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MOLOPO ENERGY CANADA LIMITED
MOLOPO ENERGY LIMITED
A Unconventional Energy CompanyNovember 2009
MOLOPO ENERGY CANADA LIMITED
The information in this presentation has been compiled by persons meeting the criteria in ASX Listing Rule 5.11. The identity of the relevant persons is dealt with in the releases to ASX.
References to “possible hydrocarbon reserves”, “probable hydrocarbon reserves” and “proved hydrocarbon reserves” have the same meaning as the ASX Listing Rules. The assessment of reserves involves matters of judgement. All amounts involve varying degrees of probability and uncertainty.
This presentation contains forward looking statements, i.e. statements that are not of historical fact. Such forward looking statements include statements regarding Molopo’s future production, profitability, financial position and cash-flow, Molopo’s business strategy, the plans and objectives of Molopo’s management for future operations, Molopo’s development plans, and Molopo’s reserve and resource positions.
Actual results, performance, achievements, outcomes or occurrences may be materially different from any forecast, prediction, estimate or other forward looking statement in this presentation, including those implied by any such forward looking statements.
Forward looking statements are based on numerous assumptions regarding Molopo’s present and future business strategies and the environment in which Molopo will operate in the future. Among the important factors that could cause Molopo’s actual results, performance or achievements to differ materially from any prediction, estimate, forecast or other forward looking statement in this presentation are – changes in levels of demand and market prices, increases in relevant input costs, drilling and production results, producible reserves being lower than anticipated, technical and other problems in the production and transportation of products, loss of market, delays in implementing projects, the impact of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty, economic conditions in relevant areas of the world, actions of competitors, and the activities of governmental authorities (including changes in taxation, business regulation, environmental laws and fiscal policy).
The uncertainties and risks affecting forward looking statements should be taken into account when considering them and the extent to which it is prudent make decisions based on them.
All forward looking statements are applicable only as of the date of this presentation. Molopo disclaims any obligation or undertaking (except as required by applicable laws) to up-date or revise any forward looking statement to reflect any change in Molopo’s expectations or assessment regarding any such forward looking statement.
Nothing in this presentation is to be regarded as constituting advice or a recommendation regarding the making of any investment in Molopo or any dealing in securities of Molopo.
MOLOPO ENERGY LIMITED
MOLOPO ENERGY CANADA LIMITED
Summary
Molopo Energy is a A$300 million market capitalised company.– Molopo Canada offers an opportunity to invest in an un-risked mid case C$500 valued portfolio– Upside portfolio value potential is in the C$2500-3000 million range
Portfolio is near term oil focused, well positioned to access improving oil prices with economic recovery– Development activity is underway – Pace of activity can be varied with success and price– Projects have scale and significant exploration upside
Long term gas value offered from emerging Quebec shale gas play ideally to accessing key high value NE USA states.
– Development will offer 20-40 year project life– Exploration and appraisal during current low cost conditions– Production ramp-up during post economic recovery gas price period
Management and Board have extensive resource development expertise – Each member of the technical team has approximately 15-30 years experience at companies including BHP
Billiton, Shell and EOG Canada– Expertise in exploring, developing, producing and divesting oil and gas conventional and unconventional resource
plays
3
MOLOPO ENERGY CANADA LIMITED
MOLOPO SUMMARY INFORMATION
Donald Beard – Chairman
Stephen Mitchell – Managing Director
Ian Gorman - Executive Director & Chief Operating Officer
Monty Bowers – President & Chief Executive Officer – Molopo Canada
Geoff Phillips – Non-Executive Director
David Hobday – Non-Executive Director
Anthony Bishop - Chief Financial Officer and Company Secretary
MOLOPO BOARD AND MANAGEMENT
Cash (Sept 30th 2009) $81 million
Debt Free
Share Information
Share Price $1.55
Fully Paid Shares (as at 07/10/2009) 194 million
Market Capitalisation ($1.55) $300 million
No of Shareholders 8,612
Top 20 / Issued Capital 28.44%
Share Price Performance – 1 Year 60%
Share Price Performance – 5 Years 600%
Share Price Performance – 10 Years 1,000%
Broker Date of Report Recommendation 12 Month Price Target
Baillieu Oct 2009 BUY $2.20
Wilson HTM Nov 2009 BUY $2.40
Credit Suisse Sept 2009 BUY $1.60
BROKER SUMMARY
4
PARENT COMPANY– Molopo Energy Limited
MOLOPO SHARE PRICE
MOLOPO ENERGY CANADA LIMITED
Williston Basin
SpearfishBakken
Québec
Molopo Canada’s growth strategy is based on three sizeable resource assets offering short term reserve and production growth from oil and long term exposure to natural gas.
