Maersk Olie og Gas A/S
CVR-No. 22757318
Annual Report 2013
Approu^cTafthe General Assemblyr72/04/2014 Chairman of the meeting: Majbritt Perotti Carlson
mf Msersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
Content Page
Company information 3
List of companies 4
Directors' Report 6
Management's Statement 13
Independent Auditors' Report 14
Accounting policies 16
Income statement - Group 21
Balance sheet - Group 22
Cash Flow statement - Group 24
Income statement - Parent 25
Balance sheet - Parent 26
Notes 28
^ MP Msersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
Company information
Maersk Olie og Gas A/S Esplanaden 50 1263 Copenhagen K
CVR-No.: 22757318 Date of incorporation: 26 September 1962 Registered office: Copenhagen Financial year: 1 January - 31 December
Board of Directors
Niels Smedegaard Andersen (Chairman) Michael Pram Rasmussen Frants Erich Bernstorff-Gyldensteen Trond Westlie
Management
Jakob Thomasen
Auditors
KPMG Statsautoriseret Revisionspartnerselskab Osvald Flelmuths Vej 4 2000 Frederiksberg
3 Maersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
List of Companies
Maersk Olie og Gas A/S is a wholly-owned subsidiary of A.P. M0ller - Maersk A/S (Copenhagen) and is included in the accounts for the A.P. Moller — Maersk Group. Maersk Olie og Gas A/S is the parent company for the following directly or indirectly subsidiaries (wholly-owned if not otherwise indicated):
Maersk Oil Qatar A/S, Copenhagen
Maersk Olie, Algeriet A/S, Copenhagen
Maersk Oil Colombia A/S, Copenhagen
Maersk Oil Angola A/S, Copenhagen
Maersk Oil Angola Holdings A/S, Copenhagen
Maersk Oil Angola Sixteen Holdings Ltd., British Virgin Islands
Maersk Oil Angola Sixteen Ltd., British Virgin Islands
Maersk Energy Marketing A/S
Maersk Oil Kalaallit Nunaat A/S, Copenhagen
Maersk Oil Kurdistan A/S, Copenhagen
(HKN Energy Ltd., Cayman Islands (30%)
Maersk Oil Kurdistan Piramagrun A/S, Copenhagen Maersk Oil Kurdistan Piramagrun Holdings A/S, Copenhagen Maersk Oil Kurdistan Qala Dze A/S, Copenhagen Maersk Oil Kurdistan Qala Dze Holdings A/S, Copenhagen
Maersk Oil Middle East A/S, Copenhagen
Maersk Oil Norway AS, Norway
Maersk Oil Mexico S.DE R.L. DE C.V., Mexico (owned by Maersk Olie og Gas A/S (99.99%) and Maersk Mexico, S.A. de C.V. (0.01%))
Maersk Oil Turkmenistan B.V., The Netherlands
Maersk Oil Oman B.V., The Netherlands (liquidated 2013)
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Maersk Oil Three PL B.V., The Netherlands
Maersk Energla Ltda., Brazil (owned by Maersk Oil Three PL B.V. (99.99%) and Maersk Olie og Gas A/S (0.01% quotas)
Maersk Brasil Ltda., Brazil (owned by Maersk Olie og Gas A/S (99.99%) and Apomar Participa^oes Ltda. (0.01%).
Maersk Oil Kazakhstan GmbH.; Germany
Maersk Oil Brasil Ltda., Brazil
Maersk Oil Houston Inc., USA
Maersk Oil Gulf of Mexico One LLC, USA
Maersk Oil Gulf of Mexico Two LLC, USA
Maersk Oil Gulf of Mexico Three LLC, USA
Maersk Oil Gulf of Mexico Four LLC, USA
Maersk Energy UK Ltd., United Kingdom
Maersk Oil GB Ltd., United Kingdom
Maersk Oil UK Ltd., United Kingdom
Maersk Oil North Sea UK Ltd., United Kingdom
Maersk Oil Exploration UK Ltd., United Kingdom
Maersk Oil Gryphon Ltd., United Kingdom
Maersk Oil Resources UK Ltd., United Kingdom
CNS (E&P) Ltd.
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Directors/ Report
The company is a wholly-owned subsidiary of A.P. M0ller- Maersk A/S.
Msrsk Olle og Gas A/S (Maersk Oil) participates through subsidiaries in exploration and production of oil and gas outside Denmark and is operator for Dansk Undergrunds Consortium's (DUC's) activities in the Danish North Sea.
2013 shows a profit of USD 295 million, which is in line with expectations but lower than the profit for 2012 (USD 1,462 million). The profit was USD 1,167 million lower than 2012 where one-off gains from tax income of USD 899 million In Algeria and a USD 91 million divestment in Brazil positively affected the result. A lower average oil price of USD 109 per barrel (USD 112) and slightly lower entitlement production 165,000 boepd (166,000 boepd) negatively impacted the result. However, the entitlement production returned to growth from mid-2013 mainly due to reinstatement of the
Gryphon FPSO, UK and the ramp up of production from the El Merk field, Algeria.
