’s oil and gas resources, and thus also the value of the licences.
nacquisitions and divestitures nfarm-in and farm-out n award and relinquish-
ment
PA Resources acquires, farms in or applies for new oil licences with good potential that
When production facilities are developed and taken into operation the value of the assets increases further.
Resources are defined as reserves once a decision has been made by the Group to develop a field.
The production and sale of crude oil and gas generates cash flow and revenues that are then used to develop the as- sets further.
complement its asset portfolio. The value of the licence is then increased through exploration, development and produc- tion. Once a licence has reached a certain value it may prove worthwhile to sell shares in the licence in order to benefit from
the increase in value. It may also be worthwhile to farm out shares in licences to new partners who can share the costs of major investments that need to be made. If licences are not judged to have suf- ficient potential they are relinquished to the state.
BUSINESS MODEL n
By pursuing two parallel tracks, PA Resources shall increase the value of the Group’s assets and generate cash flow.
ValUE oF assETs
The market value of PA Resources’ and the Group’s oil and gas assets can be deduced mainly from the existing volume of oil and gas reserves and resources, and from the volume of oil and gas produced. To a certain extent the value of the assets is also affected by the oil price as well as circum- stances and tax rates in the country in question.
It is of fundamental importance for PA Resources to increase its volume of reserves and resources, but also to increase production based on the prevail- ing conditions in the market and in the oil field concerned. Production generates cash flow that contributes to continued investments in the Group.
Read more about this in the sections on Reserves and resources and Production and sales.
.
FArm-In And FArm-OUt
The holder of shares in an oil licence may transfer (farm out) shares to another com- pany in exchange for this company taking over some of the work commitments in the licence, such as paying for a drilling or a seismic investigation within a certain period.
In return, the company brought in receives a share in any future revenues. If the conditions are met the company may retain the licence shares if not the shares are taken back by the original holder. This is known as ”farm-in” and
”farm-out”.
assET PorTFolio
Of PA Resources’ total 26 oil and gas licences, seven are production licences, one is a development licence and 18 are exploration licences.
The licence portfolio is spread across the three phases of exploration, development and produc- tion. This contributes to a long-term increase in value and to the sustainability of production and revenue. A diversified portfolio also reduces risk.
The Group also holds relatively large shares in a number of interesting licences, which is an advan- tage on any farm-out of licence shares in the future.
The oil licences are concentrated in three geo- graphical regions: the North Sea, North Africa and West Africa.
PA Resources has been appointed operator for a total of 12 licences and oil fields in Tunisia, the UK, Denmark and Greenland. In the other licences the Group is part-owner and partner.
Oil Gas
DEVELOPMENTEXPLORATIONPRODUCTION
Greenland
Republic of Congo:
Azurite
Tunisia: Elyssa, Zarat
Tunisia
Republic of Congo:
Turquoise
Equatorial Guinea: Aseng
Republic of Congo
Denmark Tunisia: Didon, El Bibane, Ezzaouia,
Douleb, Semmama, Tamesmida
Netherlands UK Equatorial Guinea
10 2
2 2
4 3
3 1
1 1
1
8 7
1 4 5 3 21
6
UK
Denmark
Netherlands
Tunisia
Republic of Congo Equatorial
Guinea Greenland
9
2 3
3 1 2
NorTH aFriCa rEgioN PA Resources focuses on three geographi-
cal regions: North Africa, West Africa and the North Sea.
