Valeura Energy Inc. · TSX:VLE
Valeura Energy — Investor Presentation (March 2016)
55 slides from Valeura Energy's investor presentation, March 2016
Slide 1: Corporate Presentation March 2016
A GLOBAL ENERGY COMPANY FOCUSED ON EXCEPTIONAL VALUE CREATION SHIFTING FOCUS TO 100% OWNED & OPERATED BANARLI LICENCES CORPORATE PRESENTATION MARCH 2016
Slide 2: Corporate Profile
Corporate Profile Valeura Energy Inc. (VLE – TSX) Canada-based oil & gas company with assets in Turkey Interests in 21 leases & licences in Turkey: 0.63 MM acres (gross); 0.31 MM acres (net)(1) Pursuing development of conventional gas & tight gas in the Thrace Basin Utilizing latest 3D seism
Slide 3: Capital Structure March 1, 2016
Capital Structure March 1, 2016 Basic shares outstanding at March 1, 2016 57,906,135 Common shares purchasable pursuant to outstanding: Options ($0.72 weighted average exercise price per share) 5,177,000 Fully diluted shares 63,083,135 Institutions Management & Directors ~ 25% 5.7% (11.2% fully dilu
Slide 4: Q4 2015 Financial & Operating Highlights
Q4 2015 Financial & Operating Highlights 3 MONTHS 3 MONTHS 3 MONTHS RESULTS ENDED ENDED ENDED DEC 31, 2015 SEPT 30, 2015 DEC 31, 2014 Production Crude oil & NGLs (bbl/d) 8 7 10 Natural gas (Mcf/d) 4,805 4,723 7,022 boe/d 809 794 1,180 Financial (Canadian $ M, except per boe amounts) P & NG revenues
Slide 5: Why Turkey?
Why Turkey? Prospective TBNG-PTI Proven petroleum systems TBNG-PTI acquisition Acquisition (natural gas & light/medium oil) Under-explored & under-exploited conventional & opportunity unconventional plays Opportunity to deploy modern technology Thrace Basin main gas producing region Anatol
Slide 6: Thrace Basin Transactions
Thrace Basin Transactions (1) Bulgaria 2010 Otto asset purchase (Edirne) Black Sea E17-b4-1 (Valeura 35% WI) E17-c1-1 E17-c2-1 Turkey 2013 Banarli licence award VLE (Valeura 100% WI) license application F18-b3,F19-d4 November 2015 F18-b3 F19-a4 5122 3659 2926 F18- F19- F19-d4-2 TBNG-VLE-PTI F17- c1,
Slide 7: Land Position In Turkey At March 1, 2016
Land Position In Turkey At March 1, 2016 LEASES & GROSS AREA VALEURA NET AREA TRANSACTION LICENCES (1) (acres) (acres) (#) THRACE BASIN TBNG JV - Onshore (2) (3) 14 293,670 117,468 Banarli Licence 5104 Award (4) (5) 2 133,840 133,840 Otto - Edirne 3 49,883 17,459 SUB TOTAL 19 477,393 268,767 ANATOLI
Slide 8: Turkey YE 2015 Reserves (Company Gross)
Turkey YE 2015 Reserves (Company Gross) TOTAL OIL LIGHT & MEDIUM NATURAL GAS NPV10 BEFORE TAX NPV10 AFTER TAX CATEGORY EQUIVALENT OIL (Mbbl) (Bcf) ($MM) ($MM) (Mboe) PROVED DEVELOPED 7 3.0 509 17.3 17.3 PRODUCING PROVED DEVELOPED NON- 36 2.9 513 13.4 12.9 PRODUCING PROVED 36 4.6 805 10.4 8.2 UNDEVEL
Slide 9: TBNG JV (Valeura 40% WI - Non-Operated) – The Proving Ground
TBNG JV (Valeura 40% WI - Non-Operated) – “The Proving Ground” I-8 Rig Drilling at TDR-9 9
Slide 10: TBNG JV
TBNG JV Interests in 1 leases & licences in Thrace Basin (0.29 MM gross acres) Well established shallow gas production and marketing business: - ~100 producing wells (gross) (shallow gas & tight gas) in 15 gas fields in onshore lands - Owned compression facilities & distribution lines - Direct s
Slide 11: TBNG JV Shallow Gas & Tight Gas Plays
