Victory Oilfield Tech, Inc. · OTC:VYEY
Victory Oilfield Tech — Victory Energy — IPAA OGIS New York (April 2015)
32 slides from Victory Oilfield Tech's conference presentation, Apr 20, 2015
Slide 1: IPAA OGIS, New York - Investor Presentation
(OTCQX: VYEY) IPAA OGIS, New York - Investor Presentation April 20, 2015
Slide 2: Forward-Looking and Cautionary Statements
2 Forward-Looking and Cautionary Statements This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fac
Slide 3: Rule 165 Legend: Important Information
3 425 Prospectus for Pre-business Combination Rule 165 Legend: Important Information This communication is not a solicitation of a proxy from any stakeholder of Victory Energy Corporation or Lucas Energy, Inc. In connection with the proposed business combination of Victory Energy Corporation and Luc
Slide 4: Investor Highlights
4 Investor Highlights • Focused on our strategic business combination with Lucas Energy (NYSE MKT: LEI) • Oil and liquid rich gas as primary targets • Permian Basin and Eagle Ford focused • Adding shareholder value by growing proved reserves and cash flow through the opportunistic acquisition of eco
Slide 5: Business Model Near-Term Focus
5 Business Model Near-Term Focus • Expect to Utilize of available capital sources to complete the Lucas Energy merger and add value to all shareholders. • Expect $12 million capital infusion through Aurora Energy Partners for near term merger and operations needs • Expect $50 million 1 from a global
Slide 6: Combined Company Benefits
6 Combined Company Benefits • Significant drilling inventory in two of North America’s most prolific and economic oil and gas plays (Permian Basin and Eagle Ford) • 130 Eagle Ford well locations offering an estimated ~17% to ~32% IRR at $50 oil 1 • 20+ Austin Chalk well locations • ≈ 10 Wolfcamp, Sp
Slide 7: Combined Company – Expected NYMEX Reserves
7 Combined Company – Expected NYMEX Reserves • Strategic business combination with Lucas Energy (NYSE MKT: LEI) with anticipated completion in 2015 • Prior to the merger Victory and its partners expect to spend approximate $9.1 million on high-grade Eagle Ford 3 drilling opportunities (increased PDP
Slide 8: Market Response to February Announcement
8 Market Response to February Announcement February 4, 2015 Public Announcement February 4, 2015 Public Announcement Percent Change Share Price Estimated stock multiple of 1.5x 2 for P2 proved reserves ($60M), delivers a $0.94 share price before capitalization adjustments using current outstanding s
Slide 9: Progress Since February Announcement
9 Progress Since February Announcement • LUCAS WAS GRANTED NYSE MKT LISTING EXTENSION THROUGH AUGUST TO SUPPORT THE COMPLETION OF THE MERGER • LUCAS DEBT WAS RENEGOTIATED TO SUPPORT MERGER TIMING • $12 MILLION FUNDING AGREEMENTS IN FORCE AND AFFECT • DEFINITIVE MERGER AGREEMENT IN ADVANCED DRAFT STA
Slide 10: Remaining Steps
10 Remaining Steps • RECEIVE FAIRNESS OPINIONS FOR LUCAS AND VICTORY • SIGN DEFINITIVE MERGER AGREEMENT • SECURE FINANCING FOR PUD DEVELOPMENT DRILLING AND PDP ACQUISITIONS 1 • SUBMIT SEC FILINGS (S-4 registration statement, Joint proxy, etc.) • OBTAIN SEC CLEARANCE OF FORM S-4 • SHAREHOLDER APPROVA
Slide 11: Resulting in Stronger Combined Company
11 Resulting in Stronger Combined Company • EXIT TRANSACTION WITH NEARLY 80% NON-AFFILIATED OWNERSHIP/FLOAT • DIVERSIFIED PORTFOLIO OF O&G ASSETS IN TWO PREMIER BASINS THAT DELIVER ECONOMICALLY VIABLE RETURNS IN TODAYS LOW PRICE COMMODITY MARKET • WELL CAPITALIZED 1 TO DEVELOP CURRENTLY HELD PROVED
Slide 12: Company Profiles – Pre-Merger
12 Company Profiles – Pre-Merger Victory Energy Profile 1 Ticker OTC QX: VYEY Share Price $0.39 Market Cap $11.2 M 52 Week High $0.49 52 Week Low $0.05 Shares Authorized 47.5 M Shares Outstanding 28.9 M Float 2 21.0 M Warrants Issued 7.5 M Avg. Daily Volume (30d) 13,180 Cash $.25 M Debt $0.8 M Curre
Slide 13: Company Profile – Post Merger Estimate
13 Company Profile – Post Merger Estimate New Pubco 100% of Shares LEI 40% Subsidiary VYEY 30% Subsidiary Navitus 30% Partnership Renaissance Natural Resources Corporation Profile 1 Ticker NYSE MKT: TBD Share Price $0.94 Market Cap $18.5 M 52 Week High N/A 52 Week Low N/A Shares Authorized 100 M Sha
Slide 14: Experienced E&P Management
14 Experienced E&P Management Kenneth Hill, CEO Mr. Hill brings 21 years of experience to Victory, prior to which he held titles of interim CEO, VP Operations and VP Investor Relations with another publicly traded E&P company. He was also one of the first 20 employees at Dell, Inc. Mr. Hill studied
Slide 15: How Can We Take Advantage of the Rapid E&P Landscape Changes?
