Company Presentation. August 2017

Transcription

1 Company Presentation August 2017

2 Cautionary Language Regarding Risks, Forward-Looking Statements and Other Matters This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of These forward-looking statements are based on our current expectations about our company, our properties, our estimates of required capital expenditures and our industry. Words such as "expect, "will," "anticipate," "indicate," "estimate," "believes," "plans" and similar expressions are intended to identify such forward-looking statements. It is important to note that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties. Actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ materially from those projected in such forward-looking statements include: the preliminary nature of well data, including permeability and gas content, and commercial viability of the wells; risk and uncertainties associated with exploration, development and production of oil and gas; drilling and production risks; our lack of operating history; limited and potentially inadequate cash resources; expropriation and other risks associated with foreign operations; anticipated pipeline construction and transportation of gas; matters affecting the oil and gas industry generally; lack of oil and gas field goods and services; environmental risks; changes in laws or regulations affecting our operations, as well as other risks described in our Annual Report on Form 10-K, Quarterly Reports filed on Form 10-Q, and subsequent filings with the Securities and Exchange Commission ( SEC ). Erin Energy undertakes no obligation to publicly update or revise any forward-looking statements. We use certain terms in this presentation such as contingent resources, prospective resources, leads, oil in place and similar terms that the SEC s guidelines strictly prohibit us from including in filings with the SEC. Our Probable (2P) and Possible (3P) reserves may not meet SEC rules and Guidelines (including those relating to pricing) for such reserves. These terms include reserves with substantially less certainty, and no discount or other adjustment is included in the presentation of such reserve numbers. U.S. investors are urged to consider closely the disclosure in our Form 10-K for the year ended December 31, 2016 and in our other filings with the SEC, available on our website at from us at 1330 Post Oak Blvd., Suite 2250, Houston, Texas 77056, Attn: Investor Relations, or by calling us at (713) You may get these documents for free by visiting EDGAR on the SEC web site at or by calling the SEC at SEC Company Presentation / August

3 Erin Energy Corporation Who we are and what we do Erin Energy Corporation is an independent oil and gas exploration and production company focused on energy resources in sub-saharan Africa Asset portfolio consists of 5 licenses across 3 countries covering a gross position of ~6,100km 2 (1.5 million acres) 5 World-class assets in 3 African countries Assets include current production and other exploration projects offshore Nigeria, exploration licenses offshore Ghana, Kenya and Gambia, and onshore Kenya 3.6 Billion barrels of un-risked resources 16 Million barrels of net reserves (2P) Highly-experienced management team and board of directors Headquartered in Houston, Texas, and listed on the New York (NYSE MKT) and Johannesburg Stock Exchanges (JSE) under the ticker symbol ERN Key Facts Trading Symbol (NYSE)... ERN Stock Price (8/10/17) $2.32 Shares Outstanding (8/10/17) M 52wk Range $ Month Average Vol ,850 Insider Ownership (8/10/17)... 84% Market Capitalization (8/10/17).. $484.4M Enterprise Value (8/10/17)... $707.9M Cash on Hand (6/30/17)......$10.7M Debt (6/30/17).. $325.1M Full-time Employees (8/10/17) Fiscal Year Ends Dec 31 Website... Corporate HQ....Houston, TX Company Presentation / August

4 Our Company at a Glance We are a global E&P company with a leading Sub-Saharan Africa portfolio that is well positioned to provide exceptional value for shareholders NIGERIA Offshore Gross Acres Interest Partner Status 2P / 2C Contingent (mmboe) OML , % - Production 16.5 (2P) / OML , % - Exploration 43.3 (Uncertified 2C) GAMBIA Offshore Gross Acres Interest Partner Status Comment 2016 average production c. 5.1 kbopd 3 wells to be drilled and tied-back to existing infrastructure to increase production 5 prospects (G, Ereng, Oyo NW, P and Ewo Deep) with 3.6 bn bbls of unrisked recoverable prospective resources G and Oyo-NW prospects targeted for drilling in Block A2 320,000 20% FAR Exploration NA Carry on first exploration well - expected in 2018 Block A5 343,000 20% FAR Exploration Blocks on trend with the SNE oil discovery in Senegal 3D seismic acquisition completed and being processed Several leads identified with new 3D seismic 1B+ barrels prospective resources, per FAR ltd. GHANA Offshore Expanded Shallow Water Tano Block Gross Acres 373,000 30% 30% 25% 15% Interest Partners Status Ultramar Energy GNPC Base Energy Exploration Appraisal 16.2 (Certified 2C) (yet to be certified) Waiting for resolution on boundary issues (maritime water dispute with Côte d Ivoire) 3 Discovered Fields with 2C contingent resources 4 high-quality prospects identified 3D seismic acquisition planned Company Presentation / August