Key figures for the Maersk Olie og Gas Group are as follows:
USD million 2013 2012 2011 2010 2009
Income statement:
Revenue 7,014 7,258 8,751 7,038 6,129 Profit before financial items and tax 2,244 2,775 4,588 3,277 2,832
Financial items, net -56 -1 -75 -53 -43 Profit for the year after tax 295 1,462 983 855 731
Balance sheet:
Total assets 12,635 12,253 11,374 8,595 8,108 Investments in property, plant and equipment 1,726 1,604 1,092 1,056 1,840 Equity 8,015 7,713 6,249 5,266 4,411
Cash flow from operating activities was USD 2.3 billion (USD 2.5 billion).
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In 2013, Maersk Oil invested USD 1.7 billion in production facilities etc., compared to USD 1.6 billion in 2012, primarily in Qatar, Algeria, UK, Brazil, Angola, Norway, Kurdistan and the US.
For 2014 Maersk Oil expects a profit below 2013.
For 2014 Maersk Oil expects higher average production level than in 2013 at an average oil price of
USD 104 per barrel. Exploration costs are expected around USD 0.9 billion, lower than in 2013 (1.1 billion). The outlook for 2014 will to a large extent depend on fluctuations in oil prices.
Maersk Oil continuously develops the production process using the best and safest technologies.
Furthermore, Maersk Oil seeks to make use of environmentally friendly and energy efficient solutions to reduce negative impact on the environment.
The lost time incidents frequency (LTIF) for 2013 was 0.89 per million working hours compared to
0.75 per million working hours in 2012. Maersk Oil works focused on eliminating incidents and has set a target of zero incidents.
Maersk Oil considers social responsibility as being ever more important for the business and continues the activities following the strategy on the topic. For more information reference is made to the parent company A.P. M0ller - Maersk A/S' sustainability report on the website www.maersk.com/Sustainability/Documents/Maersk_Sustainability_Report_2013.pdf.
In May 2013 the Board adopted targets for the diversity of the company's shareholder-appointed board members with respect to the under-represented gender. The Board believes that its members should be elected on the basis of their combined qualifications and at the same time recognises the advantages of a board comprising a wide range of backgrounds such as global experience, style. Masrsk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
culture and gender. On the basis of this ambition the Board has defined a target to increase the share of the under-represented gender on the Board, to account for at least 25% of the shareholder-appointed Board members.
As of 31 December, 2013 none of the shareholder-appointed Board members are women.
Consequently, the target for gender diversity has not yet been met.
At the Board Meeting in A.P. M0ller Maersk A/S on 21 February, 2013 a group policy was adopted with the aim to increase the share of the under-represented gender on the company's other management levels (www.maersk.com/Documents/diversity-and-inclusion-programme.pdf). In accordance with this policy Masrsk Olie og Gas A/S has taken steps to look into how the company can attract qualified women to relevant management positions. In addition, this is a focus area when identifying candidates to key positions.
Production
Qatar
Daily entitlement production in Qatar was 99,000 boepd (103,000 boepd in 2012). The reduction was due to lower cost recovery and in line with expectations.
The USD l.Sbn Al Shaheen FDP2012 development plan in Qatar was initiated and the first of 51
planned wells has been completed. The project continued according to plan and preparations for the
next major development step is progressing with Qatar Petroleum.
United Kingdom In the UK, entitlement production was 30,000 boepd (28,000 boepd in 2012) positively affected by the reinstatement of the Gryphon FPSO in mid-2013.
Maersk Energy UK Group is impacted by impairment of USD 37 million after tax relating to the Janice field.
mp Msersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
Algeria
Algeria experienced an upward trend in the entitlement oil production reaching 28,000 boepd
(27,000 boepd in 2012) from ramp up of the El Merk Fields in the second half of the year. This offsets the decline in production from mature assets.
Brazil
Maersk Oil has non-operated production in the Polvo field and the Group's entitlement share of the production was 5,000 barrels of oil per day during 2013 (5,000 in 2012).
Kazakhstan
The Group's entitlement share of the oil production continued at a level of 3,000 boepd during 2013
(3,000 boepd in 2012).
Development
In Algeria the El Merk fields commenced production in 2013 with all four of the fields on-line by the end of the year. Maersk Oil's entitlement of the production from El Merk reached 15,000 boepd by the end of 2013.
In Angola, the Chissonga field development plan was submitted to the authorities in Q3 2013. The adjacent Cubal discovery from 2013 was included in the development plan to be developed as part of the overall Chissonga project.
In Kazakhstan the Dunga Phase II project is progressing with 72 wells out of 197 planned wells completed with gradual ramp up of production expected over the next four years.
The concept for first phase of the Johan Sverdrup development in Norway was selected in February
9 imp Maersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
2014. First oil is expected in late 2019, initially with a capacity of 315,000 boepd and a later plateau production estimated at 550,000-650,000 boepd. Maersk Oil holds 20% interest in Licence PL501, one of the three licences encompassing the Johan Sverdrup discovery.
