BLOCK ENERGY plc Corporate Presentation Production and development in an emerging hydrocarbon region

Transcription

1 roduction and development in an emerging hydrocarbon region CORORATE RESENTATION 2018

2 Disclaimer This document has been prepared and issued by and is the sole responsibility of Block Energy (the Company ) and its subsidiaries. It comprises the written materials for a presentation to investors and/or industry professionals concerning the Company s business activities. By attending this presentation and/or accepting a copy of this document, you agree to be bound by the following conditions and will be taken to have represented, warranted and undertaken that you have agreed to the following conditions. This presentation may not be copied, published, distributed or transmitted. The document is being supplied to you solely for your information and for use at the Company s presentation to investors and/or industry professionals concerning the Company s business activities and the proposed admission of the entire issued share capital of the Company to trading on AIM, the market of the same name operated by London Stock Exchange plc (the Admission ). 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This update contains certain forward looking information that reflect the current views and/ or expectations of management of the Company with respect to its performance, business and future events including statements with respect to financings and the Company s plans for growth and expansion. Such information is subject to a number of risks, uncertainties and assumptions, which may cause actual results to be materially different from those expressed or implied including the risk that the Company is unable to obtain required financing and risks and uncertainties inherent in hydrocarbon exploration and development activities. 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3 Overview Low risk cash flow with excellent upside potential Oil and gas portfolio in Georgia with existing scalable production, resources and reserves US$39.3 million NV 10 assigned to 2 net oil reserves with significant scalability Substantial additional potential from 38MMbbls 2C gross contingent oil and 608Bcf 2C gross contingent gas resources at West Rustavi - estimated unrisked project value to Block of $600m at 50% recovery rate Analogous plays being tested by Schlumberger in 2018 and 2019 on adjacent licence Funded to recomplete/reactivate ~10 wells and side track 3 wells, increasing existing oil production from 15bopd to over 900bopd ortfolio Location roduction Development Management team with significant regional and Georgian-specific experience Excellent local relationships - major shareholder is an established operator, party to multiple SCs and a drilling service provider in Georgia Blue sky Focused on becoming one of the largest independent oil and gas companies in Georgia, with future expansion throughout Europe Team 3

4 Key Data SHARE RICE KEY DATA Market AIM Ticker BLOE.L Shares in Issue 259,047,601 Share rice 3.35p Market Cap 9.07 million * As at 12/07/ KEY SHAREHOLDERS Amati Global Investors % Lynchwood Nominees Limited % ershing Nominees Limited % Miton Asset Management Limited % Iskander Energy Corp % Mayan Energy Limited % 4

5 Board & Management Extensive experience in Georgia and international oil and gas developments hilip Dimmock Non-Executive Chairman aul Haywood Chief Executive Officer Serina Bierer Financial Director hilip spent a significant part of his career at B in a wide variety of senior positions including manager of the Forties oil field, and UK Director of Ranger Oil where he also held the post of vice president of the international division, and served as chairman. hilip was a Non-Executive Director of Nautical etroleum plc until its acquisition by Cairn Energy in 2012 and presently serves as the Senior Independent Non-Executive Director of Gulf Keystone etroleum. hil graduated from Oxford with a Masters of Art in hysics. aul has over 15 years experience in operational and investment management for a diverse range of private, corporate & institutional clients throughout Europe, Asia and the Middle East. aul has spent over 8 years in the Georgian oil and gas sector, and has been instrumental in the acquisition, development and sale of multiple assets in country. aul is currently a Non-Executive Director of Oilex etroleum lc and a resource focussed advisory firm, lutus strategies. Following graduation with an MSci in Geological Sciences from Imperial College, Serina qualified as a chartered accountant in 2007 with BDO LL. Her time here saw her work extensively on Middle Eastern Due diligence projects as part of the natural resources team. For over 10 years Serina has specialised in the AIM and ASX upstream oil and gas industry, and prior to joining Block Energy lc, was Head of finance at Falkland Oil and Gas Ltd. 5

