Oilbarrel.com Presentation - April 2010


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Oilbarrel.com Presentation - April 2010

  1. 1. Oil Barrel ConferencePresentation by Victoria Oil & Gas (VOG) 22nd April 2010
  2. 2. Disclaimer THIS PRESENTATION IS BEING SUPPLIED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED, FURTHER DISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED IN WHOLE OR IN PART, FOR ANY PURPOSE.These presentation materials are confidential and are directed only at persons who fall within the exemptions contained in Articles 19 and 49 of the Financial Services and Markets Act2000 (Financial Promotion) Order 2005 (such as persons who are authorised or exempt persons within the meaning of the Financial Services and Markets Act 2000 (“FMSA”), or in theUnited States who qualify as an “accredited investor”, “qualified institutional buyer” or “qualified purchaser” under United States Securities laws, or an"accredited investor" under National Instrument 45-106 in Canada, and certain other investment professionals, high net worth companies, unincorporated associations or partnershipsand the trustees of high value trusts) and persons who are otherwise permitted by law to receive them. These presentation materials are directed only at persons having professionalexperience in matters relating to investments and any investment or investment activity to which these presentation materials relate is available only to such persons. Persons of anyother description, including those who do not have professional experience in matters relating to investments, should not rely on these presentation materials or act upon their content.This document is exempt from the general restriction on the communication of invitations or inducements to enter into investment activity and has therefore not been approved by anauthorised person as would otherwise be required by section 21 of the FSMA. Any investment to which this document relates is available to (and any investment activity to which itrelates will be engaged with) only those persons described above. 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The presentation materials are not intended to be distributed or passedon, directly or indirectly, or to any other class of persons. They are being supplied to you solely for your information and may not be reproduced, forwarded to any other person orpublished, in whole or in part, for any other purpose. Any other person who receives this document should not rely or act upon it. By accepting this document the recipient represents andwarrants that they are a person who falls within the above description of persons who are entitled to receive this document. The information contained in this document is confidential andthe property of the Company.No reliance may be placed for any purpose whatsoever on the information contained in this document or on its completeness, sufficiency, accuracy or fairness. 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Save in the case of fraud, no liability is accepted for any loss, cost or damage suffered or incurred as a result of the reliance on such information,opinions or beliefs.Certain statements and graphs throughout the presentation are “forward-looking statements” including management’s and third party assessments of future plans, operations, values andreturns and represent the company’s international projects, expectations or beliefs concerning, among other things, future operating results and various components thereof or thecompany’s future economic performance.These projections, estimates and beliefs contained in such forward-looking statements necessarily involve known and unknown risks and uncertainties which may cause the company’sactual performance and financial results in future periods to differ materially from any estimates or projections.These risks include, but are not limited to, risks associated with the oil and gas industry in general, delays or changes in plans with respect to exploration and development activities andcapital expenditures, the uncertainties of estimates and projections relating to production, political risks, costs and expenses and health and safety and environmental risks, commodityprice and exchange rate fluctuations, and uncertainties resulting from competition and ability to access sufficient capital, and risks relating to the ability to complete capital marketstransactions referred to in the presentation.If you are in any doubt about the investment to which these presentation materials relate, you should consult a person authorised by the Financial Services Authority who specialises inadvising on securities of the kind described in this document. FDC is acting solely for the Company as broker in relation to matters described in this document and is not acting for anyother persons and will not be responsible in respect of such matters to any other person (whether or not a recipient of this document) for providing protections afforded to customers ofFDC or for providing advice in relation to those matters.The distribution of this document in certain jurisdictions may be restricted by law and therefore persons into whose possession this document comes should inform themselves about andobserve any such restrictions. Any such distribution could result in a violation of the law of such jurisdictions. Neither this document, nor any copy of it, may be taken or transmitted intoAustralia, Ireland, South Africa or Japan or into any jurisdiction where it would be unlawful to do so. Any failure to comply with this restriction may constitute a violation of relevant localsecurities laws.
