AGM NXT Energy Solutions Inc.

Transcription

1 AGM

2 Disclaimer and Forward-looking Statements General Advisory The information contained in this presentation does not purport to be all-inclusive or contain all information that readers may require. You are encouraged to conduct your own analysis and review of NXT Energy Solutions Inc. ( NXT, or the Company ) and of the information contained in this presentation. Without limitation, you should read the entire record of publicly filed documents relating to the Company, consider the advice of your financial, legal, accounting, tax and other professional advisors and such other factors you consider appropriate in investigating and analyzing the Company. You should rely only on the information provided by the Company and not rely on parts of that information to the exclusion of others. The Company has not authorized anyone to provide you with additional or different information, and any such information, including statements in media articles about NXT, should not be relied upon. An investment in the securities of NXT is speculative and involves a high degree of risk that should be considered by potential purchasers. NXT s business is subject to the risks normally encountered in the oil and gas industry and, more specifically, certain other risks that are associated with NXT s operations and current stage of development. An investment in the Company s securities is suitable only for those purchasers who are willing to risk a loss of some or all of their investment and who can afford to lose some or all of their investment. You should carefully consider the risks described under the heading Risk Factors in the Company s Annual Information Form for the year ended December 31, Caution Regarding Forward-Looking Information This document contains certain statements or disclosures that may constitute forward-looking information on forward-looking statements under applicable securities laws. All statements and disclosures, other than those of historical fact, which address activities, events, outcomes, results or developments that NXT anticipates or expects may or will occur in the future (in whole or in part) should be considered forward-looking information. In some cases, forward-looking information can be identified by terms including, but not limited to, "future", "may", "will", "expect", "anticipate", "believe", "potential", "enable", "plan", "continue", "contemplate", "intend" or other comparable terminology. In particular, this document contains, among other things, forward-looking statements pertaining to certain projects and /or contracts the Company anticipates participating in or entering into and the terms thereof. In addition to the cost efficiencies associated with the deployment of NXT s SFD technology in identifying, evaluating and exploiting oil and gas reserves. Such forward-looking statements reflect the Company's current views with respect to future events, are subject to risks and uncertainties and are based upon a number of factors and assumptions. Actual results may differ materially from those expressed in forward-looking statements due to a number of uncertainties and risks, including the risks described in this document and other unforeseen risks. Such risks, uncertainties, factors and assumptions include, without limitation: commodity prices, foreign currency fluctuations, availability of aircraft, reliance of specialized equipment, geological conditions, reliance on key personnel, flight operations, changes in market competition, governmental or regulatory developments, general economic conditions; and that the Corporation will be able to access capital, including debt, on acceptable terms. The Company is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable law. The Company believes there is a reasonable basis for the forward-looking information contained herein but readers should not place undue reliance on forward-looking information or disclosures and actual results may vary materially from the forward-looking information contained herein. The foregoing statements expressly qualify any forward-looking information contained herein. 2

3 Agenda FINANCIAL REPORT Current Capital Structure Private Placement SIGNED MOU TO USE SFD AS A LEAD TECHNOLOGY IN ACEH, INDONESIA 2017 REVIEW AND MARKET POSITIONING Notable Accomplishments US Patent Industry Challenge SFD Success Rates SFD Recommendation to Discovery Global Oil Market BUSINESS DEVELOPMENT OVERVIEW Indonesia (Aceh) MOU Mexico Multi-Client Survey Business Development Progress NXT PARTICIPATING IN A JOINT TECHNICAL SEMINAR 3

4 Current Capital Structure TSX : SFD $ Week High: $ Week Low: $0.39 Average Daily Volume: 10,262 Shares OTC QB: NSFDF $ Week High: US $ Week Low: US $0.317 Average Daily Volume: 37,594 Shares Capitalization * Share Outstanding (in Millions) as of March 31, Common shares issued % Stock options (average exercise price of $1.44) Warrants (exercise price of $1.20) Fully diluted number of shares Of Fully Diluted Shares Owned by Directors/Management Cash and Short-term Investments as at March 31, 2018 Approximate cash and ST Investments on hand $ 4.1 Million Long Term Debt-Free Balance Sheet * On May 15, 2018, NXT closed on a further $2 Million at $0.924/Unit issuing 2.2 million shares & 0.7 million warrants 4

