We have the building blocks to be a successful heavy oil company

Transcription

1 F A L L We have the building blocks to be a successful heavy oil company 1 TSX:PXX

2 Introduction Corporate Summary Symbol: Exchanges: PXX, PXXS TSX, OMX Shares Outstanding (MM): Basic Fully Diluted(options & warrants) Current Share Price ($/share):* 1.71 Market Capitalization ($MM): Management ownership 7.5% Working Capital ($MM):** 56.8 Debt ($MM):** 0.0 *as at Sep 08, 2009 **as at June 30, 2009 Reserves & Production 2008 Reserves: P1(MM Boe): 10.5 P2(MM Boe): 26.3 Production: 2008 Average (boe/d) 7, H1 (boe/d) 5,339 Unlocking the value of heavy oil Oil, 4,294, 80% 2009 Production (boe/d) Gas, 1,045, 20% 2

3 Why Invest in BlackPearl? Experienced Management made up of the former management group at BlackRock Ventures Inc., a company focused on heavy oil BlackRock shares increased from $0.50 to $24 per share ( ); sold to Shell Canada in 2006 Excellent group of heavy oil assets Our 3 core areas have direct technical analogues to existing successful projects Financially strong The company is debt-free Potential for 50,000 bbls/d from our 3 core areas 3

4 Business Plan We have a simple business plan that is focused on execution: Validate enhanced recovery processes on 3 core properties Advance each core property in stages within financial capacity of the company Delineate, develop and then divest non-core properties Introduce new exploration ideas Maintain a strong balance sheet, minimal use of debt 4

5 Core Areas ALBERTA SASKATCHEWAN 10,000 bopd potential MOONEY BLACKROD ONION LAKE 30,000 bopd potential 10,000 bopd potential Core Area Characteristics Significant oil in place BlackPearl operates Use existing commercial recovery techniques OIL SANDS 5

6 Mooney Project 98% Working Interest Current production of ~1,500 Boe/d, potential to be 5,000 10,000 Boe/d Gross PIIP 150 MMboe Polymer pilot wells 2P Reserves (Dec 31/08) of 8.2 mm bbls conventional development locations Upside potential from polymer flood Evaluating results of pilot polymer flood, potential to increase recovery rates Mooney Field Layout 6

7 Polymer Floods Chemical added to water to increase its viscosity Improves sweep efficiencies Primary methods will recover 3%-5% of the oil, polymer flooding could increase total recovery up to 25% Increased capital costs Water injection/handling and mixing facilities ~ $5 bbl Increased operating costs Chemical, water handling ~$ $3/bbl 7

8 Mooney Analog Reservoir Analog: CNRL s Pelican Lake Reservoir Parameter Mooney Pelican Lake * Formation Bluesky Wabiskaw Depth 900 m 400 m Net Pay (average) 2-4 (2.5) m 2-5 (3) m Porosity, % 27% 30% Permeability D D Reservoir Temperature 29 C 17 C Viscosity (Res. Temp.) cp cp Initial Reservoir Pressure 5800 kpa 2400 kpa Oil Gravity 16 API 15 API * Analogous information was determined internally based on public data sources which may or may not be in accordance with the COGE handbook. 8

9 Mooney Polymer Pilot W5M Oil Rate (bopd) Peak Initial Prod Rate 125 bopd Injection Started Nov 08 Pump Change Peak Polymer Flood Rate 180 bopd Jun Jul-08 9-Sep Oct Dec-08 6-Feb Mar May-09 6-Jul Aug Oct-09 9

10 Mooney Development Economics Polymer Flood Phase 1 Phase 2 Development Capital Per bbl $4 9 $10 16 Operating Costs Per bbl $12 15 $12 15 Royalties Per bbl $20 $20 Total Costs Per bbl $36 44 $42 51 Recycle Ratios* * Based on wellhead price of $55/bbl Total capital costs to develop Mooney polymer flood is expected to be between $125 $150 mm 10

11 Onion Lake 87.5% Working Interest Primary heavy oil production of ~2,000 boe/d, potential of 5,000 10,000 boe/d conventional development locations Thermal development provides potential to increase recovery rates from 5-8% to 50-70% Thermal Area Gross PIIP 250 MMboe 2P reserves (Dec 31/08) of 11 mm bbls Onion Lake Field Layout 11

12 Onion Lake Analog Reservoir Analog: CNRL s Tangleflags Reservoir Parameter Onion Lake Tangleflags * Formation Dina Lloyd Depth 615 m 450 m Net Pay (average) (18.5) m (18.5) m Porosity, % 36% 34% Permeability 5-10 D 3-6 D Viscosity 40,000 cp 15,000 cp Oil Gravity 11 API 13 API PIIP - thermal 100 mmboe 35 mmboe Recovery Factor 50-70% 70% 60%) SOR * Analogous information was determined internally based on public data sources which may or may not be in accordance with the COGE handbook. 12

