EWS (USA) LLC. A Proposal for Investing in United States Onshore Producing Oil & Gas Properties. December 2016

Transcription

1 EWS (USA) LLC A Proposal for Investing in United States Onshore Producing Oil & Gas Properties December 2016

2 Agenda Executive Summary EWS objectives The North American Onshore Energy Marketplace The Opportunity Who are we The Team Partners In the US In Israel Why invest with us? Investment Strategies Short Term Long Term Proposed Deal Structure Single Opportunity 2

3 Executive Summary EWS (USA) LLC. Which is based in Houston, TX, offers various investment opportunities in producing onshore oil and gas assets in the United States. Leveraging it s management team s comprehensive experience and expertise in the US energy marketplace, and it s wide network of contacts within the industry with operators, investment bankers, brokers and executives, EWS is able to identify assets that not only offer predictable cash flow, but also appreciation potential and overall above market rate of return performance. 3

4 EWS Objectives To offer Israeli investors a diversification investment into onshore mature producing oil and gas properties in the United States with the intent of providing lower risk than other US oil and gas investments and potentially above market returns. 4

5 The United States Onshore Oil & Gas Marketplace Two main factors have reshaped the current United States onshore oil and gas landscape. 1. Resource (shale) Plays. Reallocation of personnel and capital into fracking and horizontal drilling opportunities have starved many mature assets of capital and attention. Opens opportunities for smaller, more cost effective player. 2. Oil price crash of The oil crash that began in mid 2014 caused a large number of highly leveraged, companies to become overextended and unable to meet their obligations. Distressed asset sales are common and many of these assets include mature producing properties. 5

6 US $/BBL US Rigs The United States Onshore Oil & Gas Marketplace Resource (shale) Plays. Many companies have reallocated personnel and capital into fracking/horizontal drilling opportunities. This shift in focus has cause some mature producing oil and gas assets to be capital starved and neglected. Horizontal & Vertical Wells with WTI Oil Price 1,600 1,400 1, Oil price data courtesy of Federal reserve Bank of St Louis Rig count data courtesy of Baker Hughes Inc. 1, Baker Hughes Incorporated Website Crude Oil Prices: West Texas Intermediate (WTI) - Cushing, Oklahoma Horizontal Vertical 6

7 The United States Onshore Oil & Gas Marketplace Oil price crash of The extended drop in oil prices beginning in mid 2014 has caused a number of highly leveraged, mostly smaller companies to become overextended and unable to meet their obligations. At least 135 oil and gas companies are still in deep trouble, according to Debtwire Analytics, a New York company that studies debt and predicts coming bankruptcies and restructuring. Source FuelFix Sept Cumulative Bankruptcy Filings Data courtesy of Haynes and Boone, LLP 7

8 The Opportunity Distressed, over leveraged operators Late life/ mature assets which are neglected in current capital constrained environment Assets that have opportunities for production enhancements and cost reduction Map Showing Historical Production in United States courtesy of USGS Green = Oil Reg = Gas Yellow = Overlapping Oil and Gas Production 8

9 The Opportunity Most assets are acquired through an auction process rather than a negotiated transaction. Timelines for acquisitions are generally short, with days being typical. The critical element for acquisition success is the buyer having the funds to close quickly. 9

10 The Team Gad Silberstein, CEO & President ; Co-Founder Gad is a seasoned business executive who has worked extensively in both the US and Israel. Prior to joining EWS, Gad was the CEO of Optifile Systems Ltd., a Software Development and Systems Integration company that he had founded. For the last 8 years, Gad was responsible for EWS (Energy) Ltd. s North American operations. Gad earned a B.Sc. degree in Industrial Engineering from the "Technion", Israel Institute of Technology (Suma Cum Lauda) and an MBA from the Ross Business School at the University of Michigan. John Bedingfield, EVP & CTO ; Co-Founder John is an experienced businessman and scientist focused on value creation through economically viable resource, reserve and production growth. Before co-founding EWS John Served as Vice President and an Executive Officer of Apache Corporation responsible for formulating and executing its new country entry strategies and new resource play entries in the United States. In this role John developed an oil focused global strategy successfully targeting deep water, conventional, unconventional and new technology plays. Prior to that, John served as the vice president and managing director for Apache s Australia region with direct profit and loss and operational responsibilities. John earned an B.Sc. and M.Sc. Degrees from Northeast Louisiana University in Geoscience and Geology (respectively). John also graduated from the Advanced Management Program for Oil & Gas Industry Executives of the Thunderbird School of Global management. 10