5 Near-Term Catalysts Oyo-9 Production expected by year-end 2017 ~7,000 BOPD tied back to existing infrastructure No additional operating costs (tie-back to existing Armada Perdana FPSO) Significantly reduces breakeven cost per barrel Oyo-NW Exploration well to tap into Miocene formation with 1,109 MMBBLS Mean Resources (1) Drilling expected 2H 2017 Capital requirement of ~$40m High % chance of success in relation to benchmarked projects G-Prospect Exploration well to tap into Miocene formation with 160 MMBBLS Mean Resources (2) Drilling expected 2H 2017 Capital requirement of ~$26m High % chance of success in relation to benchmarked projects Balance Sheet Pre-export facility of $100mm closed in 1Q 2017 with MCB to drill Oyo-9 Balance Sheet currently constrained restructuring will allow Erin to raise development capital (equity and / or debt) Accounts Payable restructuring negotiations with vendors underway - $25M in reductions in Q217 M&A Considering strategic acquisitions Focus on producing assets Targeting 10,000 20,000 BOPD (1) Source: Management estimates (un-risked) based on Ikon Science Study Inputs (2) Source: DeGolyer and MacNaughton G Prospect downthrown target Company Presentation / August

6 2017 Development Drilling Oyo-9 2H 2017 Project Nigeria OML 120 Oyo NW Oyo-9 Oyo-9 Erin Energy Provide additional drainage point in the Oyo Central field T1A reservoir, by drilling and completing in the western extension area of the field. Increase field production by ~7,000 bopd and develop ~8 MMstb of oil reserves. Additionally, ~2,000 bopd from Oyo 7 will be reestablished with the development of Oyo 9 Tie-in to existing production facilities Company Presentation / August

7 Nigeria: Oyo-9 Current Operations Pacific Bora drilling rig arrived at the Oyo-9 field in deepwater offshore Nigeria on August, 1 st 2017 Oyo-9 has been spud as of August, 11 th 2017 Drilling and completion is estimated to last ~ 62 days Oyo-9 is projected to add 6,000 7,000 bopd to field production In conjunction with the completion operations on Oyo-9, we will undertake operations on Oyo-7 to install a gas-lift line for well startup and to provide continuous lift assistance Pacific Bora drilling rig arrives at Oyo-9 field in deepwater offshore Nigeria Total field production is expected to increase to 12,000 13,000 bopd with the successful execution of this development program Flowline Reels at Oceanic Logistics base Onne Company Presentation / August

8 Daily Production (BOPD) Daily Production (BOPD) Drill-Ready Exploration Wells Nigeria OMLs 120 and 121 Overview Prolific Western Niger Delta (> 40 Billion Barrels Discovered) Flanked by the Giant Fields Bonga, Erha & Bosi Production Facilities on the Block Prioritized high-value exploration portfolio Five Prospects Drill Ready Mean Prospective Resources of 3.6 Bbbls oil (5 Prospects) Oyo NW Anticipated Development Summary 60,000 50,000 40,000 G Downthrown G Upthrown Erin Energy 30,000 20,000 10, , , , ,000 50,000 Ereng OML 120 & 121 Portfolio of 22 prospects and leads Est. Production (Net mmbbls) Prospect G Ereng 239 mmbbls 1,695 mmbbls Source: * DeGolyer and MacNaughton. Prospective resources & production values are unrisked Company Presentation / August