n Production n exploration
n development
Geographical focus
WEsT aFriCa rEgioN
NorTH sEa rEgioN
Concession/licence Operator Partners tunisia
1 Douleb PA Resources (70%)* Serept (30%)
2 Semmama PA Resources (70%)* Serept (30%)
3 Tamesmida PA Resources (95%)* Serept (5%)
4 Ezzaouia Maretap** ETAP (55%), Candax-Ecumed (31.4%), PA Resources (13.6%)
5 El Bibane Candax-Ecumed (73.8%) PA Resources (23.9%), Maghreb (2.3%)
6 Didon PA Resources (100%)
7 Jelma*** PA Resources (70%) Topic (30%)
8 Makthar*** PA Resources (100%)
9 Zarat*** PA Resources (100%)
10 Jenein Centre Storm Ventures Int (65%) PA Resources (35%)
Concession/licence Operator Partners
republic of Congo (brazzaville)
1 Azurite Murphy (50%) PA Resources (35%), SNPC (15%)
2 Mer Profond Sud Murphy (50%) PA Resources (35%), SNPC (15%)
3 Marine XIV SOCO (29.4%) Lundin Petroleum (21.55%), Raffia Oil (21.55%), SNPC (15%), PA Resources (12.5%) equatorial Guinea
1 Aseng* Noble Energy (40%) Atlas (29%), Glencore (25%), PA Resources (6%) 2 Block I Noble Energy (40%) Atlas (29%), Glencore (25%), PA Resources (6%) 3 Block H Atlas Petroleum (56.25%) Roc Oil (37.5%), PA Resources (6.25%)
WHERE TO FIND PA RESOURCES n
The Republic of Congo is the sixth largest oil-producing country in West Africa, with significant potential for further development of offshore production. PA Resources commenced production in the Azurite field in the Republic of Congo in August 2009. The Aseng field in Equatorial Guinea is under development. The Group also has interests in four exploration licences offshore Republic of Congo and Equatorial Guinea. A number of interesting new discoveries have been made in recent years.
North Africa is an oil- and gas-rich region. PA Resources has been active in the region since 1998 and is one of the largest oil producers in Tunisia. The Group has interests in six producing fields in the country, of which the largest is the Didon field. A great deal of the Group’s oil production takes place here, but exploration is also ongoing. PA Resources is the operator of seven licnces.
NorTH sEa rEgioN
Since the 1970s North Sea oil has been a major source of income for the countries surrounding the North Sea. Today PA Resources has operations in the UK, Denmark, the Netherlands and Greenland. The Group has interests in 10 exploration licences in total and is the operator of five of these. To date, the focus in this region has been on exploration activities.
* Operatorship outsourced to Serept.
** Operatorship outsourced to Maretap, a joint venture owned 50% by ETAP and 50% by Candax-Ecumed. Maretap has no interest in the licence.
*** ETAP has the right to take a 50% interest in the Jelma licence and 55% in the Makthar and Zarat licences once discoveries have been made on the licence and a development plan has been submitted. Until such time, ownership is shared as shown above.
* Production is expected to start in 2012.
NorTH aFriCa rEgioN
WEsT aFriCa rEgioN
Concession/licence Operator Partners
UK
1 P1342 PA Resources (50%) Dove Energy (50%)
2 P1529 PA Resources (32%) Venture North Sea Gas Limited (60%), Spyker Energy (8%) denmark
1 9/06 (Gita) Maersk Olie og Gas (31.2%) PA Resources (26.8%), Danish North Sea Fund (20%), Noreco (12%), Danoil (10 %) 2 9/95 (Maja) Maersk Olie og Gas (31.2%) PA Resources (26.8%), DONG (20%), Noreco (12%), Danoil (10%)
3 11/06 PA Resources (64%) Spyker Energy (16%), Danish North Sea Fund (20%) 4 12/06 PA Resources (64%) Spyker Energy (16%), Danish North Sea Fund (20%) netherlands
1 Block Q7 Smart Energy Solutions (30%) Energie Beheer Nederland (40%), PA Resources (30%) 2 Block Q10a Smart Energy Solutions (30%) Energie Beheer Nederland (40%), PA Resources (30%) 3 Schagen Smart Energy Solutions (50%) PA Resources (50%)
Greenland
1 2008/17 (Block 8) PA Resources (87.5%) Nunaoil (12.5%)
PA Resources one of the largest operators in Tunisia
Tunisia is the country that has contributed most of PA Resources’ production to date. We have production in six oil fields and this is where the majority of the Group’s employ- ees are based. PA Resources holds a significant position as an oil producer in Tunisia. The authorities encourage and facilitate investments by means of competitive tax rules.
Production, new discoveries and further potential
PA Resources has interests in licences both in the Republic of Congo and in Equatorial Guinea. An office has been estab- lished at Pointe Noire in the Republic of Congo. Production in the Azurite field commenced during the year, which was an important step for PA Resources. The Aseng field will be the next field to commence production. Offshore West Africa is one of the world’s most promising exploration areas.
