Sky Petroleum Inc.Exploration Blocksin AlbaniaSummarySeptember 27, 2010
Disclaimer▪   This Presentation is a summary of Sky Petroleum Inc.’s Exploration Blocks in Albania and is for information ...
Sky Petroleum introduction (1/2) Corporate Profile                                       Management and Board Members Offi...
Sky Petroleum introduction (2/2)  Highlights                                         Trading Fundamentals  ▪ US listed ind...
Contents           Basic description and unique characteristics           Exploration and development plan for           t...
Basic description: in June 2010, we have been granted exclusive rights to3 exploration blocks in Albania, covering 5,000 k...
Basic description: our 10 prospects in Albania build on previous researchof OMV and are located close to producing field a...
Geography: the prospects are located in proximity of existing and plannedoil and gas infrastructure                       ...
History of exploration: significant exploration already done                                                  Sky Petroleu...
Unique opportunity: previous Albpetrol, Premier Oil and OMV researchconcluded significant oil and gas deposits likely…Bloc...
… and according to our estimates this potential may be even higher                            Mean un-risked            Pr...
Analog fields: several analogs exist from previous exploration anddevelopment                                             ...
Legal status: Sky has secured exploration license for 7 years and willautomatically get a production license when oil or g...
Fiscal regime: modern fiscal regime established and expected to remain inplace                 100% working interest (excl...
Stability: Albania is an emerging market making good progress towardsEurope in its economic development and legal environm...
Exploration and development of Albanian oil fields is attractive                                                          ...
Other players have succeeded in Albania – Bankers Petroleum                                                               ...
Other players have succeeded in Albania – Petromanas                                                                      ...
Contents           Basic description and unique characteristics           Exploration and development plan for           t...
Sky Petroleum will start with the most promising prospects in each blockBlock             Prospect      Techniques        ...
Sky Petroleum has a staged investment plan to develop the prospectsto maximize their value at minimum risk                ...
Contents           Basic description and unique characteristics           Exploration and development plan for           t...
Value of Sky Petroleum’s Albanian is estimated at roughly USD 1-3 billiondependent on POS and reserve estimates           ...
1 Simplified1 stochastic DCF model mechanics                                                                              ...
1 Prospect specifics driven by mean reserve potential and                                             Oilprobability of su...
1 Under current assumptions, the mean NPV of the project isUSD ~2.1 billion (estimated) Probability density               ...
3 The market currently values Albanian P90 reserves at USD 10-30per barrel, putting Sky Petroleum at USD ~1-3 billion (est...
Contents           Basic description and unique characteristics           Exploration and development plan for           E...
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Sky Petroleum: Exploration Blocks in Albania - Summary

  1. 1. Sky Petroleum Inc.Exploration Blocksin AlbaniaSummarySeptember 27, 2010