TBNG JV Shallow Gas & Tight Gas Plays SHALLOW GAS Akcahalil-1 Inecik- 2 Aydede-1 YAGCI-8 ND-1 TDR-2 TS-18 DTD-1 KAYI-7 BATI GAZI-1 BATI KARAEVLI-1 Danismen & Osmancik SOUTHWEST NORTHEAST 5 re-entry fracs since mid-2011 (Osmancik) DANISMEN 63 workovers & 17 new 500 m OSMANCIK drills in 2012-201
Slide 12: Thrace Basin Tight Gas Learning Curve 2011 – 2015
Thrace Basin Tight Gas Learning Curve 2011 – 2015 THRACE BASIN 3 OSMANLI 2 Banarli Exploration DISCOVERIES Discoveries Program Horizontal Drills 6 Hz MEZ/TES/KESAN DRILL & FRACS & Fracs Cumulative Vertical Drills & Develop 12 VERTICAL TESLIMKOY/KESAN DRILL & FRACS capex (1) Fracs ≈ $80MM (net) 232KM
Slide 13: Tekirdag Area Frac Results & Potential Vertical Well Development
Tekirdag Area 2011-2015 Mezardere/Teslimkoy/Kesan Frac Results & Potential Vertical Well Development (1) KAYI-14 Guney Kayi-1 Kayi Derin-1 KAYI-7 5.0 MMcf/d 1.8 MMcf/d 0.7 MMcf/d 3.4 MMcf/d KAYI-12 KAYI-14 1.6 MMcf/d 5.4 MMcf/d TDR-2 TDR-5H KAYI-6 KAYI-16 0.6 MMcf/d 2.0 MMcf/d 0.9 MMcf/d 0.9 MMcf/d
Slide 14: Mezardere Slope Fan Play Fairway
Mezardere Slope Fan Play Fairway Mezardere Prospective Depth Structure Mezardere play fairway Banarli Tekirdag Tekirdag area Mezardere exploitation program 10 km Slope fan play in Mezardere Formation showing encouraging results Seismic imaging clearly shows channel trends with both structural &
Slide 15: Banarli (Valeura 100% WI - Operated)
Banarli (Valeura 100% WI - Operated) – “Opportunity to Leverage Four+ Years of Learnings” 3D Seismic Acquisition on Banarli – May 2015 15
Slide 16: Banarli Exploration Strategy
Banarli Exploration Strategy Banarli licence awarded to Valeura (100% WI) in April 2013 (480 km2; 185 square miles) Converted to two licences under New Petroleum Law, which extends initial 5-year term to June 27, 2020: – US$9.2 MM commitment: 2,000 m well year 1; 2,000 m well year 2; 3,800 m wel
Slide 17: TBNG JV Producing Fields & Banarli Conventional Exploration Prospects
TBNG JV Producing Fields & Banarli Conventional Exploration Prospects Banarli Banarli F18-c1,c2,c3,c4 F19-d1,d4 Muratli Banarli licences Producing fields (1) Aydinkoy Banarli prospects (2) Merged Banarli, Tekirdag & Osmanli 3D seismic (~550km2) Bati Gurgen-1 Osmancik similarity imaging Yayli-1 24-hr
Slide 18: Osmancik Prospect Map (Play Types 1 and 2)
Osmancik Prospect Map (Play Types 1 and 2) Osmancik B PSTM Time Structure P10 Prospect Areas (1) MURATLI PROSPECT AYDINKOY PROSPECT YAYLI-1 TESLIMKOY FRACKING UNDERWAY BATI GURGEN-1 OSMANCIK 24-HR PRODUCTION TEST 3.4 MMCF/D Recently Drilled Wells Potential Drilling Locations (2) MAIN OSMANLI GAS FIE
Slide 19: Mezardere Prospect Map (Play Type 3)
Mezardere Prospect Map (Play Type 3) Tekirdag D PSTM Time Structure P10 Prospect Areas (1) MURATLI PROSPECT AYDINKOY PROSPECT YAYLI-1 TESLIMKOY FRACKING UNDERWAY BATI GURGEN-1 OSMANCIK 24-HR PRODUCTION TEST 3.4 MMCF/D Recently Drilled Wells Potential Drilling Locations (2) MAIN OSMANL I GAS FIELD GU
Slide 20: Potential Basin-Centered Gas Play Fairway (Play Type 5)
Potential Basin-Centered Gas Play Fairway (Play Type 5) 10 km Mezardere Depth Structure Alacaoglu-1 CI 100m 0.73 psi/ft Potential Hayrabolu-10 Ergene-1 Pressure 0.75 psi/ft 0.68 psi/ft Seal Area 1,500 km2 Kazanci-5 0.77 psi/ft Banarli Banarli F18-c1,c2,c3,c4 F19-d1,d4 Kandamis-1 0.77 psi/ft Yayli-1
