LGO Energy plc Investor Presentation, London Neil Ritson, CEO 22 September 2015
London (AIM): LGO 1
Delivering Growth through the Acquisition of Proven Reserves & Enhancement of Producing Assets
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Board of Directors Non-Executive Chairman
Steve Horton
Chief Executive Officer
Neil Ritson
Chief Operating Officer
Fergus Jenkins
Finance Director
James Thadchanamoorthy
Non-Executive Director
Iain Patrick
Non-Executive Director
Michael Douglas
Holds a BSc in Mining Engineering and an MBA. He has more than 35 years experience working in the energy industry including 27 years with BP plc where he held executive roles including worldwide Director of Drilling. He co-founded Silverstone Energy Limited in 2005.
Has a BSc in Geophysics. He has worked in the energy sector for over 38 years, initially with BP plc for 23 years before managing the international operations of Burlington Resources Inc. before founding the Vanguard Energy Group where he was Chairman and CEO.
Is a Chartered Engineer with a BEng in Mining Engineering and a MEng in Petroleum Engineering. He has over 20 years of experience working in industry, initially in mining before moving to petroleum, where he has worked for Enterprise Oil, LASMO, OMV (UK) Ltd and Afren plc.
Has a degree in Chemistry and is a qualified accountant. He has 18 years’ experience, including over 10 years spent at BP where he held a number of commercial and finance leadership positions.
Is a lawyer with over 30 years’ experience in the international oil and gas industry. He joined Monument Oil and Gas plc in 1988 where he was Commercial director until its sale in 1999. Subsequently Mr. Patrick was Commercial Director of Gulf Keystone Petroleum (UK) Limited.
Mr. Douglas has worked in the business consultancy sector for 40 years. He was a Managing Partner for PA Consulting and in 1993 Mr. Douglas founded the Quo Group, a consultancy specializing in behavioral change, performance and talent management, and executive coaching.
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Company Profile London Stock Exchange Producing Oilfields
- listed on AiM, 2007 - Trinidad and Spain
London HQ Spain
Trinidad
Staff Production target Active wells 2P Reserves P50 STOIIP Market Capital
September 2014
September 2015
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- 54 (All local) - 1500 bopd - 88 (14 new) - 12.1 mmbbls - 910 mmbbls - ÂŁ 35 million
50 (All local) 1000 bopd 81 (3 new) 7.6 mmbbls 230 mmbbls ÂŁ110 million
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Oil Price and Share Price Performance
2015
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SPAIN Ayoluengo Field, Cantabria National Park, Spain 6
Current Activity • Owner operator since 2008 of the Ayoluengo oil field in Northern Spain producing over 180 bopd (Sept.) • Discovered in 1964, developed with 54 wells and a 10,000 barrel per day facility. Currently 14 active wells • Oil in place 104 mmbbls, recovery to date only about 17% • Concession renewal due in Jan 2017 • Profitable operation running in a “care and maintenance” mode • Significant future potential in the field and in surrounding LGO leases
Ayo-37 7
TRINIDAD Goudron Field, Trinity Hills Wildlife Reserve, Trinidad
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Why Invest in Trinidad? • Politically and economically stable • New government recently elected • Geologically Trinidad is part of the East Venezuelan Basin with over 30 bn bbls • Long oil history resulting in over 3 bn barrels already produced • Last 30 years focus has been offshore. Resulting in less attention to remaining onshore oil potential • Limited use of modern technology • Large number of under-exploited proven fields and unexplored areas 9
Trinidad Assets
Trinidad Head Office, San Fernando Goudron IPSC (100%) with 2P reserves of 11.6 mmbbls and over 800 mmbbls of oil in place in two reservoirs: Goudron Sands and deeper C-sands. LGO has drilled 15 new C-sand wells since April 2014 Icacos Field in the Cedros Peninsula (50%, non-operator), producing ~35 bopd from three wells Over 10,500 acres of largely unexplored private oil leases in the Cedros and adjacent rights held in partnership with Beach Oilfield Limited 10
Goudron Field • Goudron is located in primary rainforest and produces light oil (average 38o API)
Typical legacy well (GY-233)
• Discovered in 1927 the field has a long history, but only limited production • Total of 154 wells were drilled before 1981, mostly by Texaco • Contract is an IPSC with Petrotrin with a WTI linked oil price • Export is by pipeline to the Petrotrin Point-a-Pierre refinery • Contract is for 10 years with rolling 5 year renewals • LGO is the first, and only, company to drill on an IPSC contract (2010 awards)
Goudron well GY-257 Reactivated 2012 11
Drilling Results •
15 new C-sand wells drilled in 20 months
•
Use of modern drilling and completion practices resulting in improved production
•
Measurement while drilling being used for the first time onshore in Trinidad
•
Average cost per well reduced to approx. $1.2 million
•
C-sand and Goudron Sandstone net oil pay present in every well
•
Average production rates exceed initial expectations
•
Additional reservoir target available
Well GY-664 12
LR Senergy 2015 CPR Gross Oil in Place (STOIIP) Best Estimate, P50 Historic Field Area
Well Constrained Area
Upside Area
Goudron Sandstone only
112
C-Sands only
125
Consolidated Total
237
