Galoc Oil Field Acquisition

Transcription

1 ASX : OEL Galoc Oil Field Acquisition Matthew Allen, Acting Chief Executive Officer August 2011

2 Disclaimer This presentation does not constitute an offer to sell securities and is not a solicitation of an offer to buy securities. It is not to be distributed to third parties without the consent of Otto Energy Ltd (the Company ). This presentation contains forward-looking statements that are not based on historical fact, including those identified by the use of forward-looking terminology such as statements containing the words believes, may, will, estimates, continue, anticipates, intends, expects, should, or the negatives thereof and words of similar import. Management of the Company cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied by the statements. Management believes that the estimates are reasonable, but should not unduly be relied upon. The Company makes no representation, warranty (express or implied), or assurance as to the completeness or accuracy of these projections and, accordingly, expresses no opinion or any other form of assurance regarding them. Management does not intend to publish updates or revisions of any forward-looking statements included in this document to reflect the Company s circumstances after the date hereof or to reflect subsequent market analysis. The hydrocarbon reserve and resource estimates are based on information compiled by Mr Nick Pink. Mr Pink has more than 12 years of relevant experience and is qualified in accordance with ASX Listing Rule Mr Pink is a full time employee of Otto Energy as its Senior Reservoir Engineer and has consented to the inclusion in the presentation of the information in the form and context in which is appears. 2

3 Otto Overview Listed 2004, Perth head office ~1.13 billion shares on issue and 48 million options Market capitalisation of ~A$92 million at A$0.08 Cash in bank at 30 June 2011 US$35.6 million High quality production and exploration asset portfolio in the Philippines Progressing possible growth into East Africa Galoc Increase working interest to 33% direct interest Acquires 100% control of GPC and becomes Operator of Galoc oil field Galoc Phase 2 development being pursued SC51 following up encouraging Duhat-1 drilling SC55 BHP Billiton farm-in agreed with drilling programme to commence in 2012 SC69 Completed 229 km 2 3D seismic acquisition over promising Lampos complex leads Growth focus Complementary to existing portfolio 4 operated PSC s ~ 17,000 km 2 gross of highly prospective acreage Equity production of over 2,200 bopd from Galoc field net to Otto 3

4 Acquisition Overview Acquisition of remaining shareholding interest in Galoc Production Company WLL from Vitol Group Increasing GPC shareholding from 31% to 100% GPC operates SC14C, which includes the producing Galoc oil field, via a 59.84% working interest Otto has agreed to sell down 26.84% of this working interest to Risco Energy Pte Ltd (Risco) Otto to retain 33.00% working interest in the Galoc field and control of GPC as Operator PRE ACQUISITION OTTO GPC Diagram of Holdings VITOL 31% 68.62% SC14C GALOC FIELD POST ACQUISITION (post-completion) OTTO GPC 100% 59.84% 33.0% SC14C GALOC FIELD GPC to become a wholly owned subsidiary of Otto and Otto to take over operatorship of the Galoc field Consideration of: US$1.87 million on execution of sale and purchase agreement ; and US$16.83 million on completion (scheduled to occur by 30 September 2011) Resulting SC14C Joint Venture Partners Otto Energy Risco Working Interest post Transaction 33.00% 26.84% Nido Petroleum 22.88% Philodrill 7.21% Oriental Petroleum 7.79% Forum Energy 2.28% 4

5 Strategic Benefits of Acquisition for Otto Move to Operatorship of producing Galoc field; important growth step for Otto Greater share of revenue, providing additional funds for investment into future growth Purchase price equivalent to US$11.50 per barrel (2P reserves + 2C resources); very attractive at current oil prices Increases Otto s proved and probable reserves (2P) by 0.98 million barrels of oil Positions Otto as Operator of the Galoc field ahead of Phase 2 development Cost synergies to Otto through consolidation of GPC operating office with Otto offices 5

6 Acquisition Funding Otto to fund 34.6% of purchase price, being US$18.7 million Otto s full portion of transaction to be funded from existing cash reserves Total Purchase Price US$18.7m net to Otto US$1.87 million cash consideration on execution US$16.83 million cash consideration on completion Vitol Asia Pte Ltd to retain marketing rights of GPC equity volumes (59.84%) Effective date of the transaction is 1 April 2011 Completion is scheduled to occur prior to 30 September

