Victory Oilfield Tech, Inc. · OTC:VYEY
Victory Oilfield Tech — Victory Energy — Investor Presentation (August 2014)
31 slides from Victory Oilfield Tech's investor presentation, Aug 20, 2014
Slide 1: Victory Energy Corporation Investor Presentation August 2014
d VICTORY ENERGY CORPORATION Investor Presentation August 2014
Slide 2: Forward-Looking and Cautionary Statements
Forward-Looking and Cautionary Statements This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or devel
Slide 3: Investor Highlights
Investor Highlights * Permian Basin (Texas), Resource Play Focus * Early stage rapid-growth company * Oil and liquid rich gas focus, growing reserves and cash flow * Experienced management team and operators + Asset value upside (PUD) in the portfolio * $35M in Capex available through Texas Capital
Slide 4: Company Profile
Company Profile * High growth oil and gas E&P company focused on * Victory is growing cash-flows through sustainable creating shareholder value through the acquisition and low-risk vertical well development and acquisitions development of assets in the World Class Permian Basin «Established as Victo
Slide 5: Business Model
Business Model * Low-risk vertical well development on existing and acquired properties. * Focus on well-known basins with break-even points below $55 per barrel of oil. 1 * Locate multi-well drilling opportunities that provide three or more years of drilling inventory. * Focus acquisitions on lower
Slide 6: 2014 Strategic Financial Deliverables
2014 Strategic Financial Deliverables * Deploy $15 million of new capital towards E&P development and acquisitions * Create more than $30 million in proved reserves INCREASE ee thandysd mio in proved reser RESERVES * Target longer-life, quality prospects with improved PUD opportunity E * Expand stra
Slide 7: Aurora Energy Partners
AURORA ENERGY PARTNERS (50/50 owned by Victory and Navitus) BANKING AND OTHER RELATIONSHIPS Financial relationship established in October 2011 Members include sophisticated investors & boutique private equity $10 M private placement now underway (Navitus Partners) Issue of VYEY warrants with each in
Slide 8: Reserve and investment growth
Lere/Miverals mWells $2,278,032 2,000,000 Fars Peemine Memniioe ln Mach 2012. Spud ieneary 2033. 1,500,000 3,000,000 seo.c0n $25,000 $25,900 2010 2011-2013 © 2012 vs 2013 Growth Rates CAGR Annual » Net Proved Reserves 42% 81% » Proved Reserves (PV-10) 50% 39% + Mineral & Drilling Investment 87% 88%
Slide 9: Permian Oil Focus is Driving 2014 Results
Permian Oil Focus is Driving 2014 Results 100% > 115% Anticipated CAGR 7050 9856 {3) Year CAGR | 50% 4 Six 2% 18% 1% o% 2011 «122013014 2011 2012 2013 2016 Dos N80 OR 100% 705% 7% lex 31% sox | 40% Be ox Q12014 Q22014 Q32014 42014 Q12014¢ =Q22014 32014 42014 Proved reserves based on mid-year SEC cas
Slide 10: Reserve Breakdown
Reserve Brea 27.22 667.28 140.10 $6,470,890 $3,440,490 $2,185,490 PONP. 115 21.18 15.03 $1,242,690 $722,810 $565,030 PUD 12.76 11.44 14.67 $1,287,100 $714,300 $396,590 Probable 28.42 44,23 35.76 $3,016,50 $1,385,710 $830,160 Total Reserves 73.9 754.13 205.59 $12,017,180 $6,313,310 $3,937,720 + PDP r
Slide 11: soon
930,160 3,937,270 9,930370_ soon szos suo Proved reserves based on SEC mid-year reserve case os of 7/31/2014. Guidance based on anticipated 2014 development and acquisitions u
Slide 12: Why Focus on the Permian Basin?
