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The unconventional opportunity in ArgentinaCompany presentationJuly 2018
Phoenix Global Resources plc
DisclaimerThis document has been prepared and issued by, Phoenix Global Resources plc (“Phoenix”). For the purposes of this notice, the presentation (the “Presentation”) shall include the slides that follow, hard copies of this document and any materials issued in connection with the Presentation.
This Presentation does not comprise a prospectus relating to Phoenix or any subsidiary of Phoenix or an offer, invitation or recommendation to purchase or subscribe for any securities of Phoenix or any of the business or assets described herein.
No reliance may be placed for any purpose, whatsoever on the information contained in the Presentation or the completeness or accuracy of such information. No guarantee, representation or warranty, express or implied, is given by or on behalf of Phoenix as to the fairness, sufficiency, accuracy or completeness of the information or opinions contained in the Presentation and the accompanying verbal presentation and Phoenix accepts no liability for any loss whatsoever arising from any use of this Presentation or its contents or any such information or opinions (including in the case of negligence or otherwise).
This Presentation should not be considered as the giving of investment advice. Each party to whom this Presentation is made available must make its own independent assessment of Phoenix after making such investigations and taking such advice as may be deemed necessary.
For the purposes of the United Kingdom’s Financial Services and Markets Act 2000 (“FSMA”), the Presentation is exempt from the general restriction in section 21 of FSMA on the communication of invitations or inducements to engage in investment activity on the grounds that they are directed at (i) persons having professional experience in matters relating to investment and who are investment professionals (as defined in article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Financial Promotion Order”); or (ii) high net worth companies unincorporated associations and other bodies (as defined in article 49 of the Financial Promotion Order) or (iii) other persons to whom it may be lawfully communicated (all such persons together being referred to as "Relevant Persons. The Presentation must not be acted on by persons who are not Relevant Persons.
This Presentation does not constitute, or form part of or contain any offer or invitation to sell or issue, or any offer to subscribe for, underwrite or otherwise acquire, or dispose of, any securities in Phoenix in any jurisdiction in which such offer or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any jurisdiction.
The distribution of the Presentation in other jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about and observe any such restrictions. The Presentation is not for distribution in, nor does it constitute an offer of securities for sale in any jurisdiction where such distribution or offer is unlawful. Neither the Presentation nor any copy may be taken or transmitted into the United States of America, its territories or possessions, or to any US person as defined in Regulation S under the US Securities Act 1933, as amended.
The past performance of Phoenix and its securities is not, and should not be relied on as, a guide to the future performance of PGR and its securities.
The information contained in this Presentation includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements involve numerous assumptions, risks, uncertainties and other factors and the actual results may vary. These forward-looking statements may be identified by the use of forward-looking terminology, such as the terms "intends", "expects", "will", or "may", or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions and include estimates, forecasts and statements as to management's expectations. These forward-looking statements include all matters that are not historical facts. Factors that may cause actual results and events to vary include, but are not limited to, general economic and/or business and/or political conditions, changes in law and/or regulation, Phoenix's ability to develop its strategy, competition, and future changes to current plans and strategy. There can be no assurance that the results and events contemplated by the forward-looking statements contained in this Presentation will, in fact, occur. These forward-looking statements made by Phoenix or on behalf of Phoenix speak only as of the date they are made. Phoenix does not undertake any obligation to revise these forward-looking statements after the date of this Presentation.
COMPANY PRESENTATION
Phoenix Global Resources plc
About Phoenix
We are investing in the long-term development of Argentina and the future of energy.
COMPANY PRESENTATION
Phoenix Global Resources plc
Leadership and governance
Sir Michael Rake, non-executive chairman
Former chairman of BT Group plc and Worldpay Group plc
Director of S&P Global
Chairman of Majid Al Futtaim Holdings
Non-executives
Anuj Sharma, chief executive officer20 years’ experience in the oil and gas industry
Headed Mercuria’s upstream investments in Argentina prior to Phoenix
Operational and investment experience in US shale industry
Philip Wolfe, chief financial officer28 years’ experience in the oil and gas industry
Former CFO & board member, Soma Oil & Gas
Head of oil & gas, EMEA at UBS and global head of oil & gas at HSBC
Javier Vallesi, chief operating officer23 years’ operational experience in Argentine oil and gas industry
12 years with Trefoil
Subsurface engineering and reservoir management experience with YPF and Bridas (now Pan American Energy)
