Valeura Energy Inc. · TSX:VLE
Valeura Energy — Investor Presentation (October 2011)
50 slides from Valeura Energy's investor presentation, October 2011
Slide 1: Building Momentum in Turkey Corporate Presentation October 2011
A GLOBAL ENERGY COMPANY FOCUSED ON EXCEPTIONAL VALUE CREATION BUILDING MOMENTUM IN TURKEY CORPORATE PRESENTATION OCTOBER 2011
Slide 2: Profile
PROFILE Valeura Energy Inc. (VLE – TSX) Canada-based oil and gas E&P company with assets in Turkey and Western Canada Executed agreements for five transactions in Turkey since Sept 2010 (1): − AME-GYP farm-in (minimum US$8.8MM): oil in SE Anatolian Basin − Otto asset acquisition ($1.9MM): natural
Slide 3: Why Turkey?
WHY TURKEY? Prospective TBNG-PTI TBNG-PTI acquisition Proven petroleum systems Acquisition (natural gas & light/heavy oil) Under-explored & under-exploited conventional opportunity & unconventional plays Opportunity to deploy modern technology Anatolian Basin main oil producing region in Zag
Slide 4: Valeura Lands in Turkey
VALEURA LANDS IN TURKEY PETROLEUM LEASES & LICENCES GROSS AREA VALEURA NET AREA TRANSACTION DISTRICT (#) (acres) (acres) (1) THRACE BASIN TBNG-PTI – Onshore (2) I (MARMARA) 9 507,851 203,140 TBNG-PTI – Offshore (2) I (MARMARA) 5 715,217 227,024 Marhat/TransAtlantic (3) I (MARMARA) 3 364,000 243,000
Slide 5: Thrace Basin Lands
THRACE BASIN LANDS Bulgaria Otto asset purchase (35% WI) 3839 TBNG-PTI asset purchase (40% onshore; 15-35% offshore) Turkey Greece 2926 Marhat farm-in 3659 (100% WI) 3861 3860 3734 Istanbul 4126 4201 3858 3931 3934 4532 4324 4094 4322 4323 4460 4459 TransAtlantic farm-in (50% WI) 50 km 5
Slide 6: Thrace Basin TBNG-PTI Acquisition
THRACE BASIN TBNG-PTI ACQUISITION TURKEY AME-GYP FARM-IN Kahta 17 Well Tekirdag Processing Station 7 6
Slide 7: TBNG-PTI Assets
TBNG-PTI ASSETS Large acreage position with interests in 19 leases & licences (1): - 1,223,068 gross acres (430,164 net) in Thrace Basin (onshore & offshore) - 609,826 gross acres (158,555 net) in SE Anatolian Basin Established shallow gas production and marketing business in Thrace Basin: - 169 p
Slide 8: TBNG-PTI Shallow Gas Business
TBNG-PTI SHALLOW GAS BUSINESS Kazanci/ Hayrabolu Osmanli Kilavuzlu/ Bekirler Karaevli Tatarli Kayi Yagci/ Nustratli Gazi Aydede Tekirdag Evrenbey-1 (planned spud late Oct ‘11) 10 km 10 km Estimated sales 19.4 MMcf/d (gross) or 7.8 MMcf/d (net) in 3rd Cumulative Proved + Probable quarter 2011 Field
Slide 9: Unconventional Gas Opportunity
UNCONVENTIONAL GAS OPPORTUNITY Thick Tertiary-aged sediments in Thrace Basin prospective for unconventional tight sands and shale gas exploitation: - Thermally mature source rocks exist in deeper parts of basin (depth to basement up to 9,000 m) - Existing well control indicates Mezardere, Ceylan an
Slide 10: WCSB Montney Analogy
WCSB MONTNEY ANALOGY Edirne licence B’ A’ A B Mezardere Prospective Area Area = 20,000 km2 50 km TBNG Area = 7,000 km2 Avg. H = 225 m lands Avg. H = 1,500 m BRV = 4,500 km3 BRV = 10,500 km3 Source: Canadian Discovery Ltd., April 9, 2010; and IHS Energy Group 2011 10
