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AXPLF Arabella Exploration Investor Presentation

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  • 1. Arabella Exploration, Inc. OTCQB: AXPLF, AXLWF The Pure Play Southern Delaware Basin E&P Opportunity
  • 2. 2 ARABELLA EXPLORATION Safe Harbor Statement ThisdocumentshallnotconstrueanoffertosellorthesolicitationofanoffertobuysecuritiesofArabellaExploration,Inc. (“Arabella”orthe“Company”) Forward-LookingStatements Thispresentationcontains“forward-lookingstatements”withinthemeaningoftheSecuritiesActof1933,asamended,theSecuritiesExchangeActof1934,asamended,andthePrivateSecuritiesLitigationReformActof1995,whichareintendedtobecoveredbythesafeharborcreatedthereby.Youcanidentifyforward-lookingstatementsbywordssuchas“anticipates,” “expects,”“intends,”“plans,”“projects,”“believes,”“estimates,”andsimilarexpressions.Specifically,statementsregardingArabella’sfuturebusiness,includinganyrevenueprojections,costs,earningsorotherfinancialitems,aswellasstatementsrelatingtotheobjectivesofmanagementandotherbusinessplans,includinganticipatednewproductsandinvestments,areforwardlookingstatements.Theseforward-lookingstatementsarenotguaranteesoffutureperformancebutareratherbaseduponmanagement'scurrentexpectationsandassumptionsastofutureeventsthatmaynotprovetobeaccurate.Actualresultsmaydiffermateriallyfromthoseprojectedasaresultofcertainrisksanduncertainties,includingbutnotlimitedto:thegrowthofthemarketsaddressedbyourproducts;thedemandforandmarketacceptanceofourproducts;ourabilitytosuccessfullycompeteinthemarketsinwhichwedobusiness;ourabilitytosuccessfullyaddressthecoststructureofourproducts;theabilitytodevelopandimplementnewtechnologies;andourabilitytorealizefinancialandstrategicbenefitsofpastandfuturetransactions.Otherfactorsthatcouldcauseactualresultstodiffermateriallyfromthosedescribedintheforward-lookingstatementsincludeothereconomic,business,competitiveand/orregulatoryfactorsaffectingArabella’sbusinessgenerally.Theserisksanduncertainties,andothers,thatrelatetoArabella’sbusinessandfinancialconditionaredetailedfromtimetotimeinArabella’sSecuritiesandExchangeCommissionfilings.Theseforward-lookingstatementsaremadeonlyasofthedateindicated, andArabelladisclaimsanyobligationtoupdateorrevisetheinformationcontainedinanyforward-lookingstatements,whetherasaresultofnewinformation,futureeventsorotherwise.
  • 3. 3 ARABELLA EXPLORATION About Arabella Exploration OTCQB: AXPLF Share Price (8/15/14) $8.25 Market Cap (8/15/14) $41.4mm Float 0.7mm Insider Ownership(1) 4.3mm Common Shares Outstanding(1) 5.0mm Warrants (OTCQB: AXLWF) 10.7mm Debt $4.3mm (1)Excludes 1,705,002 shares held in escrow pending the achievement of certain performance targets.
