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7th African Petroleum Conference Presentation - April 2010

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  • 1. 7th African Petroleum ForumSession 3: Hunting Grounds & The Continent’s Oil/Gas & Economic Future Presentation by Victoria Oil & Gas (VOG) Tapping Gas Value in Cameroon 13th April 2010
  • 2. Tapping Gas Value in Cameroon Contents o  Introduction o  VOG Corporate Snapshot o  Executive Summary o  Logbaba – Cameroon Potential o  Logbaba Discovery o  New Wells VOG Logbaba (La 105 & La 106) o  Further Exploration - Passive Seismic Overview o  Production Facilities & Pipeline o  High Impact Events o  Conclusion2
  • 3. VOG Corporate Snapshot Background Share Structure Free Float o  Listed on AIM in July 2004 (80.79%) Noor Petroleum (5.6%) Management (6.2%) o  60% of the Logbaba gas field in Cameroon Barclays (4.36%) Hydrocarbon Tech. o  2P reserves of 104 Bcf (3.05%) o  First appraisal well completed as a Price: £0.040 producer in January Shares: 1.4bn Market Cap: £56 MM 2010 o  100% of West Med gas and VOG Trading Liquidity condensate project in 12 month Daily Trading Volume Russia o  Located close to % of Market Cap World’s largest gas field o  Prospective resources of 1.1Bnboe3 * As at close 12 April 2010
  • 4. Executive Summary o  Victoria Oil & Gas Plc (VOG) is emerging as a significant player in natural gas production o  Logbaba gas and condensate field in Douala, Cameroon, is the only onshore gas discovery in the country o  The West Medvezhye (West Med) project in Siberia has independently estimated recoverable prospective resources of over 5 Tcf of gas o  Logbaba is poised to deliver first cash flows and profits for VOG o  Over 300 feet of gross sandstone pay in first well o  In-principal agreements signed with Industrial Customers o  First revenues from Logbaba targeted in H2 20104
  • 5. Logbaba: First Mover Advantage o  The Logbaba field represents a unique opportunity to dominate the nascent natural gas market in Cameroon o  Competitive advantages:   The field lies beneath the major industrial city in the Central African Region   Agreements for gas off-take already signed with industrial customers in Douala   The only onshore gas discovery in the country   All facilities (drilling, processing and pipeline) will be owned by VOG   Pipeline will be the only municipal gas pipeline in sub- Saharan Africa o  Plans announced to triple Cameroon power generation capacity in the next 10 years Government priority for domestic market for next 30 years: 755 MMcf/d for electricity and 25 MMcf/d for industry
  • 6. Cameroon: Heart of Central Africa ECCAS o  Cameroon is a member of the Economic Community of Central African States (ECCAS) o  Members share trade markets and currency o  Douala is the deep-water port and industrial heart of the region o  The city is the most expensive in Africa o  Major companies such as Guinness and Nestle have facilities there o  Rio Tinto Alcan have a major aluminium smelter at Edea close to Douala o  Douala handles around 95% of import/exports for Cameroon, Chad and CAR o  Logbaba is located in the6 eastern suburbs of Douala
  • 7. Logbaba: Discovery o  Logbaba was discovered in 1950s by Elf SEREPCA o  Four wells were drilled by Elf: o  All encountered gas and condensate in multiple reservoir layers o  No gas-water contacts in any sands encountered o  Three wells tested over limited intervals with individual sands testing 10 – 20 MMcf/d per well o  In 2008, RPS Energy calculated 2P reserves of: o  Gas – 104 Bcf o  Liquids – 4 MMbbl o  NPV10 – $168 MM*7 * Attributable to VOG
  • 8. Logbaba: Exceptional Progress Winter 2008 Spring 2009 Autumn 2009 Summer 20098
  • 9. Logbaba: Well La-105 Drilling/Completion La-105 Drilling o  La-105 was drilled to a total depth of 2,718 m (8,920 feet) on 1 January 2010 o  Multiple gas-bearing sands with over 300 feet of gross pay were encountered between 1,836 and 2,540 m correlating to La-103 o  A 7” liner has been run and cemented o  La-105 has been completed as a production well and testing was conducted in the first quarter 20109
  • 10. Logbaba: Well La-105 Testing o  Multiple pay zones were tested La-105 Testing over a period of two weeks at depths between 7,005 - 8,500 feet. o  Over the testing period, various zones of La-105 flowed at rates between 11 - 56 million standard cubic feet per day (MMscf/d) of natural gas and 210 - 1,000 barrels per day of condensate. Flowing wellhead pressures varied between 2,750 - 4,552 psi. o  The gas is sweet, with a high calorific value and the condensate has an API gravity10 of 47 degrees.
