Delivering Shareholder Value. June 2013

Transcription

1 Delivering Shareholder Value June 2013

2 Forward Looking Statements Statements in this presentation including forecasts or projections that are not historical in nature are intended to be, and are hereby identified as, forward-looking statements for purposes of the Private Securities Litigation Reform Act of The words anticipate, assume, believe, budget, estimate, expect, forecast, initial, plan, project, and similar expressions are intended to identify forward looking statements. These statements about Magellan Petroleum Corporation and Magellan Petroleum Australia (collectively the Company ) may relate to their businesses and prospects, planned capital expenditures, increases or decreases in oil and gas production, revenues, expenses, operating cash flows and borrowings, and other matters that involve a number of uncertainties that may cause actual results to differ materially from expectations. Among these risks and uncertainties are the following: the timeliness of our acquisition of drilling permits related to our CO 2 -EOR project at Poplar; our ability to acquire short and long term CO 2 supply for our Poplar CO 2 -EOR project; our ability to enter into satisfactory agreements for the sale of natural gas from our Dingo field in Australia; the likelihood of success of a water shut-off program at Poplar Field; government regulation and oversight of drilling and completion activity in the United Kingdom; the uncertain nature of oil and gas prices in the United States, Australia, and the United Kingdom; uncertainties inherent in projecting future rates of production from drilling activities; the uncertainty of drilling and completion conditions and results; the availability of drilling, completion, and operating equipment and services; the results of 2D and 3D seismic related to the NT-P82 interest offshore Australia; and other matters discussed in the Risk Factors section of The Company s most recent Annual Report on Form 10K. Any forward-looking information provided in this report should be considered with these factors in mind. The Company assumes no obligation to update any forward-looking statements contained in this report, whether as a result of new information, future events or otherwise. Proved reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain. In this presentation, the Company uses the terms probable, possible, 3P, and resources. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations (subject to other conditions). Resources are quantities of oil and gas and related substances estimated to exist in naturally occurring accumulations. The Company also uses the term EUR (estimated ultimate recovery), which is the sum of reserves remaining as of a given date and cumulative production as of that date. Estimates of probable and possible reserves included in 3P reserves and resources which may potentially be recoverable through additional drilling or recovery techniques are by their nature more uncertain than estimates of proved reserves and accordingly are subject to substantially greater risk of not actually being realized by the Company. 1

3 The Company Independent upstream oil and gas company Publicly listed traded on the NASDAQ since 1972 (ticker MPET) Headquartered in Denver, Colorado 37 employees globally Under new management since 2011 Montana - USA Australia UK Oil production (~275 bopd) CO 2 -EOR project at pilot stage Exploration of deep formations (Bakken / Three Forks) Onshore gas production Offshore exploration license (NT/P82) 200 k net acres onshore with unconventional exploration potential 125 k net acres over core Weald Basin shale play 2

4 The Company Continued Market Cap (1) $45 m PV-10 (3) proved reserves $130 m Cash (2) $38 m Enterprise value $34 m Production (4) 301 boepd EV/BOE of proved reserves (3) $3 Proved reserves (5) 10.8 MMboe EV/BOE of production (4) $104 k % Oil 82% % Proved developed 33% Shares outstanding 44.6 m % Operated 100% Institutional (5) 22% Insider (5) 11% 1. Based on basic shares outstanding and closing price on June 7, Equal to cash as of March 31, 2013, plus the proceeds of the Convertible Preferred Offering on May 13, Reserves as of June 30, Production equal to average boepd for quarter ending March 31, Per NASDAQ. 3

5 Proved Reserves 1 EV / BOE: $3 / PV-10: $130 m Proved Reserves PV-10 ($ m) 21% % 10.8 MMboe 12% m 15.6 PDP PDNP PUD Oil / Gas Proved Reserves Ratio PDP PDNP PUD Proved Reserves by Geography 18% 10.8 MMboe 18% 10.8 MMboe 82% 82% Oil Gas US Australia 1. As of June 30,

6 Experienced Leadership Robin West (66) Chairman Founder, CEO of PFC Energy Former Reagan Administration Assistant Secretary of the Interior ( ), responsible for U.S. offshore oil policy Member of National Petroleum Council and Council on Foreign Relations Director of Key Energy Services and formerly of Cheniere Energy Tom Wilson (61) CEO Former President of KMOC and Anderman International Former First Vice President and director of Young Energy Prize Previously, led new international strategy for Apache and served as a Project Manager for Shell Oil Antoine Lafargue (38) CFO Former CFO of Falcon Gas Storage based in Houston, TX Previously, a principal with Arcapita, a private equity fund focused on the energy and infrastructure sectors Previously held investment banking positions with DLJ/Credit Suisse and Bank of America Mark Brannum (46) General Counsel & Secretary Former Deputy General Counsel of SM Energy Company Previously, a shareholder with Winstead P.C., a large business law firm based in Dallas, TX Over 17 years of in-house and outside counsel legal experience 5

7 One Stone Convertible Preferred Allows to increase net asset value per share On May 10, 2013, Magellan issued $23.5 m of convertible preferred stock to One Stone Energy Partners, a NY based private equity fund Rationale Allows Magellan to pursue strategy from position of financial strength, including: CO 2 -EOR pilot UK exploratory well(s) Most appropriate financing option on attractive terms Conversion price at 20% premium to 10-day avg No warrants No underwriting or capital advisory fees Non-core assets not ready for divestiture New financial and strategic partner in One Stone Extensive industry expertise Will appoint two industry veterans to board 1. Full discussion of terms is available in the 8-K released by MPET on May 13, Key Terms (1) Conversion premium: Conversion price of $ % over 10 day moving average 22% over Sopak repurchase price in Jan 2013 Dividend: 7.0% per annum paid in cash or PIK Conversion/Redemption: After three years MPET can force conversion at $2.42 / share or repurchase in cash at 20% IRR Board: 2 board members not subject to shareholder vote Minority rights: One Stone to hold veto rights with respect to capex outside of budget, related party transactions, and certain changes to board size 6