PORTFOLIO OF MAJOR HYDROCARBON RESOURCE ASSETS
MOLOPO ENERGY CANADA LIMITED
Investment Rationale
6
Molopo has spent 1½ years building a portfolio of high impact resource projects in Canada and is offering an opportunity to invest in a C$500 valued portfolio with upside value potential in the C$2500-3000 million range.
Bakken Light Oil – 70 net sections of well positioned land targeting over 200 MMbbls of oil in place
Spearfish Light Oil – 86 net sections of land with 2P resource of 0.475 Mbbls targeting over 150 MMbls in place. Currrent production of 75 b/d
Quebec Shale Gas – 2.2 million acres, 4 identified prospect areas targeting over 6 Tcf of recoverable gas
Portfolio is near term oil focused positioned to access improving oil prices with economic recoveryDevelopment can be commenced immediatelyPace of activity can be variedProjects have scale and significant upside
Long term gas value offered from emerging Quebec shale gas play ideally located to accessing key high value NE USA states.Development will offer 20-40 year project lifeProduction ramp-up during recovering gas price periodExploration and appraisal during current low cost conditions
Aggressive work programme over the next 3 months will yield results prior to TSX listing in Spring 2010
MOLOPO ENERGY CANADA LIMITED 7
CANADIAN TEAM
Board of Directors
Stephen Mitchell Chairman Non Executive. CEO of Molopo Australia an ASX 200 listed company with 5 year share price appreciation of 600% and 10 year performance of 1000%.
Monty Bowers President and CEO. Former CEO of Capitol Energy Resources delivering average ROE of 68% growing production from nil to 4,400boe/d. Ex Shell and Amerada Hess.
Lanny Fenwick Non Executive Director. Former General Manager of EOG Canada (18 years), overseeing growth from 30 MMcf/d to 250 MMcf/d. Director of Galleon.
Ian Gorman Non Executive Director. COO and Executive Director of Molopo Australia during a period of rapid growth and share price appreciation . Former technical head of BHP Billiton’s Global CBM team and also Ex Shell.
Management Team
Monty Bowers - President and CEOBrian Tompkins - VP Exploration, ex EOG Canada – 10 year Spearfish ExperienceCurtis Schoenfeld - VP Engineering, ex EOG Canada – Unconventional Oil and Gas ExperienceAnthony Bishop - CFO (temporary). CFO of Molopo Australia, ex Shell and Goldman Sachs
Note: Molopo Canada will seek to appoint 2-3 further Non-Executive Directors in the period ahead
MOLOPO ENERGY CANADA LIMITED
BUSINESS STRATEGY
Identify and Acquire– Capture assets that support the creation of a multi-billion dollar production and operating
company in North America– Short term oil focus, long term gas focus
Resource and Fund– Build execution capability with local expertise and knowledge supported in short term by parent
company skills– Front end support exploration and development programmes to provide a self funding entity with
the exception of additional acquisition opportunities
Exploit– Aggressively pursue increased oil production levels and building revenue stream, position the
gas assets for long term staged exploitation
Manage Risk– Limit cash sink, tailor development to revenue stream and long term exploration success.
