ANNUAL REPORT 2018 Contents

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ANNUAL REPORT 2018 Contents ANNUAL REPORT 2018 Contents Financial highlights and key figures 3 Guidelines and policies 12 Letter from the Board of Directors 4 Management’s statement 14 Management’s review 5 Independent auditor’s report 16 Expectations to 2019 6 Accounting Policies 18 The Greenland Sea 7 Income statement 21 Jameson Land 8 Balance sheet 22 NUNAOIL’s industrial Ph.D. project 9 Cash flow statement 23 Risk Management 10 Notes 24 Corporate governance 11 Company information THE COMPANY BOARD OF DIRECTORS NUNAOIL A/S Stine Bosse, Chairman Tuapannguit 38 Søren Lennert Mortensen, Vice-chairman P.O. Box 579 Peter Helmer Steen GL-3900 Nuuk Telephone: +299 32 87 03 BOARD OF MANAGEMENT Website: www.nunaoil.gl Signe Ulfeldt Hede Email: [email protected] Follow NUNAOIL on LinkedIn AUDITORS CVR: 77 74 43 12 Grønlands Revisionskontor A/S, statsautoriserede revisorer Founded: 23 January 1985 Registered office: Kommuneqarfik Sermersooq ANNUAL GENERAL MEETING Financial year: 1 January - 31 December Annual general meeting held 2 May 2019 Cover: Map of Greenland including licences 2018. The pictures from the Annual Report are from a geology excursion to Trail Ø and Ella Ø, which are situated just North of Jameson Land in East Greenland. EDITORS: NUNAOIL A/S | LAYOUT & PRODUCTION: ICICERO, NUUK | PUBLISHED: MAY 2019 2 Annual Report 2018 · NUNAOIL A/S Financial highlights and key figures 2018 2017 2016 2015 2014 DKK 1,000 Net profit for the year Revenue 103 0 185 755 1,612 Gross profit -932 ‑1,147 ‑1,006 ‑626 ‑1,543 Profit before net financials -2,817 -3,140 -5,772 -6,909 -8,235 Financial income and expenses 32 108 19 330 1,298 Net profit for the year -2,785 ‑3,032 ‑5,753 ‑6,579 ‑6,733 Balance Sheet Balance Sheet 35,717 36,829 42,603 45,800 50,549 Total equity 11,343 14,129 17,161 22,913 29,492 Cashflow statement Operational activities 2,402 -7,761 -2,340 -4,529 -3,398 Investment activities 11 4,713 2,815 0 ‑13 Financing activities 0 0 ‑568 0 0 Total cashflow 2,413 -3,048 ‑93 -4,529 -3,411 Employees Average number (full-time) 2 4 5 7 7 Financial ratio (in %): Equity ratio 31,8 38,4 40,3 50,0 58,3 Return on equity (ROE) -21,9 -19,4 -28,7 -25,1 -20,5 The calculation of the key figures and financial ratios are complying with the recommendations from the Danish Finance Society and deviates only on a few items from this. The key figures and financial ratios have been calculated as follows: Equity ratio: Equity excl. minority interests ultimo x 100 Total Liabilities ultimo Return on equity (ROE): Result x 100 Average equity excl. minority interests STATEMENT TO INATSISARTUT This annual report meets the legal requirements for submission of accounts in Greenland, and it is furthermore the statutory annual report to Inatsisartut according to Inatsisartut Act no. 15. Dated December 7th 2009 regarding NUNAOIL A/S. The Management Report, furthermore, is worked out based on recommendations on good company governance as stated by Naalakkersuisut. The annual report is available in Greenlandic, Danish and English. In case of doubt the Danish version shall serve as the applicable copy. Annual Report 2018 · Financial highlights and key figures · NUNAOIL A/S 3 Letter from the Board of Directors During 2018, NUNAOIL board of direc- the Greenlandic subsurface based on NUNAOIL is the only company which tors has focused on the restructuring new knowledge and all of the explora- participates in all exploration and ex- of the company in order to secure its tion data that have been acquired dur- ploitation licences that are being grant- future development and economy in a ing the years, is necessary in order to ed in Greenland, and the company time, which is still challenged by a low be able to attract robust oil companies therefore plays a key role in maintain- oil price and a decline in the explora- and further investments to Greenland. ing and anchoring knowledge about tion activity in Greenland. petroleum exploration in Greenland. Therefore, NUNAOIL initiated a mul- Large amounts of geological and ge- In 2018, the number of explora- ti-year resource assessment project ophysical data, interpretations, maps, tion and exploitation licences during during 2018. The aim of the project is relinquishment reports and experienc- which NUNAOIL participated as a car- to point towards those areas of Green- es from the many years of comprehen- ried (non-paying) partner, was reduced land, which have the biggest explo- sive exploration work in Greenland are from 5 to 2 (31/12 2018). This is the ration potential and to quantify how stored at NUNAOIL. All these infor- lowest number of licences in Green- much oil/gas is most likely present in mations are made available for the re- land since 2005. However, there seems the different