Swala Energy Limited

Transcription

1 Swala Energy Limited (ASX: SWE) East African Exploration December

2 Disclaimer Certain statements contained in this presentation, including information as to the future financial or operating performance of Swala Energy Limited ( Swala or Company ) and its projects, are forward-looking statements. Such forward-looking statements: are necessarily based upon a number of assumptions and estimates that, while considered reasonable by Swala, are inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies; involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward-looking statements; and may include, among other things, statements regarding targets, estimates and assumptions in respect of production, prices, operating costs, results, capital expenditures, reserves and resources and anticipated flow rates, and are or may be based on assumptions and estimates related to future technical, economic, market, political, social and other conditions. Swala disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements made in this presentation are qualified by the foregoing cautionary statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and accordingly investors are cautioned not to rely on forward-looking statements due to the inherent uncertainty therein. Persons compiling information about hydrocarbons: In accordance with ASX Listing Rules, any geological or hydrocarbon reserves information in this presentation has been reviewed by Swala s Exploration Director, Mr Neil Taylor, who has over 30 years experience in the sector. He consents to that information in the form and context in which it appears. 2

3 What we set out to do in 2013 IPO and listing on the ASX. - April 2013 with a capital raise of AU$11MM Reduce the work programme in 12B to a more efficient level. - Reduced from 700 line kilometres to 350 line kilometres Demonstrate operatorship ability in our operated assets. - Fast-tracked Tanzanian work programme. Below budget completion. Complete the seismic programme in Tanzania. - Five basins surveyed in total, four considered viable. Continue prudent and non-dilutory cash management. - Raised $4.4MM at an 18% premium in November Secure the Eyasi licence in Tanzania. - Exclusive negotiations, but the process has suffered delays - progressing. Secure additional licences in Zambia. - Bidding round in June 2013 but the process has suffered delays - progressing. 3

4 Building a significant land position 12B Total net acreage to Swala: 15,321 km 2 KENYA: Operator: Tullow Swala interest: 50% net Net acreage: 4,000 km 2 Currently in the 2 nd Contract Year. Kilosa-Kilombero TANZANIA: Operator: Swala Tanzania Swala interest: 32.5% net Net acreage: 5,745 km 2 Pangani TANZANIA: Operator: Swala Tanzania Swala interest: 32.5% net Net acreage: 5,576 km 2 Third Contract Year commences 20 th February Third Contract Year commences 20 th February

5 Tanzania 5

6 2013 Seismic work on all licences Moshi Basin. Ca. 207 km 2. Survey 4 th December 20 th December km of 2D seismic. Likely Neogene basin fill. Mvungwe Basin. Ca. 550 km 2. Survey 18 th November 4 th December km of 2D seismic. Likely Neogene fill in a shallow (ca. 1,000m deep) basin. Kilosa Basin. Ca. 2,000 km 2. Survey 8 th August 7 th September km of 2D seismic. Likely Karoo basin fill. Kilombero Basin. Ca. 2,000 km 2. Survey 15 th October 8 th November km of 2D seismic. Likely Neogene basin fill. Kidatu Basin. Structural Closure of Km² on largest lead. Survey 10 th September 10 th October km of 2D seismic. Likely Karoo basin fill. 6

7 Kilombero Basin Probably Neogene 7

8 Two main horizons identified Yellow Horizon possible top shallow reservoir, with P50 and P10 closures. Blue Horizon possible top deep reservoir, with P50 and P10 closures. 8

9 Possible analogue to Lokichar basin The Kilombero rift is potentially analogous to Lokichar Basin, Kenya. The Kilombero Basin is approximately 100km long and about 20km wide whereas the Lokichar Basin in Kenya is approximately 150km long and 25-30km wide. 9

10 Comparable Trap Geometries Twiga South-1 Discovery, Lokichar Basin, Kenya. (from Africa Oil Presentation Cape Town 2012) Seismic Line across Kilombero Basin 10