Optimise funds sourcing and use of credit lines.
8
MOLOPO ENERGY CANADA LIMITED
BUILDING A HIGH IMPACT CANADIAN PORTFOLLIO
9
20102008 2009
Quebec: Richelieu area 2D seismic
Quebec: Lyster & Pintendre area 2D seismic
Quebec: Richelieu area Drilling
Quebec: 1.8m acres acquired
Quebec: 270,000 acres acquired
Quebec: 36,000 acres acquired
Bakken: 42,000 acres acquired
Spearfish: 55,000 net acres acquired
Bakken: 4-6 well exploration and development programme
Spearfish: 3 well recompletions and 3 new development wells
Assess Acquire Exploit
MOLOPO ENERGY CANADA LIMITED
Proposed Use of Funds through March 2010 - estimated
10
ExplorationC$ million
Appraisal C$ million
Development C$ million
Land C$ million
TotalC$
millionManitoba (75%) 0.5 0.5
Pierson 0.0 0.0 5.4 5.4Lyleton 0.0 2.2 0.0 2.2
Saskatchewan 0.6 0.6Estevan 1.0 7.5 0.0 8.5
Weyburn 1.0 2.0 0.0 3.0Quebec 2.0 0.0 0.0 0.0 2.0Total 4.0 11.7 5.4 1.1 22.2
• Funds use is 80% weighted to production/revenue generation and land management• 90% of funds directed to oil projects• Subsidiary unlikely to be taxed for foreseeable future (at least next 2-3 years) due to existing tax pools and envisaged future capital spend
MOLOPO ENERGY CANADA LIMITED
PORTFOLIO VALUE
11
0200400600800
100012001400160018002000
Manitoba Saskatchewan Quebec
Valu
e C
$ m
illio
nProject NPV after Tax @10%
LowsideMid CaseUpside
Total Mid case portfolio value is C$500 million with upside potential to exceed C$2500 million
MOLOPO ENERGY CANADA LIMITED
VALUE REALISATION OPTIONS
Parent and Subsidiary share price growth on the back of ongoing development and exploration success (repeat EOG and Chesapeake stories)
– Publically traded– Strong trade volumes (10-15% of stock per month)
Portfolio rationalisation– Molopo already demonstrated willingness to exit major projects at any point when fair
value is offered to shareholders– A$111 million Gloucester divestment Natural consolidators of assets in all Canadian Portfolio elements
– Spearfish: EOG & PennWest both planning major development programmes– Bakken: PetroBank, Crescent Point, Legacy ($230-260 million acquisitions by latter
two) – Quebec: When proven Super Majors have demonstrated willingness to make major
acquisitions in shale gas (Shell:Duvernay C$5.9 billion, BP two ~$1billion, Statoil:Chesapeake $1.4billion). Talisman already a major player in basin
12
MOLOPO ENERGY CANADA LIMITED
Manitoba Asset
13
MOLOPO ENERGY CANADA LIMITED
SPEARFISH ASSETS - Location
14
Spearfish formation, tight sand/siltstone stratigraphic traps on basin margin
Adjacent fields now being developed with multi-stage frac’dhorizontal wells