Slide 11: WCSB Montney X-Section
WCSB MONTNEY X-SECTION 250 km B B’ FORMATION MONTNEY PARAMETER LOW HIGH Depth (m) 1,500 2,500 Gross H (m) 150 300 Net pay H (m) 30 90 ф (%) 3 10 K (md) 0 2 TOC (%) 2 4.5 Pressure Gradient 0.52 0.63 Montney 260 m (psi/ft) Area (km2) 20,000 Avg Bulk Rock 4,500 Volume (km3) Source: Canadian Discovery L
Slide 12: Southern Thrace Basin Mezardere X-Section
SOUTHERN THRACE BASIN MEZARDERE X-SECTION FORMATION MEZARDERE PARAMETER LOW HIGH A A’ Depth (m) 1,000 3,500 Aydede-1 Yagci-8 BTD-1 BTD-2 DTD-3 DTD-7 DTD-9 Kuzey Kayi-1 Gross H (m) 500 2,500 Gross sand H (m) 240 900 Net pay H (m) 32 120 Ф (%) 3 15 DTD-7,9 K (md) 0 2 Frac’d Mezardere Perforations TOC
Slide 13: Tight Gas - Proof-of-Concept Program Phases
TIGHT GAS - PROOF-OF-CONCEPT PROGRAM PHASES 1. RECOMPLETION FRACS (750-2,000 m DEPTH) Identify zones which are gas bearing in Mezardere that require fracs to achieve commercial rates focusing initially on areas within structural closure Up to six well re-entries with at least a single-stage frac i
Slide 14: BTD-2 Frac Success
BTD-2 FRAC SUCCESS Frac Design and Results Third well in proof-of-concept frac program Single-stage frac completed on Oct 3, 2011 29 metre gross interval in Teslimkoy sands in Mezardere formation at depth of 980 metres Interpreted 9.0 metres net pay and 16% porosity Limited frac size to 22
Slide 15: Otto Acquisition Thrace Basin
THRACE BASIN OTTO ACQUISITION Edirne Gathering Facilities 15
Slide 16: Edirne Licence 3D Seismic Coverage
EDIRNE LICENCE 3D SEISMIC COVERAGE – 200 KM2 Kayapa-1 Ortakci -4 Ikihoyuk field Ortakci field D&A Gas Well Ortakci field Ikihoyuk field Follow-up locations on original Follow-up 3D locations on original 3D Arpaci-2 Prospects and leads Workover Dokuztepe-1 Kirmizihoyuk Karayusuf-1 field on western Pr
Slide 17: SE Anatolian Basin Lands
SE ANATOLIAN BASIN LANDS GAZIANTEP KARAKILISE Source: IHS Energy Group 2010 17
Slide 18: TBNG-PTI Lands - Gaziantep Area
TBNG-PTI LANDS - GAZIANTEP AREA Kinali Keklik well Siratas-1 (small oil discovery) (planned spud Nov ’11) 4656 4607 4638 4648 Turkey 4649 15 km Syria 18
Slide 19: AME-GYP Farm-in - Karakilise Licences 2674 & 2677
AME-GYP FARM-IN - KARAKILISE LICENCES 2674 & 2677 Karakilise-1 recompletion (currently producing TPAO Kastel field 40-50 bopd) EUR: 15 MMbbl Mardin Play Fairway Altinakar-1 drill well (Mardin oil discovery) AME Arpatepe field (currently producing 500-600 bopd) Bedinan Play Fairway Valeura Farm-in La
Slide 20: Licence 2674 – Bedinan Prospects & Leads
LICENCE 2674 – BEDINAN PROSPECTS & LEADS 119,265 gross acres N 10+ Bedinan prospects & leads identified 2674 with new 2D seismic (tilted fault blocks) Altinakar-1 discovered heavy oil in Mardin Altinakar-1 GDPA on Sept 18, 2011 approved 3-year Bedinan drill well extension of Licence 2674 to
Slide 21: Turkey Indicative Well Economics
TURKEY INDICATIVE WELL ECONOMICS PHYSICAL PARAMETERS PER WELL PV10 ATAX (6) RECYCLE PROGRAM IP (2) ATAX ($MM) RATIO (7) RESERVES (1) CAPEX (3) F&D COST (5) (MMcf/d or Netback (4) (Bcf or Mbbl) ($MM) ($/BOE) bbl/d) ($/BOE) Thrace Basin Gas Shallow Gas Drilling 0.4 0.7 0.7 25.68 11.64 0.6 2.2 Tight Ga
