Slide 1: MIE Investor Presentation
MIE Investor Presentation August 2015 Strictly Private and Confidential
Slide 2: Disclaimer
Disclaimer The information contained in this presentation has not been independently verified. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions co
Slide 3: Agenda
Agenda 1. MIE Group update and highlights • MIE group assets overview • Significant reserves base • Large resources inventory • Production growth potential • Company strategy • 1H2015 results highlights • 2015 operational guidance 2. Group assets update • China oilfields (Jilin assets) • SGE (Linxin
Slide 4: MIE Group update and highlights
MIE Group update and highlights
Slide 5: MIE group assets overview
MIE Group update and highlights MIE group assets overview Independent onshore upstream oil and gas company in China, growing domestically and globally Significant growth prospects Major cash flow contributor Emir-Oil (ADEK contract area) (100%, operator) Oilfields in Jilin (90%, operator) Aksaz, Dol
Slide 6: Significant reserve base
MIE Group update and highlights Significant reserve base Total oil reserves breakdown (as of Dec 2014) Equally likely that the actual quantity recovered is above or below the stated 2P quantity 4 171 180 32 High degree of confidence 160 stated Proved quantities will be 10 140 commercially recovered
Slide 7: Large resource inventory provides significant upside to existing reserves
MIE Group update and highlights Large resource inventory provides significant upside to existing reserves Total oil resources breakdown (as of Dec 2014) 2C Contingent Resources BE Prospective Resources 20 300 223 245 250 15 1 11 200 10 mmbbl bcf 10 150 100 5 50 22 0 0 2C - China oilfields 2C - US as
Slide 8: Further production growth potential from existing asset base
MIE Group update and highlights Further production growth potential from existing asset base 1H2015 vs 1H2014 net oil production (BOPD) 16,558 Production forecast by technical consultants (1) 110 5,269 10,357 66 3,306 35,000 11,179 6,985 1H2014 1H2015 30,000 Gross wells drilled China oilfields 143 -
Slide 9: Company strategy
MIE Group update and highlights Company strategy Optimize development of two new core assets Optimize existing mature assets Emir-Oil SGE Leverage favorable PSC terms – reallocate free cash flow amongst Group’s assets Reduce operation cost and Undertake pilot production gas sales Extend prod
Slide 10: Efficient allocation of resources in low crude oil price environment
MIE Group update and highlights Efficient allocation of resources to be prudent in low crude oil price environment FY2013 capex: US$242m FY2014 capex: US$205m FY2015 capex guidance: US$103m(1) 7% 0% 0%13% 21% 16% 42% 53% 49% 26% 38% 35% China oilfields Emir-Oil SGE US Assets China oilfields Emir-Oil
Slide 11: Operational and financial highlights
MIE Group update and highlights Operational highlights Financial highlights Group net oil production of 10,357 BOPD, a decrease of 37.5% compared to 1H2015 Group’s average oil price realised down by US$44.38/bbl or 46.2% same period in 1H2014 and within full year guidance range of 9,800 – to US$51.6
Slide 12: 2015 operational guidance
MIE Group update and highlights 2015 operational guidance # Gross Wells Net Capex (US$M) Net Production 1H2015 2015 2015 1H2015 2015 Actual guidance guidance Actual guidance China Oilfields - - 13 6,985 BOPD 6,700-7,000 BOPD SGE 12 29 51 2,088 MCFD 4,500-5,000 MCFD 3,306 BOPD 3,000-4,000 BOPD Emir-O
Slide 13: Group assets update
Group assets update @® MIE Holdings Corporation |
Slide 14: China oilfields
Group assets update China oilfields Jilin assets (Daan, Moliqing) China oilfields: Ownership 90% Major cash flow contributor Total wells drilled - in 1H2015 Gross wells 2,609 (as of Jun 2015) Significant reserve base with long Total area Daan production track record Daan 253km2 Moliqing 72km2 PS
Slide 15: China oilfields operation update
Group asset update China oilfields Operation update Net oil production 12,000 9,731 10,000 bopd 7,000 8,000 6,985 6,000 6,700 4,000 1H2014 1H2015 2015 Guidance Gross production decreased 11.3% to 16,890 BOPD Average realized oil price Net production of 6,985 BOPD (1H2014: 9,731 BOPD) 120 104.6
Slide 16: SGE: Linxing & Sanjiaobei