  2. 2. Disclaimer▪ This Presentation is a summary of Sky Petroleum Inc.’s Exploration Blocks in Albania and is for information purposes only. No investor should invest in the securities of Sky Petroleum based solely on the information contained in this Presentation. Before entering into any transaction directly or indirectly based on the information contained herein, recipients are advised to conduct their own investigation and analysis of Sky Petroleum and its project and the data contained in this Presentation in order to confirm the validity and accuracy of the said information. Information concerning Sky Petroleum, including risks related to its business and operations, are contained in Sky Petroleum’s filings with the Securities and Exchange Commission available at www.sec.gov (“SEC Filings”).▪ This Presentation does not constitute an offer or invitation for the sale or purchase of securities or of any other asset, business or undertaking and shall not form the basis of any contract. No offer or sale of securities will be made in any jurisdiction unless registered under the Securities Act of 1933, as amended, and any applicable state securities laws or unless otherwise exempt from such registration requirements, and unless made in compliance with securities laws of applicable jurisdictions.▪ Except for historical information, the matters set forth herein, which are forward-looking statements, involve certain risks and uncertainties that could cause actual results to differ. Certain factual information is derived from information provided by or otherwise reported by third-parties, which has not been confirmed or verified by Sky Petroleum. You are cautioned against relying on forward-looking statements or third-party information. Potential risks and uncertainties related to forward-looking statements include, but are not limited to, the reliability and accuracy of third-party information, obsolete technologies used in prior exploration programs, the ability to raise capital and fund exploration programs and working capital requirements, the ability to design and implement exploration and development programs in Albania on a timely basis, obtaining drilling equipment and exploration resources on a timely fashion, uncertainty of production from the wells, if any, the competitive environment within the oil and gas industry, the extent and cost effectiveness with which Sky Petroleum is able to implement exploration and development programs in the oil and gas industry, commodity price risk, general market acceptance, political risks associated with exploration and development activities, the successful technical and economic execution of Sky Petroleum’s intended exploration plan, risks related to the estimates and assumptions of management, risks related to valuation estimates, risks related to investments in penny stock and other risks and uncertainties disclosed in Sky Petroleum’s SEC Filings.▪ Sky Petroleum has not made, does not make and will not make any representation or warranty, express or implied, as to the accuracy or completeness of information contained herein and none of them shall have any liability with respect to use of the information contained herein by their direct or indirect recipient or by any person to whom such information has been properly disclosed. Sky Petroleum does not undertake any obligation to update or publicly release any revisions to this Presentation to reflect events, circumstances or changes in expectations after the date of this Presentation. 1
  3. 3. Sky Petroleum introduction (1/2) Corporate Profile Management and Board Members Offices: Austin Texas & Dubai ▪ Karim Jobanputra, CEO OTC Bulletin Board: SKPI.OB ▪ Michael Noonan, CFO Interim, VP Corporate, Corporate Secretary Operations ▪ Albania: PSC signed for Blocks 4, 5 & ▪ Robert Curt Dumre – Previously in ExxonMobil, Qatar Gas ▪ U.A.E: Agreement for offshore Mubarek – Refining and Supply expert Field 1 ▪ Russia Oil Field investment ▪ Oliver Whittle – Luzskoye field, Komi Republic of – Previously CEO of Raiffeisen Bank Albania, the Russian Federation 1 Barclays Bank – Via Concorde Oil & Gas plc. 1 1 – investment impaired to zero as of 12/31/09 2