ProDUCTioN
n The Didon field maintained a good level of production dur- ing the year despite some underperforming wells and with only brief interruptions for installation of the drilling rig for drilling of the production well Didon-10.
n Didon-10 was taken into production in mid-June.
n The production profile was changed during the autumn, however, resulting in lower production levels but a longer production period.
n A new helicopter deck was installed to ensure fast, good communications between the platform and the storage and service vessel.
n Further hydrocyclones were installed to improve capacity for treating the produced water pumped up with the oil.
n The Didon platform is now remote-controlled from the stor- age and service vessel.
DEVEloPMENT
n PA Resources has continued its work on investigating vari- ous possibilities for developing discoveries made on the Zarat licence and a reappraisal of the reserves has been carried out , see page 12.
ExPloraTioN
n PA Resources holds four exploration licences, three of which are on land and one of which is offshore.
n During the year an exploration well was drilled on the Zarat licence and the well tested a major prospect El Fell. Discov- eries of hydrocarbons were made, but the reservoir proved to be too narrow and the well was therefore plugged and abandoned.
n The Makthar licence was extended by three years and includes a 100 kilometre 2D seismic study as well as the drill- ing of an exploration well.
FoCUs iN 2010
n Continued optimisation of the Didon field and other fields, drilling of an exploration well at the Elyssa licence, as well as exploration on shore of Jenein Centre among others.
ProDUCTioN
n The Azurite field started production in August 2009. The field’s maximum production capacity is estimated at 40,000 barrels per day, with PA Resources’ share being 14,000 barrels per day. This level is to be reached in the second quarter of 2010.
n The industry’s first production, storage and offloading unit with drilling capacity (FDPSO vessel) is being used in the Azurite field.
n The production level from the first producing well was higher than expected.
n Nine wells are to be drilled on the field in total during 2009 and 2010; of which one production well and one injection well were completed in 2009.
DEVEloPMENT
n The development plan for the Aseng field was approved by the authorities in Equatorial Guinea during the year and production is expected to commence in mid-2012.
ExPloraTioN
n An oil discovery was made on the Turquoise Marine-1 prospect on the Mer Profond Sud licence offshore Republic of Congo, around 28 kilometres from the Azurite field. An initial appraisal well for the discovery was also drilled.
FoCUs iN 2010
n Increase production in the Azurite field, development of the Aseng field plus further exploration drillings in both the Republic of Congo and Equatorial Guinea.
NorTH aFriCa rEgioN
Tunisia
WEsT aFriCa rEgioN
Republic of Congo and Equatorial Guinea
n OPERATIONS IN THREE REGIONS
HAns ryCKbOrst, managing director for the West Africa region
2010 will be a very exciting year for the West Africa region due to the drillings on Azurite, Aseng and Turquoise. In addition, three appraisal wells are to be drilled in Equatorial Guinea, where previous successes increase our confidence in a positive result.
We are intensifying our explora- tion activities in Tunisia in order to increase production in the long term.
mOHAmed messAOUdI, managing director for the north Africa region
Focus on exploration
During the year a new organisation was built up in Lon- don which will be responsible for the Group’s operations in the UK, Denmark, the Netherlands and on Greenland.
The countries surrounding the North Sea have had a well-established oil industry for many decades. In Green- land the oil business is just beginning to develop and PA Resources sees great potential here.
ExPloraTioN
n Drilling of the Gita-1X exploration well was completed on licence 9/95 offshore Denmark. The well found a layer of sandstone containing hydrocarbons. A detailed appraisal of the results is in progress.
n New seismic data were acquired during the autumn on licence P1529 in British waters.
oTHEr
n During the year PA Resources was awarded a 50%
interest in a new exploration licence, Schagen in the Netherlands.
n The Group has also farmed out a 48% share in licence P1529 in the UK to Venture North Sea Gas.
n During the year PA Resources UK Limited obtained en- vironmental certification according to the international standard ISO 14001:2004(E). An independent certifica- tion agency carried out a comprehensive audit of the company’s activities covering both office operations and exploration operations.
n PA Resources is one of seven founders of a new indus- try organisation in Greenland.