5 C$MM Strategic Financing In-Place Backed by specialist energy investors Private Placement Status $10.0 $8.0 $6.0 $4.0 $2.0 $- Tranche 3 Tranche 2 Tranche 1 Gross Proceeds $3.8 MM Remaining $6.3 MM Closed Progress Announced three-tranche Private Placement of 10,905,212 Units at a price of $0.924 per Unit on Feb 16 to Alberta Green Ventures Limited Partnership (AGV) Unit consists of 1/3 warrant; each warrant exercisable at $1.20/share to February 2019 AGV is a venture capital fund investing in new technologies for the operational and environmental improvement of the energy sector Tranche 1 - $4.3 MM closed on Feb 16 Tranche 2 $2.0 MM of $5.1MM closed on May 15 June 15 extension granted to close on $3.8 MM - remaining portion of Tranche 2 and Tranche 3 Upon closing AGV earns: Right to nominate one director to NXT s Board Participate in future financings if equity ownership in NXT >= 10% Participation includes financings for new entities that may be created by NXT to expand application of its proprietary technologies 5

6 Notable Accomplishments STATEGIC GLOBAL MARKETING INITIATIVE Commencing in the 15th Bid Round April 2018 ANP (the Brazilian National Agency of Petroleum) confirmed the inclusion of the SFD method as work credits, which counts towards the minimum exploration requirement to keep the awarded blocks. Progressed business development for potential surveys in the Americas, Africa, Asia, and offshore Atlantic regions. NEW REVENUE INITIATIVES Acquired 37,596 line km of SFD data in June 2017 for the shallow water Bid Round 2.1 covering the Tampicao- Misantla, Veracruz and Cuencas del Sureste exploration areas. The SFD survey data provides 100% grid coverage over the offshore blocks, an area of approximately 8,900 km 2. A portion of the data NXT acquired provides coverage over many of the 35 blocks offered in the recently concluded Bid Round 3.1. TECHNOLOGY ADVANCEMENTS Successfully tested the upgraded SFD Data Acquisition System during the Gulf of Mexico survey. SFD RECOMMENDATIONS SUCCESS Further field validation of SFD. In December 2017 we announced Petroquímica Comodoro Rivadavia (PCR) successfully drilled two SFD recommendations based on the 2012 NXT survey. New hydrocarbon discoveries on SFD recommendations bringing the number of validated SFD recommended discoveries in the Gulf of Mexico to four. STRONGER VALIDATION Significantly expanded protection of IP through multiple patent grants globally. SFD patents granted in Russia (January 2017), Japan (July 2017), Mexico (July 2017), Canada (August 2017) and the United States (November 2017); and notices of allowance received from China (February 2018). 6

7 NXT s US Patent Granted Patents in other countries: Canada China Japan Russia Mexico European Union (pending) 7

8 Need to Address a Critical Industry Challenge Industry grappling with poor exploration success rates ESTIMATED GLOBAL RESERVES 173 Trillion Barrels ONSHORE O&G INDUSTRY 18% SUCCESS OFFSHORE O&G INDUSTRY 7% SUCCESS 36 Billion Barrels Global Consumption/Year 82% FAILURE ANNUAL DRILLING SPEND 5 year ( ) Industry Average $8.7 BILLION 93% FAILURE < 50 Years Depletion of Reserves ANNUAL FISCAL LOSS Based on drilling failure rates $7.6 BILLION 87% of exploration capital expenditures lost Source: Wood Mackenzie 2016/Financial Times 8

9 Reliability of SFD Recommendations 21 SFD recommendations made internationally and drilled to date WILDCAT - DST No. of SFD recommendations drilled successfully (Commercial discoveries made) WILDCAT P&A No. of SFD recommendations drilled unsuccessfully (NO commercial discoveries made) 16 5 >70% SFD SUCCESS RATE Where SFD and seismic prospects correlated Average OOIP/drill : >100 MMBBL Average OGIP/drill : > 100 BCF NOT RECOMMENDED by SFD 14 seismically qualified prospects surveyed and drilled: 21% Small Commercial Discoveries Average OOIP/drill : < 5 MMBBL Average OGIP/drill : < 1 BCF 79% Dry wells 9

10 Most Recent SFD Recommendation to Discovery Colhue Huapi Discoveries Argentina 2017 Mr. Miguel Torilo, Manager of Oil and Gas at PCR commented We utilized the SFD technology in order to optimize our seismic acquisition program and to focus our exploration resources on the most prospective regions of our block. Ensuing integration of the SFD data with other geological and geophysical data combined with the drilling results to date are indicative of the effectiveness of the SFD technology within the exploration cycle. UAPI_ _FINAL_ENGLISH.pdf 10