  • 4. Business
  • 5. 5 ARABELLA EXPLORATION About The Delaware Basin ArabellaoperatesintheSouthernDelawareBasinportionofthePermianBasininWestTexas,whichisoneofthemajoroilproducingregionsintheUnitedStates TheBoneSpringandWolfcampformationsintheSouthernDelawareBasin,knownastheWolfbonePlay,havethousandsoffeetofstacked,multiplepayzones TheWolfbonePlaywhichischaracterizedby: Highoilcontentandliquidsrich,highBTUnaturalgas Multipleverticalandhorizontaltargethorizons Extensiveproductionhistory Long-livedreserves Highdrillingsuccessrates ManyformationsintheDelawareBasinareover-pressured
  • 6. 6 ARABELLA EXPLORATION Arabella Overview Arabellaisanoilandnaturalgascompanyfocusedontheacquisition,developmentandexplorationofunconventional,longlife,onshoreoilandnaturalgasreservesintheSouthernDelawareBasininWestTexas Arabella’smanagementteamhasdeepexpertiseinoilandgasexploration: DeeplocallandknowledgeintheBasin Recognizedexpertiseinthegeologyoftheplay Highlytechnical,highpressure,complexhorizontalandmulti-lateraldrilling Cuttingedgeexperienceandskillsinthedrillingofdual-lateralwellsinthePermian Arabella’sacreageanddrillingcoversmulti-payhorizontaldevelopmentinSouthernDelawareBasin OverlappingBoneSpringandWolfcampshales(Wolfbone)withmultiplepotentialpayzonesperwell Existenceof“over-pressured”formationscreatingmoreeffectiveoilextraction
  • 7. 7 ARABELLA EXPLORATION Arabella Overview CurrentArabella Positions Drilled Wells 7 Wells Completing 1 Wells Drilling 1 County Gross Acres Net Acres Reeves 8,332 3,810 Ward 640 356 Total 8,972 4,166 Other Operators Arabella’sacreageisinwhatitconsiderstobetheheartoftheWolfbonePlay
  • 8. 8 ARABELLA EXPLORATION Arabella’s Existing Wells and Drilling Plan Well Working Interest (%) Lateral Length (ft) Completed Formation Peak Rate 24-hour (BOE/day) Peak Rate 30-day (BOE/day) Percent Oil EUR (BOE) SM Prewitt #1H -1stLateral -2ndLateral 17.5500 17.5500 4,000 4,000 Wolfcamp C Wolfcamp A 283 146 89% 100,000 Locker State #1H 17.5500 4,000 Wolfcamp D 350 109 85% 186,000 Graham #1H 18.5500 4,000 Wolfcamp D 634 383 83% 250,000 Woods #1H 23.2563 4,000 Wolfcamp B 1,221 634 87% 600,000 Vastar State #1V 57.1375 Vertical Wolfcamp E Jackson #1H 55.1647 4,000 Wolfcamp B 875 402 82% 530,000 Emily Bell #1H 54.0000 4,000 Wolfcamp A 1,125 482 85% TBD Woods #2H 34.1438 4,000 Wolfcamp B Emily Bell #2H 54.0000 Vastar State #1H 57.1375 Jackson #2H 53.0000 Emily Bell #3H 54.0000 Woods #3H 23.2563 Jackson #3H 55.1647 Emily Bell #4H 54.0000 Woods #4H 34.1438 Jackson #4H 53.0000 Total Depth on May 1, 2014 -Completing Class 5 Dual Lateral –Drilled but not completed Producing or Completing Drilling Schedule Preparing for horizontal re-entry
  • 9. 9 ARABELLA EXPLORATION Arabella’s Acreage Position Arabella’spositionislocatedintheheartoftheover-pressured,stackedpaysoftheDelawareBasin–withthepotentialforhighliquidsproducingwellsoutofmultiplepayzones
  • 10. 10 ARABELLA EXPLORATION Arabella’s Production Expertise Arabella’sdrillingteamusestechnologytomaximizetheefficiencyofoilrecoveryincluding: Drillingmulti-lateralwells,eitherinstagesorgrassroots Reenteringverticalwellstoaddlaterallegs Byusingadvanceddrillingmethods,Arabellacanmaximizeoilproducedatlowercostsperbarrel Secondary Drilling Primary Drilling Acquired Well Drilling Lateral Well Vertical Test Well Staged Multi- Lateral Well Reenter For Multi- Laterals Reenter For Lateral Grass Roots Multi- Lateral Well Make Acquired Vertical a Lateral Make Acquired Lateral a Multi- Lateral