In UK, the Culzean gas project was progressed towards submission of a development plan in 2015.
The Golden Eagle Area Development project also in the UK continued to progress on budget and on schedule for first oil by end 2014. The combined Flyndre / Cawdor project, UK was submitted to authorities for approval.
In the US Gulf of Mexico, work continued according to plan to commence production from the first development stage in the Jack deepwater field by the end of 2014. A second stage is planned for later production start-up.
Further appraisal drilling of the Buckskin discovery was ongoing by the end of 2013.
Exploration
Exploration and appraisal activities are in progress, mainly in:
• The North Sea (in Denmark as operator for DUG and in the UK as well as in Norway)
• West Africa (Angola)
• The Middle East (Qatar, Iraq/Kurdistan)
• Asia (Kazakhstan)
• South America (Brazil)
• US Gulf of Mexico
Maersk Oil completed 25 exploration/appraisal wells (including 1 well in the North Sea as operator)
compared to 23 in 2012.
10 m? Masrsk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
In Angola, two successful Cubal wells have been completed and the discovery has been included in the submitted development plan for Chissonga.
In Brazil, Maersk Oil participated in drilling of several exploration/appraisal wells and two more wells are planned for 2014.
In Greenland, acquisition of 3D seismic data was successfully completed in the Baffin Bay, and
Maersk Oil participated in a shallow core sampling programme to get a better understanding of the underground and hydrocarbon potential in the area. In October, a 40% interest in Block 9 was farmed-out to Tullow Oil, leaving Maersk Oil with a 47.5% share (Nunaoil 12.5%).
In Kurdistan, Maersk Oil has increased its activities. In the Sarsang licence, a 5-well exploration programme is ongoing with expected completion in 2014. Furthermore, in late 2013 Maersk Oil acquired a 40% interest in the Piramagrun and Qala Dze licences with exploration drilling ongoing at end of 2013.
In Norway, Maersk Oil participated in drilling six successful wells outlining the Johan Sverdrup field at expectation.
In the UK, two exploration wells were completed without making new discoveries.
Three additional operated licences were awarded to Maersk Oil UK in the 27th Licence round and interest in the Bagpuss/Blofeld licences were secured during a farm-in deal.
In the USA, Maersk Oil continues to build its prospect portfolio and was awarded 19 new leases in the US Central Gulf of Mexico. Drilling of the Oceanographer prospect was ongoing at year end
2013.
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More information on exploration licences and permits is available at maerskoil.com
Operator Activities in Denmark
Maersk Oil is operator for Dansk Undergrunds Consortium (DUC). In 2013, production of crude oil from DUC's fields in the Danish part of the North Sea reached an average of 156,000 barrels of oil per day (bopd), 11% lower than in 2012 (175,000 bopd). The total gas production in 2013 was 4.0 billion m3 or on average 70,000 boepd, 17% lower than in 2012 (84,000 boepd). The lower oil and gas production was caused by decreasing production from mature fields.
The level of investments in the Danish sector of the North Sea is still significant and the DUC investments in the field development amounted to USD 0.4 billion in 2013 which is same level as in
2012.
During 2013, 4 new development wells were completed (5 wells in 2012). In addition to production activities, Maersk Oil also conducts exploration activities and completed one well in 2013.
Risks and uncertainties
Maersk Oil is subject to a variety of risks which derive from the nature of the oil and gas production and exploration activities.
Material accounting estimates relate to valuation of non-current assets including determination of amortisation and depreciation profiles, and calculation of provisions to cover abandonment obligations and claims, etc.
Maersk Oil's future is dependent upon success in finding or acquiring and developing oil and gas
reserves. Further, strategic, operational, compliance, financial and emerging risks are monitored through a structured approach including systematic identification, assessment and mitigation of the
risks.
12 mp Meersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
Management's Statement
The Board of Directors and Executive Board have today discussed and approved the annual report of
Maersk Olie og Gas A/S for 2013
The annual report for 2013 of Maersk Olie og Gas A/S has been prepared in accordance with Danish
Financial Statements Act and in our opinion gives a true and fair view of the Group's and the
Company's assets, liabilities and the financial position at 31 December 2013 and of the results of the
Group's and the Company's operations and the consolidated cash flow for the financial year 2013.
In our opinion the Directors' report includes a fair review of the development in and the result of the
Group's and the Company's operations and financial conditions, the result for the year, consolidated
cash flows and financial position as well as a description of the most significant risks and uncertainty factors that the Group and the Company face.
We recommend that the annual report be approved at the Annual General Meeting.
Copenhagen, 24 February 2014
(Chairman) (Vice Chairman)
F.E. Berstorff-Gyldensteen Trond Westlie
13 Msersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
Independent auditors' report
To the shareholder of Maersk Olie og Gas A/S
Independent auditors' report on the consolidated financial statements and the parent company
We have audited the consolidated financial statements and the parent company financial statements of Maersk Olie og Gas A/S for the financial year 1 January - 31 December 2013. The consolidated financial statements and the parent company financial statements comprise accounting policies, income statement, balance sheet and notes for the Group as well as for the parent company and consolidated cash flow statement. The consolidated financial statements and the parent company financial statements are prepared in accordance with the Danish Financial Statements Act.
