OTCQB:PRHR. Investor Presentation

Transcription

1 OTCQB:PRHR Investor Presentation July 2016

2 2 Forward-looking Statement This presentation contains certain forward looking-statements and information, including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of The forward-looking statements and information expressed, as of the date of this presentation, represents PetroShare s (the Company ) estimates, forecasts, projections, expectations or beliefs as to future events and results. Forward-looking statements and information are necessarily based on a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, technical, economic and competitive uncertainties, risks and contingencies, and there can be no assurance that such statements and information will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements and information. Risks and uncertainties that could cause results or future events to differ materially from current expectations expressed or implied by the forward-looking statements and information include, but are not limited to, risks related to receipt of working capital, identification and acquisition of economically desirable properties, fluctuations in the market price of crude oil and natural gas, industry risks, risks related to permitting and the projected timeframes to receive the necessary permits, risks associated with crude oil operations, the construction of crude oil production operations and commencement of production and the projected costs thereof, risks related to litigation, property title, the state of the capital markets, environmental risks and hazards, uncertainty as to calculation of crude oil and natural gas resources and reserves and other risks. Readers should not place undue reliance on forward-looking statements or information included herein, which speak only as of the date hereof. The Company undertakes no obligation to reissue or update forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. See PetroShare s Prospectus and other filings with the Securities and Exchange Commission, under the caption Risk Factors for additional information on risks, uncertainties and other factors relating to the forward-looking statements and information regarding the Company. All forward-looking statements and information made in this presentation are qualified by this cautionary statement.

3 3 Corporate Overview PetroShare Corp is a public, domestic energy company based in Denver, CO formed to investigate, acquire and develop unconventional oil and gas properties in the Rocky Mountain and mid-continent areas of the United States. Price (7/11/16) OTCQB Market Cap (7/11/16) Common Stock Outstanding Float PRHR $1.65 $35.8 M 21.7 M 11.3 M Warrants 255,600 Insider Ownership IPO ~28% November 2015 $4.6 Fully Subscribed

4 4 Company Profile PetroShare expects to take advantage of temporarily depressed oil and gas prices as follows: Continue to acquire core Wattenberg leases at attractive prices Pursue asset acquisitions and attractive farm-in opportunities PetroShare expects to capitalize on its current lease position: The Company s current lease position provides PetroShare with approximately 5% to 50% working interest in up to 90 low risk horizontal well locations Develop and convert estimated proven reserves to cash flow in orderly manner and grow well inventory Strategic partnership agreements provide assistance for access to surface drill sites and water for drilling and completion activities as well as the provisions for certain pipeline easements Drilling Profitable at $35 oil The Wattenberg is a low-risk development play which is all about operating efficiencies The DJ Basin is one of the lowest cost basins in the U.S and drilling and completion costs continue to drop PetroShare s management estimates a greater than 40% IRR based on $35 oil, $2 natural gas, 450 MBoe/well and $3.0 million to drill and complete Experienced Management with deep, long-standing relationships Solid understanding and experience in both upstream and midstream facets provide competitive advantages and reduce well hook up times Marketing and risk management expertise Strong networking relationships through community involvement

5 Management Team Bill Conrad - Chairman Over 20 years of experience as an executive or director of oil and gas companies Founder and Former director of Synergy Resources Corporation, (NYSE MKT: SYRG) a publicly traded oil and gas company Chairman of the Board of Gold Resource Corporation, (NYSE MKT: GORO) a publicly traded gold mining and exploration company Stephen Foley - CEO Mr. Foley has served as the Chief Executive Officer of PetroShare since its inception 15 years of experience in property investment and development in Colorado 11 seasons as a safety with the Denver Broncos football organization ( 76-86) Fredrick Witsell - President Over 35 years of experience in several facets of the oil and gas industry, including prospect development, conventional and horizontal drilling and completion operations, project management, gathering and compression systems, and marketing and risk management Served as an executive and co-founder of a series of small, privately-funded oil and gas companies with properties in North Dakota, Wyoming, Utah and Colorado 5

