american patriot oil and gas limited investor presentation
DESCRIPTION
American Patriot Oil and Gas Limited INVESTOR PRESENTATION. Initial public offering – April 2014. Disclaimer. Extent of Information This document has been prepared by American Patriot Oil and Gas Corporation Limited ( “ American Patriot Oil and Gas ” or “ Company ” ). - PowerPoint PPT PresentationTRANSCRIPT
American Patriot Oil and Gas LimitedINVESTOR PRESENTATION
Initial public offering – April 2014
Disclaimer
Extent of InformationThis document has been prepared by American Patriot Oil and Gas Corporation Limited (“American Patriot Oil and Gas” or “Company”).
This Presentation, including the information contained in this disclaimer, does not constitute an offer, invitation or recommendation to subscribe foror purchase any security and neither the Presentation, disclaimer not anything contained in such forms the basis of any contract or commitment. This Presentation does not take into account your individual investment objective, financial situation or particular needs. You must not act on the basis ofany other matter contained in this Presentation but must make your own assessment of the Company.
No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information contained in this Presentation, including the accuracy, likelihood of the achievement or reasonableness of any forecast, prospects, returns or statements in relation to future matters contained in the Presentation (“Forward-looking statements”). Any such forward-looking statements that are contained in this Presentation or can be implied by the same are by their nature subject to significant uncertainties and contingencies associated with the oil and gas industry and are based on a number of estimates and assumptions that are subject to change ( and in many cases are outside the control of American Patriot Oil and Gas and its directors) which may causes the actual results or performance of American Patriot Oil and Gas to be materially different from any future results or performance expressed or implied by such forward-looking statements.
To the maximum extent permitted by law, none of American Patriot Oil and Gas’s, or related corporations, directors, employees, agents nor any other person accepts and liability, including without limitation arising from fault or negligence, for any loss arising from use of this Presentation or its content or otherwise arising in connection with it.
Exclusion of Financial Product AdviceThis Presentation is for information purposes only and is not a prospectus or other offering under Australian law or under any others laws in the jurisdictions where the Presentation might be available. Nothing herein constitutes investment, legal, tax or other advice. This Presentation is not a recommendation to acquire shares and has been prepared without taking into account the investment objectives, financial situation or needs of individuals.
Independent AdviceYou should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and seek appropriate advice, including, legal and taxation advice appropriate to your jurisdiction. American Patriot Oil and Gas is not licensed to provide financial advice in respect of its shares.
2
Investment highlights – American Patriot Oil and Gas
Early mover in emerging tight oil basins/ proven hydrocarbon province nearby historical producing fields
Large and growing acreage 25,210 net acres held at high retained interest on shore USA – Rocky Mountain basins
Strong JV partner – Treasure Exploration, (operator) and free carry on 2 horizontal wells + option for two more wells on Northern Star project.
Significant oil resource potential of 667mbbl 3P reserves & 3940mbbl 2C contingent resources.
Focus on tight oil unconventional resource with conventional oil targets – near term cashflow potential.
Strong technical and commercial team. Proximity to infrastructure.
3
CONTENTS
1. The Business
2. APOG’s Projects
3. Offer Details
APPENDIX– Board and Management Bio’s– Work program– Contact Information
INVESTMENT HIGHLIGHTS
5
THE BUSINESS
1.1 Unconventional oil and gas in USA
Rapid evolution facilitated by: US unconventional oil and gas plays have revolutionised the world
energy markets in recent years Targeting oil and gas in low permeability rocks through horizontal
drilling and fracture stimulation Different plays have emerged over recent years, originally in gas
basins in Texas and then in oilier plays such as the Bakken and EagleFord
Investors in ASX companies with exposure to shale/tight oil have reaped strong returns from these plays, which have attractive risk and return characteristics – AUT the standout following bid from Canadian E&P Baytex Energy
6
1.1 Unconventional oil and gas in USA
Source: IRESS Source: Company Reports, US Department of Energy, Energy Information Administration.
