OTTO ENERGY ASX Small to Mid Caps Conference 19 th MARCH 2009 LONDON
HIGHLIGHTS International oil producer with attractive exploration and development portfolio across 4 countries Current net working interest from Galoc production around 2,600 bopd Galoc gross mid case reserves around 20 MMbbls Current average OPEX around US$16 per barrel Currently finalising JOA documentation with BHP Billiton to fund deepwater exploration in SC55, Philippines Busy CY09 exploration and development activity schedule Exploration drilling in Argentina, Italy Gas field development in Turkey Equity raising A$35 million via 15% placement and 3 for 4 entitlement, both at 7 cents / share Funds for exploration and development projects, reduce corporate debt, working capital Two major shareholders contributing $14 million to Equity Raising with long term investment strategy
OTTO HAS A BALANCED PORTFOLIO Philippines Oil (and gas) focus Production and reserves at Galoc Calauit oil appraisal project SC55 deepwater exploration HoA in place for farm out to BHPB Europe Gas focus All lower risk and onshore Turkey gas development project High impact Italian exploration Argentina Oil focus Lower cost onshore exploration VALUATIONS ARE BASED ON SUCCESSFUL EXPLORATION
PHILIPPINES
GALOC OIL FIELD PRODUCTION (SC14C) Otto holds 18.28% indirect interest in offshore Galoc Oil Field Via a 31% shareholding in the Operator, Galoc Production Company, which has a 58% interest Vitol is the other shareholder in the Galoc Production Company Otto estimates Gross mid case field reserves of the order of 20 MMbbls First oil 9 th October 2008 Production recommenced 25 February 2009 following a M&RS related shut down in Dec 2008 Currently producing at approximately 15,000 bopd gross Field has produced over 1 million bbls gross There are a number of incremental development options NE flank of field Attic volumes Galoc North exploration
GALOC OPERATIONAL ISSUES Shut down Dec 2008 due to weather related issues and need to reattach Riser to Tether at LRTI with delays in recommencing production due to: Time required to mobilise divers, parts and equipment over the Christmas and New Year period Improvements to Mooring and Riser System (M&RS) Installation of stern mooring arrangement, the Hold Back Mooring System (HBMS) No FPSO operating costs charged during shut down Minor costs incurred for upgrades to M&RS Future benefits from infrastructure and operational improvements expected: Decreased operating expenditure through fuel cost savings Anticipated increased uptime Simpler and more controlled disconnections (during typhoon season)
GALOC MOORINGS AND RISER FPSO New Hold Back Mooring System Water Depth 290m Additional buoyancy added to Upper RTI Lower RTI FPSO Mooring Tether Mooring Base Riser Base Flow line & Umbilical Riser Trees Jumpers Horizontal Wells
CASHFLOW TO FUND PROJECT FACILITIES Assumptions 2HFY09 Gross production (mmbbls) 1.3 1.5 (mbopd average daily) 10.8 12.5* Average opex (US$/bbl) ~16 Realised oil price (US$/bbl) 40 50 60 Net Otto share of GPC Cashflow (US$mm) ~6 ~9 ~12 Otto s Galoc operations funded by non recourse net project debt of US$8.8 million at 28 February 2009 Bullet payment of US$ 1.55 million to be paid by end of March 2009 Remaining GPC debt targeted to be repaid by 2H09, dependent upon Realised oil price Performance of two wells and rate of decline Facility uptime and typhoon interruption * Over 4 months. No production 1 st Jan 24 th Feb 09
Galoc Development Options
SC55 EXPLORATION Otto to farm down from 85% to 25% with BHPB to operate (earning 60%) Conditional HOA executed JV partner TransAsia hold 15% interest Water depths of 300 2,000m Large permit area of 9,000km 2 Currently finalising JOA documentation with BHPB to fund deep water exploration BHPB drill and cover costs of two deep water wells BHPB pay cost of multi prospect 3D seismic survey BHPB to reimburse Otto back costs. Otto estimates documentation of farm in expected to be completed Q2 2009 with 3D seismic to follow in 2H 2009 and drilling in 2010.