9 Nigeria: Oyo NW Prospect Near-term Project A massive NE-SW oriented, highly faulted, shale diapir influenced structure HORIZON 5 FAR AMPLITUDE/DEPTH MAP A Pliocene / Miocene stacked channel sequences stratigraphically trapped at all levels Prospective sequence from meters Large amplitude anomalies, from km 2 area, mapped at the interpreted levels. Flat events have been recognized at the main target levels. B A lower risk, high impact, high reward prospect km2 Hc polygon area INTERPRETED OYO 3D XLINE 1580 SHOWING OYO NW TARGET LEVELS A H50 B Third Party Quantitative Interpretation study completed by Ikon Science showing significantly higher potential Shallow Hazard Survey & Drilling Plan in the works Shal. 1 Shal. 2 Hor. 1 Hor, 2 Hor, 3 H200 Mean Gross Unrisked Resources: 1.1 Billion Barrels of Oil recoverable BCF GAS Hor. Hor. 4 5 H30 0 Hor. 6 FULL H400 Company Presentation / August

10 Oyo NW Prospect - Ikon Science: Quantitative Interpretation Geophysical Study Erin contracted Ikon to conduct a third party assessment of the prospect Results show a significant interval stacked oil sands High probability of finding stacked oil sands Company Presentation / August

11 Strategic Corporate Goals Matrix of Erin s strategic goals Nigeria Ghana Gambia M&A / Other Near Term (2017) Increase Production Stabilise Cash Flow Drill & Complete Oyo-9 Drill G Prospect* Drill Oyo-NW Prospect* Await resolution of boundary issue Explore option to improve development economics Plan 3D seismic acquisition Interpreting new 3D seismic Secured Farm-out partner Negotiate AP Convert debt to equity Launch Equity Raise Medium Term ( ) Drill Oyo-10 to maintain production Explore G Prospect tie back & appraisal Tie-back of Oyo-NW early production wells Further exploration of Ereng and Oyo-West Prospects Seismic acquisition, processing & interpretation Consider development decision Assess exploration potential Appraisal of fields High grade prospect inventory 1 st exploration well (nonoperating) Explore M&A Opportunities Reduce debt Increase liquidity Long Term (2020 +) Drill Oyo-11 to maintain production Explore tie in of Near Field G Field development Oyo-NW, Ereng and Oyo- West Field Development Develop 3 discovered Tano Fields Drill further exploration wells Appraisal drilling Plan of development / FEED Execute on M&A strategy Significantly reduce net debt Increase equity & liquidity Manage accounts payable * With Capital Raise Company Presentation / August

12 Resource Prospective Wells Reserves with High-Impact Upside Potential Estimated 2P reserves and 2C resources add up to ~101 mmboe at 2016 year-end 2P proved reserves of 16.5 mmboe year-end C certified resources of 16.2 mmboe 2C yet-to-be certified resources of 68.5 mmboe ESTIMATED 2P RESERVES AND 2C RESOURCES AT 2016 YEAR- END Prospective resource base of up to 3.6 bboe contributed from the various prospects in OMLs 120 and 121 Hypothetical valuation of ~ $1 Billion + At $0.25 / barrel of oil in the ground, resources could equate to $900M At $0.50 / barrel of oil in the ground, resources could equate to $1.8B PROSPECTIVE RESOURCES Oyo North West* 1109 OML 120 (2P) 16.5 G Prospect Up & Downthrown OML 121 (Uncertified 2C) 43.3 P Prospect (East & West) 253 Ghana (Certified 2C) 16.2 Ewo Deep Prospect Ghana (yet to be certified) 25.2 Ereng Prospect Total Total MMBOE MMBOE Source: Erin Energy disclosure, 2016YE reserves. DeGolyer & MacNaughton (Nigeria prospective resources report, 15/09/2014). Note: Oyo North West prospect resources not included the D&M Sep 14 report and based on Ikon Science Study and Management estimates. Company Presentation / August

