Cairn Energy PLC Acquisition of Nautical Petroleum plc 13 June 2012
Disclaimer This Investor Presentation is in connection with t he recommended cash offer (the "Offer") by Capricorn Energy Limited ("Capricorn") a wholly owned subsidiary of Cairn Energy PLC ("Cairn") for Nautical Petroleum plc (“Nautical Petroleum”)
By attending this Investor Presentation, you agree to be bound by the following conditions: Overseas Persons
The information contained in the Investor Presentation is not for publication or distribution, directly or indirectly, in or into any jurisdiction where to do so would violate the law of that jurisdiction (a "Restricted Jurisdiction"), and the availability of the Offer to shareholders who are not resident in the United Kingdom may be affected by the laws of relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable regulatory and legal requirements. Unless otherwise determined by Capricorn or required by the City Code on Takeovers and Mergers, and permitted by applicable law and regulation, the Offer will not be made, directly or indirectly, in or into a Restricted Jurisdiction where to do so would violate the securities laws in that jurisdiction. Accordingly, copies of this Investor Presentation are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this Investor Presentation and all documents relating to the Offer (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdiction where to do so would violate the laws in that jurisdiction. No Investment Advice
This Investor Presentation is not intended to form the basis of any investment decision. It does not constitute an offer or invitation for the sale or purchase of any securities, businesses and/or assets or any recommendation or commitment by Cairn or any company or interest comprised in the Cairn Group and neither this Investor Presentation, nor its contents nor any other written or oral information made available in connection with the Offer shall form the basis of any contract. This Investor Presentation has been prepared without reference to your particular investment objectives, financial situation, taxation position and particular needs. If you are in any doubt in relation to these matters, you should consult your financial or other advisers. No Reliance
The information in this Investor Presentation has been provided by Cairn and has not been independently verified by NM Rothschild & Sons Limited, the financial adviser to Capricorn and Cairn (the "Financial Adviser") or any other person. This Investor Presentation does not purport to be comprehensive or to contain all the information that a recipient may need i n order to evaluate the Offer. No representation or warranty, express or implied, is given and, so far as is permitted by law and except in the case of fraud, no responsibility or liability is accepted by any person, with respect to the accuracy or completeness of the Investor Presentation or its contents or any oral or written communication in connection with the Offer. Forward-looking Statements
This Investor Presentation contains certain forward- looking statements, including statements regarding Cairn’s, Capricorn’s and Nautical Petroleum’s plans, objectives and expected performance. These forward-looking statements can be identified by the fact they do not only relate to historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could" or other words of similar meaning. Such statements relate to events and depend on circumstances that will occur in the future and are subject to risks, uncertainties and assumptions. There are a number of factors which could cause actual results and developments to differ m aterially from those expressed or implied by such forward-looking statements, including, among others the enactment of legislation or regulation that may impose costs or restrict activities; the re-negotiation of contracts or licences; fluctuations in demand and pricing in the oil industry; fluctuations in exchange controls; changes in government policy and taxation; industrial disputes; war and terrorism. In particular, there are uncertainties inherent in estimating the quantity of reserves and resources and in projecting future rates of production, including factors beyond Cairn’s control. Estimating the amount of hydrocarbon reserves and resources is a subjective process and, in addition, the results of drilling, testing and production subsequent to the date of an estimate may result in revisions to original estimates. The reader is cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this document. Such statements are based on the assumptions and assessments made by Cairn management in light of the information available to them at the time. Neither Cairn nor Capricorn undertakes any obligation to update or revise any forward-looking statement in this Investor Presentation to reflect any change in expectations with regard thereto or any change in circumstances or events after the date hereof.
Strategic Overview “To become the exploration company of choice, for Investors and Governments, by offering to explore for transformational potential in a rapid and safe manner within a well balanced exploration and production portfolio.”