SC55 PROSPECTS AND LEADS SC 55 Deep Water Licence Shell/Conoco Phillips oil discovery 1,000km DEEP WATER OIL & GAS TREND
ADDITIONAL PHILLIPINES APPRAISAL/EXPLORATION SC50 Appraisal of Calauit Oil Discoveries (85%) Otto Operator Up to 75MMbbls STOIIP Seeking farm in partner SC51 Exploration (80%) Otto Operator 11 prospects and leads on 2D & 3D recorded in 2007 Combined potential in this offshore block is 500MMbbls STOIIP (mid case) Seeking farm in partner SC69 Exploration (70%) Otto Operator Minimal committed work program seismic with 1 well commitment in last year of 7 year term
EUROPE
TURKEY: EDIRNE DEVELOPMENT Otto 35% Working Interest Incremental Petroleum /TransAtlantic (Operator 55%) Gross discovered volumes of between 10 20 Bcf 6 gas discoveries 100% success rate + numerous prospects on 3D Turkish gas prices remain robust ~US$12/Mscf Gas Sales Agreement under negotiation Development underway with first gas expected late 2009/early 2010 Gross CAPEX less than US$10 million expected to be paid for by gas buyer
ITALY: PO VALLEY EXPLORATION Otto farming in for 50% WI 1 firm + 1 contingent well @ US$5million/well (dry hole) Operated by AIM listed Ascent Resources Plc Gas Field Gazzata 1 Oil Field Gazzata 1 targeting up to 350 Bcf gas Strong Direct Hydrocarbon Indicators (DHI) on seismic on trend with producing gas fields Proven producing province Po Valley has produced 15.6 Tcf gas Gas Field Existing nearby infrastructure and robust regional gas prices Drilling first exploration well, Gazzata 1 Q2 2009 Gas Fields Rubiera Significant follow up potential with targets 50 to 500 Bcf
ARGENTINA
SANTA ROSA EXPLORATION EXISTING OIL FIELDS SANTA-ROSA OIL PROSPECT
COMBINED PORTFOLIO NON OPERATED, ONSHORE Turkey, Italy, Argentina OPERATED, OFFSHORE Philippines
PROJECT PIPELINE OFFSHORE OIL, S.E ASIA SC69 Oil SC51 Oil SC55 Oil SC50 Calauit Galoc Phase 2 Galoc Phase 1 Exploration Development & Appraisal Production ONSHORE GAS, EUROPE Italy Gas Turkey Gas Argentina Oil Turkey Gas
FUTURE POTENTIAL Phase 1 Galoc forecast Discovered undeveloped Galoc Phase 2, Calauit, Turkey + DEEP WATER & NEAR DISCOVERY FOLLOW UP POTENTIAL Potential profile assuming just one exploration success across either Philippines, Italy or Argentina Ultra deep water (SC55) potential off the chart. Permits also contain multiple prospects with follow up potential.
BOARD OF DIRECTORS RICK CRABB CHAIRMAN (NON - EXECUTIVE) B JURIS (HONS) LLB MBA JAAP POLL DIRECTOR (NON - EXECUTIVE) PHD PHILOSOPHY AND GEOLOGY RUFINO BOMASANG DIRECTOR (NON - EXECUTIVE) NORASIAN CHAIRMAN IAN MACLIVER DIRECTOR (NON - EXECUTIVE) JOHN JETTER DIRECTOR (NON EXECUTIVE) Mr Rick Crabb holds a degree in law and business administration from UWA. He practised as a solicitor from 1980 to 2004, specialising in resources. He is now a full time Director, also being Chairman of Paladin Resources and other resource companies. Dr Jaap Poll is the founder of the company with a distinguished 40 year career in petroleum management worldwide. He has extensive work experience in the Middle East, Europe, Central America, Africa, Asia and Australia. Mr Rufino Bomasang, originally a mining engineer, has held numerous senior positions in Philippines industry and DoE. Including being former head of the Philippines DoE and former President of PNOC-EC. Mr Ian Macliver is Managing Director of Grange Consulting Group Pty Ltd, which provides specialist corporate advisory services. He has many years experience as a senior executive and director. Mr Jetter is a solicitor and barrister, a member of the Australia Law Society and has extensive international finance and M&A experience, including being the former CEO and head of investment banking in JP Morgan in Germany. Distinguished board with big company experience (Paladin, PNOC, Shell, Woodside, JP Morgan) With the vision and capability to oversee the growth of Otto
INDICATIVE WORK PROGRAM Activity Date Galoc back on production 25 Feb 2009 Complete BHPB SC55 documentation Q2 2009 Sign Turkey Gas Sales Agreement Q2 2009 Drilling of 350 Bcf target (Gazzata 1 well) in Italy Q2 2009 Drilling of up to 950 MMbbl target in Argentina Q2 2009 Farm out of Philippines projects (SC50 and 51) 2H 2009 Conduct 3D seismic in SC55 in Philippines 2H 2009 Commence gas production in Turkey Q4 2009/Q1 2010 Drilling in Philippines SC55 2010 2012 Galoc Phase 2 and Calauit oil field appraisal/development 2010/2011