13 Our Team Experienced and diverse international management team Femi Ayoade Masters (Petroleum Engineering), University of Houston Chief Executive Officer 3. Carl Scharpf MSc (Geology), University of Cincinnati VP, Exploration and Geoscience 2. Mr. Ayoade joined the company as technical manager in September Prior to joining Erin Energy, he was technical manager of Allied Energy Plc where he provided leadership in a variety of positions, including Drilling, Petroleum Engineering, and Project and Petroleum Operations. Mr. Ayoade earned a HND degree in petroleum engineering from the Petroleum Training Institute in Nigeria and a master's degree in petroleum engineering from the University of Houston. He is a member of the Society of Petroleum Engineers. Heidi Wong MBA, Wuhan University Senior Vice President and Chief Administrative Officer Appointed Senior Vice President and Chief Administrative Officer, September 2013; joined the Company in 2008; Two decades experience, business development, government liaison and commercial affairs With Texaco and Chevron; Member of the Association of International Petroleum Negotiators, Society of Petroleum Engineers years experience in the oil and gas industry worldwide. Was offshore gulf of Mexico exploration manager for Apache Corporation. Previous positions at Murphy Oil, Marathon Oi, Burlington Resources, Union Texas Petroleum and Amoco. Member of American Association of Petroleum Geologists. Ojay Uzoh Masters (Petroleum Engineering), University of Houston VP, Technical Over 29 years engineering experience spanning five continents. Spent 20 years at shell international E&P and Shell Oil SA. Technical consultant to a major Los Angeles hedge fund. Member of the Society of Petroleum Engineers. Olu Marinho BS degree in Civil engineering, Case Western Reserve University; MS structural engineering, Stanford University VP, Projects Twenty years experience in the upstream oil and gas sector. Previously senior project management positions Eni E&P S.p.A and the Royal Dutch Shell group. Hands on experience in the planning and execution of multi-billion dollar projects for deep water applications Company Presentation / August

14 Summary Asset portfolio consists of 5 licenses across 3 countries covering a gross position of ~6,100km2 (1.5 million acres) Currently 1 producing well in Nigeria (Oyo 8), producing ~5,100 BOPD Oyo-9 production expected end of Q417 - ~7,000 BOPD Oyo 7: reestablish production concurrently with Oyo 9; ~2,000 BOPD Oyo-NW expected to be drilled 2H 2017 Capital requirements of ~$40M Balance Sheet currently constrained restructuring will allow Erin to raise development capital (equity and / or debt) Currently in negotiations with vendors to restructure Accounts Payable Estimated 2P reserves and 2C resources add up to ~101 mmboe Prospective resource base of up to 3.6 bboe Positioned to dramatically increase production with minimal additional cost for each barrel of oil produced Company Presentation / August

15 Appendix Company Presentation / August

16 Nigeria: OML120 G Prospect Multiple objects in the upper / mid Miocene play m water depth Drill Depth: 2,600 m Upper/Mid Miocene amplitude supported play Faulted rollover anticline on top of shale ridge Mean un-risked recoverable prospective resources Oil: 239 mmbbl SE G Horizon Structure with Amplitude Attribute Company Presentation / August

17 (stwt)ti me Nigeria: OML120 Ereng Prospect Targets Miocene mini-basin play; mean unrisked recoverable resources of 1.7bn bbl 715 m water depth Drill Depth: 4,200 m Mix structural-stratigraphic prospect with 4 amplitude supported sedimentary units NW Proposed Location SE Multi-targets Miocene Minibasin play: ponded slope fan lobes, confined amalgamated channel/lobe systems and unconfined sheet sands systems Mean unrisked recoverable prospective resources 4 Oil: 1,700 mmbbl Associated gas: 2,086 bcf km Company Presentation / August

18 Ghana Overview Block with 3 discovered fields Near term development opportunity In-place oil volumes of 500 million barrels Exploration Potential Identified four high quality prospects adjacent to the discovered fields Prospects are arranged in corridor between West Tano and South Tano near field opportunities Exploration portfolio provides low risk update to discovered fields 3D acquisition planned to better define prospectivity Company Presentation / August

19 The Gambia Overview Blocks A2 & A5 awarded in 2012 for 4 years to December 2018 Farmed out 80% interest to FAR for $5.2MM and secured a carry on the first exploration well Fan Discovery SNE Discovery Exploration Well Planned for 2018 Exploration Potential On trend with Cairn s Senegal SNE Oil Discovery with 2C contingent resource of 561 MMBO Large 4- Way dip closure prospect Mapped on new modern 3D Seismic Erin Energy Prospect Depth Structure Map - Albian Sandstone Proven Petroleum System High Chance of Success Same reservoir section penetrated in the SNE Discovery Company Presentation / August

20 Kenya Overview 4 blocks awarded in 2012 Allowed two ultra-deepwater blocks to expire in February 2017 to focus on the two onshore blocks First extension period for L1B and L16 (Expired lease, with opportunity to renew) Completed Gravity & Magnetics & 2D Seismic Seeking partner to acquire infill 2D Seismic Survey on L16 L16 L1B Exploration Potential Proven petroleum system demonstrated by hydrocarbon shows from offsetting wells Numerous high potential leads have been identified Company Presentation / August