  • 11. 11 ARABELLA EXPLORATION Dual Lateral Well Economics Wolfcamp A Bone Spring Avalon Shale Wolfcamp B Wolfcamp C Wolfcamp D Wolfcamp E Penn Shales Vertical Well Horizontal Well Dual Lateral Horizontal Well Illustrative Well Economics(1) Vertical Well Single Lateral HorizontalWell Dual Lateral HorizontalWell Well Cost $4.0mm $7.5mm $10.0mm EUR 250 MBOE 800 MBOE 1,600 MBOE Cost to Develop $16.00/ BOE $9.38/ BOE $6.25/ BOE Justashorizontalwellsoffersignificantlymoreefficientoilproductionthanvertical, multi-lateralisthenextadvanceincosteffectiveoilproduction Effectively,Arabellaisabletodrillasecond, entirelynewlateralwelloffofthealreadysunkcostoftheoriginalvertical (1)Illustrative Well Economics are Company estimates based on a theoretical well of each type drilled the Delaware Basin
  • 12. Financial
  • 13. 13 ARABELLA EXPLORATION Growth to Date December31, 2012 August 31,2012 December31, 2013 June 15,2014 Proved Reserves(1) (BOE) December31, 2012 August 31,2012 December31, 2013 June 15,2014 PV10 Proved Reserves(1) ($) December31, 2012 August 31,2012 December31, 2013 June 15,2014 Production(2) (BOE/Day) 19,100 618,618 2,073,289 $274,648 $9,310,700 $32,792,422 0 106 300 Notes:(1)June 15, 2014 numbers based Williamson reserve report (2)Estimated production numbers as of June 15, 2014 2,618,426 $46,134,395 615 PDP increased from $4.5mm on December 31, 2013 to $15.3mm on June 15, 2014
  • 14. 14 ARABELLA EXPLORATION Estimated Next Year Production -Base Case -One Rig 0 500 1,000 1,500 2,000 2,500 3,000 Jackson #4H Emily Bell #4H Jackson #3H Woods #4H Jackson #3H Woods #3H Emily Bell #3H Jackson #2H Emily Bell #2H Vastar State #1H Woods #2H Emily Bell #1H Jackson #1H 2013 Wells Estimated BOE/Day Basedonaprojecteddrillscheduleandtypicalwellcurves,Arabellashouldshowsignificantgrowthinproductionforthebalanceof2014andbeyond Note: Based on projected drill schedule and standard type curve, subject to change based on drill schedules and well performance
  • 15. 15 ARABELLA EXPLORATION Milestones/Catalysts During2013ArabellasuccessfullydrilledandcompleteditsfirstfourwellsincludingtheWoods#1Hwellwhichhadan24hourpeakIPofover1,200BOE/Day GoingpubliceventinDecember24,2013,followedbynameandtickersymbolchange CompletedtheVastar#1VandJackson#1HinJanuary2014andtheEmilyBells#1Hwellwithaninitial24hourpeakIPrateofover1,100BOE/DayinMay2014 SuccessfullyfinisheddrillingtheWoods#2Hwhichiscurrentlywaitingonitsfracjob OnJune26,2014ourChiefExecutiveOfficerJasonHoisagerpurchased190,477ofourordinarysharesfor$10.50ashareinaprivatetransactionfromArabella Milestones Catalysts CompletionoftheWoods#2H Horizontalre-entryandre-completionoftheVastarState#1 DrillingoftheWoods#3H,Jackson#2HandEmilyBell#2Hand#3H Raisingadditionaldrillingandexpansioncapital Meeting2014performancetargetofdoublingprovedreservesovertheyear
  • 16. Management
  • 17. 17 ARABELLA EXPLORATION Arabella Management Team Mr.HoisageristhefounderandChiefExecutiveOfficerofArabellaExploration,Inc.acompanyheestablishedin2008andwhichisactivelyacquiringanddevelopingassetsintheDelawareBasinofWestTexas.Heisresponsibleforassetacquisition,businessplanningandtheoverallmanagementoftheCompany. Mr.HoisagerisalsothefounderandPresidentofArabellaPetroleumCompany,LLC,whichcurrentlyistheoperatorforArabella’sproperties. PriortoArabella,Mr.Hoisagerservedasanindependentlandmanandwasinstrumentalinplanningstrategiclandpurchases,identifyinginvestmentpartners,acquiringleasesandmarketingtooperatorsseekingentryintotheresourceplaysofNorthandWestTexas. Mr.HoisagerattendedTexasTechUniversitywherehestudiedFinanceandAccountinganddiscoveredhisinterestintheoilandgasindustry. Jason Hoisager –Chief Executive Officer and Director Mr.SanfordhasbeentheChiefFinancialOfficerforArabellaExploration,Inc.sinceNovember2013andhasbeenactingCFOsinceAugust2013.Mr.SanfordmanagestheAccounting,FinanceandInvestorRelationsdepartments. Mr.SanfordworkedforCarriageServices,Inc.