Slide 21: Formations & Depositional Environments Within Potential Pressure Seal Area
Formations & Depositional Environments Within Potential Pressure Seal Area Yayli-1 Ergene-1 Banarli License Boundary Unconformity Top Potential Pressure Seal TD 2,914 m TD 2,967 m Osmancik Shorelines Map View Depth Slice @ 2,500 m Mezardere Ergene-1 Slope Channels Teslimkoy Member Basin Floor Fans Y
Slide 22: Robust Netbacks & Competitive Costs Drive Attractive Natural Gas Economics
Robust Netbacks & Competitive Costs Drive Attractive Natural Gas Economics in Turkey Current Cost Structure – US$MM (gross) TBNG JV BANARLI Operating Netbacks – $/boe (1) CONVENTIONAL GAS VERTICAL WELL (2) 80 Royalty Drill & Case (2,000 m TVD) 1.7 1.7 Opex Tie-in (new facilities) 0.5 0.5 70 Netback
Slide 23: Turkey Natural Gas Indicative Well Economics
Turkey Natural Gas Indicative Well Economics (1) PHYSICAL PARAMETERS PER WELL ECONOMICS PER WELL – BEFORE TAX (5) PROGRAM RESERVES (2) IP30 (3) CAPEX (4) IRR PAYOUT NPV10 RECYCLE (Bcf) (MMcf/d) (US$MM) (%) (MONTHS) (US$MM) RATIO (6) Thrace Basin - Gas Shallow Gas Drilling (500 m) with Tie-in 0.3 0.8
Slide 24: Summary
Summary Valeura provides exposure to a natural gas-focused, pure play in Turkey: $9-10/Mcf natural gas prices, 12.5% government royalty & >$40/boe operating netbacks Large land position of 0.63 MM acres (gross); 0.31 MM acres (net) Applying latest 3D seismic, horizontal drilling and multi-stag
Slide 25: Reader Advisories
Reader Advisories Forward-Looking Statements: This presentation contains certain forward-looking statements and forward-looking information (collectively, "forward-looking statements") as defined by applicable securities legislation including, but not limited to: the anticipated timing of first gas
Slide 26: Reader Advisories (Cont'd)
Reader Advisories (Cont’d) Other Advisories: Any financial outlook or future oriented financial information in this presentation, as defined by applicable securities legislation, has been approved by management of Valeura. Such financial outlook or future oriented financial information is provided f
Slide 27: Reader Advisories (Cont'd)
Reader Advisories (Cont’d) Glossary: Certain other terms used in this presentation but not defined herein or under "RESERVES DEFINITIONS" below are defined in NI 51-101 or Valeura’s most recent annual information form and, unless the context otherwise requires, shall have the same meanings herein as
Slide 28: Reader Advisories (Cont'd)
Reader Advisories (Cont’d) Abbreviations: Oil and Natural Gas Liquids Natural Gas bbl barrels Mcf thousand cubic feet bbl/d barrels per day Mcf/d thousand cubic feet per day NGLs natural gas liquids MMcf/d million cubic feet per day Bcf billion cubic feet Other boe barrels of oil equivalent m metres
Slide 29: Supplementary Information
A GLOBAL ENERGY COMPANY FOCUSED ON EXCEPTIONAL VALUE CREATION SUPPLEMENTARY INFORMATION
Slide 30: Our Heritage
Our Heritage Senior Management Board of Directors 30
Slide 31: Past Successes of Management & Board
Past Successes of Management & Board Sold 2009 $360 mm Market Cap 3x ROI (’04-’09) ~$300 mm CAGR 22% Market Cap at Trust Conversion Sold in 2007 $916 mm $898 mm 35x ROI (‘94-’03) 6x ROI (’05-’07) CAGR 51% CAGR 118% Sold in 2006 Market Cap $306 mm ~$4,653 mm 1.4x ROI (’03-’06) CAGR 10% Sold in 2004 $