Strategic Objectives:
Create value and opportunities through exploration led growth
Exposure to transformational exploration potential in frontier basins
Utilise Cairn's full cycle capabilities to deliver value from a well balanced exploration and production portfolio of assets Strong balance sheet from which to allocate capital to growth opportunities
Acquisition of Nautical Petroleum plc
AIM listed E&P company with exploration, appraisal and development assets in UK North Sea Build on achievements of Nautical in the North Sea by applying Cairn’s expertise and
access to capital to create further value
Proposed acquisition of Nautical builds on Cairn’s strategy of growing a balanced
portfolio with exposure to near-term exploration, appraisal and development leading to production and cash flow in the medium term
Offer price of 450p per share, valuing the issued and to be issued share capital of Nautical at approximately £414 million ($642 million*) – Nautical held cash and deposits of £69.9 million ($108 million*) at 31 December 2011
Consideration payable in cash and expected to become effective in August 2012
Recommended by Board of Nautical
* At current exchange rate of 1.55 12 June 2012
Overview - Nautical Petroleum plc Nautical provides Cairn with: 2C contingent resources of 86 mmboe comprising;
Additional 15% interest in the Greater Catcher area planned for develop ment taking Cairn’s
overall interest to 30% 25% carried interest in Kraken, a large heavy oil development project, and a significant interest in Ketos a nearby exploration prospect 6% interest in the Mariner oil field, planned for development
Active near term UK North Sea exploration and appraisal programme:
Recent Carnaby discovery in the Greater Catcher area Kraken / Ketos
Complements Cairn’s recent Agora acquisition by further building a material position in
North West Europe that gives a platform for future growth and cash flow generation
Nautical Assets Additional Platform for Growth
Significant technical resource with focus on oil
KRAKEN SKARFJELL
Nautical 2C Resources Gross mmbbls P50
Access to future exploration, appraisal / development and production Provides future sustainable cash flow to help fund future exploration and appraisal activities
160 Net mmbbls P50
40
MARINER Nautical 2C Resources Gross mmbbls P50
430
Total net contingent resource on publicly available information:
Net mmbbls P50
26
GREATER CATCHER Cairn 2C Resources Gross mmbbls
(mmboe)
Core assets
P50
86
P50
130* Net mmbbls P50
20 * Premier Oil (Operator) estimate 80-130 mmbbls
Catcher Area Development
Operator Premier Oil (Nautical 15%) Carnaby, Catcher, Burgman and Varadero discoveries
Catcher Area
Medium grade crude (24 - 30° API) Re-mobilised and injected sands with excellent reservoir qualities Cairn’s estimate of P50 contingent resource:
Block 28/9a
Catcher
Varadero
130 mmboe gross, 20 mmboe net
Planned for development, with concept selection H2 2012 First Oil planned for end 2015
Burgman Carnaby
Discoveries Prospects
Kraken Development
Operator EnQuest 60% interest (Nautical 25%)
Nautical farmed-out 25% interest in Jan 2012 to EnQuest with carry of up to $240m (firm carry of $150m and contingent carry of $90m)
Six successful wells to date, including the recent 9/02b-5z well which flowed at a maximum stabilised flow rate of 4,550 bopd Nautical estimate P50 contingent resource 160 mmboe gross
Gaffney Cline & Associates 2P reserves of 167 mmboe gross
Kraken
Three-way dip closed structure containing heavy oil (1415°API) in excellent quality reservoir
Block 9/2b & 9/1a
Field Development Plan submission target in 2012/13 and first oil target end 2015 North Sea heavy oil supply for refineries has declined from a peak of 250,000 bopd to ~100,000 bopd creating an opportunity for new supplies in North West Europe
Ketos
Kraken
Mariner Development
Operator Statoil (Nautical 6%) Large oil accumulations in Maureen and Heimdal reservoirs
Heavy oil (12 - 14° API)
Nautical’s estimate of P50 contingent resource:
Block 9/11a
Mariner
430 mmboe gross, 26 mmboe net
Planned for development, with final project sanction 2012/13 First Oil target 2016/17
Mariner
Sustainable Cash Flow for Future Exploration and Appraisal
Cairn’s net interest:
Greater Catcher area 30% (40 mmboe) Kraken 25% (40 mmboe) Mariner 6% (26 mmboe)
Planned near term appraisal and development leading to production and cash flow in the medium term Ability over long term to fund future activity from balance sheet strength Total net contingent resource on publically available information: (mmboe)
P50
Nautical*
86
Nautical + Agora**
106
*Excludes Carnaby
** Excludes Carnaby and Skarfjell
KRAKEN
GREATER CATCHER
Gross mmbbls1 P50
Gross mmbbls2 P50
160
130
Net mmbbls1 P50
Net mmbbls2
40
40
MARINER
SKARFJELL
Gross mmbbls1 P50
Gross mmbbls3 P50
430
60 – 160
P50
Net mmbbls1 P50
26 1 Nautical
estimates estimates 3 Wintershall estimates 2 Cairn
2012/13 Exploration and Appraisal Programme Greater Catcher additional Prospectivity:
Kakelborg
Additional prospects on block Application submitted for adjacent open acreage
Kraken / Ketos
50% interest in Ketos prospect 3D seismic survey acquired over part of acreage
Other interests in UK, Irish Sea, Ireland and France
Field / Licence
2012 Q2
2012 Q3
2012 Q4
Norfolk 2013
Spaniards East
UK
Buffalo
Bonneville Bardolph P1659
Kraken / Ketos
Bardolph
Spaniards East
Frode
Merrow Buffalo Norfolk Kraken Ketos Norway
Kakelborg PL370 Frode PL299
Merrow
Bonneville (Greater Catcher Area)
Focus on a Balanced Portfolio Cash, shareholding, developments, producing properties and cash flow
Producing Asset
Frontier basins
New Basin Initiatives
Near Term Exploration e.g. Ketos, Kakelborg, Bonneville,
Appraisal e.g. Skarfjell
Cash
Development e.g. Catcher, Kraken
Agora, Nautical
~22% Cairn India Ltd Shareholding
Low risk but with inherent organic growth potential
Spanish Cyprus Applications Applications Valencia Basin 5 Blocks, Spain South Greenland
Greenland
Pitu
Higher risk transformational exploration potential
Business Strategy Pitu
Area of current focus
(+ other Greenland blocks)
Spain (5 blocks + Applications)
Transformational Exploration (Operating focus)
Eastern Mediterranean Applications
Near-term Exploration
Appraisal and Development
North West Europe (Agora, Nautical)
Future Production
CIL + Cash
Conclusion
Attractive opportunity to expand Cairn’s existing portfolio in North West Europe and
further rebalance the company's asset base in three planned developments:
Greater Catcher area
Kraken oil field
Mariner oil field
Further value creation with access to future exploration, appraisal / development and production Complementary to Cairn’s current portfolio, including Agora, transformational
exploration potential in Greenland, and existing and prospective acreage in Mediterranean
Appendix Nautical Acquisition, June 2012
Nautical Asset Overview Field / Licence
Interest %
Key Partners
Development / appraisal Kraken
25%
EnQuest (60%)*, First Oil (15%)
Greater Catcher Area
15%
Premier (50%)*, Wintershall (20%), Cairn 3 (15%)
Mariner
6%
Statoil (65%)*, Eni (29%)
Catcher Area Carnaby
15%
Premier Oil (50%)*, Wintershall (20%), Cairn 3 (15%)
Catcher Area Bonneville1
15%
Premier Oil (50%)*, Wintershall (20%), Cairn 3 (15%)
Ketos2
100%
N/A
Merrow
50%
Premier Oil (50%)
Spaniards
21%
Premier Oil (28%)*, Serica Energy (21%), DEO Petroleum (13%), Faroe Petroleum (8%), Maersk (6%), Atlantic (3%)
Buffalo
20%
Premier Oil (40%)*, Endeavour Energy (20%), Enquest (20%)
Norfolk
20%
First Oil (35%), North Sea Energy (20%)*, Premier Oil (25%)
Near Term Exploration
Additional Exploration Other Licences in UK, Irish Sea, Ireland and France
Total number of Licences held by Nautical 24 Notes:
* Denotes Operator
1 2 3
EnQuest’s 60% interest in Kraken includes the recent ac quisition of 15% interest from First Oil in April 2012 (subject to DECC approval)
EnQuest has option to acquire up to a 50% working interest in the block Cairn has 100% interest in Agora
