exceptional shareholder returns in a rising petroleum market

Transcription

1 March 2011 exceptional shareholder returns in a rising petroleum market 1

2 INVESTMENT HIGHlightS DEVELOPMENT & PRODUCTION PLAN Strata is progressing forward with its USD $250 million five-phase capital plan to produce 56,000 barrels (bbls) per day by 2017 PHASE 1 UNDER WAY Engineering exploration and preproduction development of Cadotte holdings LAND POSITION 52,480 acres (87.6 sections) in Peace River region WORKING INTEREST is 100% Strata s CADOTTE PROJECT Best Estimate NPV USD $1.3 Billion (10% disc.) at $85/bbl over 20yrs 28% Internal Rate of Return 1.99 Billion bbls in place 517 Million bbls recoverable more on the NEXT page 2

3 INVESTMENT HIGHlights ( continued ) TREMENDOUS UPSIDE High side estimates: Up to NPV USD $1.9 Billion for Cadotte Project with 36% IRR (disc. 10%) at $95/bbl High probability of exceeding 26% recovery rate with existing and new technology Cadotte West resources untapped Price of oil rising ($150/bbl?) TECHNOLOGY Exclusive licensing agreement with University of Alberta for proprietary Steam over Solvent recovery method NEXT our business 3

4 our business Company: Strata Oil & Gas was incorporated in the US in Nov 1998, moved headquarters to Calgary, Alberta in 2005 and incorporated under Canadian law Sector: Heavy oil (carbonate hosted bitumen deposits) exploration and production in Alberta s Peace River area Goal: Provide exceptional shareholder returns in a rising petroleum market, by focusing on high-value carbonate-hosted bitumen deposits * As of March 10, 2011 NEXT world s oil reserves 4

5 World s oil reserves Trillion bbls proved oil reserves Canada holds 15% of the world s reserve Billion bbls crude bitumen 315 Billion bbls crude oil 19.7 Billion bbls World Oil Reserves ( billions of barrels ) Canada Saudi Arabia Iraq Venezuela Russia U.S. Source: Alberta Energy and Utilities Board, British Petroleum NEXT canadian crude oil production 5

6 canadian crude oil production Currently produces 3.3 Million bbls/day There are an estimated 50.7 Billion bbls in oil sands that are not under active development (000 s barrels/day) 5000 Oil Sands In-Situ 4500 Oil Sands Mining 4000 Conventional Heavy Conventional Light Source: May 2005 Alberta Energy and Utilities Board, British Petroleum NEXT alberta oil facts 6

7 alberta oil facts Growing production with approximately 1.1 Million bbls/day with 176 Billion bbls of proven oil reserves: crude bitumen 174 Billion bbls crude oil 1.6 Billion bbls Peace River Oil Sands holds over 188 Billion bbls of Oil Long life resource Typically 30 year reserve life with minimal declines Only 3% of initial established reserves produced to date 69% of possible oil sands areas are available for exploration and leasing Attractive royalty and tax regime - Alberta Energy Innovation Strategy offers royalty offsets of up to $200 million over 5 years to pilot projects that use new, innovative technology to development of oil and gas reserves Source: May 2005 Alberta Energy and Utilities Board NEXT peace river oil sands area 7

8 peace river oil sands area The Peace River Oil Sands area covers 11,052 sections (2.37 million hectares) Historic Bitumen exploration and production has focused on Bluesky and Gething Formations, Cretaceous-age clastic sediments Recent Exploration addresses the Debolt Carbonate Debolt is similar to the Grosmont play in the Wabasca area NEXT land position 8

9 land position Source: EUB ST NEXT current land tenure 9

10 current land tenure 82 Sections in Total in the Cadotte Area NEXT cadotte project 10

11 cadotte project During Strata drilled three wells on this block Resource estimate for this block was announced in September, 2007 NEXT major operators: cadotte area 11

12 major operators: cadotte area NEXT pre-feasibility study 12

13 PRE-FEASIBILITY Study Prepared by Norwest Questa Engineering Corporation Feb 2008 Method of extraction utilized for study Horizontal Cyclical Steam (HCS) Norwest used effective OBIP* estimates rather than a gross OBIP (Gross OBIP is about 50% higher) Shell s Carmon Project pad and development block design used Production schedule developed over 29 sections (each at 1sq mile) Each pad includes 20 wells of 1,400 m length, each about 600 m in the vertical direction and 800 m horizontally The pads are brought on stream over a four year build-up period *OBIP = Original Bitumen In Place NEXT Contingent resource estimate 13