21 The Board Distinguished Board of Directors Frank Ingriselli Chairman, Independent Director Mr. Ingriselli serves as the President and Chief Executive Officer of Blackhawk Energy Ventures Inc., a position he has held since founding the company in 2016, and has more than 36 years of experience in the energy industry with wide ranging oil and natural gas exploration and production company experience in diverse geographies, business climates and political environments. Mr. Ingriselli was the founder in 2011 of PEDEVCO Corp. a NYSE MKT listed company and the founder of Pacific Asia Petroleum Inc. in 2005 (Erin s predecessor entity). 5 John Rudley Independent Director Dr. Rudley served as the President of Texas Southern University from February 2008 to July 2016, where he was responsible for instituting substantive and far-reaching changes via administrative, academic, student and outreach initiatives. From June 2007 to February 2008, Dr. Rudley served as the Interim Chancellor for the University of Houston System and the Interim President for the University of Houston. 2 Lee P. Brown Independent Director 6 Mahmud Ahmed Independent Director Board member since April, 2010; career in law enforcement; three-term Mayor of Houston; Director, White House Office of national Drug control Policy, Clinton administration; honorary doctorates from Florida International University, Portland State University, State University of new York, Fresno state University, John Jay College of Criminal Justice, Paul Quinn College, Howard University; Chairman, CEO of Brown Group International, Board Chairman, Unity National Bank. Mr. Ahmed has an extensive history of government service on behalf of the Republic of Nigeria and has served at the highest levels of the Nigerian Government. Mr. Ahmed served as the Secretary to the Government of the Federation of Nigeria, a role that involved serving as Secretary to all Councils and bodies chaired by the President of the Republic, such as the Federal Executive Council and the Council of State. Mr. Ahmed served as the Minister of Defense and as the Head of Civil Service, where he was responsible for instituting fundamental reforms. 3 Dudu Hlatshwayo Independent Director 7 J. Michael Stinson Independent Director 4 Board member since 2015; Independent non-executive director, Public Investment Corporation of South Africa, since December 2013; Chairman and founder, Change EQ, privately-held management consulting firm; board member, KZN Growth Fund, AFMETCO, and the Land Bank; passionate about building ethical and sustainable corporate organisations that are sensitive to the environment. Femi Ayoade Director / Chief Executive Officer Mr. Ayoade joined the company as technical manager in September Prior to joining Erin Energy, he was technical manager of Allied Energy Plc where he provided leadership in a variety of positions, including Drilling, Petroleum Engineering, and Project and Petroleum Operations. More than 37 years experience in upstream and mid-stream oil and gas with ConocoPhillips and its predecessor company, Conoco, Inc. Multi-national operational and leadership experience with extensive experience in business development, corporate planning and M&A activity as an executive at ConocoPhillips and as a director of numerous listed companies. Extensive experience in government and public relations as SVP, Government Relations at ConocoPhillips and as Senior Advisor to the Iraqi Ministry of Oil for the U.S. Department of Defence. Company Presentation / August

22 Cap Structure Description ERN - Capital Structure as of Q117 (Mar ) Type Principal Due ($M) Promissory Note Loan Term Loans 24.9 NA Promissory Note Borrowing Facility with Allied in The Form of a Convertible Note Bonds and Notes 6.4 NA Pre Export Finance Facility Agreement with The Mauritius Commercial Bank Limited Term Loans 28.2 NA Coupon/ Base Rate Floating Rate Maturity Seniority Secured Convertible 1-Month LIBOR % 4/1/2018 Senior Yes Convertible USD 1-Month LIBOR % 4/1/2018 Senior No No USD Bonds and Notes 48.5 NA LIBOR % 4/1/2018 Senior No Convertible USD 3-Month LIBOR % 12/31/2019 Senior Yes No USD Repayment Currency Term Loan Facility with Zenith Bank PLC Term Loans % LIBOR 2/1/2021 Senior Yes No Convertible Subordinated Note Bonds and Notes 50 NA 1-Month LIBOR % - Subordinated No Convertible USD Company Presentation / August

23 Contact us For more information: NYSE MKT: ERN I JSE: ERN Main Investor Relations Media Erin Energy Corporation Corporate Headquarters 1330 Post Oak Blvd., Suite 2250 Houston, Texas Company Presentation / August