Wood Mackenzie Energy Angola s Oil Gas Revenue

Wood Mackenzie Energy Angola’s Oil & Gas Revenue: Past, Present & Future Delivering commercial insight to the global energy industry www. woodmac. com

Wood Mackenzie Energy Agenda Background to Wood Mackenzie Setting the background - Angola’s upstream industry in context Historical and possible future government revenues A brief international context Petroleum Revenue Management Workshops, Luanda, May 2006 2 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy Background to Wood Mackenzie Providing information and analysis on the upstream industry for over 30 years Asset level information - field by field or block by block • Started West African coverage in 1990 Research and analysis held in proprietary databases and economic models Asset data, field profiles, contract terms etc derived from many sources • Public information • Government information • Company information • Conversations with operators, partners… Ultimately all asset profiles and values are WM own best estimates Data here comes from Wood Mackenzie’s Global Economic Model (GEM) Petroleum Revenue Management Workshops, Luanda, May 2006 3 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy Angola has seen spectacular growth in its deepwater resource base… Source: Wood Mackenzie’s Global Economic Model (GEM) Petroleum Revenue Management Workshops, Luanda, May 2006 4 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy …resulting in ongoing upward revision of production profiles… Source: Wood Mackenzie’s Global Economic Model (GEM) Petroleum Revenue Management Workshops, Luanda, May 2006 5 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy …driven by deepwater developments Source: Wood Mackenzie’s Global Economic Model (GEM) Petroleum Revenue Management Workshops, Luanda, May 2006 6 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy Lead times from discovery to development sanction have been increasing… Source: Wood Mackenzie’s Global Economic Model (GEM) Petroleum Revenue Management Workshops, Luanda, May 2006 7 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy …and need to be accelerated to stem decline from the first tranche of developments Source: Wood Mackenzie’s Global Economic Model (GEM) Petroleum Revenue Management Workshops, Luanda, May 2006 8 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy Huge investment required to generate massive revenues… Source: Wood Mackenzie’s Global Economic Model (GEM) Petroleum Revenue Management Workshops, Luanda, May 2006 9 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy …which will transform the revenues received by the state… Source: Wood Mackenzie’s Global Economic Model (GEM) Petroleum Revenue Management Workshops, Luanda, May 2006 10 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy …dominated by profit share from deepwater PSCs… Source: Wood Mackenzie’s Global Economic Model (GEM) Petroleum Revenue Management Workshops, Luanda, May 2006 11 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy …with total state revenue at least 50% of gross revenue and could be as high as 80% Source: Wood Mackenzie’s Global Economic Model (GEM) Petroleum Revenue Management Workshops, Luanda, May 2006 12 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy UK comparison Source: Wood Mackenzie’s Global Economic Model (GEM) Petroleum Revenue Management Workshops, Luanda, May 2006 13 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy UK comparison Source: Wood Mackenzie’s Global Economic Model (GEM) Petroleum Revenue Management Workshops, Luanda, May 2006 14 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy Norway comparison Source: Wood Mackenzie’s Global Economic Model (GEM) Petroleum Revenue Management Workshops, Luanda, May 2006 15 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy Norway comparison Source: Wood Mackenzie’s Global Economic Model (GEM) Petroleum Revenue Management Workshops, Luanda, May 2006 16 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy Conclusions What are the upsides? • High prices – progressive government take • Further discoveries • Spectacular bonuses for some deepwater licences What are the downsides or risks? • Low prices • Very high cost inflation throughout industry • Very steep production decline without further discoveries • Disappointment in ultra-deep water • Small number of partners Petroleum Revenue Management Workshops, Luanda, May 2006 17 Delivering commercial insight to the global energy industry

Wood Mackenzie Energy Thank you for your attention David Morrison Catriona O’Rourke Chairman, Energy Senior Angola Analyst T: +44 207 877 0570 T: +44 131 243 4250 E: david. morrison@woodmac. com E: catriona. o’rourke@woodmac. com Wood Mackenzie Head Office Global Contact Details Kintore House 74 -77 Queens Street Edinburgh EH 2 4 NS Europe Americas Asia Pacific Email +44 (0)131 243 4400 +1 713 470 1600 +65 6549 7107 energy@woodmac. com Global Offices Beijing - Boston - Dubai - Edinburgh - Houston - Kuala Lumpur - London - Moscow - New Jersey - New York - Singapore - Sydney - Tokyo Wood Mackenzie has been providing its unique range of consulting services and research products to the Energy and Life Sciences industries for over 30 years. Wood Mackenzie’s market proposition is based on its ability to provide forward-looking commercial insight that enables clients to make better business decisions. For more information visit: www. woodmac. com Petroleum Revenue Management Workshops, Luanda, May 2006 18 Delivering commercial insight to the global energy industry