7
1.2 Acreage value – Well established value path
There is a well established value realization path in the US for shale/tight oil resource plays:
8
Stage Details Acreage Values (Estimated)
Stage 1 Acreage leasing in new play areas/few wells drilled US$20-$500/acre
Stage 2 Early stage drilling, early IP rates US$500-$1000/acre
Stage 3 Proof of concept, further drilling and optimise drilling & completions US$1000-5,000/acre
Stage 4 100’s of wells drilled and firm understanding of Type curve US$5,000-15,000/acre
Stage 5 Development model established in mature play area/M&A activity increased US$15,000-45,000/acre
APOG Acreage
1.3 Partnering with an experienced operator
Treasure Exploration is JV partner and operator of the
Northern Star project
Acquired 70% of the Northern Star project with APOG retaining 30%
Treasure paid cash and provides free carry on 2 horizontal wells
estimated cost of $8m plus an option for 2 more wells
First well expected in late 2014 with the second well six months later
Treasure is a subsidiary of an established Denver based private
Independent E&P focused on Rocky Mountains region with
significant drilling experience in tight oil plays
Track record of finding resource style tight oil plays as early entrant,
developing and successfully monetising assets
9
1.4 Business model
Early entry into onshore US tight oil resource plays, in areas with excellent infrastructure, ability to quickly
enter production, generate positive cash flow and expand play areas
Internally generate prospects using geological knowledge, capture significant land positions at a low cost
Partner with experienced Operator to reduce risk capital exposure via a farm out in a cash and carry deal
Monetise assets as play areas mature and seek value accretive acquisition opportunities to complement
organic growth
Proven track record in executing this business model with JV executed with Treasure Exploration
10
Farm Out
1.5 Shale/Tight oil game changers
Drilling techniques have advanced significantly with horizontal wells extending up to 2.5km lateral.
Costs and effectiveness of multi-stage fracturing have improved considerably in the last 10 years - Multi-stage fracturing can now be done in a few days as opposed to weeks.
Microseismic has improved the effectiveness of monitoring the fracturing process.
Technology and techniques used together mean commercial flow rates can be obtained from shale reservoirs at reasonable costs.
Minimal geological risk present; more of an engineering feat.
Production from unconventional resources projected to account for a majority of the supply of gas in the US.
Demonstrated the viability and allowed the commercialisation of shale oil and gas production.
11
APOG’S CURRENT PROJECTS
2.1 The assets
13
Early entry in low cost acreage in conventional/tight oil plays in proven oil fields
2.1 The assets
Significant 56,505 gross acres (25,210 net acres) onshore USA/High Retained working
interest on shore USA Rocky Mountain basins across 5 key projects:
Northern Star
30% WI in 36,713 gross acres (9,233 net) in Montana.
JV with Treasure Exploration
Panther
100% WI in 8,790 gross acres in Montana
Rough House
90% WI in 6,633 gross acres in DJ Basin Colorado
Southern Sun
100% WI in 3,728 gross acres in Utah
Overthrust
100% WI in 640 gross acres in Wyoming
14
Early entry in low cost acreage in conventional/tight oil plays in proven oil fields
2.2 Large and growing acreage – on shore USA
5 projects all in proven hydrocarbon basins in proximity to proven oil fields.
A targeted process of early entry in underexplored but highly prospective acreage in basins in
Colorado, Montana, Wyoming and Utah, USA
Farm out completed with Treasure Exploration on Northern Star – free carry 2 wells + 2 optional
15
Project Location WI NRIDate Acquired
Term Description Acres (net) Operator
Northern Star (1)Montana, USA
30% ~24% 2012-2013 *5 years Tight Oil 9,233Treasure Exploration
Panther ProjectMontana, USA
100% ~80% 2012 5 years Tight Oil 8,490 American Patriot
Southern SunUtah, USA
100% ~80% 2012-2013 5 years Tight Oil 3,474 American Patriot
OverthrustWyoming, USA
100% ~80% 2013 5 years Deep Oil 640 American Patriot
Rough House (2)Colorado, USA
90% ~75% 2014 5 years Tight Oil 3,373 American Patriot
Total 25,210
Early entry in low cost acreage in conventional/tight oil plays in proven oil fields
1. One lease in the Northern Star Project (2958 net acres) was issued with an 18 month lease with a 42 month extension with the extension dependent on a commitment to drill a 5000’ vertical well. The well commitment responsibility was absorbed by Treasure Exploration upon designation of Treasure Exploration as operator and the assignment of a 70% working interest in the Northern Star Project .2. Acquisition to be completed after IPO.