11 (Bn bbl) MMbpd The Need for SFD is Greater Than Ever Global oil demand reaching record levels while reserves replacement reaching record lows Global Liquids Demand 1.8% 1.9% Robust oil demand driven by global economic growth OPEC supply cuts maintained and extended Resulted in higher than expected draws on US inventories US oil inventories now below 5 year average Global discovery rates at lowest levels in more than 60 years <15% of oil consumption replaced in 2017 SFD clearly identifies larger hydrocarbon discoveries Average size of SFD recommended lead is 100mmbbl Global Liquid Petroleum Discoveries Global liquids discoveries down ~96% from 2008 peak E Sources: IEA, IHS EIA, Wood Mackenzie Financial Times 11

12 Signing of MOU between GRD and Aceh Province Indonesia February 22, 2018 MOU applying SFD as a lead Technology in Aceh, Indonesia Generation Resource Discoveries signed an MOU with the Government of Aceh to apply SFD as a lead technology for all open area offshore survey. SFD survey will help plan a seismic program and build an integrated data to design future block auctions. NXT has held detailed technical meeting along with GRD with key government officials to discuss the project and its strategic value. Agreement to carry out a geophysical survey within the Aceh Basin in Indonesia and proposes to enter into contract discussions with NXT in conjunction with the performance of that survey upon securing permits and third party financing. NXT CEO, George Liszicasz presenting at the Joint Technical Seminar in Aceh, Indonesia NXT CEO, George Liszicasz witnessing the MOU with the Governor of Aceh, Indonesia Excerpts from Jakarta Post News. The deal will also open doors to use the latest innovative technologies and processes that will fuel Aceh s ambition toward faster economic prosperity for the people, Irwandi Yusuf Governor of Aceh, Indonesia said Friday. Generation Resource Discoveries plans to utilize a proven innovative airborne geophysical survey tool from Canada called Stress Field Detector (SFD) as a lead technology in its exploration program that has delivered successful commercial discoveries in Latin America. We intend to introduce and integrate such innovative technologies and processes that deliver significant commercial successes in the Asia Pacific region with our other, similar projects, said Raja Mohamed. 12

13 MC-SFD Survey Gulf of Mexico Multi Client Survey Completed in June 2017 SFD independent results and evaluation: Acquired 37,596 line km of SFD data in June 2017 for the shallow water Bid Round 2.1 Covers Tampicao-Misantla, Veracruz and Cuencas del Sureste exploration areas including blocks from Bid Round 3.1 Determine the presence of fluid entrapment Estimate lateral extension of SFD Leads Rank SFD Leads based on prospectivity Sample of SFD Prospectivity Map Mexico 2017 Integration of SFD with other subsurface data: Correlate SFD with seismically mapped prospects Exploration risk assessment (PoS) Trap, Reservoir and Seal analysis Prospect maturation and ranking Volume estimation 13

14 US$MM US$MM Business Development Progress Pursuing key target clients and developing new strategic initiatives SFD Survey Projects Being Pursued* SFD Data Sales Being Pursued* $8.1 SFD Data Other G&G Data $ Sri Lanka Ghana Mexico Indonesia Malaysia Canada 0 Mexico US Canada Malaysia Various strategic discussions for survey projects underway in the following countries: PERU BRAZIL CHINA NIGERIA PAKISTAN *Contract negotiations are by their nature uncertain and depend on numerous factors including, but not limited to, governmental/corporate approval, geopolitical risk and economic conditions. Only countries with active discussions are included. Contract value in Sri Lanka has been agreed with SHINE Quests FZC ( SQ ). Other values are indicative of expected value and subject to change. NXT signed a contract with SQ for the provision of the SFD survey services in Sri Lanka. Work will begin once SQ and the Sri Lankan government have finalized a separate contract for a larger scale infrastructure and resource development within the Mannar Basin which will include a commitment to use SFD. Contract value of ~US$29 million, of which ~US$19.9 million relates directly to SFD services. Remaining revenue of ~US $8 million relates to the additional geophysical work that may be undertaken and will be outsourced by NXT to other local and international companies. Please see NXT s filed MD&A on or our website for further details. 14

15 Thank You NXT Energy Solutions The next generation of airborne geophysical survey technology 15