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  • 1. Business Combination with November 2012
  • 2. Forward Looking StatementsIn the interest of providing potential investors with information regarding Shona Energy Company, Inc. (“Shona"), including managements assessment of the future plans and operations of Shona, certainstatements contained in this corporate presentation constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation.Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "project", "could", "plan", "intend", "should", "believe", "outlook","potential", "target" and similar words suggesting future events or future performance. In addition, statements relating to "reserves" are deemed to be forward-looking statements as they involve the impliedassessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and can be profitably produced in the future. Forward looking statementsor information in this presentation include, but are not limited to, statements or information with respect to: the expected closing date and use of proceeds from the financing; potential reserves and futureproduction with respect to current assets business strategy and objectives; development plans; exploration and drilling plans; reserve quantities and the discounted present value of future net cash flows fromsuch reserves; future production levels; wells drilled (gross and net); capital expenditures; cash flow; debt levels; operating and other costs; royalty rates and taxes.With respect to forward-looking statements contained in this corporate presentation, Shona has made assumptions regarding, among other things: future capital expenditure levels; future oil and natural gasprices; future oil and natural gas production levels; future exchange rates and interest rates; ability to obtain equipment in a timely manner to carry out development activities; ability to market oil and naturalgas successfully to current and new customers; the impact of increasing competition; the ability to obtain financing on acceptable terms; and ability to add production and reserves through development andexploitation activities. Although Shona believes that the expectations reflected in the forward looking statements contained in this corporate presentation, and the assumptions on which such forward-lookingstatements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included inthis corporate presentation, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-lookingstatements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements willnot occur, which may cause Shonas actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied bysuch forward-looking statements. These risks and uncertainties include, among other things, the ability of management to execute its business plan; general economic and business conditions; the risk ofinstability affecting the jurisdictions in which Shona operates; the risks of the oil and natural gas industry, such as operational risks in exploring for, developing and producing crude oil and natural gas andmarket demand; the possibility that government policies or laws may change or governmental approvals may be delayed or withheld; risks and uncertainties involving geology of oil and natural gas deposits;the uncertainty of reserves estimates and reserves life; the ability of Shona to add production and reserves through acquisition, development and exploration activities; Shonas ability to enter into or renewleases; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of estimates and projections relating to production (including declinerates), costs and expenses; fluctuations in oil and natural gas prices, foreign currency exchange rates and interest rates; risks inherent in Shonas marketing operations, including credit risk; uncertainty inamounts and timing of royalty payments; health, safety and environmental risks; risks associated with existing and potential future law suits and regulatory actions against Shona; uncertainties as to theavailability and cost of financing; and financial risks affecting the value of Shona’s investments. Readers are cautioned that the foregoing list is not exhaustive of all possible risks and uncertainties.Any financial outlook or future oriented financial information in this corporate presentation, as defined by applicable securities legislation, has been approved by management of Shona. Such financial outlookor future oriented financial information is provided for the purpose of providing information about managements current expectations and plans relating to the future. Readers are cautioned that reliance onsuch information may not be appropriate for other purposes.The forward-looking statements contained in this corporate presentation speak only as of the date of this corporate presentation. Except as expressly required by applicable securities laws, Shona does notundertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in thiscorporate presentation are expressly qualified by this cautionary statement.The information contained in this corporate presentation does not purport to be all-inclusive or to contain all information that a prospective investor may require. Prospective investors are encouraged toconduct their own analysis and reviews of Shona, and of the information contained in this corporate presentation. Without limitation, prospective investors should consider the advice of their financial, legal,accounting, tax and other advisors and such other factors they consider appropriate in investigating and analyzing Shona.1