2.3 Significant reserve and resource potential
Significant reserve and resource potential focussed on higher margin oil vs gas.
3P reserves 667mbbl and 3940mbbl oil resource potential associated with the Northern star project net to APOG as
reviewed by MHA.
Primary targets are the Ratcliffe and Mission Canyon Formations with both formations currently producing from fields
adjacent to the American Patriot acreage.
The Lustre field has produced 7mmbbl oil from 41 wells from the same formations and lies within the Northern Star
project area.
APOG looking to target these proven reserves to establish early production and cash flow for the business.
16
American Patriot Net Oil Reserves and Resources attributable to Northern Star project*
Project
1P Proved
Reserves(mbbl)
2P Probable Reserve
(mbbl)
3P Proved+Probable+Po
ssible Reserve(mbbl)
2C Contingent Resources
(mbbl)
Prospective Resources
(mbbl)
Charles ‘C’ Formation 178 299 504 1389 381
Mission Canyon Formation
37 109 163 1451 719
Total 215 408 667 2840 1100
*Post farm out to Treasure, No reserve or resource potential with Southern Sun, Panther , Rough House or Overthrust project at this stage. mbbl: thousand barrels of oil.
Source: MHA Petroleum Consultants LLC Feb 14
2.4 Northern Star Project - Montana
30% Working interest covering 36,714 gross acres
(9,233 net APOG) located in the Western extent of
the Williston basin, Valley County Montana.
Treasure Exploration is JV partner/Operator with
70% (farm down in Nov 2013) with APOG free
carry on 2 horizontal exploration wells worth ≈$8m
drilling late 2014/early 2015 plus options for 2 more
wells. Looking to acquire additional acreage in the
region
Located in a proven oil producing basin and recent
nearby exploration success – Lustre Oil Field lies
in project area and produced over 7mmbbl oil from
Charles ‘C’ , Mission Canyon zone.
3P reserves of 667mbbl and resource potential of
3940mbbl.
Lower permeability rocks – Mississippi Lime
analogue mean horizontal drilling and modern
completion can be used to target significant
resource potential
17
Source : APOG
Key details on wells drilled nearby:
Well Proximity Status
Vess Oil Corp Federal 1-5H 90 miles Horizontal Charles C – 400BOPD IP
Source : APOG
Key area of focus with two wells planned (APOG Free carried) in the next 18 months
2.5 Rough House Project - Colorado
Agreement to acquire a 90% Working interest
covering 6,633 gross acres (3,372 net APOG)1
located in the DJ Basin in Washington &
Arapahoe Counties, Colorado
Conventional oil play focussed on stacked pays
with multiple carbonate reservoir targets located
on the flanks of an oil rich basin on a clearly
defined structural nose
Large position near historical discoveries and
close proximity to two recent oil producing
discoveries – Nighthawk Energy well produced
100kbbl in last 12mths, Conoco Phillips and
Southwest Energy wells –quick paybacks.
Vertical drilling opportunity (≈8000ft) with large
upside potential and potential horizontal oil play.
Exploration: 3D seismic followed by one well by
early 2015. Well costs $1.5m (APOG look to
farm down)
18
Source : APOG
Key details on wells drilled nearby:
Rough House represents a conventional oil play with recent nearby success
Source : APOG, Company announcements1: Acquisition contingent on completion of IPO
Well Proximity Status
3-1H Tebo Conoco Phillips 20 miles IP Rate 1087 bbl oil, 461 mcf/gas
Staner 5-8H Southwest Energy 3 miles IP Rate 146 bbl oil, 59 mcf/gas
2.6 Panther Project - Montana
100% Working interest covering 8,790 gross
acres (8,490 net APOG) located in Garfield
County, Central Montana
Project located on the flanks of the oil rich
Williston basin on a structural nose.