  4. 4. Sky Petroleum introduction (2/2) Highlights Trading Fundamentals ▪ US listed independent focused on the Balkans, ▪ Stock performance for the past 2 years, USD Middle East and FSU 0,8 ▪ Focused business model 0,6 – Strategic focus on near production 0,4 opportunities 0,2 – Low burn rate = positive cash flow 0 – Positive cash on balance sheet 07/2008 01/2009 07/2009 01/2010 07/2010 01/2011 – Relationships with proven operators ▪ Share Capital ▪ Raised USD 38 million in 2005 – Issued and Outstanding – 59 M (as of 2Q10) – Invested USD 25 million for Mubarek Project, – Insiders and Institutions – approximately USD 1 million for Luzskoye 25% – Approximately USD 5 million on balance – No debt, convertibles or other derivatives sheet (as of Q2 2010) ▪ Near-term catalysts for stock appreciation ▪ Signed production sharing contract for – Albanian reserve valuation and subsequent 3 Blocks in Albania production providing accretive cash flow – Mubarek participation agreement dispute ▪ Experienced technical, operational, legal and resolved financial capabilities – Capital appreciation from ConcordeSOURCE: Datastream 3
  5. 5. Contents Basic description and unique characteristics Exploration and development plan for the prospects Economic value assessment of the prospects Q&A 4
  6. 6. Basic description: in June 2010, we have been granted exclusive rights to3 exploration blocks in Albania, covering 5,000 km2 (17% of Albania) Onshore licenses Offshore licenses Onshore free Offshore free Sky Petroleum Island Manas Adriatic International 8 Exploration & Bankers Albania Beach Energy Stream Oil and Gas Capricorn A Albania & Dyas 7 Albania B D Sky Petroleum blocks 1 ▪ Block 4 E – 2,264 km2 (540,000 acres) C Du – 4 prospects mre – Estimated potential 350 MMBOE F 2 6 ▪ Block 5 – 2,076 km2 (498,000 acres) 3 – 5 prospects – Estimated potential 375 MMBOE 5 4 ▪ Dumre – 623 km2 (149,000 acres) – Estimated potential >150 MMBOE 0 20 KilometersSOURCE: AKBN; Sky Petroleum 5
  7. 7. Basic description: our 10 prospects in Albania build on previous researchof OMV and are located close to producing field and recent discoveries Gas field Sky Petroleum block Manas Petroleum Oil field Sky Petroleum prospect estimates 3,919 MMBOE of recoverable deposits Oil and gas in Albania (P90) in its blocks ▪ Surface bitumen mined by Romans near Fier 2,000 years ago ▪ Modern exploration in Albania began in 1918, but slowed down during the communist era Squepuri oil field ▪ Since 1991, Albania reopened attracting foreign exploration (Shell, discovered 2001 Occidental, OMV, …) ▪ Three major players in Albania claim 22 billion barrels OOIP in their blocks, but majority of potential not explored yet Patos-Marinza (340 MMBOE) is Oil and gas in Sky Petroleum’s prospects the largest European ▪ OMV explored blocks 4 and 5 from 1998 till 2006 onshore oil field – 1,265 km of 2D seismic data (238 km of new data by OMV) – Deep exploration wells with data in Palokastra and Kanina – Exploration discontinued due to relatively low oil price, cost Delvina gas overruns and shift in regional focus field (1.3 Tcf ▪ In June 2010, Sky Petroleum obtained exclusive license to continue OOIP), with exploration of blocks 4, 5, and Dumre largest in SE ▪ Our 10 prospects with 435 km2 total area, majority within 20-50 km of Europe) producing fields, are estimated to contain ~900 MMBOE of 0 20 discovered predominantly oil reserves Kilometers 1988SOURCE: AKBN; CIA; Manas Petroleum; OMV 6