Existing Reserves (Chapman Petroleum Engineering LTD – by Brink)
– 1P 0.244 MMstb (C$53 per bbl)
– 2P 0.475 MMstb (C$27 per bbl)
Land 86 Sections (55,040 acres gross, 41,280 acres net)
Production 90b/d gross, 75b/d net
MOLOPO ENERGY CANADA LIMITED
SPEARFISH ASSETS – Scope and Scale
15
Acreage Property Range Average Risk IssuesOIIP per Section - MMstb 9-15 10 Lowside average
Estimated RF - % 5-15 10 10-20% with infill and pressure support
Recovery per Section - MMstb 0.45-2.25 1.0 1.5 MMstb with infill
Cost per Well – C$million 1.6-2.3 2.0 C$1.65m being achieved in area
IP per well – b/d 100-250 150 EOG achieving 250+ b/d
Reserves per Well - MMstb 0.15-0.35 0.2 Assumes 4 wells per section, 80% SF
Land - Sections 86Core Focus Acreage - Sections 11-16Drilling LocationsDevelopment (within 2km of existingproduction)
29
Exploration (>2km) 46
Total 75
Recovery Potential 15 MMstb
Unrisked upside with increased well density and completion improvements is 20-25 MMstb
MOLOPO ENERGY CANADA LIMITED
SPEARFISH ASSETS – Single Well Metrics
16
0
50
100
150
200
250
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Oil
Rat
e b/
d -m
id y
ear a
vera
ge
Year
Single Well Profile
100
150
200
300
Well IPb/d
CAPEXC$m
Well Recovery
MMstb
NPVat @10% - Oil Price C$/bbl Flat
60 80 100
100 2.0 0.13 0.60 1.45 2.31
150 2.0 0.20 1.56 2.84 4.12
200 2.0 0.27 2.52 4.23 5.94
300 3.5 0.40 3.04 5.50 8.06
0
50
100
150
200
250
300
350
2006 2007 2008 2009
Oil
Rate
b/d
(1st
mon
th a
vera
ge)
Spearfish Area Initial Rate Improvements
Vertical Wells
1st GenHorz.
2nd GenHorz.
3rd GenHorz.
Taxes Manitoba
Royalty 15-18%
Provincial Tax 12%
Federal Tax 18%-15%
Existing tax pool of C$15m3.5 Core sections crown –royalty holiday
Source: Published data and Industry Intelligence
MOLOPO ENERGY CANADA LIMITED
SPEARFISH ASSETS – Project Impact
17
0
50
100
150
200
250
300
60 80 100
NPV
at
10%
C$m
illio
n
Flat Oil Price $/bbl
NPVat @ 10% MPO share of 15 MMstb
At current oil prices and 150 b/d IP the project NPV is approximately C$160 million un-risked. Price growth to $100 per bbl and beyond, rate (technology) improvements, cost reductions, increased prospective area and infill activity has the potential to increase this by factor of 3-4
Range
Peak Oil Rate – b/d 3,000-6,000
Peak Production Year 2012-2016
MOLOPO ENERGY CANADA LIMITED
Saskatchewan Asset
18
MOLOPO ENERGY CANADA LIMITED
BAKKEN ASSETS - Location
19
Recent Activity
At current oil prices two recent (last 4 weeks) acquisitions have paid approximately C$230-260m each for equivalent sized land packages with roughly 1500 boed existing production
Recent land sales in Saskatchewan are now encountering acreage bids up to C$2600 per acre.