FoCUs iN 2010
n New exploration drillings in Denmark.
n Appraisal of seismic data in the UK and Netherlands.
n Extensive 2D seismic acquisition on Greenland.
NorTH sEa rEgioN
United Kingdom, Denmark, Netherlands and Greenland
OPERATIONS IN THREE REGIONS n
GrAHAm GOFFey, managing director for the north sea region
Production in two regions – a major milestone
In January 2009 the world’s first FDPSO (Floating Drilling Production Storage and Offloading) vessel sailed from Singapore to the Azurite field and was moored by a total of 12 lines so as to be perma- nently anchored on the seabed. By August 2009 the first production well had been drilled and first oil began to flow.
The Azurite field lies offshore the Republic of Congo and is a welcome addition for PA Resources, which now has produc- tion in two regions. The production level has been very good in the first production well – higher than was originally estimated. Production will also gradually increase as further wells are drilled and taken into operation during 2010.
The field is located at sea in the Mer Profond Sud (MPS) block in the lower part of the Congo Basin, around 130 kilometres from the coast. The water depth is around 1,400 metres and the production vessel is connected to a sub-sea manifold which accommodate ten subsea wells. Totally there will be six production wells and three injection wells.
The field’s maximum production capacity is around 40,000 barrels of oil per day, with 14,000 barrels of oil per day going to PA Resources – a level that will be reached in the second quarter of 2010. This means that the Azurite field will gradu- ally take over the role as the biggest production field from the Didon field.
The field’s production is extremly important for PA Resources and our estimate is that the field will be able to produce for a relatively long period.
“A successful start of production in the Azurite field in August 2009 combined with continued drilling has resulted in a considerable increase in oil production for PA Resources and I have had the privilege of following the project’s devel- opment in close partnership with Murphy Oil,” says Hans Ryckborst, Managing Director for the West Africa region.
2010 will be a challenging
year, with the acquisition
of various seismic studies in envi-
ronmentally sensitive geographical
areas.
n RESERVES AND RESOURCES
PA Resources’ reserves and resources are our working interest of the volumes of oil, gas and other hydrocarbons that exist in the bedrock in the licences and which represent future production. In 2009 reserves were strenghtened by an increased share of proved reserves (1P) amounting to 51.8 (8.9) million barrels and an increased share of oil in proved and probable reserves (2P) amounting to 78.9 (64.8) million barrels. The volume of resources also increased during the year.
Reserves and resources – our greatest asset
PA Resources’ reserves are located in the produc- ing fields in Tunisia and the Republic of Congo, the Aseng field in Equatorial Guinea which is in development, and in the Zarat licence in Tunisia, where more fields are about to be developed for oil production. The Group’s total proved reserves (1P) increased to 51.8 (8.9) million barrels. At the same time, the share of oil and condensate in the Group’s total proved and probable oil reserves (2P), which include 1P, has increased to 78.9 (64.8) million barrels. The share of gas in the 2P reserves decreased to 0 (42.7) million barrels of oil equiva- lents as a result of reclassification to contingent resources and upgrading from gas to oil and con- densate. The economic value of oil and condensate is 2–3 times greater than that of gas.
Change in reserves in 2009
n Oil production during the year decreased re- serves by 4.1 million barrels.
n In North Africa the reserves in the Didon field in Tunisia were revised downwards due to poorer than anticipated performance in existing wells.
In producing fields in Tunisia, work during the year as well as changes in the technical and finan- cial basis of calculation resulted in 4.1 million barrels of oil equivalents being reclassified from 2P reserves to contingent resources.