  3. 3. Key Points 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 the first and second wells o In-principal agreements signed with industrial customers o First revenues from Logbaba targeted in Q4 2010 o VOG boasts a balanced asset portfolio strategy3
  4. 4. 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 o 2P reserves of 104 Bcf Tech. (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 % of Market Cap o Located close to World’s largest gas field o Prospective resources of 1.1Bnboe4 * As at close 12 April 2010
  5. 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. 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. 7. Cameroon Gas: No Competition o Logbaba remains the only onshore natural gas discovery in the country o Offshore production cannot compete with onshore in servicing local industrial markets o Total currently flaring all associated gas production from its offshore fields (approx. 50 MMcf/d) o Due to Logbaba’s position and development, VOG also has the opportunity to beat larger operators in feeding new power projects o Perenco’s offshore Sanaga Sud field yet to come into development despite location next to Kribi power station o Limbe power station, north of Douala, relies solely on liquid fuels despite Total’s offshore discoveries nearby7
  8. 8. 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*8 * Attributable to VOG
  9. 9. Logbaba: Exceptional Progress Winter 2008 Spring 2009 Autumn 2009 Summer 20099
  10. 10. Logbaba: Well La-105 Drilling o La-105 was drilled to a total depth of 8,920 feet o Multiple gas-bearing sands with over 300 feet of gross pay between 1,836 and 2,540 m correlating to La-103 o La-105 was completed as a production well10
  11. 11. 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 gravity11 of 47 degrees.
  12. 12. 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 Elf La-103 Flow indicated more than Test Results sufficient production capacity to meet initial gas 1,780 to 1,789m 4.75 MMcf/d demand of 8 MMscf/d. 2,019 to 2,038m o The Upper Logbaba A - C 12.25 MMcf/d sands will be perforated and 2,051 to 2,063m added to the completion 9.1 MMcf/d interval when required for 2,364 to 2,378m production.12 12.25 MMcf/d
  13. 13. Logbaba: Well La-106 o La-106 was drilled from La-104 pad o Well spudded on schedule early February 2010 and reached a measured total depth of 10509 feet o Drilled deeper than originally planned because of presence of sands to 10400 feet.13
  14. 14. Logbaba: Well La-106 – Initial Data Drilled deeper than planned due to the better than expected observed sand quality in the Lower Logbaba sections. Multiple gas-bearing sands encountered between 5482 feet and 10400 feet (measured depth) - Over 300 feet of gross pay Top most sand starts at 5482 ft (1671m) Example of deeper sand 9100 ft (2773m)14
  15. 15. 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 RPS15
  16. 16. Vertically Integrated Strategy 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 facility16
  17. 17. VOG: High Impact Events o VOG is targeting first revenues in Q4-2010 o While La-106 is drilled, La-105 was tested o Test data and superior modern logs will be incorporated in an independent reserve re-estimation o Installation of the facility and construction of the pipeline is expected to be completed relatively quickly now that concept is confirmed Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Completion of La-105 Testing of La-105 Drilling of La-106 Testing of La-106 Independent Reserves Restatement Exploitation Licence Application State Approval of Downstream Project Downstream Facilities Design and Feed Facilities Engineering and Construction First Revenue17
  18. 18. West Med, Russia: Land of Super-giants o West Med lies next to the super-giant Medvezhye field and 120km from Urengoy, the world’s largest natural gas and condensate field o Independent reserve auditors DeGolyer & MacNaughton estimated recoverable gross prospective resources of 1.1MMboe o Since making the first discovery in 2008, the Russian Ministry of Natural Resources as approved recoverable reserves + resources of o C1+C2: 14.4 MMboe o C3: 170.6 MMboe18 Source: Gazprom
  19. 19. West Med – 2010 Work Programme West Med Exploration Targets o New 62 km winter Road is under construction o A second IPDS passive seismic survey is under way o The passive seismic is complemented by a Gas Exploration Tomography geochemical target area survey over the same area o The surveys will target prospective zones in the northern and eastern sections of the licence o New programme brings us closer to realising the huge potential of the independently Well 103 assessed over 1.1 billion discovery barrels of oil equivalent prospective resources”.19 Shaded areas are approximate for location illustration only and are not to Scale.
  20. 20. Conclusion 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 Q4 2010 o VOG boasts a balanced asset portfolio strategy20
  21. 21. Appendix
  22. 22. 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 market22
  23. 23. Key Management Team Radwan Hadi Sam Metcalfe Geoff Gill Kamal Jardaneh Assistant Project Senior Petroleum Drilling COO VOG TECHNICAL Manager Engineer Supervisor 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 Barratt Steve Jorgensen Francois Nguene COMMERCIAL Commercial Cameroon 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, completion Pipeline and permitting23
  24. 24. Logbaba Elf Cross-section24
  25. 25. 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 area25
  26. 26. 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 RDL26
  27. 27. Falcon Petroleum – Mali and Ethiopia o VOG negotiating an extension to its option to acquire the assets of Falcon Petroleum o Falcon has a 50% interest in the PSA for Block 17 in Mali and 90% of PSA over Blocks Ab1, Ab4 and Ab7 in the Blue Nile Basin in Ethiopia o Total acreage covers over 45,000km2 Logbaba27
  28. 28. 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 Franc28
  29. 29. 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