13 Onion Lake Development Economics Primary Thermal Development Capital Per bbl $8 15 $5 9 Operating Costs Per bbl $12 15 $15 21 Royalties Per bbl $14 $8 Total Costs Per bbl $34 44 $28 38 Recycle Ratios* * Based on wellhead price of $55/bbl Total capital costs to develop Onion Lake is expected to be between $ mm 13

14 Blackrod Project Located in the Athabasca Oil Sands BlackPearl operates and has an 80% working interest in main development area Over 1 billion gross bbls PIIP Potential of 20,000 40,000 bbls/d SAGD heavy oil opportunity from the Lower Grand Rapids (9 API) Drilled 10 wells in 2009 to understand rock and fluid properties Planning a SAGD pilot for 2010/11 14

15 Blackrod Reservoir Bottom m Thick reservoir - varies from 18-26m 55% - 70% Bitumen saturation 37% Porosity 2-6 D Permeability LOWER GRAND RAPIDS W4 BITUMEN PAY Top m Core W4 15

16 Blackrod Analog Reservoir Analog: CNRL s Wolf Lake B10 Reservoir Parameter Blackrod Wolf Lake B10 * Formation Grand Rapids Grand Rapids Depth 300 m 400 m Reservoir Thickness, m (average) (20) (11) Porosity, % 37% 36% Permeability 2-6 D 2-3 D Oil Saturation 55-70% 65-75% Viscosity 83, ,000cp >300,000 cp Cum SOR Estimate * 3.1 ** Peak Production per well pair (bopd) 700 * 600 ** ** actual results * projected based on reservoir models * * Analogous information was determined internally based on public data sources which may or may not be in accordance with the COGE handbook. 16

17 Resource Development R18W T77 PHASE 1: 10,000 BOPD Commercial Development T T Proposed Pilot Well R18W4 Proposed Pilot Site Lower Grand Rapids Net Oil Pay <17m Pay Cutoff 17

18 Blackrod - Preliminary Per BBL Economics -Wellhead Price: $50 -Profit: $6-19 -Royalties: $10 (~20%) -Capital: $6-$9 -Operating Costs: $8-12 -Gas Cost: $7 -$13 Operating Characteristics Capital costs of $25-$30k per flowing bbl mcf of gas used for every barrel of oil SOR estimate of Recycle ratio of between Assumptions: Oil US$70 WTI Gas Cdn$7-9/mcf 18

19 Project Timelines Mooney Polymer Pilot Testing Polymers Phase 1 Phase 2 3,500 BOPD, $25 mm 4,500 BOPD, $100 mm Onion Lake Primary 4,000 BOPD, $40 mm Thermal 5,000 BOPD, $150 mm Blackrod Regulatory Pilot Pilot Application; Commercial Application 500 BOPD, $25 mm Commercial (phase 1) 10,000 BOPD, $300 mm 19

20 The BlackRock Story 25 20, $ , $20 CF Multiple Production (boe/d) 12,000 8, Reserves (mbbls) $15 $10 Share Price ($/share) 5 4, $ $0 Production (boe/d) Reserves (mbbls) CF Multiple Share Price ($/share) (Prov+Prob+Poss) 20

21 Financial Mandates After joining BlackPearl in Jan/09, the new management group developed certain financial objectives for the company: Provide sufficient capital to move the 3 core areas to the next stage of development -Completed a $46mm equity financing in April Improve cost efficiencies -Cash break-even point is now ~US$40/bbl (WTI) -Reduced opex as well as G&A costs Develop strategies to fund full development of core areas -Total development costs of core areas ~ $1-1.3 billion $20.00 $19.00 $18.00 $17.00 $16.00 $15.00 Operating Costs($/bbl) $19.53 $ H '08 1H '09 G&A Costs ($mm) Expand analyst coverage -9 firms are now covering BlackPearl $10.00 $8.00 $6.00 $8.60 $5.22 $4.00 $2.00 $0.00 2H '08 1H '09 21

22 Wellhead Pricing $160 $140 $120 $100 $80 $60 $40 $20 $0 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 BlackPearl Price (c$) WTI Price Heavy differentials have narrowed from historical averages our current wellhead price is ~ 77% of WTI price (last 18 months high of 79%, low of 33%) BlackPearl has not hedged any of its production 22

23 2009/10 Capital Budget The Company has recently approved an $85 million capital budget for the next 18 months: Planned Capital Total $MM Onion Lake primary development $24 Mooney phase 1 of the polymer flood $24 Blackrod SAGD pilot $25 Non-core properties, new exploration $12 Total $85 23