11 First prospective resources Yellow Horizon (mmstb) Low estimate (P90) Best estimate (P50) High estimate (P10) Gross undiscovered unrisked oil in place Gross prospective unrisked oil resources (1) Net of Government back-in rights (2) SOGTL (50%) Net to Swala (3) Blue Horizon (mmstb) Low estimate (P90) Best estimate (P50) High estimate (P10) Gross undiscovered unrisked oil in place Gross prospective unrisked oil resources (1) Net of Government back-in rights (2) SOGTL (50%) Net to Swala (3) Combined (Yellow & Blue) (mmstb) Low estimate (P90) Best estimate (P50) High estimate (P10) Gross undiscovered unrisked oil in place ,602 Gross prospective unrisked oil resources (1) Net of Government back-in rights (2) SOGTL (50%) Net to Swala (3) Recovery factor range used is 20% (P90) - 30% (P50) 40% (P10) for the Yellow Horizon, and 10% (P90) 20% (P50) 30% (P10) for the Blue Horizon. (2) TPDC retains a 20% back-in right to any successful development in the Kilosa-Kilombero licence. (3) Swala has a 65.13% equity interest in Swala Oil & Gas (Tanzania) Limited ( SOGTL ). (Refer Swala s ASX announcement of the 11 th December 2013 and RISC ITSR of the same date). 11

12 Kilosa, Kidatu assessment continues Seismic surveys over the Kilosa and Kidatu basins completed 3Q 2013 Significant structures identified in both basins Initial review suggests the basins contain sedimentary fill of Karoo age Currently completing geochemical analysis of samples from seismic shot holes. Bouguer Gravity Map. Blue areas are interpreted basins 12

13 Pangani seismic work completed Bouguer Mvungwe Basin Moshi Basin Pangani survey commenced in late November line Kms in two separate basins Mvungwe and Moshi These were always technically challenging basins Mvungwe basin appears to be smaller than Moshi. Initial results are promising and suggest a shallow Neogene basin (ca. 1,000m deep). Bouguer Gravity Map. Blue areas are interpreted basins Results also indicate that the Moshi basin is also Neogene and some 2,000-3,000m deep. 13

14 Kenya 14

15 12B Basin Modelling during 2013 Models of hydrocarbon charge vs. temperature give guidance as to the likelihood of hydrocarbons having been generated in the basin. Model-predicted oil and gas expulsion from a typical lacustrine Type I source rock - 5%TOC, HI 600mg/g TOC, 0 to 100m thickness varying from basin edge to centre, 2,637.01km 2. Note that the figures are for the expelled volumes and not for the trapped volumes (~10%). 15

16 Modelling guided seismic programme Model predicted oil and gas migration as expelled from the deep source rock in the hottest scenario (Scen60) (most optimistic scenario). Only buoyancy driven fluid migration and minimal migration losses modeled. Typical lacustrine Type I source rock - 5%TOC, HI 600mg/g TOC, 0 to 100m thickness varying from basin edge to centre. The basin modelling carried out during 2013 guided the design of the work programme and was instrumental in reducing the seismic commitment from 700km to 350km of more targeted activity. Model of hydrocarbon migration from the deep source rock in the most optimistic scenario modelled. 16

17 Seismic programme Currently scouting area ahead of starting seismic operations in Q

18 Regional infrastructure developing Northern Kenya discoveries exceed the threshold volumes for development. Kenyan and Ugandan presidents agreed joint export pipeline. Concept work on pipeline and offshore loading complete. Pre-FEED activities on pipeline expected to start imminently. Tullow/ Africa Oil discoveries pushing the development of this infrastructure. Block 12B within close distance of the proposed joint export pipeline. Image from Africa Oil Corporation. Location of 12B and Pangani added for reference. 18