Other Potential
20% of Viewfield Field area production is non-Bakken pointing to significant other potential in the Mississippian,
Sanish/Three Forks represents additional potential based on recent North Dakota activity
MOLOPO ENERGY CANADA LIMITED
BAKKEN ASSETS – Scope and Scale
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Acreage Property Range Average Risk IssuesOIIP per Section - MMstb 3-6 4 Minimum thickness assumed
Estimated RF - % 5-15 10 Potential upside from spacing
Recovery per Section - MMstb 0.15-0.75 0.5
Cost per Well – C$m 2.0-2.5 2.3
IP per well – b/d 70-200 110 New wells indicating 200+ b/d
Reserves per Well - MMstb 0.08-0.25 0.125
Land - Sections 70Core Focus Acreage - Sections 42 (60%)Drilling LocationsDevelopment (within 2km of existingproduction)
~7
Exploration (>2km) 161
Total 168
Recovery Potential 21 MMstb assuming 60% success factor
Unrisked upside with increased well density, acreage success and completion improvements is 40-50 MMstb
MOLOPO ENERGY CANADA LIMITED
BAKKEN ASSETS – Single Well Metrics
21
Well IPb/d
CAPEXC$m
Well Recovery
MMstb
NPVat @10% - Oil Price C$/bbl Flat
60 80 100
90 2.3 0.10 0.13 0.86 1.59
110 2.3 0.12 0.50 1.38 2.27
150 2.3 0.17 1.22 2.43 3.65
200 2.3 0.23 2.13 3.75 5.36
Recent Connaught Wells - Estevan Acreage
Well Date on Production IP Recent Accumap Rate (April)
8-29-1-29W2 Dec, 2008 95 bopd 14 bopd / 20% Oct1-29-1-6W2 Dec, 2008 170 bopd 59 bopd / 82% Oct8-28-1-6W2 July, 2008 200 bopd 120 bopd / 92% Oct1-28-1-6W2 Sept, 2008 250 bopd 250 bopd / 92% Oct16-20-1-6W2 Jan, 2009 100 bopd 40 bopd / 40% Oct13-26-1-6W2 Dec, 2008 15 bopd 1.5 bopd / 100% Oct (?)16-8-2-6W2 July, 2008 85 bopd 40 bopd / 45% Oct2-9-2-6W2 Nov, 2008 110 bopd 40 bopd / 80% Oct14-16-2-6W2 Nov, 2008 135 bopd 100 bopd / 90% Oct5-12-3-6W2 (Tristar) Mar, 2009 180 bopd 180 bopd / 65% Oct
Avg= 135 bopd Current Avg= 75 bopd(5-6 mos prod time typically)
Note: In addition, there are 13 horizontal wells that have either been recently licensedor drilled, and production data is not available for within these two sections of interest.
Important Development: Recent Glamis press release (Connaught Acqusition), indicatedrecent Bakken completions produced from 600 - 1000 bopd.
Taxes Saskatchewan
Royalty 17.5-27.5%
Provincial Tax 12%
Federal Tax 18%-15%
0
20
40
60
80
100
120
140
160
1 2 3 4 5 6 7 8 9 1011121314
Oil
Rat
e b/
d
Profile assumptions
90 b/d IP
110 b/d IP
150 b/d IP
200 b/d IP
No existing tax pool Acreage is crown – royalty holiday on first 35-100 Mbl
MOLOPO ENERGY CANADA LIMITED
BAKKEN ASSETS – Project Impact
22
At current oil prices and 110 b/d IP the project NPV is approximately C$160m unrisked. Price growth to $100 per bbl, rate improvements, increased prospective area and infill activity has the potential to increase this by factor of 4-6
0
50
100
150
200
250
300
350
60 80 100
NPV
at
10%
C$m
Oil Price $/bbl
NPV at 10% of MPO share 20 MMstb
Range
Peak Oil Rate – b/d 5,000-10,000
Peak Production Year 2013-2017
MOLOPO ENERGY CANADA LIMITED
Quebec Asset
23
MOLOPO ENERGY CANADA LIMITED
QUEBEC ASSETS - Location
24
CANADA – SHALE GAS PROJECT
Molopo controls 100% of 2.13 million acres with NRIs of 80% and above
Shale gas and conventional targets
Primary objective Ordovician Lorraine/Utica shales
Potential GIIP 40 TCF, recoverable potential 6TCF on indicative metrics from high graded Richelieu, Bedford, Lyster and Quebec areas (375,000 acres)