24 Funding the Capital Program The Company s $85 million capital program is expected to be funded from the following: 60 Working Capital Position Working Capital $57mm Anticipated cash flow (1) $40-45mm $MM In addition, the Company has a $25 million unused credit facility with the Alberta Treasury Branch 0 Dec 31, 2008 June 30, 2009 (1)Estimated 18 month cash flow, based on producing 5,000 boe/d, existing pricing and cost environment 24

25 Net Asset Value Estimated 2P Reserves NAV Oil and Gas Reserves (PV 10%,AT) $346.1 Tax C$0.10/C$ $40.6 Trading near NAV No value attributed for: -Blackrod SAGD -Thermal project at Onion -Polymer flood at Mooney Undeveloped Land Acres Canada at $100/acre 212,767 $21.3 $50/acre 162,741 $16.3 Working Capital $56.8 Debt $0.0 Estimated NAV $481.1 Shares Outstanding NAV/Share $1.84 Current Share Price $1.71 Current Price as a % of NAV 93% 25

26 Summary High quality assets with potential for 50,000 bbl/d Experienced heavy oil management and technical team Conservative financial plan it looks similar to BlackRock 26

27 Cautionary Statements FORWARD-LOOKING STATEMENTS This report contains certain forward-looking statements and forward looking information within the meaning of applicable Canadian securities legislation (collectively referred to as forward-looking statements ). All statements other than statements of historic fact are forward-looking statements. Forward-looking statements are typically identified by such words as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "potential", "targeting", "intend", "could", "might", "should", "believe" or similar words suggesting future events or future performance. In addition, statements relating to reserves or resources are deemed to be forwardlooking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated and can be profitably produced in the future. In particular, this document contains forward-looking statements pertaining to, and which rely on assumptions such as to, without limitation, the following: future crude oil and natural gas prices; the timing and amount of future oil and gas production; expected capital and operating costs, general and administrative and other costs; use of funds from BlackPearl s recent share issuance; future earnings and cash flow from operations; future drilling plans and capital expenditure programs; the Company s business plans and strategies; supply and demand for oil and natural gas; the Company s ability to add reserves through acquisitions, exploration and development; and the impact of federal and provincial governmental regulation. The forward-looking statements are subject to known and unknown risks and uncertainties and other factors which may cause actual results to differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this presentation which include but are not limited to: operational risk of finding and producing reserves economically; uncertainties associated with estimating the quantity of reserves; changes in global economic conditions; particularly in Canada and the US; competition for, among other things, capital, undeveloped land, skilled labor and equipment; risk of fluctuating oil and natural gas prices; risk of changes to interest rates; risk of fluctuating foreign currency exchange rates; credit or counterparty risk with respect to non-performance by counterparties to financial instruments; marketing reserves at acceptable prices; cost of capital risk associated with securing the needed capital to carry out the Company s operations; uncertainty associated with obtaining drilling licenses and other regulatory consents and approvals; production risks associated with sour hydrocarbons; risk of changes in governmental policies, especially related to royalty legislation, income tax laws, incentive programs, operating practices and environmental protection, social instability or other political, economic or diplomatic developments in its operations; environmental and safety risks related to its oil and gas properties; and ability, expertise, judgment and financial capability of joint interest partners. Many of the previously mentioned risks are beyond the Company s control, and it is impossible to ensure that any exploration drilling program or piloting program will ultimately result in commercial operations. The Company does not currently utilize derivative instruments to hedge its commodity price, foreign currency exchange or interest rate risks. BlackPearl strives to minimize and manage these risks in a number of ways, including: employing qualified professional and technical staff; maintaining a healthy balance sheet that minimizes the use of debt; carrying insurance to provide reasonable amount of protection from risk of loss; communicating openly with members of the public regarding its activities; concentrating in areas with long life reserves to reduce the risk associated with commodity price cycles; monitoring price trends and establishing relationships with credit worthy counterparties; utilizing the latest technology for finding and developing reserves; constructing high-quality, environmentally sensitive, safe production facilities; and maximizing operational control of drilling and producing operations. Undue reliance should not be placed on forward-looking statements, which are inherently uncertain, are based on estimates and assumptions, and are subject to known and unknown risks and uncertainties (both general and specific) that contribute to the possibility that the future events or circumstances contemplated by the forward-looking statements will not occur. Although we believe that the expectations conveyed by the forward-looking statements are reasonable based on information available to us on the date such forwardlooking statements were made, there can be no assurance that the plans, intentions or expectations upon which forward-looking statements are based will in fact be realized. Actual results will differ, and the difference may be material and adverse to the Corporation and its shareholders. Readers are also cautioned that the foregoing list of factors is not exhaustive. All references to BOEs are based on a 6 to 1 conversion ratio. BOEs may be misleading, particularly if used in isolation. A BOE conversion of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. 27