  • 11. Logbaba: Well La-105 Testing continued La-105 Targets o  The test covered horizons of the Lower Logbaba formation, which had not been tested before, and the Upper Logbaba D sands. o  The Upper Logbaba A through C sands, although indicated as the best quality hydrocarbon- bearing sands encountered in the well logs, were not tested as the well indicated more than Elf La-103 Flow sufficient production capacity Test Results to meet initial gas demand of 8 MMscf/d. 1,780 to 1,789m 4.75 MMcf/d o  The Upper Logbaba A - C 2,019 to 2,038m 12.25 MMcf/d sands will be perforated and added to the completion 2,051 to 2,063m interval when required for 9.1 MMcf/d production. 2,364 to 2,378m11 12.25 MMcf/d
  • 12. Logbaba: Well La-106 o  La-106 is being drilled from La-104 pad and is planned to twin the La-101 well at its bottom hole location o  Well spudded on schedule on 6 February 2010 o  Planned TD is 2,000 m TVDSS but will drill deeper due to good hydrocarbon potential in Lower formations o  La-101 was drilled in 1955 and blew out before being brought under control and completed o  The blow-out lasted 38 days, producing approx 0.9 Bcf o  The well was then tested at 15.5 MMcf/d o  La-106 targets the Logbaba formation sands12
  • 13. Logbaba: Further Exploration o  90% of the block is as-yet Passive Seismic Survey unexplored o  In late 2009, a passive seismic survey was commissioned o  Passive seismic is a direct hydrocarbon indicator o  Significant new structure outside current drilling location o  Best location on the current structure is as yet undrilled o  The new accumulations lie outside the area evaluated by RPS13
  • 14. Pipeline Route VOG plans to install and commission a gas processing facility and its own gas pipeline to the industrial customers Approx 85% of industrial market within 10km Wells 105+106 and processing facility14
  • 15. VOG: High Impact Events o  VOG is targeting first revenues in H2-2010 o  While La-106 is drilled, La-105 was tested o  Test data and superior modern logs will be submitted to RPS for reserve re-estimation o  Installation of the facility and construction of the pipeline is expected to be completed relatively quickly once concept agreed15
  • 16. Conclusion o  VOG can exploit competitive advantages to lead the gas market in Cameroon o  Logbaba is an existing discovery with first well confirming gas prospectivity o  Ready-made, captive market lies above the field with high barriers to entry for offshore competition o  Gas agreements in place. o  Government initiative to treble power generation in next 10 years o  VOG has the appetite for further expansion in Africa16
  • 17. Appendix
  • 18. Processing & Pipeline Strategy o  VOG will install and commission its own processing facility and pipeline o  Processing: o  Phase 1 will be a basic separation and dehydration process to produce sales gas and liquids Sales gas Separation & Dehydration Raw gas Process Liquids o  Phase 2 will add processing capability to extract additional Natural Gas Liquids (NGL) o  Pipeline o  A c.10km high-pressure gas pipeline will be laid underground to the industrial customers o  The initial section will only access the nearest customers to the well-site, but this covers about 85% of the market18
  • 19. Key Management Team Radwan Hadi Sam Metcalfe Geoff Gill Kamal Jardaneh Assistant Project Senior Petroleum Drilling COO VOG Manager Engineer Supervisor TECHNICAL Senior petroleum Over 25 yrs oil 15 yr career in oil 30 yrs of oil and engineer with over industry experience, and gas, gas experience, 23 30 yrs experience in worldwide. predominantly with yrs as drilling oil and gas including Has brought several Schlumberger superintendent / in Nigeria, Ghana North Sea gas Testing and then senior drilling and Equatorial projects into senior petroleum engineer for BP Guinea. production for major engineer with and currently a Former Head of corporations Blackwatch drilling consultant Planning in ADCO Kevin Foo Jonathan Scott-Barrett Steve Jorgensen Francois Nguene Cameroon COMMERCIAL Commercial Gov’t Relations Chairman Director Country Manager Manager 39 yr career in the Former CEO of Ex-Cities Service Former resources sector Eureka Mining Plc & drilling engineer Exploration and including 19 years in executive director of with 15 yrs Production the FSU; former MD Celtic Resources Plc experience in the Manager for SNH of Celtic Resources oil industry in charge of Chad- Holdings specialising in Cameroon drilling, Pipeline completion and permitting19
  • 20. Logbaba Elf Cross-section20
  • 21. RPS Independent Valuation RSP Energy Competent Person’s Report Net Attributable Reserves and Resources 1P 2P 3P Total Liquids MMbbl 0.28 2.35 4.51 Natural Gas Bcf 7.92 64.53 123.91 Total MMboe 1.71 13.97 26.81 NPV valuation at 10% $MM 18.17 168.65 412.16 Source: RPS Energy   RPS Energy undertook an evaluation of the Logbaba field in July 2008   65Bcf of 2P reserves with an NPV10 valuation of $169MM   The evaluation only RPS review encompassed a small area (~6km2) section of the total 64km2 licence area21
  • 22. Social Responsibility o  VOG, through its local entity Rodeo Development Ltd (RDL), has strived to be an excellent corporate citizen: o  During rig mobilisation, 300 local people were employed o  RDL currently employs about 100 people on the rig (roustabouts, medics, safety officers, guards etc) o  VOG has also invested in the local infrastructure with the local council o  Local community members have seized on business opportunities created by RDL22
  • 23. Abbreviations Bnboe Billion barrels of oil equivalent MMboe Million barrels of oil equivalent MMbbl Million barrels of oil bbl/d Barrels per day mcf Thousand cubic feet of natural gas mcf/d Thousand cubic feet per day MMcf/d Million standard cubic feet of gas per day Bcf Billion cubic feet of natural gas Tcf Trillion cubic feet of natural gas $MM Million US$ $Bn Billion US$ km2 Square kilometres m Metres MMBtu Million British thermal units MW Megawatts tpa Tonnes per annum CFA Central African Franc23
  • 24. VICTORIA OIL & GAS PLC HATFIELD HOUSE 52-54 STAMFORD STREET LONDON SE1 9LX Tel: + 44 (0)207 921 8820 Fax: +44 (0)207 921 8821 www.victoriaoilandgas.com info@victoriaoilandgas.com