  8. 8. Geography: the prospects are located in proximity of existing and plannedoil and gas infrastructure Sky Petroleum blocks Gas pipeline Vlora 1 port ▪ Storage capacity 65,500 m3 Sky Petroleum prospect Proposed gas pipeline ARMO oil terminal Tanker terminal ▪ Storage capacity 30,000 m3 Oil pipeline La Petrolifera Italo Albanese oil and Refinery Proposed gas terminal oil Pipeline ▪ Close to Italian refineries (120 km to Brindisi, 200 km to Bari) ▪ Proposed AMBO oil pipeline ▪ Connected to railway ▪ Capacity 0.8 Mbpd ▪ Storage capacity 65,000 m3 ▪ Project currently on-hold Fier and Ballsh refineries Trans-Adriatic pipeline ▪ Owned by ARMO (in 2008 ▪ 10-20 Bcm per year privatized by Anica Enterprises and ▪ Currently optimal route assessment Mercuria Energy Group Ltd., and surveys United States-based Refinery ▪ Planned completion year unclear Associates of Texas) ▪ Capacity 33,000 barrels per day (currently not fully utilized) ▪ New 97 MW power near Vlore (oil, possible conversion to gas) Porto Romano terminal ▪ Modern (in operation since April 2009) ▪ Proposed South-Stream gas pipeline ▪ Owned by the government (from Russia to Italy) ▪ Current storage capacity ▪ Capacity 12 Bcm per year – 20,000 m3 of oil ▪ Announced completion by 2015, start – 10,000 m3 of LPG date still not agreed upon ▪ Loading/shipping capacity per day ▪ Most likely passing through Greece – 9,000 tones of LPG 0 20 very near south Albania – 16,000 tones of oil KilometersSOURCE: AKBN; Energy Community; company websites; press search 7
  9. 9. History of exploration: significant exploration already done Sky Petroleum block 503 471 1,265 km of Sky Petroleum prospect existing 2D 291 Major thrusts seismic Gas discovery Kilometers Dumre Block 4 Block 5 Gas field Gas condensate field 39 Oil field 51 explora- Oil seep tory wells1 7 5 Number Dumre Block 4 Block 5 11 13 12 0 20 Kilometers1 Each block contains one deep well with full documentation and a number of shallower onesSOURCE: AKBN; CIA 8
  10. 10. Unique opportunity: previous Albpetrol, Premier Oil and OMV researchconcluded significant oil and gas deposits likely…Block Prospect Description Research done Conclusion Albpetrol ▪ 60 km2 ▪ ~500 km of low quality 2D ▪ Initial test well missed carbonates identified 2 ▪ Large anticlinal carbonate seismic by Albpetrol and due to poor seismic imagining prospects structure Premier Oil ▪ Top of carbonates location nowDumre ▪ Dumre ▪ Abundant, mature source ▪ DUM-7 exploratory well estimated better based on well ▪ Belshi1 ▪ Region is dominated by both 6,119 m, tested concept but evaluation folding and piercement missed target ▪ New seismic and well needed ▪ Oil discoveries within 10 km Albpetrol ▪ 26 km2, on trend with ▪ Good quality seismic (in ▪ 150 m column with extensive identified 4 producing fields NW a valley) shows of “dead” oil, structure may prospects ▪ Picari structure – 42 km by Albpetrol have been breachedBlock 4 ▪ Libohova ▪ OMV estimated 78 MMBOE of – 69 km by OMV ▪ Porosity development is low, but ▪ Konica reserves with 19% POS ▪ PK-1 exploratory well by extensive fracturing present ▪ Palokastra OMV ▪ Additional seismic needed to ▪ Tomorri – 2,605 m improve structural model – cost USD 7 million Albpetrol ▪ 40 km2, over 10 km long ▪ 136 km 2D seismic by OMV ▪ 163 m column of high-density oil identified 5 structure ▪ KA-1/1 exploratory well by did not flow prospects ▪ 5 km from Vlora-10 and 11 OMV ▪ Low porosity and drilling ▪ Llogora producing wells – 5,362 m, cost USD difficulties made tests inconclusiveBlock 5 ▪ Kanina S. ▪ Ionian Zone of Albanide fold 37 million ▪ Need to develop better structural ▪ Vurgu ▪ Original estimate 27% POS ▪ Well evaluation model and redrill ▪ Butrinti ▪ Magneto-telluric study ▪ Ramica Further details and geological research on other prospects in the appendix (reserve potential and POS not estimated by OMV)1 Dumre prospect exploration may identify additional prospects including Belshi, but current data is not sufficient to consider Belshi a viable prospectSOURCE: National Agency of Natural Resources; OMV final report 9