  • 3. Forward Looking StatementsFor the purposes of the following, “Misrepresentation” means an untrue statement of a material fact, or an omission to state a material fact that is required to be stated, or that is necessary to make astatement not misleading in light of the circumstances in which it was made. If this presentation contains a Misrepresentation, a purchaser in Ontario who purchases securities of Shona has, without regardto whether the purchaser relied on the Misrepresentation, a statutory right of action for rescission or, alternatively, for damages against Shona, provided that no action shall be commenced to enforce a rightof action more than (a) in the case of an action for rescission, 180 days after the date of the transaction that gave rise to the cause of action; or (b) in the case of any action, other than an action forrescission, the earlier of (i) 180 days after the purchaser first had knowledge of the facts giving rise to the cause of action, or (ii) three years after the date of the transaction that gave rise to the cause ofaction.Shona will not be liable if it proves that the purchaser purchased the securities with knowledge of the Misrepresentation. In an action for damages, Shona will not be liable for all or any portion of thosedamages that it proves do not represent the depreciation in value of the securities as a result of the Misrepresentation. In no case will the amount recoverable exceed the price at which the securities weresold to the purchaser. Investors should refer to the applicable provisions of the securities legislation of their respective provinces or territories for the particulars of these rights or consult with a legal advisor.Forecast capital expenditures are based on Shona’s current budgets and development plans which are subject to change based on commodity prices, market conditions, drilling success, potential timingdelays and access to cash, cash flow, available credit and third party participation. Shona’s capital budget has been prepared based upon anticipated costs for equipment and services which are subject tofluctuation based upon market conditions, availability and potential changes or delays in capital expenditures.Additionally, forecast capital expenditures do not include capital required to pursue future acquisitions. Anticipated production growth has been estimated based on (i) the proposed drilling program with asuccess rate based upon historical drilling success and an evaluation of the particular wells to be drilled and has been risked, and (ii) current production and anticipated decline rates. Although the forward-looking information contained herein is based upon assumptions which Management believes to be reasonable, Shona cannot assure investors that actual results will be consistent with this forward-lookinginformation.“Best Estimate” is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the bestestimate. If probabilistic methods are used, there should be at least a 50 Percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.“High Estimate” is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. Ifprobabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.“Low Estimate” is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilisticmethods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.“Mean Estimate” is the statistical mean resource value for each exploration prospect. The statistical mean is dependent on the estimated probabilistic distribution of recoverable resources and is not thesame as the “best estimate” or P50 resource volume. These values can be arithmetically summed to obtain a total mean estimate for a group of prospects.“Management Estimates” means the evaluation conducted by qualified reserves evaluators of the Shona technical team, effective 01 January 2012.“Prospective Resources” are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects.Prospective resources have both an associated chance of discovery and a chance of development. Prospective Resources are further subdivided in accordance with the level of certainty associated withrecoverable estimates assuming their discovery and development and may be subclassified based on project maturity. Unless otherwise indicated herein, the Prospective Resources set out in thispresentation are unrisked, meaning that they are not risked for chance of development or chance of discovery.Estimates of unrisked Prospective Resources are pursuant to Management Estimates. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it willbe commercially viable to produce any portion of the resources. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of suchdevelopment.Barrels of Oil EquivalentBarrels of oil equivalent (boe) is calculated using the conversion factor of 6 Mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boes may be misleading, particularly if used inisolation. A boe conversion ratio of 6 Mcf:1 bbl (barrel) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at thewellhead.Analogous InformationCertain noted drilling and completion data provided in this document may constitute "analogous information", such as mapping information obtained in geographical proximity to prospective exploratory landsto be held by Shona. Such information has been obtained from government sources, regulatory agencies or other industry participants. Management of Shona believes the information is relevant as it helpsto define the reservoir characteristics in which Shona may hold an interest. Shona is unable to confirm that the analogous information was prepared by a qualified reserves evaluator or auditor or inaccordance with the COGE Handbook and therefore, the reader is cautioned that the data relied upon by Shona may be in error and/or may not be analogous to such lands to be held by Shona.2