19 Work Programmes and Budgets 19

20 2014 work programme JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 12B 350km Seismic acquisition & processing Interpretation & evaluation Well planning & LLI JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC PANGANI Evaluation of 2013 seismic Seismic planning & EIA 200km seismic acquisition Interpretation & evaluation JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC KILOSA-KILOMBERO G&G studies Well planning & LLI Kito well Decision point under the PSAs. LLI = Long-lead items 20

21 2014 Budgets (net) FIRM 2014 financial implications $9.9MM DSE raise G&A Cash 12B Pangani Kilosa-Kilombero $5.2MM $2.3MM $2.4MM Firm budget CONTINGENT $5.8MM Contingent budget FIXED BUDGET Eyasi Kilosa-Kilombero $9.9MM $1.0MM $4.8MM The Company is progressing a number of initiatives to ensure its cash position is in line with its work programme commitments and expectations whilst retaining strategic flexibility. The Company may need to raise capital later in 2014 if it decides to progress with the contingent work programme, and would communicate that decision to the market. 21

22 Corporate 22

23 Capital structure million fully-paid shares issued and outstanding million Performance Shares and Options Of which 15 million shares are escrowed to April million shares issued during IPO (April 2013) freely traded 5,000,000 Performance Shares issued to the original vendors upon definition by the Company of P50 Prospective Resources of 200MMstb recoverable oil as independently verified to SPE-PRMS standards on the East African Projects P50 Kito Prospect: 151MMstb Dilution if awarded: 3.1% (1)...and of which 45 million shares are escrowed to April million shares issued to original vendors Of which 6.7 million shares are escrowed to April million shares issued to strategic investors (November 2013) freely traded 19.2 million shares issued to Convertible Note holders (January 2013) 10,000,000 Performance Shares issued to the original vendors upon spudding of a well Planned during 2014 Dilution if awarded: 5.9% (2) Options (all exercisable at 30 cents) 7 million escrowed to April million not escrowed (1) Calculated on the basis of the current issued share capital. (2) Assumes that these will be issued after the 5,000,000 performance shares have been issued. 23

24 Top 20 Shareholders SWALA ENERGY TOP 20 SHAREHOLDERS (1 st December 2013) SHARES AS % 1 Mr. Neil Catto Taylor 20,981, % 2 OCRA Trustees (Isle of Man) Limited <The Kauri Fund> 19,744, % 3 Hayaat International Limited 14,533, % 4 Energy Tanzania Limited 5,000, % 5 Mr. Chris Opperman 4,387, % 6 Mr. Jeff Hume 3,889, % 7 AEW Holdings Limited 2,500, % 8 Erncon Holdings Limited 2,410, % 9 Dr. Sonil Kalia 2,244, % 10 Mrs. Michele Mitchell de Mestres 1,550, % 11 Tenbagga Resources Fund PTY LTD 1,410, % 12 JP Morgan Nominees Australia Limited 1,378, % 13 JP Morgan Nominees Australia Limited 1,275, % 14 Tampilo PTY LTD 1,200, % 15 HSBC Custody Nominees (Australia) Limited - A/C 2 1,080, % 16 ABN AMRO Clearing Sydney Nominees PTY LTD 1,048, % 17 HSBC Custody Nominees (Australia) Limited 934, % 18 Mr. James Turner and Ms. Elizabeth Webster Taylor 810, % 19 Citicorp Nominees PTY LTD 779, % 20 Broadway Capital Investments Ltd 769, % TOTAL 87,928, % Balance of Register 65,830, % Grand TOTAL 153,758, % 24

25 Unique Corporate Structure SWALA ENERGY LIMITED ( SWE ) (AUSTRALIA) 100% SWALA ENERGY LIMITED (BRITISH VIRGIN ISLANDS) 100% 84.11% (1) 65.13% (2) SWALA ENERGY (KENYA) LIMITED (KENYA) SWALA ENERGY (ZAMBIA) LIMITED (ZAMBIA) SWALA OIL & GAS (TANZANIA) LIMITED (TANZANIA) Block 12B (50%) Kilosa-Kilombero (50%) (1) SWE equity will reduce to 81.00% on the award of a first licence and to 78.26% on the award of a second licence. Pangani (50%) (2) Swala Oil & Gas (Tanzania) Limited is expected to list on the Dar es Salaam Stock Exchange in 1Q 2014 at which point SWE s equity is expected to be reduced to 58% - 60% depending on the subscriptions raised. 25

