Valeura Energy Inc. · TSX:VLE

Valeura Energy — Investor Presentation (July 2013)

52 slides from Valeura Energy's investor presentation, July 2013

  1. Slide 1: Unlocking Turkey's Tight Gas Potential – Corporate Presentation

    A GLOBAL ENERGY COMPANY FOCUSED ON EXCEPTIONAL VALUE CREATION UNLOCKING TURKEY’S TIGHT GAS POTENTIAL CORPORATE PRESENTATION JULY 2013

  2. Slide 2: Corporate Profile

    Corporate Profile  Valeura Energy Inc. (VLE – TSX) Canada-based oil and gas E&P company with assets in Turkey and Western Canada  Executed six transactions & three licence awards in Turkey since September 2010: − Hold interests in 20 leases & licences: 1.8 MM acres (gross); 0.82 MM acres (net)  C

  3. Slide 3: Capital Structure July 1, 2013

    Capital Structure July 1, 2013 Basic shares outstanding at July 1, 2013 57,906,135 Common shares purchasable pursuant to outstanding: Financial warrants ($5.50 exercise price per share) 13,269,217 Performance warrants ($2.00 wt’d average exercise price per share) 2,796,750 Options ($1.97 wt’d averag

  4. Slide 4: Q1 2013 Financial & Operating Highlights

    Q1 2013 Financial & Operating Highlights 3 MONTHS 3 MONTHS 3 MONTHS RESULTS ENDED ENDED ENDED Mar 31, 2013 Dec 31, 2012 Mar 31, 2012 Production Crude oil & NGLs (bbl/d) 53 61 59 Natural gas (Mcf/d) 4,787 5,682 9,074 boe/d (@6:1) (1) 851 1,008 1,572 Financial ($ thousands except per boe amounts) P &

  5. Slide 5: Why Turkey?

    Why Turkey? Prospective  Proven petroleum systems TBNG-PTI  Under-explored & under-exploited conventional & TBNG-PTI acquisition Acquisition (natural gas & light/heavy oil) opportunity unconventional plays  Opportunity to deploy modern technology  Anatolia Basin main oil producing region in Zagr

  6. Slide 6: Pro Forma Land Position In Turkey

    Pro Forma Land Position In Turkey PETROLEUM LEASES & LICENCES GROSS AREA VALEURA NET AREA TRANSACTION DISTRICT (#) (acres) (acres) (1) THRACE BASIN Licence 5104 Award (Banarli) (2) I (MARMARA) 1 118,598 118,598 TBNG-PTI – Onshore (3) I (MARMARA) 10 507,853 203,141 TBNG-PTI – Offshore I (MARMARA) - 1

  7. Slide 7: Turkey Year-End 2012 Reserves (Company Gross)

    Turkey Year-End 2012 Reserves (Company Gross)(1) MMboe – Million barrels of oil equivalent  159% year-over-year increase in proved plus probable (2P) reserves in Turkey  Primarily natural gas reserves in Thrace Basin on TBNG-PTI lands (Valeura 40%) and Edirne Licence (Valeura 35%)  Growth in 2P r

  8. Slide 8: Turkey Year-End 2012 Contingent Resources (Company Gross)

    Turkey Year-End 2012 Contingent Resources (Company Gross)(1) MMboe – Million barrels of oil equivalent  302% year-over-year increase in best 3C – High Estimate estimate of contingent resources (2C) in 2C – Best Estimate Turkey 1C – Low Estimate  Natural gas in six discovered gas fields on TBNG-PTI

  9. Slide 9: Thrace Basin Transactions

    Thrace Basin Transactions Bulgaria Otto asset purchase Black Sea 3839 (35% WI) Valeura licence Turkey applications applications (100% WI) (100% WI) Banarli licence TBNG-PTI asset purchase award (40% WI onshore; (100% WI) 15% WI offshore) 3659 2926 5122 5104 3861 Greece 5151 3860 3934 4126 3858 3931

  10. Slide 10: TBNG-PTI Assets

    TBNG-PTI Assets  Large acreage position with interests in 14 leases & licences (10 in Thrace Basin and 4 in Anatolia Basin)  Established shallow gas production and marketing business in Thrace Basin: - 95 producing wells in 15 shallow gas fields in onshore lands (794 gross sections) - Owned compre