  • 4. Investment HighlightsWell-balanced asset portfolio Established production and cash flow Diversified oil & gas exploration opportunities in several different basinsSignificant exposure to the largest emerging oil plays in Colombia 1.5 million gross acres in Caguan Basin heavy oil belt – which contains the 1.8 billion barrel oil in place Capella discovery 223 thousand gross acres in the Middle Magdalena Basin prospective for unconventional shale oil (potential of 5.4 billion barrels oil in place) – with an initial carry by ExxonMobil and Shell for approximately $100 millionLarger combined entity will benefit from increased scale Superior access to lower-cost capital Provides shareholders with enhanced trading liquidity Increased ability to participate in regional consolidation activitiesAccelerated continued participation in existing Shona assets Esperanza Block Recent LOI with Altenesol to supply natural gas for the Nataly I LNG Project 4 high-potential gas prospects expected to be drilled in the second half of 2013 Serrania Block Two significantly-sized oil prospects, including one of the largest undrilled four-way closures in northern South America Estimated at a total of 250 million barrels of recoverable oil Block 102 3D seismic program to be initiated in 2013 focusing on 30 to 100 MMBO leads on trend with 170 MMBO Capahuari Sur Frield3
  • 5. Transaction OverviewStrategic combination of Canacol Energy Ltd. (“Canacol”) and Shona Energy Company, Inc. (“Shona”) announced onOctober 15, 2012Equates to a transaction value of C$0.56* per Shona common share, based on the 15-day volume weighted average shareprice of Canacol at the time of announcement (C$0.4449) Security Exchanged for C$0.0896 cash consideration per share Common Shares and 1.0573 Canacol Common Shares per Shona Common Share Preferred Shares $100 cash consideration per Preferred Share, plus payment of accrued dividends Warrants Exercisable into 1.2587 Canacol Common Shares under economically equivalent termsRespective boards have unanimously approved the transaction and the Directors and Officers of Shona and Canacol haveagreed to vote their shares in favour of the transactionRequired shareholder approvals 66 2/3% of Shona Common and Preferred Shares voted at a special meeting of Shona shareholders 50% + 1 of Canacol Common Shares voted at a special meeting of Canacol shareholdersTransaction expected to close on December 19, 20124
  • 6. Balanced Asset PortfolioExcellent mix of producing assets and exploration upside Existing and near term production (four producers in four basins) and free cash flow supports longer term exploration and appraisal projectsThe combined entity will have one of the largest and mostdiverse oil & gas portfolios in Colombia Mix of conventional and unconventional opportunities29 blocks covering 3.3 million acres in Colombia Lower Magdalena Basin – significant natural gas reserves and production Llanos Basin – existing light oil production with exploration upside Caguan-Putumayo Basin – tremendous heavy oil upside Middle Magdalena Basin – emerging shale oil opportunityOther Latin American interests Growing oil production base in Ecuador Light oil exploration in Peru and Brazil5
  • 7. Lower Magdalena BasinThe company’s 100% W.I. Esperanza Block in theLower Magdalena Basin covers 60,002 acresProven exploration concept with 3D seismic and AVOanomaliesJanuary 1, 2012 Reserves(1) Proved 70 BCF Probable 34 BCF Possible 85 BCF Total 189 BCFPotential 300 BCF (unrisked) on identified prospectsthat have AVO anomaliesCurrent Cerro Matoso and E2 contracts provide forlong-term natural gas sales of 14 mmcfpdNegotiating gas sales Definitive Agreement withAltenesol LNG Colombia SAS to supply nearbyNataly I LNG project6 (1) Gross reserves as per Collarini Associates NI 51-101 compliant reserves report effective January 1, 2012
  • 8. Nataly I LNG ProjectOn October 10, 2012, Shona and Altenesol LLC signed a Gas Sales Letter of Intent to convert Shona’s natural gas intoLiquefied Natural Gas for sale to Altenesol’s off-takersShona to supply 17,000 MCFD of natural gas at a price per mcf of $4.50 - $5.25 via a meter at the Jobo StationDoubles current gas sales and brings Shona to up to approx. $40MM in annual Cash FlowCommencing around January 2015 72,000 GPD 56,000 GPD 60,000 GPD Residential/Industrial Service Stations Fleet Trucks Plant Location7
  • 9. Llanos Basin• Canacol holds approximately 205,000 (net) acres in Llanos Basin targeting light oil over 6 blocks• Rancho Hermoso & Enterrios Net revenue production of 10,814 bopd (at quarter-end June 30, 2012) Canacol holds a Risk Service Contract with Ecopetrol that applies to all production from the Mirador formation, and a Production Sharing Agreement for production from all other formations• LLA 23 Operated 80% Working Interest on 92,000 (net) acres Management estimates net risked recoverable resources of 11.0 mmbbls and a net risked pre-tax PV10 of $242 million Canacol anticipates drilling its first exploration well to test the Labrador prospect immediately to the north of the Rancho Hermoso field in Q4 2012 Total depth of approximately 11,200 ft and will take approximately 20 days to drill• Additional Canacol interest in ANH operated blocks Drilled 13 of 13 successful LLA 10 - Non-operated 39% Working Interest in 74,000 (net) acres; wells ANH operates Caño Los Totumos - non-operated 51% Working Interest in 10,500 (net) acres Morichito - non-operated 15% Working Interest in ~9,000 (net) acres8