Conventional oil play focussed on stacked
pay with multiple targets at 5500-8000ft in
carbonate reservoir targeting Duperow
formation and other stacked pay zones
Vertical drilling opportunity with upside
potential as an unconventional tight
reservoir horizontal play. Vertical well costs
are $1.2m
Low cost of entry and close to
producers/infrastructure
Exploration: Acquisition/processing Seismic
and farm down for free carry on well
19
Source : APOG
Significant acreage position with staked pay held at high retained interest
2.7 Southern Sun - Utah
100% Working interest covering 3,728 gross
acres (3,474 net APOG) in the Paradox Basin in
San Juan county, Utah
Conventional and unconventional potential,
targeting shales (Gothic) and carbonate
reservoirs at 5500ft depth
Vertical drilling opportunities with potential to
turn to horizontal oil plays, close to producers/
infrastructure.
Significant near term conventional production
potential from the Tin Cup Mesa field covering
480 acres. Opportunity to expand this acreage
position.
Acreage surrounded by Anadarko, Kimmeridge
Energy and Hawkwood Energy. Anadarko
permitted 5 and drilled 2 horizontal wells – close
to APOG
Exploration: Seismic, acquire more acreage
and farm down for free carry on well
20
Source : APOG
Early entrant into an emerging play and looking to farm down for free carry
Key details on wells drilled nearby:
Source : Company announcements
Well Operator Details
Long Point State 3523-2-1H Anadarko Drilled – data confidentialLewis Road Fee 3424-2-1H Anadarko Drilled – data confidentialCedar Point Fee 3526-16-1H Anadarko Drilled – data confidential
2.8 Geology – Northern Sun
Two main targets are carbonate reservoirs of the
Mississippian Madison Group
Project located on the western Extent of the Williston
basin, an 80,000 square mile intercratonic basin which
covers North & South Dakota and Montana in USA.
Charles ‘C’ limestone or “Ratcliffe formation”
reservoirs.
Mission Canyon limestone reservoirs also have
significant potential.
Reservoir targets exhibit low permeability and porosity
such that traditional completion methods were not
economic. However, with the tested high oil
saturations present, and utilizing modern drilling and
completion methods, such as horizontal drilling and
multi-staged frac’ing we expect to make these zones
economic and prolific.
Mississippi Lime analogue in terms of oil shows,
porosity and tightness
Horizontal drilling and hydraulic fracturing can be used
to target significant resource potential
21
Northern Star Project
Target Zone
2.9 Northern Star Stratigraphic column
22
2.10 Catalysts next 12 months
23
Catalyst Indicative Timing
First horizontal well with Treasure Exploration on Northern Star project End 2014
Rough House project farm down June - Dec 2014
Panther project farm down/well End 2014
Southern Sun seismic/lease acquisition June-Dec 2014
Rough House project well End 2014
Second horizontal well with Treasure Exploration on Northern Star project June 2015
Southern Sun farm down/well June 2015
The timing is subject to regulatory approvals , equipment and services availability and weather conditions.
3.0 Offer details
American Patriot will raise circa $8-12m via the issue of 40-60m shares at $0.20 per share.
Post raising shares on issue of 163.3m,Pro-forma market cap of $32.6m (at $0.20 per share, assuming maximum subscription)
Proceeds from the raising to be used to fund the Rough Head project acquisition, drilling and seismic costs, new acreage opportunities and general working capital expenses
Loyalty option issue of 1 option for every 2 ordinary shares held at the Record date.
