what’s old is new - citadel...
TRANSCRIPT
What’s old is new
May, 2013
Forward Looking Statements
This presentation contains forward-looking statements, including without limitation those statements regarding
Citadel’s ability to exploit mining concessions. The statements and discussions contained in this presentation
that are not historical facts constitute forward-looking statements, which can be identified by the use of forward-
looking words such as "believes," "expects," "may," "intends," "anticipates," "plans," "estimates" and analogous
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this presentation that these forward-looking statements and estimates as to future performance, estimates as to
future valuations and other statements contained herein regarding matters that are not historical facts, are only
predictions, and that actual events or results may differ materially. Citadel cannot assure or guarantee you that
any future results described in this presentation will be achieved, and actual results could vary materially from
those reflected in such forward-looking statements. We assume no obligation to update any forward-looking
statements in order to reflect any event or circumstance that may arise after the date of this presentation, other
than as may be required by applicable law or regulation. Reserve and Resource Disclosure: Securities and
Exchange Commission (“SEC”) rules prohibit a publicly-reporting oil and gas company from including oil and gas
resource estimates in its filings with the SEC, except proved, probable and possible reserves that meet the
SEC’s definition of such terms. Estimates of non-proved and non-probable reserves included herein are not
based on SEC definitions and guidelines and may not meet specific definitions of reserves or resource
categories within the meaning of the SPE/SPEE/WPC Petroleum Resource Management System.
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Executive Summary: What’s Old Is New
COIL: An Exploration & Production Company focused on California
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Founder & CEO: Armen Nahabedian – 4th Generation Oilman.
o Family’s extensive geologic database & knowledge provide first mover advantage.
o Experienced operator with boots on the ground advantage.
o United States Marine 1999 – 2003; Veteran of Operation Iraqi Freedom.
CFO: Phil McPherson – 11 years as a small cap E&P analyst.
o Noted expert on California companies.
o Wall Street Journal “Best on the Street” award in 2011; Multiple “5 Star” awards.
February 2013 Capital Raise – 4.1MM shares @ $0.34 totaling $1.4MM
o COIL (OTCBB) 28.1MM shares issued (29.6MM including vested options and warrants).
o Simple Capital Structure: Insider Ownership ~ 16MM Shares.
$1MM Drilling CAPEX next 6 Months – fully funded.
o Rancho Grande (20% W.I.) San Joaquin Basin – 2 exploration wells 3,500’ – 7,000’
o Project Indian (60% W.I.) Salinas Basin – 5-well pilot steam project.
o Recently acquired 3,000 acres at Yowlumne; potential recompletion of existing well
Sojitz Energy Ventures (SEV) – Strategic Joint Venture Partner
o $50 billion Japanese trading conglomerate
o Vast technical and analytical resources
Disciplined Geographic Focus
“California’s Oil Renaissance” is in its Nascent Stage
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Driven by technological innovation
o Reprocessing of vintage seismic data combined with new hi-resolution 3-D seismic
o Comingling of multiple hydrocarbon bearing zones
o Horizontal drilling applied to conventional targets
o Advances in thermal recovery for heavy oil
Premium Prices: Supply imbalance between California refiners and global markets means
local production garners a $10 to $20 per barrel premium to other U.S. markets.
Larger independents are aggressively entering Basin
o Potential to drive future M&A activity and ultimately exit strategy
o Berry Petroleum (BRY) acquired by Linn Energy (LINE) ($4.3 billion, Feb ’13)
o Plains Exploration (PXP) acquired by Freeport-McMoRan (FCX) ($6.9 billion Dec ‘12)
Limited small-cap opportunities to capitalize on this trend
Older Fields and or Field Extensions represent low hanging fruit as technology and higher
commodity prices allow the industry to unlock previously uneconomic zones.
The best place to find oil is where it’s already been found!
General Project Locations
Indian
Rancho Grande
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Yowlumne
Project Indian: Overview
688 acres under lease from OXY in San Benito County
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Analogous to North San Ardo oilfield
o Discovered by Chevron in 1950
o Re-discovered by NEG in 2005 with
Salinas Energy
Shallow heavy oil ~13 degree API
60% working interest – 47.4% NRI
100 MMBbls of gross oil in place
Expect 20% - 40% recovery
Phase I CAPEX $600k ($360k Net)
5-well pilot cyclic steam project
Proof of concept expected by end of 2013.
Proximity to PG&E improves economics
o Electric power for pumps
o Natural gas for steam
PG&E Gas Transmission Line
PG&E Power
Project Indian
Project Indian: California Heavy Oil Background
The Majority of California Oil Production is Heavy
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Heavy oil characterized as less than 18 degrees API, immobile without stimulation
Thermal recovery (steam injection) is the primary stimulation technique
o Steam created using natural gas increases recovery by 15-50% of (OOIP)
60% of California daily oil production (~300,000 barrels per day) is heavy
Low natural gas prices + high oil prices = attractive thermal economics
~52,000 gross acres leased
By JV Partner Sojitz Energy
Ventures.
Rancho Grande & Surrounding Oil Fields
Rancho Grande Area
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Rancho Grande: Overview
~52,000 gross acres under lease paid for by Sojitz
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Tejon Ranch Overview
15 locations permitted, another 20 permits pending
2D and 3D seismic coverage of prospects to support extensive well control
First exploratory drilling started May 2013.