DETAILS OF CAPITAL RAISING Equity raising of A$35 million via Placement and Entitlement Issue Otto s two major shareholders and Directors remain strong supporters Participating in Entitlement Issue and Sub Underwriting to extent of A$14 million Directors also providing a short term unsecured loan facility of A$1.53M and participating in the Entitlement Issue to approximately A$1 million Placement S.708 Placement under Company s 15% capacity 73.9 million shares at 7 cents per share Gross proceeds of A$5.2 million All placees firm on entitlement Entitlement Issue 3 for 4 share entitlement at 7 cents per share Gross proceeds of A$29.7 million Fully underwritten by Euroz
USE OF FUNDS A$ Million* Repay Shareholder & Director Loans 12.9 Italy Drilling 8.5 Argentina Drilling 2.5 Turkey Development 1.8 Working Capital / G&A / Contingency / Costs 9.3 Total 35.0 Assumes shareholder and Director loan facilities are fully drawn in order to pay the US$1.55 million March 31 2009 bullet payment on the Galoc project non recourse debt facility * Assuming USD exchange rate of 0.65
TRANSACTION TIMETABLE INDICATIVE TIMETABLE Trading Halt Pre market, Tuesday, 17 March 2009 Firm bids to Euroz by 7pm (AEDT) Wednesday, 18 March 2009 Allocations advised 10am (AEDT) Thursday, 19 March 2009 Return of signed Confirmation and Settlement Advice by 2pm (AEDT) Thursday, 19 March 2009 ASX Announcement and return to trade Thursday, 19 March 2009 Ex entitlement date Tuesday, 24 March 2009 Expected DvP Settlement of Placement Shares Friday, 27 March 2009 Entitlement Issue Record Date Monday, 30 March 2009 Entitlement Issue Opens Thursday, 2 April 2009 Entitlement Issue Closes Monday, 20 April 2009 Shortfall Notice to Sub Underwriters Thursday, 23 April 2009 Settlement Entitlement Issue Tuesday, 28 April 2009
POST RAISING CAPITAL STRUCTURE million Issued capital (fully paid ordinary shares) 492.7 s.708 Placement shares 73.9 3 for 4 share Entitlement Issue 424.9 Director Shares (subject to shareholder approval) 5.0 Total shares on issue 996.5 Existing unlisted options held by Directors and Staff ($0.20 $0.60) 45.5 Sub underwriting options to be issued (subject to shareholder approval) 56.0 Total shares and options 1,098.0 Market capitalisation at 7 cents per share (excluding out of the money options) Cash at 28 February 2009 adjusted for equity raising proceeds (before issue costs)* Shareholder Loans at 28 February 2009* Galoc project non recourse debt facility at 28 February 2009* A$73.7 A$37.3 A$7.7 A$13.5 * Assuming USD exchange rate of 0.65
SUMMARY Fully funded after capital raising with strong support from major shareholders and board Galoc oil field back on production 25th Feb 09, first million barrels produced, Reserves of ~ 20MMbbls with further upside Major Farm out deal with BHPB on SC55 Documentation to be completed Q2 2009 BHPB to fund 3D seismic program this year Otto carried in deep water drilling in 1 well 2010 and 1 well 2011. High impact exploration drilling campaign to commence Q2 2009 Low risk onshore gas drilling Italy Target up to 250 Bcf recoverable Onshore oil drilling Argentina Target > 100MMbbls recoverable Turkey onshore gas development production late 2009/early 2010 Galoc Phase 2 development 2010 onwards
DISCLAIMER This presentation does not constitute an offer to sell securities and is not a solicitation of an offer to buy securities. It is not to be distributed to third parties without the consent of Otto Energy Ltd (the Company ). This presentation contains forward looking statements that are not based on historical fact, including those identified by the use of forward looking terminology such as statements containing the words believes, may, will, estimates, continue, anticipates, intends, expects, should, or the negatives thereof and words of similar import. Management of the Company cautions that these forward looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied by the statements. Management believes that the estimates are reasonable, but should not unduly be relied upon. The company makes no representation, warranty (express or implied), or assurance as to the completeness or accuracy of these projections and, accordingly, expresses no opinion or any other form of assurance regarding them. Management does not intend to publish updates or revisions of any forward looking statements included in this document to reflect the Company s circumstances after the date hereof or to reflect subsequent market analysis.
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