6 Management Team William Lloyd - Executive VP of Engineering, Chief Operating Officer Over 35 years of experience, leading operations for extensive drilling and completion programs in the Rocky Mountains, California, Norway and Alaska, which included a record horizontal well, the longest Extended Reach well and the largest ice road construction and exploration drilling program Most recently served as Senior VP of Operations for a successful private Rocky Mountain Oil and Gas Company with divestitures in excess of $500MM William Givan - Vice President of Land Over 35 years of experience, in all facets of land work, administration and business development Most recently served as Senior Land Manager for a successful private Rocky Mountain Oil and Gas Company with over 1.0 million acres under management Stephen Devanney - Investor Relations Over 40 years of continuous practical market and marketing expertise, including corporate finance, business development, private placements, institutional retail/wholesale trading, JV and M&A Founded and served as President and CEO of a large regional Investment Banking firm with over 200 brokers in three states for 11 years Served as a board member on several public and private companies 6

7 Investor Highlights Management Team Long-Standing Partnerships Access to Capital and Clean Balance Sheet Assets in Low Cost / High return Basin (DJ Basin Wattenberg Field) Meaningful Growth Opportunities via Kingdom Resource Arrangement Over 110 years of collective experience in the major US Basins and Rocky Mountain Region including the Wattenberg oil and gas field Solid understanding and experience in upstream and midstream facets as well as risk management Experience in managing operations and growing assets in depressed commodity price cycles Entered into an exclusive oil and gas leasing agreement with Kingdom Resources LLC ( KR ), the developer who owns certain mineral rights in the rural residential area KR will aid and assist the Company with access to drill sites, water and with pipeline easements Closed the first acquisition with KR for its initial Wattenberg lease position in May 2015 and continues to acquire leases under this program Secured a $5 MM Line of Credit with Providence Energy Group ( PRO ), a sophisticated energy investment firm with a successful history in oil and gas investments (See Appendix) Recently raised, $4.6 MM IPO will provide drilling capital and aid in continued acquisitions The Wattenberg Field is one of the 5 largest proved oil fields in the U.S.* Accumulated an acreage position of approx. 5,640 gross (1,980 net) acres representing up to 90 gross (23 net) horizontal Niobrara / Codell well locations plus numerous vertical well optimization projects 14 low risk horizontal development locations pending permit approval on its Shook Pad plus 8 fully permitted horizontal wells on the Corcillius Pad Third party operators have proposed or permitted an additional 38 horizontal wells in which PetroShare will have a working interest Plans to take advantage of temporarily depressed oil and gas prices by: Continuing to acquire core Wattenberg leases at attractive prices under its KR exclusive lease brokerage agreement Acquire producing assets and acreage positons at depressed prices in targeted areas of the Wattenberg core area and the DJ Basin *U.S Energy Information Administration (March 2015) 7

8 8 Market Poised for Growth DEPRESSED PRICE CYCLE equals POTENTIAL OPPORTUNITY! Unsustainable patterns Spike and Crash 6 mos to bottom ($40/bbl) 5 mos to recover 175% from bottom ($70/bbl) 12mos to $80/bbl Crash 14 mos to bottom ($26/bbl) 4 mos to recover 175% from bottom ($45) Market Bottom?