Slide 32: Organization Structure
Organization Structure BOARD OF DIRECTORS Abby Badwi Tim Marchant Bill Fanagan Jim McFarland Claudio Ghersinich Ron Royal Stephanie Stimpson, Corporate Secretary PRESIDENT & CEO ASSISTANT Jim McFarland Shari Lemon VP VP VP VP CFO BUSINESS ENGINEERING OPERATIONS EXPLORATION DEVELOPMENT Steve Bjornson
Slide 33: Officers
Officers President & CEO: Jim McFarland, P. Eng. 43 years oil & gas experience Former President & CEO, director and co-founder, Verenex Energy (Libya light oil) Former Managing Director, Southern Pacific Petroleum (Australian shale oil) Former President & COO, Husky Oil (heavy oil, upgrading)
Slide 34: Officers (Cont'd)
Officers (Cont’d) VP Engineering: Don Shepherd, P. Eng. 41 years oil & gas experience Former General Manager, Verenex Energy Area 47 Libya based in Tripoli 13 years with Saudi Aramco as Asset Management Team Leader and Senior Engineering Specialist (Saudi Arabia) 12 years in executive manageme
Slide 35: Other Vice Presidents
Other Vice Presidents VP Business Development: Barry Wihak, P. Geol. 32 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 on acquisitions in France, Netherlands a
Slide 36: Manager
Manager Country Representative (Ankara, Turkey): Mehmet Ekinalan 8 years oil & gas experience Former Resident Representative of Thrace Basin Natural Gas Turkiye Corporation 21 years telecommunications experience (Turkey and USA) Former CEO and Board member of Turkish Telecom Former CEO of AYCE
Slide 37: Board of Directors
Board of Directors Abby Badwi, P. Geol. Vice-Chairman, Bankers Petroleum Ltd. Executive Chairman, Americas Petrogas Inc. Former President & CEO, Bankers Petroleum Ltd. Geological background Bill Fanagan, CA (Chair) Former Chairman, Verenex Energy Inc. Former President & CEO, Gulf Indonesia Resources
Slide 38: Mezardere Slope Fan Model
Mezardere Slope Fan Model Mezardere consists of a north-easterly pro- grading slope fan complex, deposited within delta front and pro-delta setting Potential reservoirs include: − Porous channel and basin floor sands − Interlaminated sands and shales from channel abandonment, overbank, distal ap
Slide 39: Recent Osmancik & Mezardere Results & Potential Extension of Play Types into Banarli
Recent Osmancik & Mezardere Results & Potential Extension of Play Types into Banarli Potential Pressure Seal Hayrabolu-10 Banarli 2015 3D: 152 km2 Gurgen-1 Bati Gurgen-1 IP30: 3.3 MMcf/d (Osm) Yayli-1 Gurgen-2 Osmancik Teslimkoy fracking IP30: 3.3 MMcf/d (Osm) 24-hr production test underway Gurgen-3
Slide 40: Formations Present At Top Of Potential Pressure Seal (2,500 m Depth)
Formations Present At Top Of Potential Pressure Seal (2,500 m Depth) Potential Pressure Seal Lower Danismen Coastal Plain Osmancik Mezardere Shorelines Slope Channels Yayli-1 Bati Gurgen-1 Teslimkoy Basin Floor Fans 40
Slide 41: Time Horizon Slice - Similarity Seismic Image
Time Horizon Slice - Similarity Seismic Image Yayli-1 5 km Bati Gurgen-1 41
Slide 42: Basin Floor Fan - Spectral Decomposition Seismic Image
Basin Floor Fan - Spectral Decomposition Seismic Image 5 km Upper Teslimkoy Basin Floor Fan Complex Yayli-1 Bati Gurgen-1 Mezardere Slope Channel Osmancik Shorelines 42
Slide 43: TBNG JV Shallow Gas Business