  11. Slide 11: TBNG-PTI Shallow Gas Business

    TBNG-PTI Shallow Gas Business  TBNG-PTI total Q1 2013 gas production 10.6 MMcf/d (gross) & 4.3 MMcf/d (net): − Approximately 50% shallow gas; 50% tight gas − Average wellhead price in 1Q2013 was $10.77/Mcf  2012 full year shallow gas program: (1) ₋ Spudded 9 conventional shallow gas wells: 5 on pr

  12. Slide 12: Shallow Gas & Tight Gas Plays in the Thrace Basin – TBNG-PTI Lands

    Shallow Gas & Tight Gas Plays in the Thrace Basin – TBNG-PTI Lands Akcahalil-1 Inecik- Aydede-1 YAGCI-8 ND-1 TDR-2 TS-18 DTD-1 KAYI-7 BATI GAZI-1 BATI SHALLOW GAS 2 KARAEVLI-1 SOUTHWEST NORTHEAST  Danismen & Osmancik DANISME N  50% of production 500 m OSMANCIK  ~95 wells  36 workovers & 9 MEZARD

  13. Slide 13: Tight Gas Proof-Of-Concept Program Phases

    Tight Gas Proof-Of-Concept Program Phases 1. Recompletion fracs (750-2,000 m depth) − Identify gas bearing zones in Mezardere, Teslimkoy & Kesan units that require fracs to achieve commercial rates focusing initially on areas within structural closure − 26 well re-entry fracs completed: 8 in 2nd hal

  14. Slide 14: Representative Teslimkoy/Kesan Single-Stage Frac Results

    Representative Teslimkoy/Kesan Single-Stage Frac Results (1) PARAMETER RANGE AVERAGE FRAC SIZE - k# sand 6 - 193 81 NET PAY – m (2) 3 - 29 12.7 POROSITY - % (2) 10 - 18 16.6 INITIAL 30-DAY RATE – MMcf/d (3) 0.3 – 3.2 1.0 CUMULATIVE PRODUCTION PER WELL TO 58 - 326 137 June 30, 2013 - MMcf (1) Results

  15. Slide 15: New Drill Spuds In 2012 & 2013 YTD – TBNG-PTI Lands

    New Drill Spuds In 2012 & 2013 YTD – TBNG-PTI Lands Dogu Hayrabolu-10 Kazanci-5 Koseilyas-1 Karya-1, Sig-1 Kuzey Guney Atakoy-1 Kayi Derin-1 Atakoy-2 Guney Guney Karababa-1 Kayi-1 Hayrabolu Tekirdag Deep Atakoy-8 Karanfiltepe-6 Deveseki-1 Development Exploration Area Dogu Area TDR-9, 14 Gazi-2 10 km

  16. Slide 16: Tekirdag Area Tight Gas Development Drilling Program

    Tekirdag Area Tight Gas Development Drilling Program (1) KAYI DERIN-1 Planned horizontal Horizontal wells DTD-19H –Wells Kesan (completing) (DTD-19H, BTD-4H -BTD-4H) Teslimkoy TDR-6 TDR-9 TDR-7 DTD-19H BTD-4H TDR-14 BAGLIK-1 BTD-5 DTD-19 Teslimkoy/Kesan Penetrations BTD-3 Delineation Drills Delineat

  17. Slide 17: Banarli Licence 5104 – Multiple Exploration Plays

    Banarli Licence 5104 – Multiple Exploration Plays Edirn Teslimkoy/Kesan Alacaoglu e Potential Active Depth Structure “Kitchen” Area Mezardere Kitchen Hayrabolu-10 Sariyer-1 5104 Kazanci-5 Banarli Licence 5104 Tekirdag 10 km  Banarli licence awarded to Valeura (100%) in April 2013 (118,598 acres or

  18. Slide 18: Banarli Licence 5104 – Potential Active Kitchen Area

    Banarli Licence 5104 – Potential Active “Kitchen” Area Banarli Tekirdag 18

  19. Slide 19: SE Anatolian Basin Licences

    SE Anatolian Basin Licences Gaziantep Karakilise Licences Licences (26% WI) (27.5 - 100% WI) (Mardin play) 2677 (Mardin, Dadas 5052 Shale & Bedinan 2674 plays) TURKEY Bostanci 4985 4656 4656 Licence 4607 (100% WI) 4658 (Mardin, Jurassic SYRIA & Triassic plays) 4649 IRAQ 50 km 19

  20. Slide 20: Bostanci Licence 4985

    Bostanci Licence 4985 1 km Potential High Impact Prospect East Tawke  Underlies large undrilled surface anticline at Peshkabir-1 North North juncture of Turkey, Iraq and Syria borders SIV-10-04 SIV-10-03 New 2D Bostanci  35 km west of Tawke oil field & 16 km northwest seismic shoot Prospect of Pes