Why Focus on the Permian Basin? NEW MEXICO {Bei MEXICO ©2007 ney lpataBranes, ne 1a" EASTERN Sp The play is the largest oil field in the U.S. (Baker-Hughes rig count & Pioneer recoverable resources). Predictable vertical well economics deliver break-even points at less than $55 per bbl (Midland Basi
Slide 13: Vertical Activity Growing, Horizontal Activity Less Than Half
Vertical Activity Growing, Horizontal Activity Less Than Half [ victory Counties: Andrews, Borden, Crockett, Dawson, Ector, Gaines, Glasscock, Howard, Irion, Martin, ‘Midland, Mitchell, Reagan, Schleicher, Scurry, Sterling, Tom Green and Upton 350 58% Vertical Rigs Se 96% Vertical Rigs 300 Vd 250 20
Slide 14: Phase II and Phase III development
PHASE II Research & Development (Reasonable Certainty, Reliable Technology) {Defining Reservoir Parameters) PHASE III Exploitation & Optimization (Consistency, Repeatability, Economically Producible) Finding and Development Costs Deploy capital in the sweet spot Completion techniques for optimal EUR
Slide 15: Permian multiple pay zones
The Permian is also attractive because it has multiple pay zones — some of which are extremely amenable to horizontal drilling (Develop vertical now, horizontal later) rm 2 ; i Esa. - o a we: LOWER_WC 10400 - ciscoKcLNE: sTRAWN 10000 roman 11400 - sess Clear Fork Upper Spraberry Tomi Lower Spraberry
Slide 16: Drill and complete undeveloped leasehold on current high-value properties
Drill and complete undeveloped leasehold on current high-value properties Sell properties with limited development upside and re-deploy capital to properties with higher production and more than three years of development (i.e. Lightnin’ to Fairway) Acquire development acreage and production in the
Slide 17: Growth Through Acquisitions & Development
Growth Through Acquisitions & Development L\ irway Purchase Delta Permian Basin County Glasscock (Tier 1) Glasscock (Tier 1) N/A NA Purchase (Sale) Price $ 4,080,000 $5,754,059 $1,905,059 15 Developed Acres 320 1,280 960 40 Undeveloped Acres 320 3,280 2,960 10.3 BOE/PD 324) 64.43 2) 32 20 POP Wells
Slide 18: Review of Significant Properties
3 VICTORY ENERGY CORPORATION (OTCQX: VYEY) Review of Significant Properties
Slide 19: Fairway (Proved and Producing)
Fairway (Proved and Producing) Description * Acquired June 2014 (over 4,560 acres) * Located in Glasscock and Howard County, TX + Conventional drilling play (vertical) + Eight producing oil wells as of May 1, 2014 + Five new wells drilled and in various stages of completion as of August 1, 2014 + Th
Slide 20: Wolfcamp B prospectivity
Source: Pioneer 2013, 3Q Report Tier 1 is highest prospectivity acreage, as determined by several geologic properties, including: Original cil in place (OO1P) ~Kerogen content ~Thermal maturity Porosity ~ Brittle mineral fraction (fracability, low clay content) Geologic maps based on: >70,000 logs >
Slide 21: Fairway Economic Plan & Assessment
Fairway Economic Plan & Assessment + The company plans to improve the property’s current cash-flow and market valuation via a three year or shorter development plan + Utilizing an independent third-party reserve report and a development model established by the current operator, the company anticipa
Slide 22: Description
Description + Acquired April 2011 (over 5,000 acres) + Located in Pecos County, TX + Conventional drilling play (vertical) + Three wells completed with seven remaining © 2 oll wells with EUR of 187,240 BO © 1 gas well flowing to sales with daily flow at 475 met 188,000 BOE + 3D seismic supported + F
Slide 23: Adams Baggett Gas Field (Proved and Producing)
Adams Baggett Gas Field (Proved and Producing) [victory ] SE Description Per Well Economics + Acquired 2008 (180 acres) * Well cost to the 100% $600k * Located in Crockett County, TX * Working Interest in 7 wells 100% + High Btu natural gas production . - o Net Revenue Interest 75% + Nine vertical g
Slide 24: Description
Description + Acquired in April 2012 (320 acres) + Located in Nueces County, TX. + Conventional drilling play (vertical) + One well completed and on production + Formation focus — Frio Sands (7,800") * Operator is Hurd Operating (Corpus Christi, TX) Reserves and Production Model to 75% NRI * Gross E
Slide 25: Experienced E&P Management
Experienced E&P Management Kenneth Hill (CEO) + Served as Victory’s COO from Jan. 2011 — Jan. 2012. + 21 years of professional experience, seven in E&P. + Previously held titles of Interim CEO, VP of Operations and VP Investor Relations with another publicly traded E&P company. + Member of the first
Slide 26: Investment Summary
Investment Summary * Proven management team with over 175 years of combined oil and gas experience * Predictable IRRs offered by the largest resource play in the U.S. (Permian Basin) * Access to proved producing properties and development project deal flow * Strong balance sheet — excellent capital
Slide 27: Contacts
Contacts Victory Energy Corporation Kenneth Hill, CEO Email: Kenny@vyey.com Phone: (512) 347-7300 www.vyey.com 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 a7
Slide 28: Appendix and Support Material
3 VICTORY ENERGY CORPORATION (OTCQX: VYEY) Appendix and Support Material
Slide 29: Predictable Economics Deliver Predictable Outcomes
Predictable Economics Deliver Predictable Outcomes Our current focus is on vertical wells with $49 - $55 WTI Oil Price Break Even Estimated Internal Rates 0 * S&P’s Estimated Break Even WTI Oil Price* 29
Slide 30: Permian Dominance in Rig Count
Permian Dominance in Rig Count U.S. Well Count Waa Q2 2014 BAUGHES 1A ‘wpe Source: Baker Hughes Incorporated 20
Slide 31: Largest U.S. Oil Fields
Largest U.S. Oil Fields Estimated Recoverable Resource (BBOE)' ° 25 50 75 Spraberry/Wotaryp | Eagle Ford Shale Prudhoe Bay, AK Bakken Shale Delaware Basin East Texas Basin Midway-Sunset, CA Wilmington, CA Kuparuk River, AK Kern River, CA ‘Thunder Horse, GOM Yates, West TX Belridge South, CA Wasson,