Total unrisked potential of some 100 Tscf GIIP and 15 Tscf recoverable
MOLOPO ENERGY CANADA LIMITED
Shale Acreage Prospectivity
2006-2007 Farm-in activity priced land in C$50-150 per acre range (Forest Oil and Questerre)
2008-2009 Farm-in post initial shales gas success priced land in C$250-1000 per acre range (Canbriamand Gastem)
25
Play Type Total Land acres
Chance Factor * Risked Acreage acres
Shallow Fairway 90000 0.5 45000
Deep Fairway 44000 0.7 30800
Sub Basin 190000 0.3 57000
Northern Extension - controlled 92500 0.2 18500
Northern Extension – un-controlled 814000 0.05 40700
Deep Thrusted - good 448400 0.1 44840
Deep Thrusted – poor 472000 0.01 4720
Total 2.16 million 241560
Land deal values assume all of target farm-in area is equally prospective
Implied value of Molopo risked acreage is in the range C$60-240 million
Conventional potential represents value upside
* Chance Factor defined by production tests, recent shale gas well control, seismic, 1970-1980 exploration, gravity and magnetic data
MOLOPO ENERGY CANADA LIMITED
QUEBEC ASSETS – Scope and Scale
26
Acreage Property Range Average Risk IssuesGIIP per Section - Bscf 4-150 40 Zero in some areas
Excludes conventional and ultra deep
Estimated RF - % 5-30 15 Increase with infill
Recovery per Section - Bscf 0-45 6
Cost per Well – C$m 1.0-2.5 (V)2.0-4.0 (H)
2.03.5
Highside weighted
IP per well – Mscf/d 300-1000 500 Utica only results in 300-800 Mscf/dLorraine incremental
Reserves per Well - Bscf 0-4 2
Land - Sections 3382Core Focus Acreage - Sections 582Drilling Locations ~3000-4000
Recovery Potential ~6 Tscf in core area
Unrisked upside with increased well density, acreage success, completion improvements and RF increase is 10-15 Tscf
MOLOPO ENERGY CANADA LIMITED
QUEBEC ASSETS – Single Well Metrics
27
Well IPMscf/d
CAPEXC$m
Well Recovery
Bscf
NPVat @10% - Gas Price US$/mscfFlat
5.5 7.5 9.5
350 2.4 1.7 0.84 1.61 2.37
500 2.4 2.0 1.46 2.40 3.33
1000 2.4 2.0 2.99 4.18 5.38
2000 2.4 2.3 4.33 5.89 7.44
Taxes QuebecRoyalty 12.5-20%
Provincial Tax 12%
Federal Tax 18%-15%
QEC/GMR/FST St Francois du Lac-1Vertical 2007, frac test 2008, “up to
1MMscf/d” ?Utica, Apr08 press release
QEC/GMR/FST St Louis de Richelieu-1
Vertical 2007, not tested?
QEC/TLM Gentilly-1Vertical Well
Utica frac test >800Mscf/d sustained over 18 days,
Sep08 press;Lorraine frac test “sustained gas
flows encouraging further work”, Apr09
pressQEC/TLM La Visitation-1
Vertical, Utica frac test 300Mscf/d, sustained over 5 days, Apr09 press
QEC/TLM St David-1Vertical, Utica frac test
450Mscf/d, sustained over 17 days, Apr09 press
Canbriam/GMR/Mundiregina
3 vertical wells 3Q09
QEC/GMR/FST Yamaska Wells
Original verticals taken horizontal 4 stage slick water frac test Utica, initial 4MMscf/d,
sustained 100-800Mscf/d, Feb09 press
QEC/TLM 3 Wells, verticals only
Frac test flow sustained rates 300-800Mscf/d same Utica zone in all 3 wells, Apr09 press
“Biogenic” Top Utica 700-2500ft“Thermogenic” Top Utica
2500ft to Logan’s Line
0.00
0.50
1.00
1.50
2.00
2.50
1 3 5 7 9 11 13 15 17 19 21 23 25
Gas
Rat
e -M
Msc
f/d
Year
Vertical well rate profiles ~2 Bscf Recovery
Low Rate
Mid Rate
High Rate
Max Ver Rate
Well cost includes 20% facilities allowance
Existing tax pool ~$7 millionRoyalty is 12.5% provincial and some land has 7.5% ORRI
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