  21. Slide 21: Gaziantep Licence 4607

    Gaziantep Licence 4607  123,372 gross acres (26% WI)  Operated by TransAtlantic  Alibey-1 Hz drilled in July 2012 as 414 m horizontal side-track in original Alibey-1 vertical well, which flowed heavy oil from the Mardin Group 4607 (Bozova Member) Alibey-1 HZ  First horizontal well drilled by (in

  22. Slide 22: Karakilise Area Licences 2674, 2677 & 5052

    Karakilise Area Licences 2674, 2677 & 5052 Karakilise-1 Shell/TPAO Mardin recompletion Joint Venture (producing 20-30 bopd) TransAtlantic Shell/TPAO Bahar-1 Saribugday-1 (Bedinan oil discovery producing 375 bopd TPAO post-frac) (2)(4) Ciksor-3 (indicated Bedinan oil Perenco discovery) Altinakar-1 Ka

  23. Slide 23: Turkey Indicative Well Economics

    Turkey Indicative Well Economics (1) PHYSICAL PARAMETERS PER WELL ECONOMICS PER WELL – BEFORE TAX (6) PROGRAM IP (3) RESERVES (2) CAPEX (5) IRR PAYOUT PV10 RECYCLE (MMcf/d or (Bcf or Mbbl) ($MM) (%) (MONTHS) ($MM) RATIO (7) bbl/d) Thrace Basin - Gas Shallow Gas Drilling 0.30 0.9 0.8 >100 8 1.0 2.7 T

  24. Slide 24: Summary

    Summary  Pure play in Turkey  Large land position – 1.8 MM gross acres or 0.82 MM net acres  Q1 2013 corporate production 851 BOE/d (91% natural gas in Turkey at realized price of $10.66/Mcf)  Thrace Basin discovered resource base (2P reserves + 2C contingent resources) approximately 680 Bcf (11

  25. Slide 25: Supplementary Information

    A GLOBAL ENERGY COMPANY FOCUSED ON EXCEPTIONAL VALUE CREATION SUPPLEMENTARY INFORMATION

  26. Slide 26: Disclaimer/Forward Looking Information

    Disclaimer/Forward Looking Information This presentation contains certain forward-looking statements including, but not limited to: the anticipated tight gas delineation and development program in the Thrace Basin and the ability to finance development; anticipated work programs, budgets and operati

  27. Slide 27: Oil and Gas Terms and Advisories

    Oil and Gas Terms and Advisories "reserves" are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on analysis of drilling, geological, geophysical and engineering data; the use of established

  28. Slide 28: Our Heritage

    Our Heritage Senior Management Board of Directors 28

  29. Slide 29: Recent Successes of Management & Board

    Recent Successes of Management & Board Sold 2009 $360 mm Market Cap 3x ROI (’04-’09) ~$675 mm CAGR 22% Market Cap at Trust Conversion Sold in 2008 $916 mm $202 mm 35x ROI (‘94-’03) 4x ROI (’05-’08) CAGR 51% CAGR 89% Sold in 2006 Sold in 2005 $306 mm $122 mm 1.4x ROI (’03-’06) 3x ROI (’02-’05) CAGR 1

  30. Slide 30: Organization Structure

    Organization Structure BOARD OF DIRECTORS Abby Badwi Jim McFarland Bill Fanagan Ken McKay Claudio Ghersinich Ron Royal Stephanie Stimpson, Corporate Secretary PRESIDENT & CEO Jim McFarland ASSISTANT Shari Lemon MANAGER VP VP MANAGER CFO BUSINESS ENGINEERING OPERATIONS GEOSCIENCES DEVELOPMENT Steve B

  31. Slide 31: Management - Officers

    Management - Officers President & CEO: Jim McFarland, P. Eng. 40 years Oil & Gas Experience  Former President & CEO, director and co-founder, Verenex Energy (successful Libya oil and gas explorer)  Former Managing Director, Southern Pacific Petroleum (Australian shale oil)  Former President & COO

  32. Slide 32: Management – Officers (Cont'd)

    Management – Officers (Cont’d) VP Engineering: Don Shepherd, P. Eng. 40 years Oil & Gas Experience  Former General Manager, Verenex Energy Area 47 Libya based in Tripoli  Former VP Engineering & Operations, Calvalley Petroleum (Yemen)  13 years with Saudi Aramco as Asset Management Team Leader an