Management's responsibility for the consolidated financial statements and the parent company Management is responsible for the preparation of consolidated financial statements and parent company financial statements that give a true and fair view in accordance with the Danish Financial Statements Act and for such internal control that Management determines is necessary to enable the preparation of consolidated financial statements and parent company financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' responsibility Our responsibility is to express an opinion on the consolidated financial statements and the parent company financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial statements and the parent company financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements and the parent company financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the consolidated financial statements and the parent company financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Company's preparation of consolidated financial statements and parent company financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the consolidated financial statements and the parent company financial statements.
14 Meersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit has not resulted in any qualification.
Opinion In our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the Group's and the parent company's financial position at 31 December 2013 and of the results of the Group's and the parent company's operations and consolidated cash flows for the financial year 1 January - 31 December 2013 in accordance with the Danish Financial Statements Act.
Statement on the Directors' report
Pursuant to the Danish Financial Statements Act, we have read the Directors' report. We have not performed any further procedures in addition to the audit of the consolidated financial statements and the parent company financial statements. On this basis, it is our opinion that the information provided in the Directors' report is consistent with the consolidated financial statements and the parent company financial statements. m/
Copenhagen, 24 February 2014
KPMG
Statsautoriseret Revisionspartnerselskab
Henrik Kronborg IveRen State Authorised Public Accountant
15 Msersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
Accounting Policies
The Annual Report for 2013 of Maersk Olie og Gas A/S has been prepared in accordance with the provisions of the Danish Financial Statements Act applicable to large (class C) companies.
The accounting policies for the financial statements are unchanged from last year.
Maersk Olie og Gas A/S has with reference to the Danish Financial Statements Act § 86 section 4 refrained from preparing cash flow statement for the parent company.
Presentation, classification and designations in the income statement and balance sheet have been adjusted to the special nature of the company.
Consolidated Accounts
The consolidated financial statements comprise the entities controlled by Maersk Olie og Gas A/S.
The consolidated financial statements are prepared by combining the financial statements of the parent company and the individual subsidiaries. Intercompany income and expenses, intercompany balances and dividends are eliminated.
For acquired companies the assets and liabilities are measured at fair value at the date control was achieved using the acquisition method. Identifiable intangible fixed assets are recognised if they arise from a contractual right or can otherwise be separately identified. The difference between the fair value of the acquisition cost and the fair value of acquired identifiable net assets is recognised as goodwill under intangible fixed assets.
Foreign Currency
The functional currency is USD. The Annual Report is presented in USD, in accordance with provision 16 of the Danish Financial Statements Act. The exchange rate of USD to DKK was 5.4127 at 31 December 2013 (2012; DKK 5.6591)
16 Msersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
Monetary assets and liabilities in currencies other than USD are translated at the exchange rate at the balance sheet date. Transactions in currencies other than USD are translated at the exchange rate prevailing at the date of the transaction.
Exchange rate gains and losses are included in the income statement as financial income and expenses.
Derivatives
Derivatives are recognised on the trading date and measured at fair value and included in other receivables (positive fair value) or other debt (negative fair value).
Changes to the value of derivatives used to hedge the value of recognised financial assets or liabilities are recognised in the income statement together with the changes in the value of the hedged assets or liabilities.
Changes to the value of derivatives used to hedge future transactions are recognised directly in equity until the hedged transactions are realised at which time value changes are included in the hedged transactions.
Changes to the value of derivatives that do not meet the requirements for consideration as hedging instruments are included in the income statement on a current basis.
The Income Statement
Revenue comprises the value of the company's (Group's) share of the oil and gas production as well as oil traded. If the company (Group) sells more than its share of the produced oil (overlift) this is recognised at sales price in the balance sheet under "Deferred income". If the company (Group) sells less than its share of the produced oil (underlift) this is recognised at cost price under "Prepayments". In agreements where tax is settled in oil, this tax is recognised both as revenue and
Other operating income comprises operator fee, insurance compensation regarding operation and gains by sale of licence shares, etc. In the parent company the operating income consists of services provided to subsidiaries as well as operator fee.
17 Meersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
Production expenses comprise costs incurred in generating the revenue for the year including purchase of oil.
Exploration expenses are recognised in the income statement as they are incurred.
Expenses for initial surveys incurred before acquisition of licence for hydrocarbon extraction are also included in the income statement as they are incurred.
Financial items comprise interest and currency exchange rate gains and losses from translation of cash and debt in foreign currencies other than USD.