n In the Elyssa and Zarat fields 1P reserves of 27.4 million barrels of oil equivalents were able to be defined, while at the same time 2P reserves decreased by 18.5 million barrels of oil equiva- lents. The volume of oil and condensate increased markedly in the two fields, with oil now making up a share of around 60 percent compared with its previous 25 percent. This is due to the fact that the development of the fields will focus on the production of oil and condensate, with gas being
CHAnGe In PA resOUrCes’ reserves In 2009
developed assets Assets under development non-developed assets total
million barrels of oil equivalents 1P/P90 2P/P50 1P/P90 2P/P50 1P/P90 2P/P50 1P/P90 2P/P50
As of 31.12.2008 8.9 16.1 0.0 34.2 0.0 57.2 8.9 107.5
Production – 4.1 – 4.1 0.0 0.0 0.0 0.0 – 4.1 – 4.1
Revision of previous estimates –1.1 –6.0 20.7 0.0 27.4 –18.5 47.0 –24.5
Revision – development projects 17.7 26.2 –17.7 –26.2 0.0 0.0 0.0 0.0
As of 31.12.2009 21.4 32.2 3.0 8.0 27.4 38.7 51.8 78.9
reinjected into the reservoir. The gas in the fields has been reclassified as contingent resources.
n In West Africa work during the year allowed 20.0 million barrels of oil equivalents to be defined as 1P reserves in the Azurite field in the Republic of Congo and in the Aseng field in Equatorial Guinea. The gas in the Aseng field, which is to be reinjected into the reservoir, is categorised as contingent resources while awaiting commercial development. The reserves in the Azurite field, which in 2008 were classified as assets under development, were this year reclassified as devel- oped assets as a result of the start of production.
Contingent resources
PA Resources’ contingent resources, which are oil and gas that have been proven by drilling, increased to 65.4 (34.6) million barrels of oil equivalents. The increase is partly due to success- ful drilling activities with new discoveries of oil, as well as to the revaluation of the assets that was carried out during the year. In particular, the re- classification of the gas in certain fields in Tunisia resulted in an increase in contingent resources. It is highly likely that the contingent resources will be produced, assuming that certain technical or economic conditions are met.
risked prospective resources
The Group also has 319.1 (216.2) million barrels of oil equivalents in risked prospective resources.
These resources are in prospects that have not yet been drilled and the commercial volume of hydrocarbons has not yet been established. Geo- logical surveys have shown that the prospects can be drilled and the chances of success have been assessed. The additional resources are mainly in the North Sea and Greenland.
0 50 100 150 200 250 300 350
North Africa West
Africa North Sea Total reGIOnAl dIstrIbUtIOn OF reserves And resOUrCes, As At 31 deC 2009
(million barrels of oil equivalents) n 2P reserves n Contingent resources n Risked prospective resources
rEaD MorE…
about PA Resources’ reserves and resources in the ‘Annual Statement of Reserves 2009’ on the company’s website.
www.paresources.se.
PrOved And PrObAble reserves (2P)*
2P 2009 2008
Oil and
condensate 78.9 64.8
Gas 0 42.7
total 78.9 107.5
*Breakdown of proved and probable reserves (2P) in oil/
condensate and gas.
PRODUCTION AND SALES n
Increased production in the second half-year
PA Resources’ production and sales of oil and gas generate important cash flow and profit that enable us to continue to develop the business. The recession has affected the Group, but the trend in the second half of 2009 was very positive – production grew and selling prices increased.
In 2009 PA Resources focused on increasing its production level. In August the first production well in the new Azurite field in the Republic of Congo came on stream and further wells were put into production after the end of the period. A total of 4,074,500 (4,039,900) barrels of oil were produced during the year, representing average production of 11,200 (11,100) barrels per day.
Oil is produced at a total of seven oil fields – six in Tunisia and one in the Republic of Congo. The Didon field in Tunisia has been the Group’s biggest producer for a number of years, but after the end of the year this role was gradually taken over by the Azurite field in the Republic of Congo. Produc- tion in the Didon field declined in 2009 due to a changed production profile with production at a lower level. During the year a range of efficiency measures were implemented in the Didon field to reduce production costs.
sales
PA Resources sold a total of 3,174,000 (3,884,400) barrels of oil during 2009 excluding royalties. The reduction compared with the previous year is due to the fact that no sold oil was lifted by custom- ers in December. In October the first quantity of oil from the Azurite field was sold, resulting in a marked increase in sales in the last quarter.
PA Resources’ average selling price was USD 59 (92) per barrel during 2009. The recession resulted in a lowest average price of USD 43 per barrel in the first quarter, although this then climbed to USD 70 per barrel in the fourth quarter.