(NYSE:CSV)from1997to2012wherehehadsubstantialexperienceinpubliccompanyfinancialreporting,investorrelationsandmergersandacquisitions.Mr.Sanford’slastpositionatCarriageServices,Inc.wasExecutiveVicePresident,ChiefFinancialOfficerandChiefAccountingOfficer. Mr.SanfordwasChiefFinancialOfficerforAutomationTechnology,Inc.in2013,wastheChiefFinancialOfficerforEnduroSystems,Inc.from1996to1997andtheCorporateControllerforPetrolon,Inc.from1992to1995.Mr.Sanfordworkedinpublicaccountingfrom1982to1992,includingPricewaterhouseCoopers,intheauditdepartmentwhereheservedvariouscompaniesintheoilandgasindustries. Mr.SanfordisasCPAandhasabachelor’sdegreeinAccountingfromSamHoustonStateUniversityandaMBAinFinancefromtheUniversityofHouston.Mr.SanfordiscurrentlyontheBoardofDirectorsoftheHouston,TexasChapterofFinancialExecutivesInternationalandpreviouslyservedasthePresidentoftheChapter. Terry E. Sanford –Chief Financial Officer
  • 18. 18 ARABELLA EXPLORATION Arabella Management Team (cont.) Mr.MastersonistheHeadGeologistatArabellawhereheaidsinacquiringdesirableacreage,monitoringlocaldrillinginformationandresultsandcollaborateswiththeArabelladrillingengineersinthelocation,drillingandcompletionofwells–includingthedrillingandcompletionbasedongeologytomaximizeofwellpayzones PriortojoiningArabella,Mr.MastersonwasanindependentconsultingspecializinginthePermianBasinandthe‘WolfbonePlay”inparticular.HisworkincludedreportsformajoroilcompaniessuchasEagleOilandGas,AtlanticOperating,TROXandTwoBlackBear,Inc. Duringhistimeasaindependentconsultant,Mr.MastersonwasinstrumentalinthedevelopmentoftheWolfbonePlayanditsensuingcommercialdevelopment. Previously,Mr.MastersonhasspenttwentyyearsinthefieldandworkedasVicePresidentofAcquisitionsandExplorationatSouthwestRoyaltiesandasageologistatGrandBanksEnergy,MonsantoandTexaco. Richard Masterson –Head Geologist
  • 19. 19 ARABELLA EXPLORATION Mr.BushisapartneratSt.AugustineCapitalPartners,LLC,aFortWorth-basedinvestmentfirmfocusedonoilandgastransactionsandconsultingforprivatebusinesses. Previously,Mr.Bushco-foundedPennybackerCapital,LLC,arealestateprivateequityfirm,workedatAkinGumpStraussHauer&FeldLLPasacorporateattorneyandclerkedforU.S.DistrictJudgeSidneyAllenFitzwater. Mr.Bushhasservedonnumerouspoliticalcampaigns,foundedtheHispanicRepublicansofTexasandisthepastnationalco-chairofMaverickPAC. In2006Mr.BushjoinedtheU.S.NavalReservesthroughtheprestigiousDirectCommissionOfficerprogram.In2010,hebegananeight-monthtourofdutyinAfghanistaninsupportofOperationEnduringFreedomundertheSpecialOperationsCommand. Mr.BushreceivedhisundergraduatedegreefromRiceUniversityandhisJurisDoctoratefromtheUniversityofTexasSchoolofLaw. George P. Bush Arabella Board of Directors Malachi O. Boyuls Mr.BoyulsisapartneratSt.AugustineCapitalPartners,LLC,aFortWorth-basedinvestmentfirmfocusedonoilandgastransactionsandconsultingforprivatebusinesses. Previously,Mr.BoyulsworkedasGeneralCounselforThomasTitle&EscrowandasanattorneyatGibson,Dunn,& Crutcher,LLP. Mr.BoyulsclerkedforFederalDistrictCourtJudgeDavidC.GodbeyandFederalAppealsCourtJudgeHarrisLHartzandwasajudicialinternforcurrentSupremeCourtJusticeSamuelA.Alito,Jr.ontheThirdCircuitCourtofAppeals. Mr.BoyulshasbeenappointedasaNextGenerationFellowandaMemberoftheTexasAppraiserLicensingAndCertificationBoard Mr.BoyulsreceivedhisundergraduatedegreefromtheUniversityofMaryHardin-BaylorandhisJurisDoctoratefromtheNewYorkUniversitySchoolofLaw.