Shallow objectives: 20+ Prospects
o 50+ MMBbls
o 8,000 feet or less
COIL pays 22.22% cost share for 20% WI
o First two wells net to COIL ~$450k
First Two-well program currently drilling
o Section 19 – 3,550’ TD
o Section 2 – 4,100 TD
Next set of prospects in planning stages
Rancho Grande
Rancho Grande: Prospect Inventory 1,000 – 8,000 Feet
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Area Formation SectionUnrisked
Potential Description
1 Vedder Oil Pool 19 & 20 15 MM BOE Horizontal Redevelopment of Vedder pool to the south in Sections 28,29,30, 31.
1b Monterey 19 & 20 25 MM BOE Horizontal development of Monterey formation Pulv Chert Zone at 7,500'.
2 Olcese Pool 19 & 20 2 MM BOE Vertical development of Olcese Pool at 7,500 feet.
2b Santa Margarita 19 & 20 5-7 MM BOE Horizontal development of Santa Margarita pool at 3,500 feet - updip from 187-19 w ell.
3 Olcese Channel Sand 21 5-8 MM BOE Seismically definded faulted anticlinal closure in Middle Miocene Olcese channels sand.
4 Valv Channel Sand 10 15 MM BOE Standard 338-9 w ell tested 500 Bopd from upper portion. Seismic show s the channel into Section 10.
5 Vedder & Eocene Sand 5,11,12,14 15 MM BOE Negotiating lease
6 Santa Margarita 4 & 36 8-10 MM BOE Fault-stratigraphic trap updip from Santa Margarita oil show s.
7 Olcese Sands 27 & 34 4-6 MM BOE Stratigraphic trap in thick Middle Miocene Olcese Sands present in 16-26 and 42-26 w ells.
8 Santa Margarita 25 15 MM BOE Anticlinal closure in Santa Margarita and deeper Miocene sandstones.
9 Vedder Sands 4 10 MM BOE 3D Seismic and w ell control defined anticlinal closure at 10,000 feet.
10 Reserve Sands 34 & 35 2 MM BOE 3D Seismic show s fault trap w ith over 100 feet untested closure.
11 Vedder Sands 34 & 35 7-10 MM BOE Untested Veddersand anticlinal closure w ith 3D Seismic and w ell control.
12 Reserve Sands 2 4 MM BOE 3D Seismic and w ell data indicate 2-30 locations updip from 63-2 w ell w ith over 500 feet of pay.
13 Santa Margarita 35 2 MM BOE Updip development at a depth of 1,300 - 2,000 feet.
14 Vedder Sands 1,2,10,11 5-10 MM BOE Fault trap updip from Arco Tejon 1-2 deep test w ell. 3D Seismic show s NE-SW trending reverse fault.
15 Shallow Vedder Sands 7,12,13 5 MM BOE Anticlinal closure beneath Tuis Creek basalts at 5,000 feet.
16 Olcese Sands 10,11 5 MM BOE 3D Seismic show s faulted NW trending anticlinal arch w ith amplitude anomalies.
17 Olcese Sands 11 5 MM BOE 3D Seismic show s faulted NW trending anticlinal arch w ith amplitude anomalies.
18 Santa Margarita 23 & 24 10-50 MM BOE Sub-Thrust anticlinal closure beneath the south dipping Pleito Thrust Fault.
19 Vedder Sands 8,9,16,17 20-50 MM BOE Sub-Thrust anticlinal closure beneath the south dipping Pleito Thrust Fault.
20 Reserve Sands 9 5-10 MM BOE Stratographic pinchout, 3D Seismic show s local domal closure.
21 Santa Margarita 8 10-15 MM BOE East plunging anticline defined by 3D Seismic. Stacked amplitude anomalies.
22 Vedder Sands 19 & 20 25-40 MM BOE Westerly continuation of the sub-thrust anticlinal fold beneath the south dipping Pleito Thrust.
23 Vedder Sands 7 10-20 MM BOE Westerly culmination of the Section 8 anticline, w est of the Grapevine Fault.
Experienced Management Team
Armen Nahabedian: CEO, President & Director
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Fourth generation California oil and gas explorer.
10-year executive in family business (NEG)
Served in the United States Marine Corps in Operation Iraqi Freedom
Managed highly profitable JVs with public companies
Daniel Szymanski: Chairman
20-year industry veteran, including assignments with Tenneco, Chevron and OXY
Served as Manager of Business Development at OXY headquarters in Los Angeles
Since 2008 has been an industry consultant and partner in seismic data firm
BS in Geology, University of Wisconsin and MS in Geophysics from Purdue
Phil McPherson: CFO & Director
11-year sell-side Small Cap E&P research analyst, most recently at Global Hunter Securities
Zack’s 5-star Analyst 2005, 2006 & 2007, WSJ “Best on the Street” analyst in 2011
Widely recognized expert in California oil investments
Bachelors in Economics from East Carolina University
Contact Information
What’s old is new
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Headquarters:
417 31st St. Unit A
Newport Beach, CA 92663
949-612-8040
Geologic Office:
420 Bryant Lane
Ojai, CA 93023
805-646-4189