26 Dar Listing Timetable Conditional CMSA approval received Prospectus (English and Swahili) in preparation Late CMSA approval meant that roadshow would have started before Christmas decision was therefore taken to continue in the new year. Event Date Lodgement of Prospectus with the DSE and the CMSA 13th November 2013 Opening Date of Offer 3rd February 2014 Closing Date of Offer 3rd March 2014 Allotment 12th March 2014 Announcement of results of the offer 14th March 2014 Electronic crediting of shares to CDS Accounts, Dispatch of Depository receipts and payments of refunds 20th March 2014 Anticipated date of admission to the official list of DSE 31st March

27 What do we set out to do in 2014? IPO of SOGTL and listing on the DSE. - March 2014 with a capital raise of US$2-3MM Secure the Eyasi licence in Tanzania. - Timing to benefit from other regional activity. Secure additional licences in Zambia. - Process is advancing. Complete the FTG over Kilosa-Kilombero and move towards drilling Kito. - FTG will give insights into additional prospectivity in the Kilombero basin. Continue prudent and non-dilutory cash management. - Review alternatives e.g. renewed Area of Mutual Interest approach. Advance understanding of Pangani and 12B - Predominantly through seismic. Advance at least one new country entry. - Several licencing rounds anticipated in EARS region. 27

28 Opportunity Summary Significant exposure to the East African Rift System Local presence giving competitive advantage Active business development pipeline Clear pathway through 2014 activity Experienced management and board of directors Committed cornerstone investors Gaining market credibility and confidence 28

29 2013: growing market confidence SWE ASX 200 One of only a few O&G in 2013 raising equity at a premium to previous closing price. Data courtesy of Argonaut Securities. 29

30 2013: healthy trading volumes Buying Buying volumes Selling volumes Selling Total 106 million shares traded since listing (18 th April 2013) with a transactional value of $24 million (to date of presentation) 30

31 2014: 2C resources to underpin value Year Buyers Sellers Segment Region Paid (US$ mm) 2C (boe) $/boe 2013 Tangiers Petroleum Limited Jacka Resources Limited Conventional Diversified DNO International ASA Atlas Petroleum;Eurogas Int. Shallow Water North Africa Bounty Oil & Gas NL Key Petroleum Ltd. Shallow Water East Africa Government of Cote D'Ivoire Rialto Energy Limited Shallow Water West Africa Perenco S.A. Bowleven plc Shallow Water West Africa Etablissements Maurel et Prom Cove Energy plc Shallow Water East Africa Wentworth Resources Limited Cove Energy plc Shallow Water East Africa Jacka Resources Limited Providence Resources plc Deepwater West Africa Rialto Energy Limited ACC Int.;C&L Natural Resources Ltd. Deepwater West Africa XState Resources Limited Bombora Energy Ltd. Shallow Water Global Rialto Energy Limited ACC Int.;C&L Natural Resources Ltd. Deepwater West Africa Tullow Oil plc Heritage Oil plc Diversified East Africa Cove Energy plc Artumas Group Inc. Shallow Water East Africa Etablissements Maurel et Prom Artumas Group Inc. Shallow Water East Africa Vitol Group Bowleven plc Shallow Water West Africa Strategic Oil & Gas Ltd. African Petroleum;Greenfields Petroleum Shallow Water West Africa Bowleven plc FirstAfrica Oil Plc Conventional West Africa BG Group plc Gulf Keystone Petroleum Ltd. Conventional North Africa Average for all reported transactions $2.3/boe Market capitalisation (as at date of presentation): AUD 46.1 million. Corporate Sale value based on historical transactions and Kito net 2C volumes alone: AUD 98.5 million. Data courtesy of First Energy Capital 31