  • 20. 20 ARABELLA EXPLORATION Mr.BakaycurrentlyisthePresidentandChiefExecutiveOfficerandservesontheboardofdirectorsofKonaGrill,Inc. (NASDAQ:KONA),anAmericangrillandsushibar. Mr. Bakay founded BBS Capital Management, LP, a Texas limited partnership that serves as the investment manager to the BBS Capital Fund, LP, in January 2008 and has served as its managing member since its formation. Prior to forming BBS Capital Management, LP, Mr. Bakay was the co-founder and co-portfolio manager of Patara Capital, L.P., an investment management firm based in Dallas, Texas from January 2006 through December 2007. From May 2005 through January 2006, Mr. Bakay was an equity analyst at Southwest Securities, Inc., a subsidiary of SWS Group, Inc. (NYSE: SWS), a financial services company, where he covered the specialty retail industry. Mr. Bakay graduated from Boston College, Carroll School of Management with a Bachelor of Science in finance and from Boston College, Carroll School of Management with a Master of Science in Finance. Berke Bakay Arabella Board of Directors (cont.) Mr.HauserhasservedasadirectorofKonaGrill,Inc.(NASDAQ:KONA)sinceDecember2004. Mr.HauserservesasthePresidentandownerofCapitalRealEstate,Inc.,acommercialrealestatedevelopmentcompanybasedinMinneapolis,Minnesota,whichhefoundedin2001. Mr.Hauser’scommercialrealestateactivitieshaveconsistedoftheconstructionand/ordevelopmentofatleast300projectswithvalueinexcessof$1.45billion. Inaddition,Mr.HauseristheManagerandownerofNetLeaseDevelopment,LLC,whichisacontrolledoperatingcompanyunderCapitalRealEstate,Inc.,aswellasamemberandmanagingpartnerofseveralotherpartnershipsformedforrealestateandrelatedventures. PriortofoundingCapitalRealEstate,Inc.andNetLeaseDevelopment,LLC,Mr.HauserservedasapartnerwithRelianceDevelopmentCompany,LLCfrom1992to2001,wherehewasresponsibleforthemanagement,development, andsaleofretailproperties. Richard J. Hauser
  • 21. 21 ARABELLA EXPLORATION Mr.HeynistheChiefExecutiveOfficerofTritaurianCapital,Incorporated,aFINRAregisteredbroker-dealer.From2001tothepresent,Mr.HeynhasbeenwithwithTritaurianCapital,Incorporated,anditspredecessorcompanies. Priorto2001,Mr.HeynheldvariousinvestmentbankingpositionsinthefinancialindustryincludingintheInvestmentBankingDivisionofMerrillLynch,theMergersandAcquisitionsGroupofJ.P.MorganandtheCorporateFinanceDepartmentofMorganStanley. Mr.HeynwasanadvisortoCSChinaAcquisitionCorp.,aSpecifiedPurposeAcquisitionCorporationthatsubsequentlymergedwithatargetinChinatoformAsiaEntertainment&ResourcesLtd.,whichbecameIaoKunGroupHoldingCompanylistedontheNASDAQStockMarket(NASDAQ:IKGH). Mr.HeynwasanadvisortoChinaUnistoneAcquisitionCorp.,aSpecifiedPurposeAcquisitionCorporationthatsubsequentlymergedwithatargetinChinatoformYuchengTechnologiesLimited,whichwaslistedontheNasdaqCapitalMarket(NASDAQ:YTEC)untilbeingtakenprivate. Mr.HeynreceivedaB.A.fromYaleUniversitywithmajorsinhistoryandpoliticalscienceandcurrentlyholdsSeries7,24,63,79and99securitieslicenses. William B. Heyn Arabella Board of Directors (cont.)
  • 22. 22 ARABELLA EXPLORATION Contact Information Phone Email Company William B. Heyn (432) 279-0790 william.heyn@arabellaexploration.com Investor Relations DerekGradwell (512) 270-6990 dgradwell@mzgroup.us www.arabellaexploration.com 500 W. Texas Avenue Suite 1450 Midland, Texas 79701 Telephone: (432) 897-4755

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