The company and its Danish subsidiaries are jointly taxed with a number of Danish companies in the A.P. Moller - Maersk Group. Tax on profit for the year includes the amount estimated to be paid for the year as well as adjustments regarding previous years and change in deferred tax. Provision for deferred tax is made on temporary differences between the accounting and tax values of assets and liabilities. Deferred tax on temporary differences which at the time of the transaction does not affect the financial result or the taxable income is not recognised. Deferred tax assets are only recognised to the extent that it is probable that they can be utilised against future taxable income.
The Balance Sheet
Intangible assets are measured at cost less accumulated amortisation and impairment losses. Amortisation is calculated on a straight-line basis over the estimated useful lives of the assets.
Intangible assets in connection with acquired oil resources (concession rights, etc.) are amortised from commencement of production and over the fields' expected production periods of up to 15 years. Acquired exploration rights are amortised from the date of acquisition for a period up to five years.
IT software is amortised over a useful life of 3-5 years.
Tangible fixed assets are measured at cost less accumulated depreciation and write-downs.
18 Masrsk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
The cost price of production facilities etc. comprises direct and indirect costs for appraisal and production wells and production equipment, etc. for fields considered commercial. Cost Includes the net present value of estimated costs of abandonment, removal and restoration. The cost of an asset is divided Into separate components which are depreciated separately If the useful lives of the Individual components differ. Depreciation on production facilities etc. is made over the expected production period/economic life determined Individually for each development plan.
For oil production facilities including facilities under construction, where oil is received as payment for the Investment (cost oil), depreciation takes place concurrently with the receipt of cost oil.
Fixtures and operating equipment are depreciated within three years.
Depreciation periods and residual values for intangible and tangible fixed assets are re-evaluated annually.
Impairment losses are recognised when the carrying amount of an asset or a cash-generating unit exceeds the higher of the estimated value In use and fair value less costs to sell.
Investments In subsidiaries are recognised and valued at the company's share of the subsidiaries' equity according to the equity method. In the income statement the result from the subsidiaries Is recognised after tax.
Investments In associated companies are recognised as the Group's share of the equity value measured according to the Group's accounting policies. In the Income statement the result from the associated companies is recognised after tax.
Inventories, which mainly comprise spare parts etc., are measured at cost following the FIFO principle, less write-down for obsolescence.
Receivables are measured at nominal value which in all material respects corresponds to amortised cost. Write-down is made for anticipated losses on an individual basis.
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Prepayments recognised under assets include prepaid expenses and underlift at cost.
Dividend for distribution regarding the financial year is included as part of the equity.
Provisions are recognised when the Group has an existing legal or actual obligation and includes actuarial calculated pension obligations, deferred tax and provision for abandonment of oil fields, etc. Provisions are recognised on the basis of best estimates and considering discounting when the time element is significant.
Deferred income regarding future years is recognised under liabilities.
Cash Flow Statement
The cash flow statement shows the Group's cash flow for the year divided into cash flow from operations, cash flow used for investments and cash flow from financing activities.
Liquid funds etc. include cash and bank debt as well as interest-bearing demand deposits from affiliated companies.
20 Msersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
M>!ERSK OLIE OG GAS GROUP INCOME STATEMENT FOR 2013
USD 1,000
Note 2013 2012
1. Revenue 7,013,918 7,258,084 Other operating income 291,367 594,245
7,305,285 7,852,329
2. Production expenses 2,233,951 2,169,753
Gross Profit 5,071,334 5,682,576
2./3. Administration expenses 199,325 180,835
2. Exploration expenses 1,133,673 1,067,980
6. Depreciation and write-down 1,494,038 1,658,929
Profit before financial items and tax 2,244,298 2,774,832
7. Result after tax in associated companies -41,649 -41,885
4. Financial income 30,724 63,537
5. Financial expenses 86,910 64,565
Profit before tax 2,146,463 2,731,919 10. Tax on profit for the year 1,851,187 1,269,641
Profit for the year 295,276 1,452,278
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IWERSK OLIE OG GAS GROUP BALANCE SHEET AT 31.12.2013
USD 1,000 Note 2013 2012 ASSETS NON-CURRENT ASSETS
Intangible assets Software etc. 27,520 40,084 CO2 quotes 6,148 6,148 Oil rights 3,108,628 3,187,282
3,142,296 3,233,514
Property, plant and equipment Production facilities etc. 2,973,011 2,082,666 Production facilities etc. under construction 1,944,352 2,317,165 4,917,363 4,399,831
Financial assets Investments in associated companies 197,332 196,893 Receivables Group companies 151,057 150,000
Pensions, net assets 0 14,545 348,389 361,438
TOTAL NON-CURRENT ASSETS 8,408,048 7,994,783
CURRENT ASSETS
Inventories 272,358 146,304
Deferred tax asset 111,382 102,737