  11. 11. … and according to our estimates this potential may be even higher Mean un-risked Probability Exploratory reserve potential of Success Target depth well costBlock Prospect MMBOE Percent Rationale Meters USD million Dumre Dumre 150 35 Good source and seal, 6,400 25 modest reservoir expected Libohava 100 17 Low porosity, bad access 4,000 12 Konica 100 17 Far from existing production 4,500 15 Block 4 Palokastra 75 25 Oil shows, appears breached 2,100 7 Tomorri 75 17 Far from existing production 2,500 7 Llogora 100 17 Bad access (Cika Mountain) 4,500 15 Kanina South 75 35 Positive oil discovery nearby 4,700 18 Block 5 Vurgu 75 25 Production nearby 4,200 14 Butrinti 75 25 Similar to Delvina, bad access 3,300 12 Ramica 50 25 Close to producing fields 3,000 10 Total 875 Total mean risked potential around 211 MMBOE 135SOURCE: Experts 10
  12. 12. Analog fields: several analogs exist from previous exploration anddevelopment Sky Petroleum prospects Analog fields Sky Petroleum block Sky Petroleum prospect Gas field ▪ 150 MMBOE Ballsh- ▪ 46 MMBOE ▪ Cret/Eoc.Carb Gas condensate field Dumre ▪ 6,400m deep Hekal ▪ 1,000-3,000m ▪ Since 1966 Oil field Kanina ▪ 75 MMBOE ▪ 49 MMBOE ▪ Mess-clastics South ▪ 4,700m deep Kucove ▪ 0-1,500m ▪ Since 1928 ▪ 75 MMBOE Aquila ▪ 27 MMBOE ▪ Offshore, 850m Tomorri ▪ 2,500m deep (Italy) ▪ Since 1998 ▪ 50 MMBOE ▪ 100 MMBOE ▪ Cret/Eoc.Carb Ramica ▪ 3,000m deep Gorisht- ▪ 1,000-2,500m ▪ Since 1965 Kocul ▪ 75 MMBOE ▪ ~14 MMBOE ▪ Cret/Eoc.CarbBallaj-Divjaka Palokastra ▪ 2,100m deep Amonica ▪ 2,000-2,500m ▪ Since 1980 ▪PekishtiKolonja-B. Dumre 100 MMBOE Cakrran- ▪ 131 MMBOE ▪ Cret/Eoc.CarbSeman-P. Kucove Libohova ▪ 4,000m deep Mollaj ▪ 3,000-4,500m ▪ Since 1977 ShpiraguFrakulla ▪ Patos-Marinza Visoka 100 MMBOE ▪ 350 MMBOE ▪ Cret/Eoc.CarbDrashovice Cakrran-Mollaj Llogora ▪ 4,500m deep Delvina ▪ 2,800-3,400m ▪ Since 1989 Ballsh-HekalKanina S. ▪ ▪ ▪ Gorisht-Kocul Amonica Tomorri 100 MMBOE 42 MMBOE Cret/Eoc.Carb Llogora Ramica Palokastra Libohova Konica ▪ 4,500m deep Visoka ▪ 800-1,000m ▪ Since 1963 Konica ▪ 75 MMBOE Patos- ▪ 385 MMBOE ▪ Mess-clastics Vurgu Delvina 13 Vurgu ▪ 4,200m deep Marinza ▪ 0-1,800m ▪ Since 1927 Finiq-Krane Butrinti 0 20 Kilometers ▪ 75 MMBOE Butrinti ▪ 3,300m deepSOURCE: AKBN; JS Herold; Wood Mackenzie; OMV 11
  13. 13. Legal status: Sky has secured exploration license for 7 years and willautomatically get a production license when oil or gas is discovered Exploration period Production period First Second Third Guaranteed ExtensionTimeframe 2 years 3 years 2 years 25 years 5 yearsMinimum Total 1.50 million Total 2.65 million Total 3.15 millionexpenditure ▪ 1.25 million ▪ 0.15 million ▪ 0.15 millionrequirements 150 km seismic G&G G&GUSD acquisition evaluation evaluation ▪ 0.20 million ▪ 2.50 million ▪ 3.00 million G&G (2 exploration (2 deep evaluation wells) or 1 well exploration ▪ 0.05 million and 100 km wells) seismic seismic reprocessing No license ever terminated by the government in AlbaniaSOURCE: Production Sharing Contract 12
  14. 14. Fiscal regime: modern fiscal regime established and expected to remain inplace 100% working interest (exclusive rights) 25+5 years production period Government take ▪ Royalty 10% of sales revenues ▪ Tax 50% of the realized profit ▪ Profit sharing with AKBN 0-4% according to cumulative profit Possibility to export 100% of production and repatriate all net earnings 100% cost recovery (however interest charges not tax deductable) Capital commitments: USD 7.3 million for exploration Competitive local workforceSOURCE: Production Sharing Contract; Albanian laws and regulations 13
  15. 15. Stability: Albania is an emerging market making good progress towardsEurope in its economic development and legal environment Rank 112 worldwide – behind Egypt, Rank 84 worldwide – ahead of Egypt, Bosnia, Paraguay, Guatemala, etc. Bosnia, Paraguay, Guatemala, etc. GDP per capita USD thousand 4.1 3.4 2.4 2.6 2.9 nominal 1.8 1.2 1.3 1.4 0.9 Foreign Direct 0.6 Investment 0.3 0.3 0.3 0.1 0.2 0.1 0.2 USD billion 2000 2001 2002 2003 2004 2005 2006 2007 2008SOURCE: Global Insight HIS; Nationmaster; press search 14