14 Contingent resource estimate Source: Norwest Corporation NEXT pre-feasibility findings 14

15 pre-feasibility findings RECOVERABLE PORTION OF Contingent Resource FOR THE CADOTTE AREA BY TARGET ZONE IN MILLIONS OF STOCK TANK BARRELS (MMSTB) Source: Norwest Corporation NEXT economic evaluation 15

16 economic evaluation DIFFERENT OIL PRICE ASSUMPTIONS (USD $ BILLIONS) Sproule and McDaniel and Associates forecast that Alberta Heavy Crude Oil will sell for USD $30 less than WTI NEXT pre-feasibility findings 16

17 pre-feasibility findings Economically Viable NPV (disc. 10%) of cash flows before income taxes of USD $1.3 Billion (over initial 20yrs, producing only 360 million bbls of the total 517 million bbls available) Daily Production Rate of 56,000 bbls per day Based on a review of public data for similar projects Product anticipated to be dil-bit, rather than synthetic crude oil Transportation of bitumen via trucking or pipeline to Haig Lake terminal for transfer to the Rainbow Pipe Line which connects to the Edmonton refineries Source: Norwest Corporation NEXT cadotte development - capital plan 17

18 CADOTTE development - CAPITAL PLAN NEXT phase 1 development strategy 18

19 phase 1 DEVELOPMENT STRATEGY I. CADOTTE Initial Drilling Program Results Addressed Resource Evaluation & Pre-Feasibility Study Production Testing Determine Additional Drilling Locations Water Survey Submit Application for Pilot Plant II. CADOTTE WEST Preliminary Recognition of Resource Potential Delineate Resource Through a Seismic / Drilling Program Add to the Current Resource Submit Applications for the Appropriate Extraction and Processing Methods NEXT phase 1 cadotte development 19

20 phase 1 - cadotte development NEXT leadership 20

21 leadership Ron Daems (President & CEO) Extensive financial and resource industry experience Career has focused primarily on business development, strategic planning and financial analysis in the resource sector Currently engaged as President and CEO of Capex Energy Services, a privately held company Previous experience: Portfolio Manager for a multinational investment firm, founded and became the CEO of Emerging Business Solutions, a privately held business development company focused primarily on assisting startup companies in the resource sector Pratt Barndollar (Director) Experienced geophysicist who has served as senior geosciences manager and interpreter for large and small oil companies Bachelor of Science degrees from Kansas State University, in Geophysics and Civil Engineering Currently is Exploration Portfolio Manager at Talisman Energy Previous experience: VP, Exploration of Napa Energy, Chief Geophysicist and Exploration Portfolio Manager for Devon Energy, Senior Geophysicist for Samson Canada, Chief Geophysicist for Apache Canada, and Senior Explorer and Project Leader for Phillips Petroleum NEXT forward looking statements 21

22 forward looking statements This information may contain forward-looking statements about our exploration, production, and other operating and financial plans. These statements are not guarantees of future performance, involve certain risks, uncertainties, and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Among the factors that could cause actual outcomes and results to differ materially are changes in petroleum prices; changes in refining and marketing margins; potential failure to achieve, and potential delays in achieving, expected reserve or production levels from existing and future oil and gas development projects due to operating hazards, drilling risks, and the inherent uncertainties in interpreting engineering data relating to underground accumulations of oil and gas; unsuccessful exploratory drilling activities; unexpected delays or difficulties in constructing company facilities; general domestic and international economic and political conditions; the ability to meet government regulations; potential disruption or interruption of the Company s facilities due to accidents or political events and other matters detailed in our publicly available filings with the Securities and Exchange Commission. Cautionary Note: As an oil and gas company, in our filings with the SEC we only disclose proved reserves that have been demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. However, in the information presented here, we may use certain terms such as probable reserves, potential net recoverable reserves, barrels of oil, in-place, resource, and recoverable reserves that we do not include in our filings with the SEC. NEXT contact information 22

23 contact information ADDRESS Strata Oil & Gas Ltd. #408, th Avenue N.W. Calgary, Alberta T2M 0K3 PHONE (403) TOLL FREE FAX (403) WEBSITE 23