32 Strong Board and Management Mr. Ken Russell, Chairman Mr. Russell has over 35 years of oil and gas industry experience and he has held a number of managerial roles and directorships in the oil and gas industry. These range from positions of Base Manager through to Managing Director and CEO of listed entities. Mr. Russell was also a founding director of ASX listed companies, Bounty Oil and Gas NL and Key Petroleum Ltd. In parallel with his involvement in the oil and gas industry he has considerable experience, developed over the last 25 + years, in international business having owned and operated a number of privately held companies. Dr. David Mestres Ridge, CEO and Managing Director Dr. Mestres Ridge worked first for Total Oil Marine ( ) and then as an independent M&A and business development advisor to oil companies active in the North Sea and North Africa He was a Vice-President at the Royal Bank of Canada, first in the Global Investment Banking Oil and Gas team and then in the Equity Research team. Dr. Mestres Ridge briefly managed Petrodel Resources, a company active in Tanzania. He also worked with Black Marlin Energy during its IPO on the Toronto Stock Exchange. Dr. Mestres Ridge has a BSc in Applied Geology, an MSc in Mining Geology, a PhD in Chemical Engineering and an LLM in Law. Mr. Neil C. Taylor, Exploration Director Mr. Taylor is the former Exploration Manager of East African Exploration Limited ("EAX"), Black Marlin Energy's E&P subsidiary. A geologist by background, Mr. Taylor has over 30 years of experience in the oil and gas business with internationally renowned E&P companies including British Petroleum and Woodside Energy. Through his time with those companies Mr. Taylor has been involved with or led exploration and production activities world-wide. Mr. Taylor joined EAX in 2008 with the remit of growing the company's asset base, and added six new licences to EAX's portfolio during his tenure. Mr. Peter D. Grant, Non-Executive Director Mr. Grant holds a B.Sc. (Hons.) in Geology from Nottingham University. Mr. Grant has over 35 years' experience in exploration, first gained as a Geophysicist/Party Chief with Seismograph Services Limited. He was then Senior Geophysicist for British Gas before joining BHP Petroleum where he was Exploration Manager in Africa and the Middle East; Project Manager in Myanmar; and General Manager in Yemen. In 1995 Mr. Grant joined Woodside Energy Limited, where he was Exploration Manager N. Australia; International Exploration Manager; General Manager UK; and General Manager International Exploration. He is also Deputy Chairman for the Arab Australian Chamber of Commerce and Industry and a Board member of the Australia Korea Business Council of Western Australia. Mr. Ernest Massawe, Non-Executive Director Mr. Massawe is Certified Accountant (ACCA, UK) and holds a Bachelors of Commerce from the then University of East Africa Nairobi. He is the founder as well as the former Chairman and Managing Partner of what is now the Ernst and Young Tanzania practice after having led the firm for the past 30 years until his retirement on 31st December Mr. Massawe is widely respected within the professional and business community in Tanzania, evidenced by his many high profile appointments in the Accountancy profession, Financial services, Mining and Capital Markets sectors. Mr. Charles Benson, Non-Executive Director Mr. Benson is currently the Chief Operating Officer of the Hayaat Group, a private investment company headquartered in Abu Dhabi. Prior to joining the Hayaat Group, Mr. Benson was a founder and Commercial Director of iman Services. Before founding iman, Mr. Benson was Chief Operations Officer of Fujairah Bulk Shipping, a joint venture between Pacific Basin Shipping and the Government of Fujairah. Mr. Benson was one of the Fujairah Bulk Shipping's three founding executive managers and a Board Director. Before relocating to the United Arab Emirates, Mr. Benson was a Project Manager for Pacific Basin Shipping Limited in Hong Kong where he was responsible for evaluating investment opportunities not directly correlated to Pacific Basin's core revenue streams. Prior to this Mr. Benson was an assistant fund manager for Cazenove Fund Management in London. 32