  16. 16. Exploration and development of Albanian oil fields is attractive ESTIMATEcompared to alternatives and value-creating at current oil priceBreakeven price1 for oil capacity: 2008-12 MC = marginal cost capacityUSD/bbl (real 2008 USD), WTI (already producing in 2007) FC = full cost capacity (new90 investments) 8180 Current oil prices Patos-Marinza (FC) Selected Supply Elements70 67 A 62 Saudi Arabia Spare Capacity60 Ballsh-Hekal (FC) B Saudi Arabia (MC) 53 C Saudi Arabia (FC)50 Gorisht-Kocul (FC) 41 42 D Russia (MC)40 33 E Brazil DW (FC) Cakrran-Mollaj (FC) 33 Venezuelan Heavy Oil (FC) 28 L F30 G US DW GoM (FC) H Russia (FC)20 F G I K I Angola DW (FC)10 5 7 J Canadian Oil Sands (FC) A B C D E H J K US Stripper Wells (FC) L US 10-30 b/d onshore Low -2 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 Rate (FC)Production capacity (2012)Million bopd 2007 liquids 2012 liquids production production capacity capacity1 Assumes an IRR of 10% for new capacity additions and cash breakeven for existing production capacitySOURCE: Wood Mackenzie; EIA; IOGCC 15
  17. 17. Other players have succeeded in Albania – Bankers Petroleum Bankers DJI S&P/TSX Stock price (BNK at TSX stock exchange) Company description Indexed August 2007 – August 2010 March 3, 2010 Bankers announced increased volume of reserves by 34% ▪ Market cap: USD 1,637 million January 30, 2008 March 26, 2009 Bankers to 92.9 MMBOE P90 ▪ Enterprise Value: USD 1,610 million 1,000 Bankers acquired announced 69.4 MMBOE P90 ▪ Regional presence: Albania (used to a 50% interest in reserves in their Albanian prospects have also some US operations, but these 800 the Kucove field (Kucove 2.4 MMBOE) have been spun-off to a newly established (reserves unknown) public company BNK Petroleum in 2008) 600 400 200 0 1.7. 1.9. 1.11. 1.1. 1.3. 1.5. 1.7. 1.9. 1.11. 1.1. 1.3. 1.5. 1.7. 1.9. 1.11. 1.1. 1.3. 1.5. 1.7. 1.9. 2007 2008 2009 2010 Start Exploration Production Granted licenses ▪ N/A ▪ Bankers Petroleum drills in Albania since 2004 ▪ 25 years development license for Patos- ▪ By the end of 2009 Bankers completed 572 wells Marinza1 (310 producing, 13 water disposal, 249 non-active) – Proved reserves: 90 MMBOE Production – the largest onshore oilfield in Europe Barrels of oil per day 10,300 ▪ 25 years development license for Kucove1 – Proved reserves: 3 MMBOE 5,875 6,438 ▪ 7 years exploratory license for Block F 4,724 (adjacent to Patos-Marinza; prospective for 600 natural gas) 2004 2007 2008 2009 2010 1Q1 Option to renew for additional five-year terms 16SOURCE: DataStream; Banker Petroleum; press search
  18. 18. Other players have succeeded in Albania – Petromanas Manas Petroleum Petro Manas DJI S&P/TSXV Stock price (PMI at TSXV stock exchange) Company description Indexed August 2007-August 2010 ▪ Market cap: USD 204 million Dec 2007 July 2009 Feb 24, March 18, 2010 May 27, 2010 ▪ Enterprise Value: USD 204 million License License 2010 Manas Petroleum raised USD 75 M ▪ Regional presence: Assets only in Albania, Parent for blocks for blocks Manas estimated total for Albania Manas Petroleum also has assets in Canada A, B, D 2 and 3 Adriatic reserves in its blocks exploration and 300 and E acquired at 3,919 MMBOE P90 development Manas Petroleum 32% of shares of 250 Petromanas given to 200 DWM DWM Petroleum 150 Petromanas Energy 100 Sold in Feb 2010 (formerly WWI 50 Manas Adriatic Resources) 0 1.7. 1.10. 1.1. 1.4. 1.7. 1.10. 1.1. 1.4. 1.7. 1.10. 1.1. 1.4. 1.7. 1.10. 2007 2008 2009 2010 Start Exploration Production Manas Adriatic obtained licenses for a total ▪ 2D Seismic ▪ First drilling expected to start in early 2011 of 6,000 km2 in Albania – >4,000 km done before Petromanas ▪ Blocks A, B, D and E since December 2007 – 694 km added by Petromanas in 2008-09 ▪ Blocks 2 and 3 since July 2009 – 230 km planned for 2010-11 ▪ Main prospects identified – 9 in blocks A, B, D and E – 3 in blocks 2 and 3 ▪ Ready to drill an appraisal well in ShpiraguSOURCE: DataStream; Manas Petroleum; Petromanas; press search 17