Goudron Sandstone only
170
C-Sands only
320
Consolidated Total
490
Goudron Sandstone only
343
C-Sands only
462
Consolidated Total
805
Gross (mmbbls) Reserves
1P
2P
3P
1.54
11.37
23.58
Source: LR Senergy, June 2015 Net Attributable reserves are approximately 5% less than gross reserves
Well GY-664
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Initial Goudron Sandstone Infill Targets ⑦
• All close to existing infrastructure
④ ⑨
• Outside production radius of legacy wells
⑧ ⑥
• Slim-hole design ②
③ ①
⑩
⑤
• Straight hole • TD between 1,200 and 1,700 feet MD • Wireline logging • Columbus Rig #1 or Water & Oil Well #1 • Drilling time 6-9 days • Initial cost estimate US$420,000 per well 14
The Future: EOR/Water Flood • Local analogues at Trinity-Inniss, Navette and Beach-Marcelle Fields • Wealth of local experience in Trinidad • Over 60 mmbbls of 3C resources Source Challenge Energy 2012
• • • •
Existing study for 4,000 bopd capacity New scoping studies ongoing Collected critical data during recent drilling phase Cores and pressure data systematically collected 15
Cedros Peninsula Icacos Field, Trinidad
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Exploring the Cedros • In addition to the Icacos Leases (50%), LGO holds rights to over 7,500 acres of other underexplored leases
Installing new well tanks
• Currently evaluating all existing seismic data, including 3D, and all wells. • Only one deep well; which found oil below 10,000 feet • Acquired a micro-seepage soil survey in 2014, results have very encouraging indications • Gathered a high resolution gravity and magnetics survey. • Plan to drill a deep well to the deeper Herrera Sandstone reservoirs
Rigs & Production facilities exploiting deep potential offshore seen from Cedros coastline
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Full Tensor Gravity Installing new well tanks
•
LGO sponsored the first ever FTG survey of onshore and offshore Trinidad
•
Acquired as a Multi-Client survey by ARKeX and available for sale
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Provides high level of definition and shows many unexplored leads
Proprietary processing and interpretation now underway Rigs & Production facilities exploiting deep •
potential offshore as seen from Cedros coastline
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What we are looking for…
• On trend with the 500 mmbbls Soldado offshore fields complex
• Herrera Sandstone blocks with oil saturation from > 10,000 feet
Installing new well tanks
Galpha Point Mud Volcano 19
Future 20
Valuation Summary Trinidad
ÂŁ million Goudron 1P Goudron 2P Core NAV Goudron 3P Goudron Risked CR Risked NAV
7.7 42.2 39.9 59.7 8.6 66.0
1.3p
2.2p
Source: First Energy Corp, September 2015
Upside from:
Existing Spanish production Oil price increase (cf. 2015e $49, 2016e $57) Goudron water flood Cedros peninsula assets La Lora Concession renewal and water flood Trinidad business development 21
Full Group Valuation (Current Oil Price)
ÂŁ million
Primary Recovery
Secondary Recovery
Trinidad Exploration
450 400 350 300 250 200 150 100 50 0
Goudron Risked NAV
Spain Ayoluengo
Goudron Water flood
Spain Water flood
Cedros 22
LGO Energy Proposition Installing new well tanks
Experienced and successful operator in Spain and Trinidad Competitive advantage created in Trinidad Significant low cost production potential being realised at the Goudron Field Very large resource base with early opportunities to realise value Long-term US$25 million debt arrangement secured from BNP Paribas Medium term options for EOR in both Trinidad and Spain Optional exploration in a proven, but under explored basin Looking to stabilise the share register through institutional investment
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Forward Looking Statements Certain statements in this presentation are “forward looking statements� which are not based on historical facts but rather on the management’s expectations regarding the Company's future growth. These expectations include the results of operations, performance, future capital, other expenditures (amount, nature and sources of funding thereof), competitive advantages, planned exploration and development drilling activity including the results of such drilling activity, business prospects and opportunities. Such statements reflect management's current beliefs and assumptions and are based on information currently available. Forward looking statements involve significant known risks, unknown risks and uncertainties. A number of factors could cause the actual results to differ materially from the results denoted in these statements, including risks associated with vulnerability to general economic market and business conditions, competition, environmental and other regulatory changes, the results of exploration, development drilling and related activities, actions by governmental authorities, the availability of capital markets, reliance on key personnel, uninsured and underinsured losses and other factors, many of which are beyond the control of the Company. Although these statements are based upon what management believes to be reasonable assumptions, the Company cannot assure investors that the actual results will be consistent with these forward looking statements.
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Delivering Growth through the Acquisition of Proven Reserves & Enhancement of Producing Assets
London (AIM): LGO www.lgo-energy.com 25