Executive management
INDEPENDENT NON-EXECUTIVE DIRECTORS
NON-EXECUTIVE DIRECTORS
John Bentley Javier AlvarezGarrett Soden David Jackson
Matthieu Milandri Guillaume Vermersch Nicolás Mallo Huergo
Mercuria (1) representatives Shareholder representative
COMPANY PRESENTATION 1
1. Mercuria Energy Trading Group owns 80.85% of the issued share capital of Phoenix.
Phoenix Global Resources plc
A leading independent Argentinian E&P company
560,000Net Vaca Muerta
acres
1%of Argentineproduction
7.5%of entire
Vaca Muertaacreage
11,070Boepd
conventionalproduction
LISTING INFORMATION
London Stock Exchange AIM:PGR
Buenos Aires Stock Exchange BCBA:PGR
Issued share capital 2.76bn
1 As per WD Von Gonten & Company, NSAI, OPC and Francisco Guilsano reports.
2 As per Gaffney, Cline & Associates year end 2017 reserves audit report.
PHOENIX’S GROWTH POTENTIAL
Phoenix Global Resources plc COMPANY PRESENTATION 2
Phoenix Global Resources plc
Strategic priorities
Operatorship is key to implement our strategy and to our success
The combination transaction provided scale and consolidated our unconventional acreage position
We continue to strategically add additional acreage with exposure to Vaca Muerta and other unconventional formations
Exploration and development activity focused on appraising and developing our unconventional acreage
Applying the latest and best US shale technologies
Migrating our significant resource base to reserves
High margin production from conventional oil assets
Balancing existing conventional production with unconventional developments
Reduction of unit cost through growth and synergies
Creating shareholder value through production and capital growth
Disciplined approach to capital allocation
Opportunistic inorganic growth through farm-ins, joint ventures, partnerships and portfolio rationalisations
Control and consolidate
Explore and develop
Profitable production
Realise value
COMPANY PRESENTATION 3
Phoenix Global Resources plc
Why Argentina?
The 2015 elections returned a progressive and pro-business government that is focused on economic growth and stability. This progressive administration provides the foundation for real change in the fortunes of Argentina.
COMPANY PRESENTATION
Phoenix Global Resources plc
Why Argentina?Political change continues to drive reformsPro-business agendaNormalising economic imbalancesDeregulation of capital marketsEquity markets growingFDI and portfolio flows increasingIMF reaches staff-level agreement on three year US$50 billion stand-by arrangement
G20 Chair
Fast track to OECD
membership
25%Corporate tax
reduced to 30% in 2018 and to
25% in 2020
COMPANY PRESENTATION 4
Phoenix Global Resources plc
Argentina – an established oil and gas industryOIL PRODUCTION GAS PRODUCTION
UPSTREAM PLAYERS
WELL ESTABLISHED SERVICE INDUSTRY
Phoenix Global Resources plc COMPANY PRESENTATION 5
Phoenix Global Resources plc
Vaca Muerta
Vaca Muerta is a world-class unconventional resource play with current production in excess of 90,000 boepd and a production expectation of more than 110,000 boepd in 2018, double 2016 production. Unconventional oil and gas has the potential to transform the future of Argentina’s economy.
COMPANY PRESENTATION
Phoenix Global Resources plc
RECOVERABLE SHALE GAS RESOURCES (TCF)
Vaca Muerta – a world class shale playESTABLISHED OIL AND GAS INDUSTRY (SINCE 1920S)
Established infrastructure
Skilled and trained personnel with deep understanding of assets
Developed oilfield service sector with international and domestic players
POSITIVE REGULATORY ENVIRONMENT
Federal government actively encourages investment in industry, and has deregulated the oil price
Provincial governments in Neuquén, and more recently in Mendoza, introduced supportive regulations for unconventional oil and gas, and proactive permitting
Industrial, labour and fiscal reforms driving efficiency gains and lowering costs
RECOVERABLE SHALE OIL RESOURCES (BN BBL)
ABOVE GROUND FACTORS
BELOW GROUND FACTORS
Depth typically 2,000 – 3,000
metres
Not to scale Lateral up to3,000 metres
Characteristics Vaca Muerta Wolfcamp Eagle Ford MarcellusOil and liquid
rich gas OilOil and liquid
rich gas Gas
Area (million acres) 7.5 11.2 3.0 6.2Total organic content (%) 3-10 3 3-5 2-12Thickness of shale horizon (ft) ~1,000 ~900 ~250 ~200Reservoir pressure (kpsi) 4.5-9.5 4.6 7.0-12.0 2.0-5.5
Phoenix Global Resources plc COMPANY PRESENTATION 6
Phoenix Global Resources plc
Vaca Muerta – a world class shale play
US$7.6BnInvested in
Vaca Muerta
TOTAL VACA MUERTA PRODUCTION (BOEPD)
75,0002017
4,1002013
10,1002014
24,9002015
54,5002016
Source: G&G Energy Consultants
TOTAL DRILLED AND COMPLETED WELLS IN VACA MUERTA (CUMULATIVE)
8142017
2022013
3852014
5852015
7052016
Source: G&G Energy Consultants
COMPANY PRESENTATION 7
Phoenix Global Resources plc
Asset overview
We are investing in the long-term development of Argentina and the future of energy.