  19. 19. Contents Basic description and unique characteristics Exploration and development plan for the prospects Economic value assessment of the prospects Q&A 18
  20. 20. Sky Petroleum will start with the most promising prospects in each blockBlock Prospect Techniques Rationale ▪ Dumre ▪ Data ▪ Dumre 7 Redrill prospect has excellent structural model, reprocessing proven source rocks and good drilling data Dumre ▪ Seismic 50 km ▪ Block contains multiple analog prospects which will be ▪ Well validated by success in the Dumre 7 prospect ▪ Very high reserve potential – 150 MMBOE in Dumre 7, an additional 100 MMBOE in analog features ▪ Palokastra ▪ Existing data ▪ Initial test well indicated the presence of hydrocarbons and reprocessing producible reservoir rocks Block 4 ▪ Additional ▪ Need to develop a better structural model seismic ▪ Terrain conducive to good seismic data acquisition acquisition ▪ Attractive prospect reserve potential – 75 MMBOE ▪ Well ▪ Kanina ▪ Existing data ▪ Kanina 1 proved hydrocarbons in the system; reservoir reprocessing rock is present Block 5 ▪ Additional ▪ Need to re-evaluate porosity development and technology seismic to deal with low porosity, high density oil acquisition ▪ Attractive prospect reserve potential – 75 MMBOE ▪ WellSOURCE: Experts 19
  21. 21. Sky Petroleum has a staged investment plan to develop the prospectsto maximize their value at minimum risk PRELIMINARY Exploration period First (2 years) Second (3 years) Third (2 years) Investment Development activity Condition to proceed Timing USD million ▪ Dumre – Seismic reprocessing ▪ None ▪ Q4 2010 1.5 1 – Additional seismic acquisition ▪ None ▪ Q1 2011 1.5 – Exploratory well ▪ Preparation of improved structural model for ▪ Q4 2011 25.0 well path planning ▪ Kanina – Seismic reprocessing ▪ None ▪ Q1,2 2011 0.5 – Reservoir modeling studies ▪ None ▪ Q3,4 2011 0.5 – Additional seismic acquisition ▪ None ▪ Q2, 2011 1.0 – Exploratory well ▪ Positive indications from reservoir and ▪ Q3 2012 18.0 structural modeling ▪ Palokastra – Seismic reprocessing ▪ None ▪ Q4 2011 0.5 – Additional seismic acquisition ▪ None ▪ Q2 2012 1.0 – Exploratory well ▪ Positive indications from structural modeling ▪ Q3 2013 7.01 Includes gathering and assimilating of all previous data on all three blocksSOURCE: Experts 20
  22. 22. Contents Basic description and unique characteristics Exploration and development plan for the prospects Economic value assessment of the prospects Q&A 21
  23. 23. Value of Sky Petroleum’s Albanian is estimated at roughly USD 1-3 billiondependent on POS and reserve estimates 1 Stochastic DCF model ▪ NPV of individual prospects based Detailed model on Discounted Cash Flow mechanics and ▪ Real option valuation (option to quit assumptions in after unsuccessful exploratory well) the backup ▪ Monte Carlo simulation of stochastic inputs to capture uncertainty21 3 Multiples Stock price reaction ▪ Based on Enterprise Value ▪ Based on stock price reaction of publicly traded E&P companies USD 1-3 billion (net of index evolution) to capacity divided by P90 reserves (estimated) announcements of other players in Albania ▪ Compared to Sky Petroleum expected P90 reserves ▪ Normalized to MMBOE of reserves Estimates by all 3 methods depend heavily on POS and reserve estimated 22