6 Board & Management Extensive experience in Georgia and international oil and gas developments Roger McMechan Technical Director Niall Tomlinson Executive Director Tim arson Non-Executive Director 30+ years in managing domestic and int l operations with senior managerial /executive roles at companies including etro Canada, Burlington Resources and Winstar Resources (North Africa and throughout Eastern Europe). Extensive experience in new field dev, mature field optimization, oil and gas well drilling, completions and stimulation as well as oil/gas opportunity evaluations. Five years of working in Georgia, including operations, crude marketing, new well drilling, old well workovers & recompletions. Roger has a BSc, Engineering. from the University of Waterloo, Canada and is a rofessional Engineer registered in Alberta, Canada. Energy and Mining Analyst with 11 years experience. He started his career with Rio Tinto as an Exploration Geologist and has over 10 years experience consulting and working with various junior natural resource companies. Niall has spent over 3 years assessing natural resource projects in the Republic of Georgia. He holds an MSc in Metals and Energy Finance from Imperial College and is a Chartered Geologist. etroleum Engineer with 39 years global experience on and offshore; from deep water operations in the Far East to multi-rig operations in the Middle East, Amazon and Europe. Roles include Superintendent at Schlumberger, operations executive with Occidental etroleum and Team Leader on shale projects in UK and France. 6

7 Geography Licences are located in a proven and prolific hydrocarbon region Located in the Kura basin and contiguous to largest historical producing field (~70,000bopd) in Georgia Licences located in close proximity to blue chip operator Schlumberger s 100% owned strategic position Over 7 billion barrels of proven reserves in Azerbaijan and North Caucasus (Russia) Norio XI n XI c Georgia is comparatively under-explored but has established oil and gas infrastructure Satskhenisi XI a Tbilisi XI g West Rustavi XI m XIII XI f XI b XI h XI XII XI e Major investment is being made in the Georgian oil and gas industry underlining the upside potential 7

8 ortfolio Early Mover Advantage roduction - proven reserves Multiple large scale development and appraisal opportunities Norio (100% WI) and Satskhenisi Field (90% WI) 1.1 MMBbls of 2 net oil reserves 32 MMBbls 2C net contingent oil resources *Based on US$5/Mcf & US$50 Oil. West Rustavi Block Xlf ermit (25% WI, earn-in for 75% interest) 0.34 MMBbls 2 net oil reserves 28 MMBbls 2C net contingent oil resources 456 Bcf 2C net contingent gas resource Netback*: ~US$2.6/mcf; ~US$30-35/bbl Additional projects being considered Actively evaluating additional blocks which have oil shows and production history Reviewing further oil and gas opportunities throughout region Note: the figures for West Rustavi show a 75% working interest. Block Energy has a 25% interest in the West Rustavi SA at present, and thereafter the Company has an option to increase its interest to 75% as described in the appendix and paragraph 13 viii of art V of the admission document Source: Source: Competent erson s Report for Norio, West Rustavi and Satskhenisi Fields Republic of Georgia dated July carried out by Gustavson Associates 8

9 Reserves and Resources Large inventory with high degree of confidence for both oil & gas CORORATE OIL RESERVES SUMMARY Gross Reserves, MBbls Net Reserves, MBbls Net Cash Flow, US$m Net resent Value Discounted at 10%, US$m FIELD NAME 90 (1) 50 (2) 10 (3) 90 (1) 50 (2) 10 (3) 90 (1) 50 (2) 10 (3) 90 (1) 50 (2) 10 (3) NORIO (100% WI) 899 1,631 2, ,108 1, WEST RUSTAVI (75% WI) , SATSKHENISI (90% WI) Total 1,382 2,552 4, ,466 2, Gross is for 100% Working Interest. Net is net of government share. (MBbl = thousand barrels of oil; US$m = millions of US$) CORORATE CONTINGENT RESOURCES Gross Unrisked Contingent Resource s by Area Contingent Oil/Condensate Resources, MMBbls Contingent Associated/Free Gas Resources, Bcf Net Unrisked Contingent Resource s by Area Contingent Oil/Condensate Resources, MMBbls Contingent Associated/Free Gas Resources, Bcf FIELD NAME Low (1C) Best (2C) High (3C) Low (1C) Best (2C) High (3C) Low (1C) Best (2C) High (3C) Low (1C) Best (2C) High (3C) Risk Factor NORIO (100% WI) % WEST RUSTAVI (75% WI) , % SATSKHENISI (90% WI) % Total , Net is net of working interest. (MMBbls = million barrels of oil; BCF = billion cubic feet) Source: Competent erson s Report for Norio, West Rustavi and Satskhenisi Fields Republic of Georgia, Effective date of 1 st July & completed September 15th 2017 and carried out by Gustavson Associates West Rustavi figures contingent on farm-in completion 9