Customers
PA Resources’ crude oil is sold on the world mar- ket. Around 60 percent of the oil produced in Tu- nisia in 2009 was sold to Royal Dutch Shell under a contract, 20 percent was sold to the spot market via a broker and around 20 percent was sold locally to the state oil company ETAP in accordance with the terms of the licence. Local sales are made at a 10 percent discount on the world market price. The oil produced in the Republic of Congo in 2009 was sold through a contract with Royal Dutch Shell.
royalties
The licence agreements for Tunisia and the
Republic of Congo involve royalties, which are paid to the state either in kind or as a monetary royalty. In 2009 PA Resources’ royalty costs amounted to around 11.5 percent of the volume produced. For more information refer to Note 2.1, Description of significant accounting principles.
Inventories
The oil inventory, excluding royalty oil, amounted to 643,731 (205,258) barrels on 31 December 2009.
In accordance with the Net Entitlement Method of accounting, the outstanding oil inventory on the balance sheet date is reported as if the oil inventory had been sold. For more information refer to Note 2.1, Description of significant accounting principles.
Focus in 2010
In 2010 the Group is focusing on achieving the planned maximum production level in the Azurite field in the Republic of Congo. PA Resources’ share of production increases thereby to 14,000 barrels of oil per day on average. More production and injection wells are to be drilled in Azurite during 2010. In addition, the Group will continue to de- velop the Aseng field in Equatorial Guinea, where production is planned to start in 2012.
Production forecast
PA Resources makes and follows up its production forecasts in its interim financial reports.
0 20 40 60 80 100 120
Q106 Q2 06Q3
06Q4 06Q1
07Q2 07 Q3
07Q4 07Q1
08Q2 08 Q3
08Q4 08 Q1
09 Q2 09 Q3
09Q4 09 43
70 120
PA resOUrCes AverAGe sellInG PrICe Per qUArter, 2006 – 2009
(USD/barrel)
million barrels (+0.9%)
PrOdUCtIOn In 2009
4.1
* The comparative figures for 2008 exclude Norwegian production, which was divested as of 31 December 2008.
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
Q1 Q2 Q3 Q4 Fullyear
OIL PRODUCTION PER QUARTER 2008 AND 2009*
(thousand barrels) n 2008 n 2009
rEaD MorE aBoUT…
pricing and quality of oil, production costs, seasonal variations and the life cycle of an oil field at www.paresources.se.
n THE OIL MARKET
A more stable market and higher oil prices
PA Resources operates in a global market with global players and international trading.
In 2009 the recession contributed to reduced demand, production and investments as well as lower oil prices in the world, but the future looks considerably brighter.
the past year
2009 was a tough year for the oil industry. Demand for oil fell during the year by around 1.6 percent due to the global recession that began in autumn 2008 and continued during 2009. As a result, oil prices fell drastically up to and including Febru- ary 2009. At its lowest, the price of oil was around USD 39 per barrel. The turnaround came in March 2009, when oil prices began to rise again. In the fourth quarter of 2009 the world was able to see a cautious improvement in the economy and the oil price was at levels of around USD 70-80 per barrel.
Production also fell by around 2 percent in 2009. The low oil prices reduced the incentive for oil companies to produce. The OPEC oil cartel, among others, kept down production in an at- tempt to stimulate the oil price.
The tough financial climate, accompanied by lower demand and cash flow for oil companies the world over, resulted in a decline in investments in oil and gas operations of around 19 percent in 2009 compared with 2008. During a recession oil companies tend to defer the least profitable projects. This will have a negative effect on the supply of oil in the years ahead.
The cautious improvement in the economy in the fourth quarter of 2009 combined with economic forecasts by the International Monetary Fund and provisional data from America and Asia have resulted in a more optimistic view of the
future. The International Energy Agency (IEA) expects demand for oil to increase by 1.7 percent in 2010.
Outlook
The International Energy Agency estimates that global energy requirements will increase by 1.5 percent per year up to 2030, partly due to the developing countries of Asia and the Middle East.
The issue of climate change and investments in renewable energy may affect demand for oil in the long term. Oil will remain the most important individual fuel in 2030, however, even though its share of the total energy mix is estimated to decline from 34 to 30 percent.