9 US Shale Plays U.S. Shale Oil Breakeven Prices DJ Basin among the lowest breakeven prices Source: BofA Merrill Lynch Global Commodities Research 9

10 Target Zones - Stacked Shallow Play PetroShare Focus Area * SR Sealing Rock, cap to oil migration 10

11 11 Southern Core Acreage Position Neighboring Major Independent Producers 5/11/2016 5:05pm

12 Wattenberg Existing Proven Play Horizontal Drilling Activity Southern Core Area 350 to 700 MMBOE* PetroShare Shook Pad Up to 50.0% WI (40.0% NRI) 14 Wells (6) Codell, (4) Niobrara B, (2) Niobrara C, (2) Niobrara A [Est. 350 to 500 MMBOE*] PDC Jacobucci Pad (14 Mid Range laterals) Active Drilling Program 10% to 29% WI 14 Wells (6) Codell, (3) Niobrara B, (5) Niobrara C 475 to 715 MMBOE* 680 to 720 MMBOE* PLUS (2) Niobrara XRL Great Western 350 to 475 MMBOE* PDC Leases Acquisition 6/30/16 Todd Creek Farms Base Leases * MMBOE estimates from independent reserve engineer - variations due to completion quality and horizontal lateral length 12

13 13 Improving on Completions Conventional Completion: Design Based Upon Assumption That Equal Spaced Entry Points Will Be Uniformly Treated No Diversion Additive Geotechnical Data Engineered Completion: Frac Entry Points Tied To Rock Properties Identified With Geotechnical Analysis Diversion Additive to Enhance Treatment To Individual Entry Points Expanding on the naturally occurring fracture systems creates more effective and economical completions

14 Road to Growth & Controlling Costs Operating Strategy and Base Case Capital Program Lower for Longer 2016 G&A Controls Keep G&A lower than comparable DJ Basin operators We have the experience not to bloat G&A G&A is one of the lowest in the DJ Basin area Manage balance sheet & debt Outsource accounting, financial, land and permitting functions Control public company legal expense 2016 Capital and Development Program Operated drilling program Drill 5 gross wells (2.5 net wells) and complete 3 wells (1.5 net wells) Non-operated drilling program 16 gross wells (3.1 net wells) Expansion acquisitions and critical tuck-in lease purchases and/or WI% rollups 2017 G&A Controls Maintain status quo if commodity prices remain low Keep G&A at low levels compared to industry norms Continue outsourcing programs and control vendor/provider costs 2017 Capital and Development Program Live within cashflow and equity capital availability Operated completion program complete additional 3 wells based on cost & commodity prices Non-operated drilling program evaluate projects as presented Evaluate acquisition & leasing opportunities based on economic merit and capital availability 3/15 - Announces Acquisition of Acreage in the Wattenberg Field /15 - Closes $4.6 Million Public Offering; Approved for Trading on OTCQB 5/15 - Closing of Lease Acquisition, $5.0M Revolving Line of Credit and Participation Agreement 4/16 - Closed on the acquisition of an oil and gas lease from an independent third party totaling approximately 378 net acres in Section 5 of Todd Creek Farms 4/16 - Closed acquisition of a producing well and associated leases totaling approx. 320 net acres within Todd Creek Farms 6/16 Closed acquisition with a major area operator to acquire producing vertical wells and associated HBP leases totaling approximately 3,718 gross and 2,690 net acres in Adams County, Colorado

15 $5.0 MM Credit Facility The Company has secured a $5.0 MM Line of Credit with Providence Energy Group ( PRO ), a well-known energy investment firm with a successful history in oil and gas investments $5 MM Revolving Credit Facility The credit facility calls for interest-only payments due upon receipt of initial production proceeds and allows PetroShare to quickly capture leasing and asset acquisition opportunities in the DJ Basin as they present themselves The Company has drawn approx. $4.6 MM of this facility for lease acquisitions and associated costs. The line of credit is secured by PetroShare s present and future interests in their oil and gas leases acquired in the Todd Creed Farms AMI area in the Wattenberg Field area of northeast Colorado Participation Agreement PetroShare Corp has entered into a 50% Participation Agreement ( PA ) covering its initial target area of Township 1 South Range 67 West with PRO PRO is committed to continued funding for acquisitions in the DJ Basin/Greater Wattenberg area and has up to $600 MM in acquisition capacity 15

16 Contacts Company Stephen W. Devanney Investor Relations Derek Gradwell SVP, Natural Resources - MZ Group dgradwell@mzgroup.us