72% of pre IPO stock subject to 24month escrow
24
3.1 Capital structure
25
Capital Structure Post Offer
SharesMinimum
Subscription% Max Subscription %
Existing Shares 103,311,290 72% 103,311,290 63%
Shares to be issued40,000,000 28% 60,000,000 37 %
Total Shares following completion of the Offer 143,311,290 100% 163,311,290 100%
Market capitalisation at the Offer Price $28,662,258 $32,662,258
Source: American Patriot Oil and Gas Prospectus
3.2 Proposed use of funds
26
Source: American Patriot Oil and Gas Prospectus
Proposed Use of Funds
Application $8,000,000
Min Subscription
$12,000,000Max
Subscription
Acquisition of Rough House Project $1,192,563 $1,192,563
Rough House Seismic acquisition and reprocessing $1,111,111 $2,777,778
Rough House Drilling Commitment $1,666,667 $1,666,667
Proposed Lease Leasehold Acquisition $444,4444 $1,777,778
Proposed Seismic acquisition and reprocessing $0 $553,333
Working Capital $2,770,626 $2,963,742
Costs of the Offer $814,589 $1,066,140
Total $8,000,000 $12,000,000
3.3 Indicative timetable
27
Event Date
Prospectus Lodged with ASIC 24 March 2014
Expected expiry of exposure period 31 March 2014
Opening date 1 April 2014
Closing Date 5.00pm (Sydney time) on 28 April 2014
Allotment of shares 1 May 2014
Despatch of holding statement 6 May 2014
Expected date of trading on ASX 12 May 2014
Note: The timetable is indicative only and subject to change
APPENDICES
Work programme next 24 months*Activity 2014 2015
Quarter Ending JAN-MAR APR-JUN JUL-SEP OCT-DEC JAN-MAR APR-JUN JUL-SEP OCT-DEC
Northern Star Project
Leasing
3D Seismic
Wells Drilled (2 horizontal wells Treasure free carry) 1 1
Panther Project
Leasing
3D Seismic
Wells Drilled (vertical well)** 1
Southern Sun
Leasing
3D Seismic
Wells Drilled (horizontal well)** 1
Rough house Project
Complete Rough House project acquisition
Leasing
3D Seismic
Wells Drilled 1
Overthrust Project
Leasing
3D Seismic
Wells Drilled**
Total Wells Drilled 3 1 1* Work programme fully funded by proceeds from IPO **APOG to seek free carry on wells The timing is subject to regulatory approvals , equipment and services availability and weather conditions.
29
Board and management team
Alexis Clark / Chief Executive Officer and Managing Director
Previously an Oil & Gas Analyst at Patersons Securities responsible for coverage of small-mid capitalisation Oil & Gas
companies also Energy Analyst at Merrill Lynch.
Over 10 years experience in Institutional banking and finance for Energy & Resources companies.
Chartered Financial Analyst (CFA), Chartered Accountant (ACA) Bachelor of Economics & Commerce at the University of
Adelaide.
Robert Hoar / Chief Geologist
Exploration geoscientist with 30 years of oil and gas industry experience. throughout the world including many US basins.
Worked for a number of well-known companies including Amoco, where he spent half his career, Oryx, and Ker McGee.
Worked in many phases of geophysics including 3D acquisition and interpretation, and VSP acquisition and interpretation.
BA in geology from Hamilton College and a MSc in Geology from the University of Vermont.
Justin Dunn / Landman
2nd generation landman
Degree in Business Administration from Goucher College
Previously worked as Landman for Hunter Energy
30
Board and management team
David Shaw / Non Executive Chairman
Practising solicitor with his own firm Campbell & Shaw Lawyers.
Chairman of Ambassador Oil & Gas Ltd and Director on a number of private company boards and advisory boards.
Previous Essendon club President from 1992 to 2002 and former Commissioner of the AFL.
Jim Angelopoulos / Non Executive Director & Chief Operations Officer
Monash University Engineering Graduate and career as a director of a number of successful businesses in
Australia.
Currently the Managing Director of one Fuseco Ltd.
Experienced Energy Company Investor and a Director of a Joint Venture gas & oil enterprise in Kentucky USA.
Founding director of APOG.
Frank Pirera / Non Executive Director & Chief Financial Officer
More than 30 years experience in public practice.
Graduate of Monash University -Bachelor of Business (Accounting) and is a fellow of the Certified Practising Accountants (CPA).
Wealth of experience in financial control and management and strategic planning having advised numerous public and private companies throughout his career.
31
Contact information
ALEXIS CLARK CHIEF EXECUTIVE OFFICER & MANAGING DIRECTOR Email [email protected] Mobile + 61 401 626 014
ROBERT HOAR CHIEF GEOLOGISTEmail [email protected] Mobile + 1 1303 807 3844
JIM ANGELOPOULOS DIRECTOR & CHIEF OPERATIONS OFFICEREmail [email protected] Mobile + 61 418 102 232
Address
AMERICAN PATRIOT OIL AND GAS LIMITED
Level 1, 141 Capel Street Suite 300, 1601 Blake Street, Denver
North Melbourne 3051 Australia Colorado, 80202 USA
32
THANK YOU