COMPANY PRESENTATION
Phoenix Global Resources plc
Overview of Phoenix’s assetsNeuquina basin Austral basin Cuyana basin
Gross acres 2,499,389 1,162,876 70,385
Workinginterest acres 1,028,379 528,567 68,164
Operated workinginterest acres 627,380 — 60,294
Basin production2017 (net WI) 5,026 3,900 2,136
Wells drilled 2017 127 6 1
Capital expenditure 2017 (US$ million) 65.2 9.3 9.6
Phoenix Global Resources plc COMPANY PRESENTATION 8
Phoenix Global Resources plc
Overview of Phoenix’s assets – Neuquina basin
LicencesWorking
interest %Vaca Muerta
net acreage
Puesto Rojas area (1) 100 / 67.7 / 20 424,000
Mata Mora 90 50,000
Corralera 90 51,000
Other (2) 90 / 40 37,000
Puesto Rojas area (3) 2,832
Chachahuen (YPF operated) 1,976
Other licences (4) 218
Total Neuquina basin 5,026
UNCONVENTIONAL ACREAGEHIGH LEVEL MAP OF NEUQUINA
CONVENTIONAL PRODUCTION BOEPD (2017)
1. Includes acreage at Puesto Rojas, Cerro Mollar Norte, Cerro Mollar Oeste, La Paloma, La Brea, Vega Grande Rio Atuel (66.7)% and Mallargüe (20%).
2. Includes acreage at La Tropilla I and El Manzano Oeste.
3. Include production from Puesto Rojas, Cerro Mollar Norte, Cerro Mollar Oeste, La Brea and Vega Grande.
4. Includes Cajon de los Caballos and El Manzano Oeste
Phoenix Global Resources plc COMPANY PRESENTATION 9
Phoenix Global Resources plc
Puesto Rojas areaWD Von Gontenassessment of 3C+3Pr resources of 1 BnboeNine vertical wells drilled in 20173D seismic completed on southern portion of Puesto Rojas and La Brea (Q1 2018)Nine vertical wells planned for 2018, plus first horizontalTargeting Vaca Muertaand Tight AgrioEstimated 2018 capex up to US$100 million
UNCONVENTIONAL ACREAGE
424,000Net Acres Vaca Muerta
/ Unconventional
Phoenix Global Resources plc COMPANY PRESENTATION 10
Phoenix Global Resources plc
Mata MoraSecured 90% stake and operatorship in Q1 2018NSAI assessment of 3C+3Pr WI resources of 540 MMboeTwo horizontal wells planned to be drilled in Q3 and completed Q4 2018Nabors high-spec drill rig contractedEstimated 2018 Capex up to US$40 million
UNCONVENTIONAL ACREAGE
50,000Net Acres Vaca Muerta
/ Unconventional
Phoenix Global Resources plc COMPANY PRESENTATION 11
Phoenix Global Resources plc
CorraleraSecured 90% stake and operatorship in Q1 2018Two horizontal wells planned to be drilled on Corralera Sur and Noreste blocks in 2019-2020
UNCONVENTIONAL ACREAGE
Phoenix Global Resources plc COMPANY PRESENTATION 12
51,000Net Acres Vaca Muerta
/ Unconventional
Phoenix Global Resources plc
2018 work programme2018 Capital
Expenditure US$ million (2)Basin Block Q1 Q2 Q3 Q4
UN
CON
VEN
TIO
NAL
Neuquina Puesto Rojas area (1) 75
Mata Mora 40
Corralera 3
Laguna el Loro 7
TOTAL 125
CON
VEN
TIO
NAL
NeuquinaPuesto Rojas area (1)
Chachahuen (3)
25
20
CuyanaAtamisqui /Tupungato 5
Austral (3) Santa Cruz Sur /Tierra del Fuego 15
TOTAL 65
KEY
SEISMIC
DRILLING
COMPLETIONS
BUSINESS DEVELOPMENT
HORIZONTAL WELL
COMPANY PRESENTATION 13
1. Includes Puesto Rojas, Cerro Mollar Norte, Cerro Mollar Oeste, La Paloma, La Brea, Vega Grande Rio Atuel and Malargüe..