areas. Moreover, the pro- source assessment project. to be new exploration interest from ject will provide an overview of where newcomers as well as from compa- more information is needed as well as This means that NUNAOIL will not on- nies which previously have been active pointing towards initiatives which can ly provide a framework for the com- in Greenland. Therefore, it is expected reduce exploration risk and costs in mercial petroleum activities in Green- that the exploration activity in Green- Greenland. land. NUNAOIL will also ensure that land will increase during the coming the comprehensive knowledge about years. In relation to that, it is NUNA- This has not been done before, and the petroleum potential of Greenland, OIL’s intention to demonstrate that there is no doubt that this will be ben- which has been accumulated in the Greenland is an attractive place to in- eficial not only for the oil industry but company during the years, are being vest when it comes to exploration for also for the Greenlandic energy au- utilized in order to create new inter- new resources. thorities. The project is being coordi- est for carrying out exploration work in nated with the implementation of the Greenland and in the long term con- The NUNAOIL board of directors has oil strategy 2019-2023 initiated by the tribute to the development of a petro- assessed that being able to promote a Greenlandic energy authorities. leum industry in Greenland. detailed and standardized overview of potential petroleum resources within 4 Annual Report 2018 · Letter from the Board of Directors · NUNAOIL A/S Management’s review Activity development The project involves all geological NUNAOIL’s share capital amounts to In 2018, NUNAOIL participated as a car- knowledge about the petroleum re- DKK 10 million, while its equity end ried partner in 5 exploration and ex- sources in Greenland, which is available 2018 amounted to DKK 11,343 mil- ploitation licences; 2 on Jameson Land from Denmark and Greenland, and thus lion. Total cash flow of the company in East Greenland and 3 offshore North- makes the project very unique. was positive by DKK 2.4 million due to east Greenland. NUNAOIL’s licence received payment of office sale in 2017 share varies from 6.25% to 12.5%. As The resource assessment project is as well as received payment of un-used a carried partner NUNAOIL participates mainly being financed by already ex- Appendix 4 funds during relinquish- on equal terms as the other partners isting funds within NUNAOIL – the so- ment of exploration and exploitation within the licences. Being carried means called KANUMAS funds, which has licences. that NUNAOIL’s expenditures are cov- been accumulated in the company due ered for by the partners within the re- to the sale of seismic data acquired by After the date of balance no situations spective licences, but only during the the KANUMAS group with NUNAOIL as have occurred significantly influencing exploration phase. NUNAOIL’s commit- operator during the period of 1991 to the accounts. ment is the same as for the partners, 1994. The KANUMAS funds have to be and is of great importance in terms of spend on petroleum related project like The budget for 2019 is envisaging a anchoring knowledge about petroleum this one. deficit of DKK 2.3 million. Possible sales geology, technology, environment and of seismic data will have a positive influ- law within Greenland. ence on the result but out of prudence Financial results and further sales of seismic data are not in- In 2018, the exploration work within expectations cluded in the budget. the 5 licences worked out as planned. The result of the year was a deficit of Focus has been on the evaluation of the 2.7 million DKK, which is better than It is expected that the Namminersorlutik petroleum potential, risks and possibili- anticipated due to non-budgeted sale Oqartussat, The Government of Green- ties within the individual licences in or- of seismic data. land, during 2019 will launch a petrole- der to be able to make a qualified drill- um strategy, as replacement for Green- or-drop decision before the end of the In 2018, NUNAOIL decided to initiate land’s oil and mineral strategy 2014- first sub-period. Three of the five part- a resource assessment project main- 2018. If this new strategy will mean nerships decided to relinquish their re- ly financed by the so-called KANUMAS changes to NUNAOIL is unknown. spective licenses to the Greenlandic au- funds, which have had a positive influ- thorities, and at the end of 2018 there ence on the result of the year. was then two active exploration and ex- ploitation licences. Until a commercial discovery of oil/gas is made and production intiated NUNAOIL During 2018, NUNAOIL intiated a com- is expecting its result to show a deficit.
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