Receivables Receivables from sale of oil and gas 535,232 379,064 Receivables Group companies 2,354,556 2,089,720 Receivables Joint Venture partners 166,786 157,419 Other receivables including tax 373,511 1,050,693 Prepayments 135,782 100,175
3,565,867 3,777,071
Cash 276,960 231,733
TOTAL CURRENT ASSETS 4,226,567 4,257,845 TOTAL ASSETS 12,634,615 12,252,628
22 Masrsk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
M/ERSK OLIE OG GAS GROUP BALANCE SHEET AT 31.12.2013
USD 1,000 Note 2013 2012 EQUITY AND LIABILITIES
8. EQUITY
Share capital 29,925 29,925 Net revaluation according to the equity method 0 0 Retained earnings 7,984,590 7,683,524
8,014,515 7,713,449 PROVISIONS
9. Deferred tax 781,452 803,460
9. Other provisions 1,484,921 1,180,409
2,266,373 1,983,869 LONG-TERM LIABILITIES OTHER THAN PROVISIONS
Loan from group companies 200,000 250,000 200,000 250,000 SHORT-TERM LIABILITIES OTHER THAN PROVISIONS
Trade payables 1,348,642 1,133,353 Loan from group companies 524,301 865,954 Payables to group companies 82,563 105,312 Tax 49,227 63,650 Other payables 106,231 103,825 Deferred income 42,763 33,216
2,153,727 2,305,310
TOTAL LIABILITIES 2,353,727 2,555,310
TOTAL LIABILITIES, PROVISIONS AND EQUITY 12,634,615 12,252,628
11 Contingencies etc. 12 Related parties Maarsk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
M/ERSK OLIE OG GAS GROUP CASH FLOW STATEMENT FOR 2013
USD 1,000 2013 2012
Profit before financial items and tax 2,244,298 2,774,832
Depreciation and write-down 1,494,038 1,658,929 Other non-cash items 28,673 -51,964 Change in working capital etc. -37,417 -214,887 Cash flow from operating activities before financial items 3,729,592 4,166,910
Financial income 20,224 53,422
Financial expenses -18,152 -35,713 Taxes paid -1,439,785 -1,658,374
Cash flow from operating activities 2,291,879 2,526,245 Purchase of intangible assets and property, plant and equipment and purchase of subsidiaries and activities -1,635,562 -1,863,905
Sale of intangible assets and property, plant and equipment 265 110,070
Cash flow used for investing activities -1,635,297 -1,753,835
Proceeds from new loans 212,373 9,520
Repayment of loans -596,396 -761,979
Cash flow used from financing activities -384,023 -752,459
Net cash flow for the year 272,559 19,951 Liquid funds etc. at 1 January 2,251,215 2,215,686 Exchange rate adjustments -14,959 15,578
Liquid funds etc. at 31 December 2,508,815 2,251,215
Comprising:
On demand deposit with group company 2,231,855 2,019,482
Liquid funds etc. * 276,960 231,733 2,508,815 2,251,215
* Liquid funds etc. of tUSD 276,960 Includes restricted cash of tUSD 41,289 per 31 December 2013 (2012: tUSD 3,758).
24 Msersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
M/ERSK OLIE OG GAS A/S INCOME STATEMENT FOR 2013
USD 1,000 Note 2013 2012
Operator's fee etc. 179,830 100,794
2/3. Administrative expenses 279,220 192,081
2. Exploration expenses 55,380 80,233
6. Depreciation 794 104
Profit before financial items and tax -155,564 -171,624
7. Profit after tax in subsidiaries 405,556 1,706,933
4. Financial income 17,262 8,035
5. Financial expenses 5,879 11,666
Profit before tax 261,375 1,531,678
10. Tax on profit for the year -33,899 69,400
PROFIT FOR THE YEAR 295,276 1,462,278
Proposed distribution of net profit
Dividend for distribution 0 0 Reserve for net revaluation according to the equity method 405,556 1,706,933 Retained earnings -110,281 -244,655
295,276 1,462,278
25 Msersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
M/ERSK OLIE OG GAS A/S BALANCE SHEET AT 31.12.2013
USD 1,000 Note 2013 2012 ASSETS NON-CURRENT ASSETS 6. Property, plant and equipment Fixtures, fittings, tools and equipment 2,221 0
7. Financial assets Investment in subsidiaries 7,678,337 7,390,835
TOTAL NON-CURRENT ASSETS 7,680,558 7,390,835
CURRENT ASSETS
10. Deferred tax asset 6,586 4,476
Receivables Receivables Group companies 697,343 1,096,963 Receivables Joint Venture partners 166,786 175,719 Other receivables 6,435 12,535 Prepayments 3,255 26,075
873,819 1,311,292
Cash 38,546 25,564
TOTAL CURRENT ASSETS 918,951 1,341,332
TOTAL ASSETS 8,599,509 8,732,167
26 Mf Msersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
M/ERSK OLIE OG GAS A/S BALANCE SHEET AT 31.12.2013
USD 1,000 Note 2013 2012 LIABILITIES AND EQUITY
EQUITY
Share capital 29,925 29,925 Net revaluation according to the equity method 0 0 Retained earnings 7,984,590 7,683,524
8,014,515 7,713,449
PROVISIONS Other provisions 61,000 50,000
61,000 50,000
SHORT-TERM LABILITIES OTHER THAN PROVISIONS
Trade payables 228,934 246,289 Loans from group companies 200,560 615,954 Payables to group companies 59,762 38,485 Other payables 34,738 67,990
523,994 968,718
TOTAL LIABILITIES 523,994 968,718
TOTAL LIABILTIES, PROVISIONS AND EQUITY 8,599,509 8,732,167
11 Contingencies etc. 12 Related parties
MP Maersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
MAERSK OLIE OG GAS A/S Notes as at 31.12.2013 (USD 1,000)
Group Parent company 2013 2012 2013 2012 Note 1, Revenue
Segments (geoeraphican Qatar 3,885,252 4,181,267 United Kingdom 1,220,567 1,078,544 Algeria 1,155,766 1,133,020 Kazakhstan 98,514 105,840 Brazil 161,361 175,942 USA 2,015 0 Denmark 490,443 583,471 7,013,918 7,258,084
Note 2, Staff costs
Salaries 377,986 301,886 Pension contribution 39,880 51,927 Other social security costs 36,549 11,172 454,415 364,985
Executive and board renumeration 2,012 1,429 2,012 1,429
Average number of employees in Masrsk Olie og Gas A/S1 subsidiaries 2,313 2,140
Staff costs included in the income statement for the Group are contained under the items production expenses, administrative expenses, exploration expenses and in the balance sheet under production facilities etc. in progress.