  24. 24. 1 Simplified1 stochastic DCF model mechanics Stochastic input Key inputs Method Key parameters/illustrative curves ▪ Estimated per prospect ▪ Range 10% (Libohova) – 35% (Dumre) Probability of ▪ Based on source rock, reservoir success rock, trap and migration assessment ▪ Based on long-term EIA USD per barrel Oil price forecast prediction ▪ Normal distribution 0 2010 2015 2020 2025 2030 2035 ▪ Based on analogous fields in Percent of reserves Production Albania (peak 7% of Revenue 10 profile recoverable reserves 5 years after production start) 0 ▪ Estimated per prospect (P50) ▪ Range 50 MMBOE (Ramica) – Addressable ▪ Based on estimated reservoir 150 MMBOE (Dumre) reserves size and saturation ▪ TOTAL 875 MMBOE ▪ Log-normal distribution ▪ Expected mostly oil ▪ Based on typical Opex curve USD per barrel of productionCash flow, Opex Opex per BOE ▪ Calibrated for Albania 20NPV 0 ▪ Estimated per prospect ▪ Range USD 8 million (Palokastra) – Exploratory ▪ Driven by exploratory well cost USD 26 million (Dumre) Capex ▪ Based on analogous well costs in the region Capex ▪ Estimated per prospect USD per BOE of reserves Development ▪ Based on exploratory Capex 2 Capex 01 Full details in backup 23
  25. 25. 1 Prospect specifics driven by mean reserve potential and Oilprobability of success assumptions Gas Share of oil in Mean un-risked Probability the discovery Exploration reserve potential of Success Percent of total Exploratory Well Capex startBlock Prospect MMBOE Percent reserve USD million Year Dumre Dumre 150 35 90 25 2010 Libohava 100 17 90 12 2017 Konica 100 17 90 15 2018 Block 4 Palokastra 75 25 90 7 2012 Tomorri 75 17 90 7 2019 Llogora 100 17 90 15 2016 Kanina South 75 35 90 18 2011 Block 5 Vurgu 75 25 80 14 2013 Butrinti 75 25 30 12 2015 Ramica 50 25 90 10 2014 Total 875 Total mean risked potential around 211 MMBOESOURCE: Experts 24
  26. 26. 1 Under current assumptions, the mean NPV of the project isUSD ~2.1 billion (estimated) Probability density -0.13 4.70 3,0 5% 90% 5% ▪ The probability of positive NPV is ~94%1 2,5 2,0 ▪ Mean NPV is USD 2.1 1,5 billion 1,0 (minimum USD -0.1 billion, 0,5 maximum USD 13.6 billion, NPV standard deviation USD 1.4 0 USD billion -2 0 2 4 6 8 10 billion) Cumulative probability of NPV<x ▪ The downside is very limited thanks to the100% staged investment decisions ▪ Dumre block is the main driver of the overall NPV with a mean value USD 0.4 billion 6% -2 0 2 4 6 8 10 NPV USD billion1 Assuming independent prospectsCautionary Note: NPV is complex and these valuations may not be indicative of the actual value.SOURCE: Monte Carlo simulation: 100,000 iterations 25
  27. 27. 3 The market currently values Albanian P90 reserves at USD 10-30per barrel, putting Sky Petroleum at USD ~1-3 billion (estimated) Price per reserves Event and stock reaction USD/MMBOE Total potential value of Sky Petroleum’s2010 ▪ Bankers announced 92.9 MMBOE P1 Albanian assets is reserves (23.5 MMBOE increase) 32 USD ~1-3 billion ▪ Market cap grew by USD 763 million1 Assuming2009 ▪ USD 10-30 per BOE of reserves ▪ P90 reserves at 105 MMBOE based on the ▪ Bankers announced 54.0 MMBOE P1 following reserves (8.7 MMBOE increase) 22 – Mean risked2008 ▪ Market cap grew by USD 194 million1 reserve potential ▪ Bankers acquired 50% of Kucove 211 MMBOE field2 (~24 MMBOE increase) corresponds to P50 10 ▪ Market cap grew by USD 240 million1 reserves – P90 reserves are2007 ▪ Bankers announced 45.3 MMBOE P1 typically ~50% of reserves (1.7 MMBOE increase) 14 P50 reserves ▪ Market cap grew by USD 24 million1 – Mubarek field not1 One week before the event until two weeks after the event, net of index change for the same period included2 Kucove field at the end of production life (discovered 1928, ~50% reserves depleted)Cautionary Note: Valuations based on the results of others may not be indicative of the actual value of Sky Petroleum. 26SOURCE: Company reports; DataStream; press search
  28. 28. Contents Basic description and unique characteristics Exploration and development plan for Exploration and development plan for the prospects the prospects Economic value assessment of the prospects Q&A 27

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