Demand for oil is according to IEA expected to amount to 86.3 million barrels per day in 2010, then increasing by 1 percent per year until 2030 when the level is expected to reach 105 million barrels per day. The oil price is expected to recover as the economy picks up, reaching an average price of USD 100 per barrel in 2020 and USD 115 per barrel in 2030.
million barrels of oil per day (–2.2%)
GlObAl PrOdUCtIOn OF OIl 2009
million barrels of oil per day (–1.6%)
GlObAl demAnd FOr OIl 2009
84.9 84.5
0 30 60 90 120 150
2005 2006 2007 2008 2009
OIl PrICe develOPment 2005 – 2009 Spot price North Sea oil Brent (dollars per barrel)
During a recession oil compa- nies tend to defer their least profitable projects. This will have a negative effect on the supply of oil in the years ahead.
rEaD MorE aBoUT…
the industry, seasonal variations, etc. at
www.paresources.se. Source: US Energy Information Administration Source: IEA
THE OIL MARKET n
Industry colleagues
The term ‘industry colleagues’ is a more accurate description of our relationship with other oil com- panies than ‘competitors’. An oil company may be a competitor, partner and customer of PA Resources all at the same time.
PA Resources mainly compares itself to listed companies within the energy sector that carry out exploration and production of oil and gas and which operate in roughly the same geographical markets. They should also have comparable levels of reserves and production.
It is difficult to assess an oil-producing com- pany’s market share since the crude oil is produced in different countries and then sold on the global market. Instead, the market value of an oil com- pany may be measured by the size of its reserves.
Comparisons of production figures or the revenue generated by the companies may also be of interest.
lIsted IndUstry COlleAGUes In PA resOUrCes’ mArKets
Domicile/Stock exchange North
Africa West Africa North Sea Average production in barrels per day in 2009
PA Resources Sweden/ NASDAQ OMX Stockholm + Oslo Stock Exchange ✔ ✔ ✔ 11,200
Lundin Petroleum Sweden and Switzerland/ NASDAQ OMX Stockholm ✔ ✔ ✔ 38,200
DNO International Norway/ Oslo Stock Exchange ✔ ✔ 21,500
Norwegian Energy (Noreco) Norway/ Oslo Stock Exchange ✔ 10,100
Premier Oil Scotland/ London Stock Exchange ✔ ✔ ✔ 44,200
Dana Petroleum UK / London Stock Exchange ✔ ✔ 39,000*
Cairn Energy Scotland/ London Stock Exchange ✔ ✔ 27,000
Soco International UK / London Stock Exchange ✔ 6,400
FaCTors aFFECTiNg THE oil PriCE
1
tHe GlObAl eCOnOmy A global reces- sion suppresses demand for oil, while an economic boom stimulates demand. Moreover, during a recession the least profitable projects are deferred and production is kept down. This was the case in autumn 2008 and in 2009.2
OPeC Decisions on production levels by the oil cartel OPEC impact the oil price. In 2009 OPEC kept down production in order to stimulate the price.3
InventOry levels Large national oil inventories result in a lower oil price, while inventory reductions tend to move the oil price upward.4
FAllInG PrOdUCtIOn Oil production from the increasingly aging oil fields of the world is declining. Developing new fields is becoming increasingly more difficult and more expensive, which will move the price of oil upward.5
POlItICAl tUrbUlenCe Conflicts in or between oil-producing countries may push up the price of oil.6
WeAtHer And UnFOreseen events Demand for oil in- creases somewhat in the winter.Unforeseen events such as hurricanes, terrorist attacks, disasters and regime changes can occur.
7
AlternAtIve en- erGy sOUrCes The countries of the world are expected to make major public investments in renewable energy. A move to alternative energy sources could affect the oil price in the long term.IndUstry COlleAGUes’ PrOved And PrObAble reserves*
million barrels oil equivalents Soco International
Cairn Energy Dana Petroleum Premier Oil Norwegian Energy (Noreco) DNO International Lundin Petroleum PA Resources n 2007
n 2008
0 50 100 150 200 250 300 350
* Data for the fullyear 2009 were not yet available when the annual report was adopted.
* The average production during 2009.