Slide 22: Turkey Indicative Budget 2011
TURKEY INDICATIVE BUDGET 2011 (1) DRILLING NON DRILLING TOTAL BUSINESS SEGMENT GROSS WELLS NET WELLS WI AMOUNT WI AMOUNT WI AMOUNT (#) (#) (US$MM) (US$MM) (US$MM) TBNG-PTI Acquisition 13 5.2 4.3 7.3 11.6 Otto Acquisition 4 1.4 1.1 0.3 1.4 Marhat/TransAtlantic Farm-in 1 1.0 1.5 1.0 2.5 AME-GYP Farm-i
Slide 23: Capital Structure September 30, 2011
CAPITAL STRUCTURE SEPTEMBER 30, 2011 (POST 10:1 CONSOLIDATION) Basic shares outstanding at September 30, 2011 46,406,135 Common shares purchasable pursuant to: Financial warrants outstanding ($5.50 exercise price per share) 13,269,217 Performance warrants outstanding ($2.00 wt’d average exercise pri
Slide 24: Summary
SUMMARY Closing of TBNG-PTI acquisition in Turkey has transformed Valeura: - Boosted estimated production to 1,630 BOE/d in 3rd quarter 2011 - Acquired an established shallow gas production & marketing business currently realizing wellhead prices of approximately US$7.00/Mcf - Increased exposure to
Slide 25: Disclaimer/Forward Looking Information
DISCLAIMER/FORWARD LOOKING INFORMATION Certain information contained herein constitutes forward-looking information under applicable securities legislation. Such forward- looking information is provided for the purpose of providing information about management's current expectations and plans relati
Slide 26: Disclaimer/Forward Looking Information (Cont'd)
DISCLAIMER/FORWARD LOOKING INFORMATION (CONT’D) inherent in pursuing oil and gas opportunities in foreign countries; the state of the capital markets; the ability of the Corporation to obtain financing on acceptable terms; the ability of the Corporation to obtain qualified staff, equipment and servi
Slide 27: Oil and Gas Terms and Advisories
OIL AND GAS TERMS AND ADVISORIES OIL AND GAS TERMS: "reserves" are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on analysis of drilling, geological, geophysical and engineering data; the
Slide 28: Supplementary Information
A GLOBAL ENERGY COMPANY FOCUSED ON EXCEPTIONAL VALUE CREATION SUPPLEMENTARY INFORMATION
Slide 29: Our Heritage
OUR HERITAGE Senior Management Board of Directors 29
Slide 30: Recent Successes of Management & Board
RECENT SUCCESSES OF MANAGEMENT & BOARD Sold 2009 $360 mm Market Cap 3x ROI (’04-’09) ~$903 mm CAGR 22% Market Cap at Trust Conversion Sold in 2008 $916 mm $202 mm 35x ROI (‘94-’03) 4x ROI (’05-’08) CAGR 51% CAGR 89% Sold in 2006 Sold in 2005 $306 mm $122 mm 1.4x ROI (’03-’06) 3x ROI (’02-’05) CAGR 1
Slide 31: Organization Structure
ORGANIZATION STRUCTURE BOARD OF DIRECTORS Abby Badwi Jim McFarland Bill Fanagan Ken McKay Claudio Ghersinich Ron Royal Stephanie Stimpson, Corporate Secretary PRESIDENT & CEO Jim McFarland ASSISTANTS Kumari Campbell Shari Lemon MANAGER MANAGER VP VP CFO BUSINESS GEOSCIENCES ENGINEERING OPERATIONS DE
Slide 32: Management - Officers