15 How Can We Take Advantage of the Rapid E&P Landscape Changes? Let’s review The Data!
Slide 16: April EIA Forecast Shows Modest Recovery
16 April EIA Forecast Shows Modest Recovery Modest price improvement above $60 is forecast by Q4 2015
Slide 17: History Shows a More Aggressive Recovery
17 $2 $4 $6 $8 $10 $12 $0 $20 $40 $60 $80 $100 $120 $140 2007 2008 2009 2010 2011 2012 2013 2014 2015 WTI Spot Henry Hub History Shows a More Aggressive Recovery 18 month Recovery $43 to $85 2008 – 2009 Crash $124 to $43 • The 2008 global economic crash saw a 66% drop in oil prices (Q2 2008 $124 to
Slide 18: The Right Basins Deliver Excellent Outcomes
18 The Right Basins Deliver Excellent Outcomes Eagle Ford and Permian Midland Basin Wells Offer Excellent Economic Returns and Break Even Floors. (chart does not include recent basin drilling cost reductions) 32% 25% 24% 22% 20% 10% 4% 0% 5% 10% 15% 20% 25% 30% 35% 1 Returns are based on Standard &
Slide 19: Recent Cost Declines Make Both Basins Profitable
19 Recent Cost Declines Make Both Basins Profitable Eagle Ford Opportunities as a Result of the Expected Merger with Lucas • AFE’s for drilling and completion of horizontal wells with 7,200 foot laterals have decreased 18% from $9.4 million to $7.8 million from November to March 1 • Gonzales and Kar
Slide 20: Focus on Eagle Ford Price Sensitivity
20 Focus on Eagle Ford Price Sensitivity 20% IRR @ $53/bbl 28% IRR @ $58/bbl 37% IRR @ $63/bbl 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% $40 $43 $45 $48 $50 $53 $55 $58 $60 $63 $65 U nl ev er ed T er m in al IR R (5) Year Average Oil Price 5 Year Avg. Price per Ba
Slide 21: Contacts
21 Contacts Investor Relations Derek Gradwell Senior Vice President, Natural Resources – MZ North America Main: 212-301-7130 Direct: 512-270-6990 Email: dgradwell@mzgroup.us www.mzgroup.us Victory Energy Corporation Kenneth Hill, CEO Email: Kenny@vyey.com Phone: (512) 347-7300 www.vyey.com
Slide 22: Appendix and Support Material
22 Appendix and Support Material
Slide 23: Pre-Merger Corporate Structure
23 Pre-Merger Corporate Structure
Slide 24: Post-Merger Corporate Structure
24 Post-Merger Corporate Structure Renaissance Natural Resources Corp Shareholders Subsidiaries Entities Renaissance Newly Listed NYSE MKT Company Aurora Aurora Energy Partners Navitus Navitus Energy Group & Partners Victory Victory Energy Corporation Victory SHs Victory Shareholders of Record Lucas
Slide 25: Asset Overview
25 Asset Overview
Slide 26: Portfolio Highlights and Opportunities
26 Portfolio Highlights and Opportunities • Fairway Project (~1000 Gross Acres) • Glasscock & Howard Counties • 80% oil, 20% Gas • 10% WI, 7.5% NRI • Bootleg Canyon (~5000 Gross Acres) • Pecos County • 75% oil, 25% gas • 5% WI, 3.75% NRI • Adams Baggett (~180 Gross Acres) • Crockett County • 100% Hi
Slide 27: Pre-drilling Proved Reserves
27 Pre-drilling Proved Reserves Lucas Reserves (NYMEX Strip 2/20/15) Type (MBOE) NPV10 (M$) PDP 137 $3.4 PUD 5,219 $31.9 Total Proved 5,356 $35.4 Probable 3,163 $15.3 Total 2P 8,519 $50.7 Forrest Garb & Associates (NYMEX Adjusted) Victory Reserves (NYMEX Strip 2/20/15) Type (MBOE) NPV10 (M$) PDP 96
Slide 28: Post-Drilling Proved Reserves
28 Post-Drilling Proved Reserves Pre-Merger CAPEX Spend 2 CAPEX Two 50% WI Boggs Wells $7.8 M Five 2% WI Penn Virginia Wells $1.3 M Total Pre-Merger CAPEX Deployed $9.1 M Post-Merger Reserve Estimates (NPV 10) (M$) (MBOE) Proved Developed Producing (PDP) $18.1 M 687 Proved Undeveloped $27.4 M 5,100
Slide 29: Permian Assets in Sweet Spot of Play
29 Permian Assets in Sweet Spot of Play • Fairway project (proved producing) • Glasscock & Howard counties • 80% oil, 20% gas • ~1,000 gross acres • At least 20 more drilling locations with 40 acre spacing • 10% WI / 7.5% NRI • Fusselman & Wolfberry focus • Bootleg Canyon (proved producing) • Pecos
Slide 30: Permian Geology Offers Stacked Pay Upside
30 Permian Geology Offers Stacked Pay Upside • Midland and Central Basin offers multiple productive zones in the Fusselman, Wolfberry, Strawn and Atoka, with potential for future horizontal Wolfcamp, Clearfork and Cline development. • Deliver value from vertical wells today and horizontal wells in t
Slide 31: South Texas Assets Located in “Oil Zone”
31 South Texas Assets Located in “Oil Zone” Lucas Acreage is primarily located In Gonzales and Karnes Counties Both counties are in the “oil fairway”
Slide 32: Eagle Ford and Austin Chalk
32 Eagle Ford and Austin Chalk