7 Overview of SC14C: The Galoc field 7

8 Overview: SC14C Offshore NW Palawan Background OEL holds 33.0% direct ownership (through Galoc Production Company WLL) (post-acquisition from Vitol) Operator : Galoc Production Company WLL (GPC) Discovered in 1981, production commenced October o API oil, low sulphur, water depth 290m Two production wells connected to FPSO Improved mooring and riser upgrade to be installed 4Q2011 Will substantially increase production uptime Limited cost exposure to Otto (US$4.0m) Important step for Phase 2 development approval Geology Turbidite sandstone reservoir at ~2,100 meters depth Fiscal Terms of Production Sharing Contract: Factor Percentage Cost recovery cap 70 Contractor profit share 37.5 Filipino Participation Incentive Allowance 7.5 Corporate Tax 30 Production (100%) bbls Production (Otto 18.78%) Bbls Uptime % Rolling 12 month average 3Q , , Q ,819 83, Q , , Q , ,

9 MMboe Reserves upgrade and improved uptime Production Current rate Production to date Revenue, Costs and Netback Last Cargo (June 2011) Opex Phase 1 Capex Netback (after costs, taxes and other charges) ~6,750 bopd 7.54 MMbbls US$ /bbl US$22 /bbl US$13 /bbl ~US$50 /bbl Q Update Net OEL 18.78% Production 116,106bbls Liftings 128,648 bbls Cash receipts from GPC US$7.66million Otto Net 2P Reserves plus 2C Resources Post Acqusition (MMboe) P Reserves (1/1/2011) Production Acquisition 2P Reserves (1/4/2011) C Resources 9

10 Phase 2 Development and Near Field Exploration Phase 2 Phase 2 evaluation ongoing Potentially involves between 1 and 3 new wells Unlock 2 to 8 MMbbls of Contingent Resources SC14C Exploration Near field tie back with potentially substantial oil column, possibly connected to Galoc field Galoc North Prospect: Areal Extent ~12km2 Potential HC Column ~240m 5km tie-back to existing facilities Key risk reservoir thickness and presence STOIIP 9 to 66 MMbbls Galoc North Exploration Prospect Possible communication with Galoc Field Galoc-2 Galoc-3 ST1 Galoc-1 Potential Phase 2 Well Locations 10

11 Improved Mooring and Riser System Project Outline: New system to substantially increase operating uptime of the field (greater than 95% Project is 40% complete and on track for successful delivery Field outage planned in Q4 2011, coinciding with the typical peak in the monsoon season Crucial infrastructure to allow a Phase 2 development of the field 11

12 Overview of Otto Energy 12

13 Refocused Portfolio and OEL s Sweet Spot The Philippines represents a core focus area for growth Otto acquired over 2,400 km 2 of 3D and 760 kilometres of 2D seismic during 2010 Portfolio of 4 Service Contract areas Approx 17,000 km 2 gross of highly prospective onshore and offshore acreage Includes production, near term development and exploration assets within established oil and gas plays within region 13

14 Fundamentals / Capital Structure Capital Structure Fully paid ordinary shares 1.13b Unlisted options 1 48m Performance Rights Market capitalisation m Cash (at June 2011) US$35.6m Shareholders Molton Holdings 21.3% Santo Holdings 21.3% Acorn 7.4% Directors 3.7% Shareholders 3,191 Debt (at June 2011) Nil Notes 1. Exercisable at prices between 12 and 60 cents per share. 2. Undiluted at 8.1 cents per share 14

15 Board & Management Team with Strong E&P Industry Expertise TBA CFO AND COMPANY SECRETARY MATTHEW ALLEN B.Bus, CA, F.Fin, MAICD CHIEF EXECUTIVE OFFICER CHAIRMAN RICK CRABB BJuris (Hons), LLB, MBA DIRECTOR IAN BOSERIO BSc Hons (Geophysics) BSc Hons (Geology) DIRECTOR JOHN JETTER LLB and BEc, INSEAD EXPLORATION MANAGER PAUL SENYCIA Bsc (Hons) (Mining Engineering) MAppSc (Exploration Geophysics) PHILIPPINES COUNTRY MANAGER ROSS PRASSER BE (Mining) DIRECTOR IAN MACLIVER B.Com, CA, F Fin, MAICD DIRECTOR RUFINO BOMASANG BSc (Min. Eng), MBE 15

16 SC55 Permit Overview Joint Venture Partners: Name Percentage OEL (through 100% subsidiary NorAsian Energy Ltd) Trans-Asia Oil & Energy Development Corporation 6.82 Work Program: Sub-Phase Date Commitment/cost(min US$) 4 Aug 11 Aug 12 1 Deepwater Well/($3m) 5 Aug 12 Aug 13 1 Deepwater Well/($3m) Extension Period Further 3 years allowed Relinquishment 50% of original Permit Area at end of Sub-Phase 4 Fiscal Terms of Production Sharing Contract: Factor Percentage Cost recovery cap 70 Contractor profit share 40 Filipino participation incentive allowance 7.5 Corporate Tax (paid from Government share) 30 Trans-Asia option to acquire additional interest 5 Gross overriding royalty to RGA Resources Inc 1 16