MANAGEMENT - OFFICERS President & CEO: Jim McFarland, P. Eng. 39 years Oil & Gas Experience Former President & CEO, director and co-founder, Verenex Energy (successful Libya oil and gas explorer) Former Managing Director, Southern Pacific Petroleum (Australian shale oil) Former President & COO,
Slide 33: Management - Officers (Cont'd)
MANAGEMENT - OFFICERS (CONT’D) VP Engineering: Don Shepherd, P. Eng. 40 years Oil & Gas Experience Former General Manager, Verenex Energy Area 47 Libya based in Tripoli Former VP Engineering & Operations, Calvalley Petroleum (Yemen) 13 years with Saudi Aramco as Asset Management Team Leader and
Slide 34: Senior Technical Employees
SENIOR TECHNICAL EMPLOYEES Manager Business Development: Barry Wihak, P. Geol. 30 years Oil & Gas Experience Former President & CEO, director and co-founder, Cangea Energy (private, Colombia focus) 5 years with Vermilion Energy Trust as Business Development Advisor (acquisitions in France, Netherl
Slide 35: Board of Directors
BOARD OF DIRECTORS Abby Badwi, P. Geol. President & CEO, Bankers Petroleum Ltd. Geological background Bill Fanagan, CA (Chair) Former Chairman, Verenex Energy Inc. Former President & CEO, Gulf Indonesia Resources Limited Financial background (Audit Chair) Claudio Ghersinich, P. Eng. Co-founder & for
Slide 36: Valeura's Corporate Strategy
VALEURA’S CORPORATE STRATEGY Target creation of large global E&P company in 5 - 7 years - Goal to achieve NAV growth rate of 20 - 25% per annum Build E&P portfolio in 1 or 2 other regions of the world - MENA /Mediterranean Basin/Central Europe region of prime interest currently and may pursue opp
Slide 37: Financial Highlights at June 30, 2011
FINANCIAL HIGHLIGHTS AT JUNE 30, 2011 3 MONTHS ENDED 6 MONTHS ENDED RESULTS JUNE 30, 2011 JUNE 30, 2011 Production Crude oil & NGLs (bbl/d) 57 55 Natural gas (Mcf/d) 3,810 2,219 BOE/d (@6:1) (1) 692 425 Financial ($ except per boe amounts) P & NG revenues (net) 2,707,193 3,269,325 Funds flow from op
Slide 38: TBNG-PTI Acquisition
TBNG-PTI ACQUISITION Transaction with TransAtlantic Petroleum Ltd. ("TransAtlantic") to take 40% of TransAtlantic’s acquisition of all of the shares of Thrace Basin Natural Gas Turkiye Corporation ("TBNG") and Pinnacle Turkey, Inc. ("PTI"): - Total purchase price for 100% of TBNG-PTI was US$100MM c
Slide 39: TBNG-PTI Land Schedule
TBNG-PTI LAND SCHEDULE VALEURA PARTICIPATING EXPIRY DATE GROSS AREA LEASE/LICENCE NO. INTERESTS (3) (D/M/Y) (acres) (%) (acres) THRACE BASIN – PETROLEUM DISTRICT I MARMARA Production leases 2926, 3659, 3860, 3861 8/6/2017 to 2/12/2023 17,401 40 6,961 Exploration licences – onshore 3734, 3858, 3931,
Slide 40: TBNG-PTI Shallow Gas Reserves Summary
TBNG-PTI SHALLOW GAS RESERVES SUMMARY (1) BTAX RESERVES (2) PV @ 10% (3) CATEGORY 40% WI 40% WI 40% WI (Bcf) ( MMboe) ( US$MM) PROVED PDP 4.96 0.83 23.8 PNP 1.94 0.32 6.2 PUD 1.42 0.24 5.3 TOTAL PROVED 8.32 1.39 35.3 PROBABLE 1.73 0.29 3.5 TOTAL PROVED PLUS PROBABLE (4) 10.1 1.68 38.8 (1) W.D. Von G
Slide 41: Thrace Basin Seismic