The Parent Company, Maersk Olie og Gas A/S, has no employees as all those engaged are employed by Rederiet A.P. M0ller A/S. During the financial year, an average of 1,798 people were employed in Maersk Olie og Gas A/S (2012: 1,731 people).
Total payroll costs amounted to USD 337 million (2012: USD 288 million).
The A.P. M0ller - Maersk Group has a restricted shares programme, comprising approximately 21 persons in the Maersk Olie og Gas Group including management. The transfer of restricted shares is contingent on the employee still being permanently employed and takes place when three years have passed from the time of granting. The value of the shares granted in 2013 to employees in the Maersk Olie og Gas Group is estimated at approximately USD 1.0 million (2012: USD 1.2 million) which is recognized in the income Statement.
28 . ^ Meersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
Group Parent company 2013 2012 2013 2012
Note 3, Administration expenses
For the statutory auditors:
KPMG, Statsautoriseret Audit 414 377 175 180 Revisionspartnerselskab: Other assurance 6 0 0 0 services
Tax and VAT 3,660 2,800 3,660 2,800 advisory services
1,085 409 189 Other services 403
KPMG incl. Audit 1,300 1,062 175 180 network firms: Other assurance 48 0 0 0 services
Tax and VAT 4 335 2,800 3,660 2,800 advisory services
1,056 1,085 409 189 Other services
Group Parent company 2013 2012 2013 2012 Note 4, Financial Income
Interest received 7,243 37,136 321 1,448 Interest received from group companies 23,481 12,929 932 390 Exchange rate adjustments etc. 0 13,472 16,009 6,197 30,724 63,537~ 17,262 8,035
Note 5, Financial expenses
Interest paid 8,542 11,372 5 787 Interest paid to group companies 21,184 22,129 5,874 10,879 Other financial expenses 33,248 31,064 0 0 Exchange rate adjustments etc. 23,936 0 0 0 86,910 64,565 5,879 11,666
29 mtf Masrsk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
Note 6, Intangible/tangible assets Group 2013 2013 2013 2013 2013 Production Production facilities etc. Software facilities, under USD 1,000 etc. COz Quotes Oil rights etc. construction
Cost at 01.01 57,741 6,148 7,244,409 12,921,096 2,317,165 Additions during the year 9,496 0 184,637 271,507 1,454,554 Disposals during the year 0 0 -98,087 0 0 Transferred 0 0 0 1,827,368 -1,827,368
Cost price 31.12 67,237 6,148 7,330,959 15,019,971 1,944,351 Depreciation and impairment losses at 01.01 17,657 0 4,057,127 10,838,430 0 Disposals during the year 0 0 -98,087 -157 0 Depreciation and amortisation for the 22,060 0 214,642 1,159,582 0 year Write-downs for the year 0 0 48,649 49,105 0 Transferred 0 0 0 0 0 Depreciation, amortisation and write-downs at 31.12 39,717 0 4,222,331 12,046,960 0
Carrying amount 31.12 27,520 6,148 3,108,628 2,973,011 1,944,351
Ownership of fixed assets in Qatar at a carrying amount of total USD 621 million (2012: USD 907 million) is being transferred to the state-owned oil company, Qatar Petroleum when the investment has been recovered by the earnings from the production of hydrocarbons or at the time of termination of the concession agreement. The company has the right of use during the concession period.
Tangible assets in Algeria with the right of use are included with at a carrying amount of total USD 564 million (2012: USD 557 million). The consortium maintains the right of use until termination of the concession.