  33. Slide 33: Functional Managers

    Functional Managers Manager Business Development: Barry Wihak, P. Geol. 30 years Oil & Gas Experience  Former President & CEO, director and co-founder, Cangea Energy (private, Colombia focus)  5 years with Vermilion Energy Trust as Business Development Advisor (acquisitions in France, Netherlands

  34. Slide 34: Board of Directors

    Board of Directors Abby Badwi, P. Geol. Vice-Chairman, Bankers Petroleum Ltd. Geological background Bill Fanagan, CA (Chair) Former Chairman, Verenex Energy Inc. Former President & CEO, Gulf Indonesia Resources Limited Financial background (Audit Chair) Claudio Ghersinich, P. Eng. Co-founder & forme

  35. Slide 35: TBNG-PTI Acquisition

    TBNG-PTI Acquisition  Transaction with TransAtlantic Petroleum Ltd. ("TransAtlantic") to take 40% of TransAtlantic’s acquisition of all of the shares of Thrace Basin Natural Gas Turkiye Corporation ("TBNG") and Pinnacle Turkey, Inc. ("PTI"): - Total purchase price for 100% of TBNG-PTI was US$100MM

  36. Slide 36: TBNG-PTI 2011 Frac Results

    TBNG-PTI 2011 Frac Results PEAK 24-HOUR INITIAL 7-DAY INITIAL 30-DAY CUMULATIVE FRAC DATE NET PAY (1) POROSITY (1) ON-STREAM AVERAGE AVERAGE PRODUCTION TO WELL (d/m/y) (m) (%) RATE ON-STREAM RATE ON-STREAM RATE JUNE 30, 2013 (MMcf/d) (2) (MMcf/d) (2) (MMcf/d) (2) (MMcf) Yazir-2; 1st stage 18/07/2011

  37. Slide 37: TBNG-PTI 1Q2012 Frac Results

    TBNG-PTI 1Q2012 Frac Results INITIAL 7-DAY INITIAL 30-DAY CUMULATIVE PEAK 24-HOUR FRAC DATE NET PAY (1) POROSITY (1) AVERAGE AVERAGE PRODUCTION TO WELL ON-STREAM RATE (d/m/y) (m) (%) ON-STREAM RATE ON-STREAM RATE JUNE 30, 2013 (MMcf/d) (2) (MMcf/d) (2) (MMcf/d) (2) (MMcf) DTD-11 7/01/2012 3 13 1.1 0

  38. Slide 38: TBNG-PTI 2Q - 4Q2012 Frac Results

    TBNG-PTI 2Q - 4Q2012 Frac Results INITIAL 7-DAY INITIAL 30-DAY CUMULATIVE PEAK 24-HOUR FRAC DATE NET PAY (1) POROSITY (1) AVERAGE AVERAGE PRODUCTION TO WELL ON-STREAM RATE (d/m/y) (m) (%) ON-STREAM RATE ON-STREAM RATE JUNE 30, 2013 (MMcf/d) (2) (MMcf/d) (2) (MMcf/d) (2) (MMcf) Sulemaniye-2 (3) 9/05/

  39. Slide 39: TBNG-PTI 2013 YTD Frac Results

    TBNG-PTI 2013 YTD Frac Results INITIAL 7-DAY INITIAL 30-DAY CUMULATIVE PEAK 24-HOUR FRAC DATE NET PAY (1) POROSITY (1) AVERAGE AVERAGE PRODUCTION TO WELL ON-STREAM RATE (d/m/y) (m) (%) ON-STREAM RATE ON-STREAM RATE JUNE 30, 2013 (MMcf/d) (2) (MMcf/d) (2) (MMcf/d) (2) (MMcf) Baglik-1 (L. Kesan) (3) 8

  40. Slide 40: TBNG-PTI New Drill Spuds In 2012 – Current Status

    TBNG-PTI New Drill Spuds In 2012 – Current Status SPUD RIG RELEASE TD STATUS WELL LICENCE WELL TYPE (d/m/y) (d/m/y) (m) July 15, 2013 Baglik-1 3931 10/03/2012 06/05/2012 Unconventional 3,594 Producing Dogu Karya-1 3934 04/04/2012 23/04/2012 Unconventional 2,022 Evaluating TSK-1 3931 05/04/2012 10/04