10 Norio and Satskhenisi A low risk / high impact development play with production roven fields 40km from Tbilisi: 2.1 MMBbls of light sweet crude oil produced Currently producing ~15bbls/d - currently cash flow positive Crude sales price = Brent minus US$10 at the well head Initial stage low cost high impact work programme targeting increase in production to 250bopd: Norio: Workovers, Recompletions and Sidetrack Satskhenisi: Reactivations Company-making reserve/resource potential: > 1.1 MMBbls of 2 oil reserves net to Block > 32 MMBbls Net WI (2C) Contingent Resource potential > 240 MMBbls 50 oil in place XI c Attractive Licence terms: Operating costs recovered 100%, then Of remaining production Block retains 50% as cost oil and the residual profit oil is split 50:50 with the state during cost recovery phase Terms are valid until 2025 with optional 5 year renewal No discovery or production bonus No minimum work programme XI m XI b 10

11 West Rustavi Low risk development with high production appraisal upside roven field: SC signed March 2018 with 25 year term, extendable by 5 years Current 25% interest with option to earn up to 75%, details provided in appendix ~41 MBbl light sweet crude produced from Middle Eocene - 35 degrees AI oil & 41 MMcf gas from two wells completed in the middle Eocene. 200 MMBbls of oil produced from Schlumberger ermit directly to North Initial low cost / high impact work programme to increase production: Re-enter and reactivate 3-4 wells to earn up to 50% working interest Drill 2 side tracks targeting 650 bopd and completing earn-in to 75% working interest in the SC Conduct gas test and prepare FD Conduct 3D Seismic Company-making resource potential*: 0.4 MMBbls 2 net reserves in the Middle Eocene ~456 Bcf 2C net contingent gas resource target in the Lower Eocene/Cretaceous some vertical wells tested at 1-1.5mmscf/d 28 MMBbls 2C net contingent oil resources in middle & upper Eocene reservoirs XI g XI f XI b XIII XI h * Based on earning to 75% as per agreement detailed in appendix 11

12 West Rustavi Analogue Application of horizontal sidetracks has seen success locally Ninotsminda Immediate Analogue Vertical well rate Sidetrack initial rate Horizontal sidetracks in offset pool have increased average I 10x to 400bbls/d and has recovered 270Mbbls/well Vertical well rate Sidetrack initial rate Fractured Middle Eocene oil discoveries/shows 12

13 West Rustavi Natural Gas Tests Offset by gas discoveries and existing gas discoveries W Rustavi Block Schlumberger ipeline XI m XI c N S W Rustavi Gas take away options: Tie in to high press line Tie in to low pres. Line and sell to Rustavi Industries Sell gas to State for UGS facility XI g XI b XIII Rustavi Industrial Complex XI h 13

14 Strategy Three Stages Focused on becoming one of the largest independent oil & gas companies in Georgia 18 months 24 months 24+ months Increase production via low cost low risk workovers, sidetracks hase 1 fully funded Test and flow gas in previous discoveries W Rustavi Block - 2C 600BCF; 3C 1TCF (gross) Drill new horizontal wells and sidetracks to increase production to 2,000 bopd+ Bring West Rustavi gas online d all in capex US$1.10/MCF and netback of ~US$3/MCF Secure additional licences in Georgia and the wider region STAGE 1 STAGE 2 STAGE 3 Creating asset value and cash by implementing a defined development strategy 14

15 Increased Activity in Georgia The right time for Georgia Schlumberger, the world s largest oilfield service provider (market cap of ~US$95B) acquired a 100% working interest in 3 blocks in Georgia in 2017 and assumed the role of operator Drill location, directly offsets Block s W Rustavi permit XIf and target is a direct analogue to discoveries had in Blocks XIf licence Validation of; Georgia s political and business climate - a good place to do business Underpins Georgia is a safe place to conduct business & bolsters Block s investment thesis Confirms commerciality and market potential for gas production in Georgia rovides significant upgrade to the Georgian oil and gas services industry Schlumberger successes and news flow will support Block s market appeal 15

16 Investment Case An oil and gas company with significant re-rating potential Asset backed Existing production, proven reserves, large scale development and appraisal opportunities roven reserves US$39.3m NV 10 assigned to 2 oil reserves provides strong asset backing Multiple targets Significant upside via low risk gas development, recompletions & horizontal side track re-entries multiple discoveries on licences The right place Exposure to the same high impact gas play targeted on Schlumberger s licences, 1 TCF 3C gross contingent resources on West Rustavi Strong economics $30-35 net backs for oil (900 barrels initial target) and netbacks of c.us$2.6/mcf for gas (West Rustavi on conservative 50% recovery translates into a c.us$600m project value to Block) Management team Extensive regional and Georgian specific experience High impact news 6-18 month - Multi well programme targeting large scale gas appraisal/development in a robust commercial environment supported by a low risk, catalyst rich oil programme generating sustaining cash flow 16

17 Contacts Block Energy plc St Brides artners Limited Frank Buhagiar / Juliet Earl Financial R/IR