33 Prospective and Contingent Resources There is no certainty that any discovered resources referred to in this presentation will be commercially viable to produce. There is no certainty that any portion of the undiscovered resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. Risks associated with discovering oil: The estimation of prospective resource volumes for high-risk and poorly calibrated basins can be subject to large variation from the introduction of new information. The estimates presented herein are based on all of the information available at the effective date of the resource estimate. New data or information is likely to have a material effect on the resource assessment values. Whilst additional exploration work will be undertaken, there is no certainty that any additional resources will be discovered. Once discovered, there is no certainty that the discovery will be commercially viable to produce any portion of the resources. It s likely that significant changes to the resource estimates will occur with the incorporation of additional data and information. Risk Associated with the Estimates: In the event of a discovery, basic reservoir parameters, such as porosity, net hydrocarbon pay thickness, fluid composition and water saturation, may vary from those assumed by the Company s independent third party resource evaluator affecting the volume of hydrocarbon estimated to be present. Other factors such as the reservoir pressure, density and viscosity of the oil and solution gas/oil ratio will affect the volume of oil that can be recovered. Additional reservoir parameters such as permeability, the presence or absence of water drive and the specific mineralogy of the reservoir rock may affect the efficiency of the recovery process. Recovery of the resources may also be affected by well performance, reliability of production and process facilities, the availability and quality of source water for enhanced recovery processes and availability of fuel gas. There is no certainty that certain mineral interests are not affected by ownership considerations that have not yet come to light. Substantial Capital Requirements: Swala expects to make significant capital expenditures for exploration activities in the future. The Company's ability to access the equity or debt markets may be affected by any prolonged market instability. The inability to access the equity or debt markets for sufficient capital, at acceptable terms and within required time frames, could have a material adverse effect on the Company's financial condition, results of operations and prospects. Ability to Execute Exploration and Development Program: It may not always be possible for Swala to execute its exploration and development strategies in the manner in which the Company considers optimal. Execution of exploration and development strategies is dependent upon the political and security climate in the host countries where the Company operates and agreement amongst the Company joint venture partners. The Company's exploration and development programs in East Africa may involve the need to obtain approvals from relevant authorities who may require conditions to be satisfied or the exercise of discretion by the relevant authorities. It may not be possible for such conditions to be satisfied. Absence of a Formal Development Plan including Required Funding: There is no certainty the Company will prepare and have approved a development plan for any portion of the contingent resources or that the Company will be successful in funding any development should such a plan be prepared. General market conditions, the sufficiency of such a development plan and the outlook regarding oil and gas prices are some factors that will influence the availability of funding or the Company s ability to attract oil and gas industry partners to participate in the project. Access to Infrastructure: Currently there is limited local infrastructure for the production and distribution of oil and gas in the countries in which Swala operates. Export infrastructure to enable other markets to be accessed has not yet been developed and is contingent on numerous factors including, but not limited to, sufficient reserves being discovered to reach a commercial threshold to justify the construction of export pipelines and agreement amongst various government agencies regulating the transportation and sale of oil and gas. Additional Risks: Additional risks associated with the estimate of the prospective and contingent resources include risks associated with the oil and gas industry generally (i.e. financing; operational risks in exploration, development and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of estimates and projections related to production; costs and expenses; health, safety, security and environmental risks; and the uncertainty of resource estimates), drilling equipment availability and efficiency, the ability to attract and retain key personnel, the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with dealing with governments and obtaining regulatory approvals, and the risk associated with international activities. 33

34 For further information please contact: Swala Energy Limited David Mestres Ridge (CEO) T: david.mestres@swala-energy.com Walbrook Investor Relations Ben Knowles T: M: ben.knowles@walbrookir.com.au 34