11 The Team Ben Zion (Benny) Rosenberg, EVP of Investors Relations ; Co-Founder Benny has been active in the Israeli and US NG marketplaces over the last eight years, and in both he played a leading role in several large infrastructure projects. Prior to founding EWS Ltd. in 2004, Benny was the SVP of Business Development, at the Hagai Group, the largest supplier of material and services to the Construction and Infrastructure Projects Industry in Israel. Benny, who brings to EWS 25 years of business experience, has earned a B.A. degree in Economics and Philosophy from the Hebrew University of Jerusalem, Israel. Ram Belnikov, Investments EVP Ram brings expansive business and leadership experience to our venture. Prior to joining EWS (USA) llc. he held numerous key positions in both the Israeli public and private sectors, including as the General Manager of the Ministry of Interior and the Director of the Budget Division at the Ministry of Finance. Ram has also held prominent roles in the Israeli energy and telecommunications industries, leading many companies beyond their competitors. Among these positions were President & CEO of HOT, President & CEO of 012 Golden Lines. Ram holds a B.A. in Economy and International Affairs as well as an M.B.A. from the Hebrew University. In addition to his professional work Ram has served on the boards of directors of several public and private social institutions. Partners: In order to ensure compliance with all regulation while maximizing investors net returns, the following will consult and monitor EWS (USA) operations: 11

12 Why Invest with Us 60 years of cumulative experience in the North American Oil & Gas industry, thirty of which are directly related to production and exploration activities Diverse team with great depth of technical and business acumen Cross functional team that can address and resolve all legal, regulatory and taxation issues to maximize the investors net returns 12

13 Investment Strategies Focused and disciplined acquisition of mature oil and gas proved developed producing (PDP) assets with upside. Deal Size: Deals in the $5-50 MM range. Most deals expected to be between $8-15 MM. Short Term: Target assets intended to be PDP rich with reservoirs that have low decline rates (<15%) and proven long life reserves. These properties expected to have additional opportunities or upside that are not valued in the purchase price. Investors may have right of first refusal to invest in upside opportunities related to the assets, such as exploration and development opportunities. EWS will choose an operator that has a demonstrated track record of successful management of similar assets and a cultural focus on cost control and production enhancement. Assets will ideally be held for 7-10 years before liquidating positions. 13

14 Investment Strategies Focused and disciplined acquisition of mature oil and gas proved developed producing (PDP) assets with upside. Longer Term: Acquire assets with exploration/exploitation upside. These types of assets carry more risk but if successful, may yield higher returns and stronger cash flows than PDP only assets. Evaluate sale vs. development of successful upside projects to maximize investor returns. 14

15 Proposed Deal Structure Investors will: Own an interest in a special purpose vehicle (SPV) that will then invest in an entity to be jointly owned with an operator (which entity will own directly the assets). Receive 100% of the SPV s net income until 100% of the initial investment is recovered PLUS 7% IRR is realized Receive 80% of the SPV s net income thereafter Management team will : Receive annual fee of 2% of initial investment until payout Receive 20% of SPV s net income thereafter 15

16 Proposed Deal Structure:1 Base Case EWS USA LLC Israeli Investors The base case involves investment by all parties through flow-through (i.e., fiscally transparent entities). Operator SPV 2 LLC SPV 1 LLC US R/E 16

17 Proposed Deal Structure:1 Royalties Royalty Owners Owners Investors WI 100% Share SPV 1 Share Actual Expense Opex & tax Payout Operator Yes SPV 2 100% SPV2 Share No Payout Yes 80% SPV 2 Share 20% SPV2 Share No 2% Fee on initial investment EWS 17

18 Average Oil Price Recent Texas Gulf Coast Example of Distressed Sale Opportunity: Deal Alpha Realization Multiple & IRR 6 MM$ 8 MM$ 10 MM$ Acquisition Price $55/bbl 3.1X 34% 2.3X 23% 1.9X 16% Deal Alpha Summary $50/bbl $45/bbl 2.6X 27% 2.1X 20% 2X 18% 1.6X 11% 1.6X 11% 1.3X 6% ~61 wells producing an aggregated ~270 BOPD at time of purchase. Historical decline rate of 2-3% annually Opex ~ $20/bbl Realization Multiple = Cumulative Distributed Returns Paid-In Capital 18

19 Deal Alpha Cash Flow Curves $8 MM Acquisition & $50 Oil $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000, $7,954,903 $6,745,735 $5,526,559 $4,249,293 $2,910,093 $1,513,293 $- $(2,000,000) $(4,000,000) $3,707,683 $1,760,513 $40,807 $(6,000,000) $5,878,935 $(8,000,000) $8,000,000 $(10,000,000) BTCF Cumulative Cash Flow 19

20 Contacts Info EWS(USA) llc Kirby Rd., Suite 1200 Houston, TX Tel: US Gad Silberstein M US M IL John Bedingfield jb@ewsnortham.com M US Benny Rosenberg br@ewsnortham.com M IL