2. Includes US$10 million licence fees for Neuquén bid round and Mata Mora / Corralera renegotiation.
3. Chachahuen operated by YPF; Austral basin assets operated by ROCH S.A.
Phoenix Global Resources plc
Financial overview
COMPANY PRESENTATION
Phoenix Global Resources plc
Financial overview
FY 2017(1) Q1 2018
Revenues 141.8 47.0
Adjusted EBITDAX (2) 40.6 14.4
Capital expenditure 82.8 20.4
Total debt 192.5 99.7
Cash on hand 23.6 15.3
Net debt 168.9 84.4
Strong financial backing from Mercuria Group US$160 million convertible revolving credit facility (3)
Net debt of US$84.4 million at 31 March 2018Available cash and undrawn facilities of US$100 million at 31 March 2018Additional debt capacity in the local bank market
FINANCIAL POSITIONSUMMARY FINANCIALS (US$ MILLION)
1. FY2017 includes Trefoil for full year and former Andes since 10 August 2017.
2. Adjusted EBITDA in FY2017 excludes one-time charges of US$32.9 million.
3. Convertible at 45 pence per share through maturity in December 2021. Interest rate of 3 months LIBOR plus 4%.
Phoenix Global Resources plc COMPANY PRESENTATION 14
Phoenix Global Resources plc
Netback analysis by basin Q1 2018 - unaudited (1)
(US$ million) NEUQUINA AUSTRAL CUYANA TOTAL
Oil revenues 24.9 6.1 11.0 41.9
Gas revenues 0.0 5.0 — 5.0
Gross revenues 24.9 11.1 11.0 47.0
Royalties & turnover tax (4.9) (1.7) (2.2) (8.8)
Net revenues 20.0 9.4 8.8 38.1
Operating costs (5.3) (6.4) (5.5) (17.1)
Netback 14.7 3.0 3.3 21.0(US$/boe)
Realised oil price US$/bbl 59.28 59.82 61.15 59.84
Realised gas price US$/MMbtu 5.07 4.06 — 4.06
Realised price US$/boe 59.26 36.02 61.15 51.75
Royalties & turnover tax US$/boe (11.75) (5.61) (12.07) (9.73)
Net revenues US$/boe 47.51 30.40 49.08 42.02
Operating costs US$/boe (12.59) (20.61) (30.46) (18.84)
Netback US$/boe 34.92 9.79 18.63 23.18Oil & gas – sales volume
Oil bopd 4,670 1,126 1,990 7,787
Gas boepd 3 2,297 — 2,301
Total volume boepd 4,674 3,423 1,990 10,0871. Unaudited management information
COMPANY PRESENTATION 15
Phoenix Global Resources plc
Conclusion
Phoenix Global Resources plc COMPANY PRESENTATION 16
Phoenix Global Resources plc
Appendix
COMPANY PRESENTATION
Phoenix Global Resources plc
Buyer Seller AnnouncedValue
(US$ Million) US$/Acre Commentary
Jul 2013 1,240 12,900Continuation of previous joint operationsInitial outlays of US$1.24 billion
Sep 2013 120 11,000Initial 16 well programme50:50 joint venture with YPF operating
Apr 2014 140 2,800Four-year 50:50 exploration project to drill and analyse 7 vertical and 2 horizontal wells
Dec 2014 550 N/A Two investments of US$250 million and US$300 million from the partnersIncludes both drilling and processing facilities
Mar 2015 475 10,000Petronas contributing US$475 million of US$550 million over 3 annual phases30 wells planned in 3 year pilot50:50 JV (YPF operator)
Feb 2017 300 6,950 Pilot programme agreed in the block located northeast of Loma Campana50:50 JV (Shell operator)
Apr 2017 500 N/AMOU for development of the area in which partners will invest US$300 million in the AP East block and US$200 million in AP West Agreement includes unitisation of blocks and redistribution of P.I.s
Apr 2017 390 6,900MOU to develop field with the drilling of 26 wells and construction of new infrastructure49:51 JV (YPF operator)
Aug 2017 300 7,730Joint exploration of Bajo del Toro block with the drilling 8 wells and construction of related infrastructure50:50 JV (YPF operator)
Feb 2018 735 13,61059% of PELSA, that holds a 73% operating stake in three exploration concessions, majority of assets cover conventional operations in the Neuquen basin, with acreage in the Vaca Muerta
Jun 2018 N/A N/A 30% stake in two ExxonMobil affiliates with various interests in licenses for seven blocks across Vaca Muerta
Announced investments in the Vaca Muerta
COMPANY PRESENTATION Appendix
Phoenix Global Resources plc
Thank you
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