  • 10. Caguan-Putumayo BasinThe combined entity will have an interest in 9 blocks coveringover 1.5 million gross acres, targeting more than 50 prospectsand trends, in the Caguan Basin’s heavy oil trend Block W.I. Operator Gross Acres Ombu Block(1) 10% Sinochem 73,855 Sangretoro 100% Canacol 385,344 Cedrela 100% Canacol 319,804 Tamarin 100% Canacol 67,922 Achapo 100% Canacol 52,799 Portofino 40% Pacific Rubiales 258,680 Serrania 37.5% Hupecol 110,769 Los Picachos 37.5% Hupecol 52,771 Macaya 37.5% Hupecol 195,254Over 1,000km of 2D seismic data accumulated identifying 47prospects Including one of the largest undrilled four-way closures in northern South America at the Serrania Block6 stratigraphic well program underway for calendar 2012 Ecopetrol paidExisting world class heavy oil discovery at Capella on the Capella $209/acre for PUT 17 discovery in 2012Ombu Block PRE paid $155/acre Management estimates 1.8 billion barrels of OOIP (gross) for Portofino in 2011 Booked 3P reserves of 7.7 million barrels net to the company Canacol paid 5 year plan of vertical and horizontal infill drilling to increase field’s productive $33/acre (average) for capacity and book reserves its approx. 1MM net acres9 (1) Contains the Capella field which management estimates 1.8 billion barrels OOIP
  • 11. Middle Magdalena BasinIn the Middle Magdalena Basin, the Company has aninterest in 3 blocks covering 223 thousand acresThe position is prospective for unconventional shale oil Purchase price fordevelopment Carrao Energy was recovered in less than The La Luna formation is one of the world’s most productive source rocks seven months via farm-outs Analogue to the Eagle Ford shale in TexasManagement’s P50 estimate for net undiscovered petroleuminitially in place is 5.4 billion barrelsSizable carried interest on the drilling of 6 wells beginningin Q3 2012 VMM2 – ExxonMobil will carry the total cost for two vertical wells and a horizontal well with multi-stage frac, capped at $50.0 million VMM3 – Shell-Colombia acquired 100% participating interest and assumed ~$50 million in work commitments; Canacol has the option to exercise a 20% participating interest for no additional cost effective in 201410
  • 12. EcuadorCanacol holds a 25% W.I. in the JV company Pardaliservices Operator: Tecpetrol International(1) 40%, others: Schlumberger 20% and Sertecpet 15% In February 2012, signed a 15 year incremental production contract with PetroEcuade for Atacapi the Libertador and Atacapi mature fields in Northern Ecuador Libertador Libertador and Atacapi fields have been producing for 30 years and are currently producing approximately 16,000 bopd – Pardaliservices partnership would be entitled to incremental production above this level Pardaliservices will receive a fixed price tariff of $39.56 for each incremental barrel produced PetroEcuador pays all operating expensesPardaliservices plans to spend a total of $334 million ($93.3 million, net toCanacol) Drill 31 new development wells and work over 28 existing wells over the 15-year period of Incremental 42 mmbls (gross) the contract 18,000 Facilities expansion 16,000 Waterflood pilot for secondary recovery 14,000 Incremental 12,000 10,000High-Impact Potential 8,000 6,000 Estimated 45 MMBO incremental to Pardaliservices with an undiscounted revenue value 4,000 Base Curve of $1.8 billion ($450MM net to Canacol) 2,000 Actual production was 1,400 bopd over forecast in August 2012 - The first four workovers resulted in actual production that was 80% higher than forecast11 (1) Proven operator in Ecuador since 1999
  • 13. Profile of Combined Entity Current Production of 13,150 boe/d Production vs Exploration Blocks Enterprise Value of $465 million Shona (upon signing of the Definitive Agreement) Prod. - 1 Shona Shona 2,333 boe/d Expl . - 4 Ca na col 18% Approximately US$736 million of Prod. - 2 BT 2P PV10 reserve value Ca nacol 10,814 boe/d 82% 317 MMboe of prospective Ca na col Expl . - 21 resources Shona shareholders will own approximately 28% LQA Op. Cash Flow of $125MM/year 2P Net Reserves(1) of 32MMboe Board of Directors to be comprised of 6 Canacol Shona representatives and 2 Shona $21.4 17% representatives Shona Ca na col 15.9 mmboe 16.0 mmboe Net debt of $56.9MM, including 50% 50% Ca na col $25MM of subordinate $103.5 convertible debentures 83% (1) Shona has Possible reserves of 78 bcf, or 13 MMboe12 (1) Net Company interest, effective as at Jan. 1, 2012 for Shona and as at Jun. 30, 2012 for Canacol
  • 14. Reasons to Own Pro Forma Canacol will have a very large and exciting asset portfolio with several near-term catalystsDominant position in Colombia’s heavy oil belt in the Caguan-Putumayo Basin Drilling results from stratigraphic tests on the Portofino and Cedrela contracts expected early 2013 Planned drilling of the Serrania Block in 2013 with up to 250 MMBO gross potential Continued development of the existing 1.8 billion barrel OOIP Capella discoverySubstantial exposure to the tremendous oil shale potential in the Middle Magdalena Basin Fully-carried for up to $50MM each by Exxon (VMM2) and Shell (VMM3) Drilling results from the first 2 exploration wells in the VMM2 block expected in early 2013Growing cash flow from continued monetization of the natural gas assets in the Lower Magdalena Basin Pending definitive agreement on ground-breaking LNG project that doubles the Block’s cash flow in 2015 12 targeted prospects containing the potential for an additional 300 BCF of reserves with a 4-5 well drilling program scheduled for the second half of 2013Additional light oil production potential and free cash flow generation out of the Llanos Basin Spudding the first exploration well on the LLA-23 block to test the Labrador prospect in early November 2012 Ongoing acquisition of an additional 31 km2 of 3D seismic on the northern part of the LLA‐23 blockNear-term growth in Ecuador assets Drilling 4 new development wells and working over 8 existing producing wells before the end of 201213