  41. Slide 41: TBNG-PTI New Drill Spuds In 2013 – Current Status

    TBNG-PTI New Drill Spuds In 2013 – Current Status SPUD RIG RELEASE TD STATUS WELL LICENCE WELL TYPE (d/m/y) (d/m/y) (m) July 15, 2013 TDR-14 3931 29/01/2013 22/02/2013 Unconventional 1,750 Cased & Standing Hayrabolu-10 2926 08/02/2013 10/04/2013 Unconventional 4,054 Cased & Standing Unconventional -

  42. Slide 42: Otto Producing Asset Purchase

    Otto Producing Asset Purchase  Definitive agreement signed Dec 14, 2010 to acquire 35% interest in Edirne Licence 3839 in Thrace Basin held by Edirne Enerji (wholly owned by Australia-based Otto Energy Ltd.)  Purchase price US$3.1MM (including taxes) with effective date Oct 1, 2010  Acquisition c

  43. Slide 43: Edirne Licence 3839 (35%) 2011 – 2013 YTD Program

    Edirne Licence 3839 (35%) 2011 – 2013 YTD Program Kayapa-1 Ortakci -4 Ikihoyuk field 3D seismic coverage Ortakci field D&A Gas Well Ortakci field 200 km2 Ikihoyuk field Follow-up locations on original 3D Ortakci -4 Workover Follow-up locations on original 3D Kirmizihoyuk-1 Workover Arpaci-2A Workove

  44. Slide 44: Thrace Basin Seismic

    Thrace Basin Seismic (Under application) (Under (Under application) application) 2011 acquired 3D seismic (413 km2)  Drilling on 2D seismic only prior to 2012  2011 3D seismic shoot on TBNG-PTI lands 2013 Banarli 2D program (92.5 km) completed (413 km2) in late 2011: 2012 acquired 2D seismic (186

  45. Slide 45: Licence 2674 – Bedinan Prospects and Leads

    Licence 2674 – Bedinan Prospects and Leads  119,265 gross acres (27.5% WI) N  10+ Bedinan prospects & leads identified 2674 with new 2D seismic (tilted fault blocks)  Altinakar-1 discovered heavy oil in Mardin  GDPA approved 3-year extension of Licence Bedinan Altinakar-1 2674 to May 30, 2014 pr

  46. Slide 46: Turkey Natural Gas Infrastructure

    Turkey Natural Gas Infrastructure 46

  47. Slide 47: Turkey Oil Infrastructure

    Turkey Oil Infrastructure 47

  48. Slide 48: Thrace Basin Turkey – Stratigraphic Column

    Thrace Basin Turkey – Stratigraphic Column  Tertiary basin  9,000 m of tertiary age sediments  Depositional environment − Deltaic sands − Turbidite sands − Reef development on Paleozoic highs  Key reservoirs − Danismen - gas − Osmancik – gas − Mezardere - gas − Ceylan – gas − Sogucak – oil − Ham

  49. Slide 49: SE Turkey – Stratigraphic Column

    SE Turkey – Stratigraphic Column Reservoirs  Sinan/Garzan reefs (Tertiary/Upper Cretaceous)  Karabogaz & Mardin (Mid Cretaceous)  Bedinan (Ordovician) Source Rocks  Karabogaz (Cretaceous)  Dadas (Silurian) Seals  Germav (Upper Cretaceous)  Dadas (Silurian) Play Types  Structural - Reverse an

  50. Slide 50: Canada Year-End 2012 Reserves (Company Gross)

    Canada Year-End 2012 Reserves (Company Gross) (1) LIGHT & NATURAL GAS TOTAL OIL PV10 BEFORE HEAVY OIL NATURAL GAS CATEGORY MEDIUM OIL LIQUIDS EQUIVALENT TAX (2) (Mbbl) (Mbbl) (Bcf) (Mbbl) (MBOE) ($MM) PROVED 62 8 0.4 13 143 1.5 PROBABLE 131 5 1.0 49 358 3.8 TOTAL PROVED PLUS PROBABLE 192 13 1.4 63 5

  51. Slide 51: Verenex Energy Inc. Share Price Performance

    Verenex Energy Inc. Share Price Performance $100MM financing $20 Amalgamated 10.0 Confirmed 1st Libya Offshore France Prairie Fire. Libya non-consent discovery well D&A $31MM financing. Strategic to CNPC deal Commenced alternatives review 8.0 $15 trading on TSXV $30MM financing CNPC acquisition @ $2

  52. Slide 52: Verenex Experience in Libya

    Verenex Experience in Libya  "Go where the oil is"  Seek out first mover advantage  Operate and choose partners wisely  Invest in good science, data capture and quality of technical analysis  Aggressively apply "western" technology and work processes in operations  Ensure experienced, on-the-g

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