Group asset update SGE: Linxing & Sanjiaobei SGE assets Linxing: 64.75% Ownership (through SGE) Sanjiaobei: 49% Gross wells (as of Jun 2015) 106 Area Linxing East Linxing East 1,301km2 (1,301km2) Linxing West 573km2 Sanjiaobei 1,124km2 PSC terms expiry Linxing West Linxing 2028 Sino Gas (573km2) Ene
Slide 17: SGE: Clear path to commercial production
Group asset update SGE: Linxing & Sanjiaobei Operation update Clear path to commercial production Development timeline Status 2015 Drilling and Testing Program: 12 wells drilled and 5 wells tested Third horizontal well TB-3H finished drilling with lateral length 1,080m. To 1 CRR for Linxing East
Slide 18: Well-established infrastructure in Ordos Basin
Group asset update SGE: Linxing & Sanjiaobei Well-established infrastructure in Ordos Basin Multiple gas pipelines with existing tie-in points will provide market access for Sino Gas’ pipeline quality gas 3RD BEIJING PIPELINE LINXIAN-LINFEN Linxing: Pipeline construction site. Gas gathering pipeline
Slide 19: Emir-Oil
Group asset update Emir-Oil Emir-Oil Reserves & resources summary (Aksaz, Dolinnoe, Emir, Kariman) (as of Dec 2014) Ownership 100% Oil Gas ADEK contract area 850km2 (mmbbl) (bcf) ADEK Contract Area 1P reserves 34 43 (Emir-Oil) Gross wells 48 2P reserves 98 95 (as of Jun 2015) Exploration license 3P
Slide 20: Emir-Oil operation update
Group asset update Emir-Oil Operation update Net oil production Oil production decreased by 37.3% to 3,306 BOPD compared to 5,269 BOPD in 10,000 1H2014 8,000 6,000 5,269 4,000 3,306 Average realized price: US$48.76/bbl (1H2014: US$78.04/bbl) 4,000 2,000 3,000 - Export: US$53.68/bbl (1H2014: US
Slide 21: Emir-Oil exploration activities
Group asset update Emir-Oil Exploration activities Exploration well Aidai-1 finished drilling in June 2015 at total depth of 5,080m. The well has pervasive oil shows in reservoir objective Triassic units and will be tested in 3-4Q2015 YE2014 Reserve Report estimated the following Resources Unr
Slide 22: US asset (Condor Energy)
Group asset update US asset (Condor Energy) Condor Energy Ownership 100%1 Net acreage 6,502 acres Niobrara (Condor Gross wells (horizontal) 5 Energy) Operation update Condor Acreage MIE operates 5 horizontal wells in a Colorado Niobrara asset through Condor Energy No drilling activities planned
Slide 23: Financial update
Financial update @® MIE Holdings Corporation |
Slide 24: Financial performance summary
Financial update Financial performance summary 1H2014 1H2015 Corp & Corp & (In US$ million) China Emir-Oil USA Others Total China Emir-Oil USA Others Total 2015 vs 2014(%) Revenue 215.8 77.0 2.1 - 294.9 66.8 30.0 0.5 - 97.3 -67.1% Segment operating result 70.5 19.7 (2.7) (9.9) 77.6 3.9 (2.4) (0.4) (
Slide 25: Lifting costs analysis of China assets and Emir-Oil
Financial update Lifting costs analysis of China assets and Emir-Oil Lifting cost per barrel (1) 14.00 12.00 11.47 10.14 10.00 9.66 9.29 8.59 8.00 7.22 US$/bbl 6.00 5.34 4.39 4.31 4.00 2.00 0.00 1H2014 2H2014 1H2015 China oilfields (Daan + MLQ) Emir-Oil Total (1) Lifting costs includes directly cont
Slide 26: Historical financials
Historical financials Key sales related statistics Average realized oil price Revenue breakdown by region 150 400 109 105 295 300 94 (1) 96 2 100 88 89 88 77 79 (US$m) (US$m) 74 191 200 1 (1) 58 53 54(1) 50 52 52 45 50 97 100 216 30 1 145 67 0 0 1H2014 2H2014 1H2015 1H2014 2H2014 1H2015 WTI Brent Ji
Slide 27: Oil price performance
Financial update Oil price performance Oil price (US$/bbl) 1H2014 1H2015 2015 vs 2014 200 Jilin assets Avg. realised oil price 104.6 53.1 (51.5) Avg. Daqing price 104.9 53.2 (51.7) 150 (US$/bbl) Emir-Oil (export)(1) Avg. realized export oil 88.2 59.0 (29.2) price 100 Discount to Titan 21.0 3.3 (17.7
Slide 28: EBITDA breakdown analysis of China assets
Financial update EBITDA breakdown analysis of China assets Breakdown of China Oilfields (US$/bbl) 1H2014 1H2015 104.54 104.56 53.08 8.09 9.36 4.05 4.05 2.98 3.13 Purchasing, services and other 17.63 17.73 Distribution and administrative expenses Employee compensation costs 6.63 2.61 4.33 0.28 Taxes
Slide 29: EBITDA breakdown analysis of Emir-Oil assets
Financial update EBITDA breakdown analysis of Emir-Oil assets Breakdown of Emir-Oil (US$/bbl) 2014 70.63 1H2015 63.34 1.73 8.42 53.68 1.73 3.16 48.76 8.42 4.3 2.03 3.16 39.68 8.12 4.74 4.3 2.03 8.12 3.85 1.73 11.35 19.96 10.2 8.42 15.26 5.22 3.16 12.03 3.24 5.22 4.3 2.68 3.24 2.03 9.88 7.55 2.63 0.9