30 mr Maarsk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
Note 6, Intangible/tangible assets (continued) Parent company 2013 Fixtures, fittings, tools and USD 1,000 equipment
Cost at 01.01 1,296 Additions during the year 3,015 Disposals during the year -713
Cost price 31.12 3,598
Depreciation and write-downs at 01.01 1,296 Disposals during the year -713 Depreciation and write-downs during the year 793
Depreciation and write-downs at 31.12 1,377
Carrying amount 31.12 2,221
Note 7, Financial assets Group Parent company 2013 2013 Shares in associated Shares in companies subsidiaries
Cost at 01.01 243,250 9,197,978 Additions during the year 42,089 1,581,971 Reclassification -82,521 Divestment during the year -19,060
Cost price 31.12 285,339 10,678,369
Value adjustments at 01.01 -46,357 -1,807,143 Reclassification 82,521 Divestment during the year 19,059 Share of subsidiaries / associated companies profit after tax -41,649 405,556 Dividend -1,700,024
Value adjustments at 31.12 -88,007 -3,000,032
Carrying amount 31.12 197,332 7,678,337
31 MP Maersk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
A list of subsidiaries and associated companies is set out on pages 4 and 5 of the annual report to which reference is made.
During the period one of the UK entities has transfered and merged the defined benefit pension plan with an A.P.Moller - Maersk group company at no charge. The net asset is USD 0 at 31 December 2013 (2012. USD 14.5 million).
Note 8, Equity Group Parent company 2013 2013
Share capital 29,925 29,925 Net revaluation according to the equity method Net revaluation at 01.01 0 Profit for the year 405,556 Dividend from subsidiaries -1,700,024 Transfer from Retained earnings etc. 1,294,468 Net revaluation according to the equity method 0
Retained earnings Retained earnings at 01.01 7,683,524 7,683,524 Transferred from profit for the year 295,276 -110,281 Dividend from subsidiaries 0 1,700,024 Transfer to Net revaluation according to the equity method 0 -1,294,468 Value adjustment of hedging instruments at 31.12 5,791 5,791
Retained earnings at 31.12 7,981,590 7,984,590
Total equity 8,014,515 8,014,515
Share capital consists of the following shares: Number Nominal, DKK Number Nominal, DKK 4 5,000 1 1,500,000 13 10,000 2 2,500,000 67 50,000 2 4,000,000 2 250,000 2 5,000,000 128 500,000 4 10,500,000 6 750,000 2 15,000,000 4 1,000,000 Total nominal 173,000,000
There has been no changes to the share capital during the past five years.
32 MP Msersk 01 ie og Gas A/S CVR-No. 22757318 Annual Report 2013
Note 9, Provisions
Deferred tax mainly relates to the oil and gas interests in the British sector of the North Sea. Other provisions include discounted abandonment provisions and other obligations from group entities. Of this, USD 135 million (2012: USD 62 mio.) is expected to be due within one year.
Provisions are recognised based on specific estimates and the amounts as well as timing of payments are subject to variations.
Note 10, Corporate tax
Tax on profit for the year, USD 1,851 million (2012: 1,270 million) comprises taxes in subsidiaries, USD 1,885 million (2012: USD 1,201) and tax in the parent company, USD -34 million (2012: USD 69 million). Deferred Tax asset is USD 111 million (2012: USD 103 million), of which USD 7 million (2012: USD 4 million) is in the parent company.
Unrecognised tax asset amounts to USD 388 million (2012: USD 268 million)
Note 11, Contingencies
Group:
Contingent assets include mainly exploration costs incurred, which according to agreements will be compensated if production of hydrocarbons is carried out.
As an ordinary part of both Masrsk Olie og Gas A/S' and its subsidiaries' activities, field development plans are signed and drilling and production rigs are chartered. When exploration and production are undertaken abroad, each subsidiary together with its partners are jointly liable for the contractual obligations.
At the end of 2013, the Maersk Olie og Gas Group has capital commitments etc. amounting to USD 3.7 bn. (2012: USD 4.0 bn.). Included in this amount is chartering of drilling and production rigs etc. USD 1.5 bn. (2012: USD 1.7 bn.), operating lease obligations USD 0.6 bn. (2012: USD 0.7 bn.) and work obligations etc. USD 1.6 bn. (2012: 1.6 bn.).
The company and Danish subsidiares are jointly taxed with Danish companies within the A.P. Moller - Maersk Group. This entails unlimited joint liability for Danish corporation taxes and withholding taxes on dividends, interests and royalties within the jointly taxed companies. A similar obligation exists for joint registration of VAT.
33 Masrsk Olie og Gas A/S CVR-No. 22757318 Annual Report 2013
Parent company;
The parent company vouches for its subsidiaries' obligations through performance guarantees with variable periods, which may comprise considerable amounts.
Note 12, Related parties
Companies in the A.P. Moller - Maersk Group and the Executive board and board members of the company are related parties.
Parties exercising control
The company is 100% owned by A.P. M0ller - Maersk A/S.
The consolidated financial statements of the A.P. Moller - Maersk Group is available at the Company's address, Esplanaden 50,1098 Copenhagen K, Denmark.
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