Aurora Oil & Gas — Cadence Resources — Investor Presentation (April 2006)
26 slides from Aurora Oil & Gas's investor presentation, Apr 3, 2006
Slide 1: Cadence Resources / Aurora Oil & Gas
Stock Symbol: CDNR Exchange: OTCBB Basic Shares Outstanding: 81.3 million http://www.auroraogc.com
Slide 2: Disclaimer
In this slide presentation, statements regarding our goals and objectives, our expected methods of operation and development strategies, our expected and potential production volumes, the volume of potential reserves, anticipated oil and gas prices, anticipated market growth, potential drilling loca
Slide 3: Executive Summary
Executive Summary Low-risk development of unconventional gas reserves in the Antrim and New Albany Shale Over 460,000 net acres with ~3,196 potential drilling locations and ~2.7 Tcf in potential reserves Rapidly growing proved reserves and production ~150 gross wells drilled in 2005 with ~95% succes
Slide 4: The Company
The Company Cadence/Aurora - reverse merger October 31, 2005 ~$482 million pro forma market capitalization (1) Aurora has been actively acquiring acreage in the Antrim Shale (Michigan) and New Albany Shale (Indiana / Kentucky) for ~10 years $100 million BNP Paribas senior credit facility with $40 mi
Slide 5: Summary Acreage Position
Summary Acreage Position Acreage potential does not currently translate into Proved Reserves. Generating Proved Reserves will require successful drilling. The Company has ~3,196 potential drilling locations with ~2.7 Tcf in estimated total potential reserves. GROSS NET GROSS NET GROSS NET Leasedhold
Slide 6: Antrim and New Albany Shale Plays
Antrim and New Albany Shale Plays Relatively shallow blanket shale formations High-upside, lower-risk development potential
Slide 7: Antrim and New Albany Shale Plays
Antrim and New Albany Shale Plays Antrim Shale (~19% of net acreage) Well-developed, low-risk “resource play” ~8,000 wells drilled to date in the play w/ ~95% historical drilling success rate Focus of 2005 / 2006 drilling program to provide low- risk source of production / cash flow New Albany Shale
Slide 8: Antrim Shale Well Economics
Antrim Shale Well Economics Vertical Well Cost: ~ $300,000 Well Depth: 250 – 1,500 ft. Reserves / Well: ~0.5 bcf (avg.) Peak Production: ~ 150 mcf / day avg. Time to Peak: 6-12 mo. (de-watering period) Decline Rate: ~ 7% / yr. Productive Life: ~ 40 years Avg. W.I.: 46% IRR: ~30%+ @ $5.00 gas
Slide 9: Antrim Shale Production Profile
Antrim Shale Production Profile Source: Schlumberger Holditch. ~ 7% / yr.
Slide 10: New Albany Shale Well Economics
New Albany Shale Well Economics Horizontal Well Cost: ~ $750,000 Well Depth: 500 – 2,500 ft. Reserves / Well: ~0.7 – 1.2 bcf Peak Production: ~ 200-300 mcf / day Time to Peak: 6-12 mo. (de-watering period) Decline Rate: ~ 5% / yr. Productive Life: ~ 30 years Average W.I.: 43% IRR: ~45% @ $5.00 gas
Slide 11: New Albany Shale Production Profile
New Albany Shale Production Profile Source: Schlumberger Holditch. 1bcf+ wells, drilled and completed for $750,000.
Slide 12: Natural Gas Price Differentials
Natural Gas Price Differentials Source: Bloomberg. (06/30/04 – 2006 YTD)
Slide 13: Unconventional Gas Growth
Unconventional Gas Growth Source: JP Morgan. Unconventional gas sources are expected to be the key source of domestic production growth.
Slide 14: Proved Reserves
Proved Reserves Proved reserves 12/31/05 64 Bcf Proved reserves acquired 1/06 24 Bcf Reserve reports prepared by: Schlumberger: Data & Consulting Services Netherland, Sewell & Associates, Inc. Ralph E. Davis Associates, Inc. Note: Reserve reports do not include New Albany Shale By 1H’06, a number of
Slide 15: Production Profile
Production Profile A large inventory of drilling prospects and an aggressive development program have the potential to provide for years of strong production growth
Slide 16: Aurora's Low Impact Natural Gas Production System
Aurora’s Low Impact Natural Gas Production System Low Pressure and Safe Small modular style compression facilities 100% Electrified and Quiet Stainless steel pumps Fiberglass tubing Poly pipeline systems (no decay or leaking) Improved production of shale natural gas Properly designed flow systems (o
Slide 17: Cost-Efficient Production Technology is Key
Cost-Efficient Production Technology is Key Advantages of Aurora’s low pressure system of producing wells reduces development costs increases production rates extends commercial life of wells facility capacity maximized over life of wells
Slide 18: Traditional Compressor vs Aurora's Skid-mounted Compressor
Traditional Large Central Compressor Unit Aurora’s Skid- mounted Compressor and Separator
Slide 19: 10" Poly Pipe used as flow lines
10" Poly Pipe used as flow lines for gas and water
Slide 20: Price of Electricity Stable Compared to Other Fuels
Price of Electricity Stable Compared to Other Fuels ‘PROPANE ELECTRICITY The price of electricity has remained stable while the price of other heating fuels has been volatile.
Slide 21: Management Team
Management Team William Deneau (Chief Executive Officer) 19 yrs. experience in Antrim shale CEO of Aurora since 1997 John Miller (VP, Exploration & Production) Focused on Michigan / Indiana shale E&P since 1994 Current role at Aurora since 1997 Thomas Tucker (VP, Land & Development) Focused on Land
Slide 22: Partners
Partners Samson Resources - Tulsa, OK El Paso Production Company – Houston, TX Rex Energy – College Park, PA Aurora has a number of drilling joint ventures with industry leaders that allow it to more effectively leverage its asset base, spread development risks and cost:
Slide 23: Key Operating Statistics
Key Operating Statistics Total Net Acres: 460,098 Total Net Wells (12/31/05): 182 Proved Reserves: 88 Bcf (total thru 1/31/06) Avg. Operating Cost (2005): $2.73 / Mcf Average F&D Cost $0.60 / Mcf (Antrim Shale) $0.75 / Mcf (New Albany Shale)
Slide 24: Key Financial Statistics
Key Financial Statistics Current Stock Price (03/28/06): $5.46 Common Shares (2/07/06): 81,298,683 Warrants: 2,249,500 ($1.71 exercise price) Options: 3,165,776 ($0.75 exercise price) Pro Forma Net Debt (3/31/06): ~$83 million
Slide 25: Summary
Summary Company : Develop Significant Acreage in Shales Multi-year Inventory: 2 TCF potential Proved Expected to Grow: To 100 BCF in 2006 Rapid Growth: 15 million cf/d target by year end Focus Drilling Reserves Production
Slide 26: Investor Relations Contact
Stock Symbol: CDNR Exchange: OTCBB Basic Shares Outstanding: 81.3 million http://www.auroraogc.com Investor Relations Contact: Jeff Deneau: (231) 941-0073
Cadence Resources — Investor Presentation (April 2006) on 6ix