17 Success Cse Mean Recoverable Resources BCF Gas Success Case Mean Recoverable Resources MMbbls Condensate SC55 Carbonate Gas Prospect & Lead Portfolio An impressive portfolio of gas and condensate targets, aggregating into an emerging major regional offshore trend, parallel to the island of Palawan, Philippines Total unrisked potential Mean Recoverable Resources (Nido level carbonates only): Gas 19 Tcf Condensate 670 MMbbls 5, ,500 4,000 Gas Condensate Carbonate Prospect Clastic Prospect 3,500 3,000 2,500 2, Carbonate Lead Extension 3D 1, , Hawkeye 3D 1) based on 35 bbl Condensate / MMSCF Gas 2) column height limited to 1,500 metres 17

18 SC55 Leading Drilling Candidate CINCO mss CINCO A reefal /platform carbonate complex Top Nido Depth Map CI: 200m Malampaya Top Nido CINCO m Maps of same scale Cinco Prospect (OEL WI post farm-down 33.18%) Area of Closure Water Depth Objective Depth 53 km 2 Up to 500m column height 1,430 metres 3,120 4,500 metres Initial Success Case Gross Recoverable Resource Estimate CINCO Comparable areal closure to Malampaya MALAMPAYA Analogue Gas Tcf (mean of 2.1 Tcf) Same scale Condensate MMbbls (mean of 74 MMbbls) MALAMPAYA (Northern Palawan) (Proven Reserves 2.5 Tcf Gas and 81 MMbbl Condensate) 18

19 SC55 Hawkeye Lead Hawkeye Prospect (OEL WI post farm-down 33.18%) Location Water Depth Objective Depth Area of Closure STOIIP (Success Case) GIIP (Success Case) Offshore, SW Palawan 1,690 Metres 2,800 Metres 50 km 2 Up to 500m column height (mean of 680 MMbbls) (mean of 1.3Tcf) STOIIP means Stock Tank Oil Initially in Place GIIP means Gas Initially in Place Hawkeye Flat Spot (DHI) Second Flat Spot (DHI) Hawkeye Prospect Areal Closure: 50km 2 *Rock physics work supports an oil phase below the gas cap (DHI) 19

20 Philippines Visayan Exploration Licence 2011 SC51 SC69 Activity Follow up New 210km² 3D Seismic Interpretation/ Prospect Maturation Work program being finalised for further exploration in the block Completed 3D seismic acquisition in June. Now processing SC69 SC51 Northern Block 79% WI 5280km 2 40% WI 1660km 2 SC51 Southern Block 0% WI 1660km 2 20

21 SC69 Maturing to drillable status with 3D seismic OEL WI 79% Lampos Lampos South Location Off-shore Visayan Basin Water Depth 740 Metres 714 Metres Objective Depth 1,250 Metres 1,350 Metres Closure Area 14.2 km km 2 Closure Height 300m 330m STOIIP* MMbbls MMbbls GIIP* Bcf Bcf SC69 Duhat-1 Presently Drilling SC51 North Source Area Calamangan Trough LAMPOS PROSPECT LAMPOS SOUTH PROSPECT = PROSPECTS = 2D Identified LEADS * Success case if trap oil filled * Success case if trap gas filled 21

22 Anticipated Philippines look ahead Otto Activity at July 2011 Q Q4 Q Q4 Q Q4 Q Q4 Q Q4 Q Q4 Q Q4 PALAWAN EXPLORATION & DEVELOPMENT SC14C Galoc Turret Conversion Production 3D seismic Front End Engineering & Design Phase 2 Sanction Phase 2 Execution SC55 3D Seismic 1 deepwater well 1 deepwater well VISAYAN EXPLORATION SC51 2D seismic 1 exploration well 1 exploration well SC69 3D Seismic Acquisition Processing & interpretation I exp well or seismic acquisition 1 exploration well 22

23 Entry into East Africa In addition to the Philippines, Otto is exploring a number of different entry points to East Africa: Recent large oil and gas discoveries in the region Play type complements Otto s existing portfolio Provides onshore low cost ground floor exploration Expressions of interest made for permits in Kenya 23

24 In closing... Otto to take over Operatorship of the Galoc oil field post acquisition through holding 100% of the interest in Galoc Production Company WLL Adds to experience and benefits Otto in search for new projects Acquisition will result in the increase in Otto s Galoc oil field holding from 18.78% indirect to 33.0% direct interest Greater share of revenue, providing additional funds for investment into future growth Increases Otto s proved and probable reserves by 0.98 million barrels of oil Total acquisition consideration of US$18.70 million net to Otto Purchase price of US$11.50 a barrel (2P + 2C), attractive at current oil prices Galoc joint venture focused on sanction of Phase 2 in early