8 Poplar CO 2 Enhanced Oil Recovery project in progress ANALOGOUS CO 2 -EOR PROJECTS (1) 22,000 net unitized acres Covers Poplar Dome, the largest geologic structure in the western Williston Basin Substantially all of the acreage held by production CO 2 Enhanced Oil Recovery project in progress 1. Analogous CO 2 -EOR projects are generally based upon formation, source rock type, and depth. 7

9 CO 2 -EOR Development Milestones Potential additional proved reserves of 50 MMbbls Step 1: Lab tests (completed Aug 2012) Confirmed miscibility of CO 2 and oil from Poplar Conducted by Core Laboratories Step 2: Pilot 5 well pilot project to start summer 2013 Pilot test for 2 years Prove concept; estimate recoverable reserves; establish CO 2 sweep efficiency Acquire data for full-field optimization Image source: Australian Government s Cooperative Research Centre s Program; CRC for Greenhouse Gas Technologies Step 3: Full field development Develop field in multiple phases 8

10 CO 2 -EOR Analogs Analogous to successful CO 2 -EOR projects Poplar is analogous to Midale and Weyburn, two oil fields with highly successful CO 2 -EOR projects in Williston Basin Recovery potential (1) Poplar produced ~52 MMboe since 1950 s and with no production from a water flood (1) Remaining OOIP 53% 63% 80% 10% recovery from CO2-EOR is in line with analogous fields Tertiary 17% 11% Primary + secondary 30% 26% 10% 10% Midale OOIP: 515 Weyburn OOIP: 1,400 Poplar OOIP: Poplar recovery factor of 10% includes primary recovery methods only. Source: Public documents and presentations issued or contributed to by Cenovus Energy (Weyburn) and Apache Corporation (Midale) 9

11 Poplar Several reserve development opportunities Charles Approximately 275 bbls/day CO 2 EOR: pilot project in 2013 CO 2 Flood Bakken / Three Forks / Nisku VAALCO test well results pending Other development opportunities Amsden: new oil pool discovery Jan 12 Nisku: produced 200k bbls from 1 well between 1970 and 1990 Tyler: 4 current wells with additional potential Greenhorn: formation is similar to Eagle Ford shale Judith River: shallow gas opportunity 10

12 Australian Onshore Assets Continued gas marketing efforts for Palm Valley and Dingo Palm Valley 11 Bcf of proved gas reserves and 14 Bcf of probable gas reserves Proved reserves PV-10: $10 m 100% owner / operator Currently producing Ramp up to 1.4 Bcf / yr expected by Summer 2014 Dingo Similar resource to Palm Valley 3 appraisal wells ( 84 and 90) 100% owner / operator Ongoing marketing efforts No reserves recorded Requires building 50 km pipeline connection Mereenie Potential A$17.5 m bonus based on production milestones following asset swap with Santos (May 12) 11

13 Australia Offshore Bonaparte Basin 3D seismic results expected Summer 2013 NT/P82 Long term development opportunity 2 potential prospects Potential reserves of 1 to 3 Tcf 100% working interest 3D seismic survey results expected Summer 13 1 exploration well required by 2015 Shallow water jack-up rig territory 12

14 UK Shale High potential from unconventional prospects 200,000 net acres 11 licenses In Dec 2012, England lifted its moratorium on fracking, which had prevented the development of shale resources in the country Farm-out potential Celtique operated (50%) Acquired 175 km 2D seismic in July 2011 Conventional plays: shallow oil and deep gas Unconventional plays: oil and gas potential in Liassic and Kimmeridge shales Northern operated (22.5% 40%) Markwells Wood production test suspended PEDL 240 (Isle of Wight) Wytch Farm extension play Magellan operated (100%) Conventional play: deep gas potential at Horse Hill Magellan operated : 2 licenses, 100% WI Celtique operated : 4 licenses, 50% WI Northern operated : 5 licenses, 22.5%-40% WI 13

15 UK Australia US Asset Overview Several transformational assets with clear development timeline CO 2 Pilot begins CO 2 pilot prelim. results 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 Australia offshore 3D seismic results Onshore Australia gas contracts UK: Drill 1 exploratory well Asset Value Potential Capex Cash $38 m Poplar (current) P1 reserves PV-10 $120 m (1) Ongoing work-overs Poplar CO 2 Pilot +50 MMbbls (2) $10-20 m (3) Poplar Three Forks Offshore: NTP/82 Potential for 1-3 Tcf Incurred (4) Onshore: Palm Valley P-1: 11 Bcf / P-2: 14 Bcf (1) Onshore: Dingo Similar to resources at PV Pipeline Weald/Wessex Basin Net acres: 125 k (5) $5 m (6) 1. As of June 30, Total potential reserves. 3. Estimated cost of pilot over next two years 4. 3D seismic cost already incurred 5. Total UK acreage is 200K net acres; 125k net acres with Celtique which contains unconventional potential 6. Cost for drilling one exploratory well; excludes completion 14

16 Investment Considerations Existing production and three high-growth assets Favorable market dynamics Strong oil pricing in the US Australian gas market robust pricing OECD countries only Control of core assets 100% ownership Poplar CO 2 -EOR 100% ownership of Australian assets Attractive Company economics Stable base level of production Reserves in US and Australia Significant valuation upside from development of assets Long-term contracts in Australia Focused organization under new management Emerging from an 18-month turnaround Streamlined portfolio of projects poised for growth Newly hired staff in US with decades of O&G experience 15