THRACE BASIN SEISMIC 10 km Drilling to date on 2D seismic only Legacy 2D Seismic (5,100 km) 2P reserves estimate (1) includes 12 drilling and 11 fracturing (3,514 km onshore; candidates in conventional reservoirs 1,586 km offshore) 3D seismic acquisition underway (461 km2) to extend pool bound
Slide 42: Otto Producing Asset Purchase
OTTO PRODUCING ASSET PURCHASE Definitive agreement signed Dec 14, 2010 to acquire 35% interest in Edirne Licence 3839 in Thrace Basin held by Edirne Enerji (wholly owned by Australia-based Otto Energy Ltd.) Purchase price US$3.1MM (including taxes) with effective date Oct 1, 2010 Acquisition clos
Slide 43: Ortakci Producing Field Example
ORTAKCI PRODUCING FIELD EXAMPLE Lower Danismen Time Structure – Legacy 3D Seismic Opportunities on Edirne Licence 1 km Bright spots on seismic key exploration tool Shallow conventional gas targets in Osmancik sands at ~300 m (10+ prospects & leads) Deeper conventional (reef) & unconventional t
Slide 44: Licence 2674, 2677 & 2678 – Earning Program
LICENCE 2674, 2677 & 2678 – EARNING PROGRAM Seismic Completed 227 km 2D seismic shoot N US$2.7MM (net – 100% basis) cost 2678 Identified 20+ prospects & leads on 2674 & 2677 2678 Karakilise-1 2D seismic grid New 2D seismic grid in Bedinan and Mardin formations recompletion Licence 2678 relin
Slide 45: Natural Gas Infrastructure
NATURAL GAS INFRASTRUCTURE 45
Slide 46: Oil Infrastructure
OIL INFRASTRUCTURE Map of Turkey’s Oil Infrastructure, 2008 ed or " r GREECE i P : ee __!sta + AKS fray YAAN 162 1.4 mb/d ( SS Eis r Black Sea ~<a é ig SOS 3 ee RUSSIA BULGARIA % ‘ La ~~ ds \\ GEORGIA ee 2 Kirktareli ai ) air a Samsun ®/ Oe go ee eSakarya Rnasya Ordu Trabzon ARMENIA ae ¥ e yae Gumts
Slide 47: Thrace Basin Turkey - Stratigraphic Column
THRACE BASIN TURKEY - STRATIGRAPHIC COLUMN Tertiary basin 9,000 m of tertiary age sediments Depositional environment Deltaic sands Turbidite sands Reef development on Paleozoic highs Key reservoirs Danismen - gas Osmancik – gas Mezardere - gas Ceylan – gas Sogucak – oil Hami
Slide 48: SE Turkey - Stratigraphic Column
SE TURKEY - STRATIGRAPHIC COLUMN Reservoirs Sinan/Garzan reefs (Tertiary/U Cretaceous) Karabogaz & Mardin (Mid Cretaceous) Bedinan (Ordovician) Source Rocks Karabogaz (Cretaceous) Dadas (Silurian) Seals Germav (U Cretaceous) Dadas (Silurian) Play Types Structural - Reverse and normal
Slide 49: Verenex Energy Inc. Share Price Performance
VERENEX ENERGY INC. SHARE PRICE PERFORMANCE $100MM financing $20 Amalgamated 10.0 Confirmed 1st Libya Offshore France Prairie Fire. Libya non-consent discovery well D&A $31MM financing. Strategic to CNPC deal Commenced alternatives review 8.0 $15 trading on TSXV $30MM financing CNPC acquisition @ $2
Slide 50: Verenex Experience in Libya
VERENEX EXPERIENCE IN LIBYA "Go where the oil is" Seek out first mover advantage Operate and choose partners wisely Invest in good science, data capture and quality of technical analysis Aggressively apply "western" technology and work processes in operations Ensure experienced, on-the-g
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