Slide 30: Cash flow statement and key credit statistics
Financial update Cash flow statement and key credit statistics For the period ended Jun 30 Adj. EBITDA / net interest expense(1) (In US$ million) 1H2015 1H2014 Cash Flow Statement Cash generated from operations 42 125 9x Interest paid (26) (27) Income tax paid (2) (9) Net cash generated from operati
Slide 31: Appendix
Appendix @® MIE Holdings Corporation |
Slide 32: Key milestones
Key milestones Dec 2010 May 2011 Feb 2013 Apr 2014 Nov 2014 IPO on SEHK raised Issued US$400m Issued US$200m Issued US$500m Drawdown US$35m net proceeds of Senior Notes due Senior Notes due Senior Notes due unsecured 1-year HK$750m 2016 2018 2019 loan from DB (LIBOR+3.5%) 2010 2011 2012 2013 2014 20
Slide 33: Corporate and shareholding structure (August 2015)
Corporate and shareholding structure (August 2015) Far East Energy Limited Celestial Public (Hong Kong)(1) 54.3% 8.1% 37.6% MIE Holdings Corporation (Cayman Islands) HKSE Listed Company 100% 100% 92.2% 100% 100% 100% 100% 100% 100% MIE Maple Gobi Riyadh MIE New Camel Oil and Asia Dynamic MI Energy I
Slide 34: Strong cash flow supported by PSC structure
Strong cash flow supported by PSC structure Jilin assets oil allocation under PSCs 1H2014 1H2015 Production Net:Gross 51% (2) 41%(2) VAT 5% of the total gross production Calculated at progressive ad valorem rates, ranging from zero to 12.5% based on the Royalty annual production of individual projec
Slide 35: China Special Levy (Windfall Tax) Calculation
China Special Levy (Windfall Tax) Calculation |<-----New Regime effective from 2015/1/1----->||<------------------------Old Regime---------------------->| Saved Windfall Effective Windfall Effective Oil Price Threshold Tax Rate Threshold Tax Rate Windfall Tax Tax Rate Tax Tax Rate Tax 40 65 0% -- 0.
Slide 36: Jilin assets - sales and marketing
Jilin assets - sales and marketing PetroChina has been MIE’s sole customer. Selling to PetroChina is MIE’s choice, not obligation Sole customer MIE believes PetroChina is the best customer given they make timely payments MIE transports all crude oil produced from oilfields through their pipelines or
Slide 37: SGE ownership & PSC structure
SGE ownership & PSC structure Annual Gross Production 85% 15% 92.2% Cost Recovery Gas VAT & Royalty Asia Gas Share of Operating Costs + Exploration Costs + Non-Cost Recovery 51% 49% Development Costs (plus 9% Gas SGE deemed interest) *Factor X=0.90-1.00 depending on CUCBM production volume 64.75% 49
Slide 38: China's favourable government policies and incentives
China’s favourable government policies and incentives for unconventional gas NDRC implementing a pilot program to test a more market-based gas pricing system to replace the existing “cost-plus” system Unconventional gas will move toward import parity netback pricing Gas pricing On 10 July, 201
Slide 39: Understanding SGE Gas Reservoirs
Understanding SGE Gas Reservoirs Linxing-East Sanjiaobei & Linxing-West e.g. North Dome or Urengoy e.g. Marcellus or Barnett 32
Slide 40: Emir-Oil O&G marketing options
Emir-Oil O&G marketing options Infrastructure Map Replace current rental facility, which has processing capacity: 6,480 BOPD 5.25 mmcfgpd New oil and gas processing station Processing capacity: oil 12,000bopd, gas 600,000m3/d (21mmcfgpd) FEED completed and the Emir proposal had been appr
Slide 41: Emir-Oil new sales route
Emir-Oil new sales route Aktau Port Samara Previous route New route Baku Port Makhachkala Port (Azerbaijan) (Russia) Kenkiyak Ukraine Batumi Port Novorossiysk Port (Georgia) (Russia) Kazakhstan ANPZ (US$/ton) Previous Route New route Atyrau Russia Atasu Trucks, railway and port fee (up to 36.3 36.3
Slide 42: Kazakhstan tax summary
Kazakhstan tax summary Calculated based on the export sales price and ranges from as low as 0% if the export sales price is less Rent export tax than US$40 per barrel to as high as 32% if the export sales price per barrel exceeds US$190 Depends on annual production output. The tax code currently pro
Slide 43: Kazakhstan tax summary (continued)
Kazakhstan tax summary (continued) 1. Export Duty US$8.11/bbl (US$60/ton effective Mar 2015) 2. Export Rent Tax Rate 7% 11% 14% 16% 17% 19% 21% 22% 23% 25% 26% 27% 29% 30% 32% Oil Price 40 50 60 70 80 90 100 110 120 130 140 150 160 170 190 Oil Price 50 60 70 80 90 100 110 120 130 140 150 160 170 180