TBNG JV Shallow Gas Business 2013 shallow gas program: − Spudded 1 new drill (evaluating) − Completed 14 workovers (11.0 MMcf/d aggregate initial 7-day rate); 3 well re-entry fracs − Acquired 232 km2 of new 3D seismic in Osmanli area 2014 shallow gas program: − Spudded 1 sidetrack & 5 new drills
Slide 44: TBNG JV Tight Gas Proof-Of-Concept Program Phases
TBNG JV Tight Gas Proof-Of-Concept Program Phases 1. Recompletion fracs (750-2,000 m depth) − Identify gas bearing zones in Mezardere, Teslimkoy & Kesan formations that require fracs to achieve commercial rates focusing initially on areas within structural closure − Initiated new Mezardere laminated
Slide 45: Teslimkoy/Kesan Multi Frac Type Curves (Vertical Wells)
Teslimkoy/Kesan Multi Frac Type Curves (Vertical Wells) (1)(2) Type Curve - Vertical Wells 1200 120 D&M Vertical Well, 2P - 0.8 Bcf, Rate vs. Time 1100 1000 D&M Vertical Well, 2P - 0.8 Bcf, Cum. Recovery vs. Time 100 900 CUMMULATIVE RECOVERY - % OF EUR 800 80 PRODUCTION RATE - Mcf/d 700 600 60 500 4
Slide 46: Mezardere Multi Frac Type Curve (Horizontal Wells)
Mezardere Multi Frac Type Curve (Horizontal Wells) (1)(2) Type Curve Comparisons - Horizontal Wells 3000 120 2500 100 CUMMULATIVE RECOVERY - % OF EUR 2000 80 PRODUCTION RATE - Mcf/d VLE HZ Type #2, Reserves - 1.0 Bcf, Rate vs. Time 1500 60 D&M Teslimkoy Hz, 2P - 1.35 Bcf, Rate vs. Time VLE HZ Type #
Slide 47: Tekirdag Area Horizontal Drilling
Tekirdag Area Horizontal Drilling 2nd HZ well BTD-4H 1st HZ well DTD-19H Teslimkoy U. Kesan 655 m lateral 425 m lateral 10-stage frac 7-stage frac IP30 rate 3.0 MMcf/d IP30 rate 0.4 MMcf/d 5th HZ well TDR-11H Mezardere TDR-14 678 m lateral DTD-6 10-stage frac Baglik-1 BTD-5 IP30 rate 1.3 MMcf/d DTD-
Slide 48: TBNG JV New Drill Spuds In 2012 - 2015
TBNG JV New Drill Spuds In 2012 - 2015 Hayrabolu Hayrabolu-10 Kazanci-5 Deep Exploration Kuzey Atakoy-1 Area Guney Atakoy-2 Karanfiltepe-5, 6 Guney Karababa-1 Atakoy-8 Biyikali-2ST Tavanli-1 Gurgen-1,2,3 Guney Osmanli-3 Guney Kayi-1 TSK-1, 2 Osmanli Dogu Osmanli-1 Kayi Derin-1 New Discovery DTD-19,
Slide 49: TBNG JV New Drill Spuds In 2012
TBNG JV New Drill Spuds In 2012 SPUD RIG RELEASE TD STATUS WELL LICENCE WELL TYPE (d/m/y) (d/m/y) (m) MARCH 1, 2016 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 10/04/2012 Conventional
Slide 50: TBNG JV New Drill Spuds 2013 - 2015
TBNG JV New Drill Spuds 2013 - 2015 SPUD RIG RELEASE TD STATUS WELL LICENCE WELL TYPE (d/m/y) (d/m/y) (m) MARCH 1, 2016 TDR-14 3931 29/01/2013 22/02/2013 Unconventional 1,749 Producing Hayrabolu-10 2926 08/02/2013 10/04/2013 Unconventional 4,054 Evaluating Unconventional - 1,626 MD DTD-19H 3931 03/0
Slide 51: Thrace Basin Seismic
Thrace Basin Seismic 10 km 2015 Banarli 3D (152 km2) Drilling on 2D seismic only prior to 2012 2013 Osmanli 3D (232 km2) 2011 & 2013 3D seismic (645 km2) guiding TBNG- 2011 Tekirdag/Hayrabolu 3D (413 km2) PTI JV drilling since early 2012 2013 Banarli 2D (92.5 km) Valeura funded 2013 2D seismic
Slide 52: Turkey Natural Gas Infrastructure
Turkey Natural Gas Infrastructure 52
Slide 53: Turkey Oil Infrastructure
Turkey Oil Infrastructure 53
Slide 54: 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
Slide 55: 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