Result of General Meeting - May 2010


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Result of General Meeting - May 2010

  1. 1. Victoria Oil & Gas plc General Meeting 12th May 2010
  2. 2. DisclaimerTHIS 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. 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  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. 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: 754 MMcf/d for electricity and 25 MMcf/d for industry
  5. 5. Cameroon: Heart of Central Africa o  Cameroon is a member of the ECCAS 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 the5 eastern suburbs of Douala
  6. 6. 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 nearby6
  7. 7. Logbaba: Exceptional Progress Winter 2008 Spring 2009 Autumn 2009 Summer 20097
  8. 8. 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 well o  Logbaba wells are more complex and difficult to control than predicted o  Chronic lack of oil and gas infrastructure o  Drilling progress being far slower than expected due to the need for heavier mud8 weights.
  9. 9. Logbaba: Encouraging Early Results Due to encouraging LWD GR/Res Log from La-105 initial results, significant additional rig-time and expenditure was devoted to subsurface data acquisition to better evaluate the reservoir rock and fluid properties. Top Logbaba Fm at 1,735m TVDRKB This and the Sandstone application of latest technology are enabling VOG to Sandstone realise the true reservoir and well Sandstone potential at Logbaba. Sandstone9
  10. 10. Logbaba: Well La-105 Testing o  Multiple pay zones tested at La-105 Testing depths between 7,005 - 8,500 feet. o  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 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 sufficient production capacity to meet10 initial gas demand of 8 MMscf/d.
  11. 11. Logbaba: Well La-106 – Initial Data   Drilled deeper than planned to 10509 ft 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)11
  12. 12. 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 RPS12
  13. 13. Vertically Integrated Strategy - 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 facility13
  14. 14. Production Facilities Conceptual Engineering Process   Two production concepts agreed by VOG Board:   Low pressure gas distribution in polyethylene pipe to industrial customers in Douala with an initial demand of 7 to 8 MMscf/d;   10 MW leased temporary power plant using 2.8 MMscf/d gas delivering power at 90 kV to the Logbaba substation.14
  15. 15. Concept Block Diagram Flare ~ LP LP Wells Well Manifold Separator ~ Pipeline Chokes Skid System (Condensate) Pressure Let Down ~ ~ Station Condensate Storage Power Generator Condensate To Industrial Tanker Consumers Switchgear Loading Condensate Transformer Diesel Tankers Generator (own use) Resurfaced Transmission Road Line15 To Limbe Refinery To Substation
  16. 16. Front End Engineering Design (FEED) Data collection studies We have commenced and nearly completed FEED studies   Graphical Information System Project to merge satellite data with site and pipeline route survey   Pipeline Route Selection and Network Design   Definition of Customer Conversions   Logbaba Site and Pipeline Route Survey   Civil works   Soil sampling and analysis   Logbaba Site- •  Essential requirements: Process and Power Plant •  Accommodation, offices and warehousing   Pipeline construction and installation   Pre-qualification of Cameroon Civils Contractors16   HV Transmission Line to Logbaba Substation
  17. 17. Production Facilities Schedule17
  18. 18. 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 confirmed18
  19. 19. Appendix
  20. 20. 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 Barratt Austen Titford Francois Nguene COMMERCIAL Commercial Gov’t Relations Chairman Financial Director Director Manager 39 yr career in the Former CEO of Chartered Accountant Former resources sector Eureka Mining Plc & with more than 17 years Exploration and including 19 years in executive director of experience, covering Production the FSU; former MD Celtic Resources Plc both the project Manager for SNH of Celtic Resources development and in charge of Chad- Holdings operational phases in Cameroon quoted natural resource Pipeline companies.20
  21. 21. 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  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*21 * Attributable to VOG
  22. 22. 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 12.25 MMcf/d o  The Upper Logbaba A - C 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.22 12.25 MMcf/d
  23. 23. 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.23
  24. 24. Pipeline Route and peripheral Customer Sites Approx 85% of industrial market within 10km SABC Brewery Wells 105+106 and processing facility Packindustry & CCIC24
  25. 25. 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 market25
  26. 26. Logbaba Elf Cross-section26
  27. 27. 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 area27
  28. 28. 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 RDL28
  29. 29. 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 Franc29
  30. 30. 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