Valeura Energy Inc. · TSX:VLE

Valeura Energy — Investor Presentation (May 2012)

51 slides from Valeura Energy's investor presentation, May 2012

  1. Slide 1: Building Momentum in Turkey – Corporate Presentation May 2012

    A GLOBAL ENERGY COMPANY FOCUSED ON EXCEPTIONAL VALUE CREATION BUILDING MOMENTUM IN TURKEY CORPORATE PRESENTATION MAY 2012

  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 in Turkey since September 2010 & invested $86 MM: − Acquired interests in 22 leases & licences: 2.1 MM acres (gross); 0.75 MM acres (net)  Co

  3. Slide 3: Capital Structure May 14, 2012

    Capital Structure May 14, 2012 Basic shares outstanding at May 14, 2012 46,406,135 Common shares purchasable pursuant to: Financial warrants outstanding ($5.50 exercise price per share) 13,269,217 Performance warrants outstanding ($2.00 wt’d average exercise price per share) 2,796,750 Options outsta

  4. Slide 4: Why Turkey?

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

  5. Slide 5: 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 TBNG‐PTI – Onshore (2) I (MARMARA) 9 507,853 203,141 TBNG‐PTI – Offshore (2)(7) I (MARMARA) ‐ 116,508 17,476 Marhat/TransAtlantic (3) I (MARMARA) 3 365,

  6. Slide 6: Thrace Basin Transactions

    Thrace Basin Transactions Bulgaria Otto asset purchase 3839 (35% WI) TBNG‐PTI asset purchase Licences 4322, 4323, 4324, GYP Asset Turkey (40% onshore; purchase 4459 & 4460 expected to (24% WI) 15% shallow offshore) be relinquished prior to 4187 3659 Mar ‘12 2926 3999 3861 3998 Greece 3734 3860 4126

  7. Slide 7: Thrace Basin TBNG-PTI Acquisition / AME-GYP Farm-in

    THRACE BASIN TBNG‐PTI ACQUISITION TURKEY AME‐GYP FARM‐IN Kahta 17 Well Tekirdag Processing Station 7 7

  8. Slide 8: TBNG-PTI Assets

    TBNG‐PTI Assets  Large acreage position with interests in 19 leases & licences at the effective date: ‐ Relinquished one Gaziantep licence in November 2011 ‐ Relinquished five deep offshore licences in Sea of Marmara in February 2012  Established shallow gas production and marketing business in Th

  9. Slide 9: TBNG-PTI Shallow Gas Business

    TBNG‐PTI Shallow Gas Business Kazanci/ Hayrabolu Osmanli Kilavuzlu/ Bekirler Karaevli Tatarli Kayi Yagci/ Nustratli Gazi Aydede Tekirdag 10 km 10 km  1Q2012 production 20.1 MMcf/d (gross) or 8.1 MMcf/d (net): Cumulative Proved + Probable − Average wellhead price $7.81/Mcf in 1Q2012 Field Production

  10. Slide 10: Unconventional Tight Gas Opportunity

    Unconventional Tight Gas Opportunity  Thick Tertiary‐aged sediments in Thrace Basin prospective for unconventional tight sands and shale gas exploitation: ‐ Thermally mature source rocks exist in deeper parts of basin (up to 9,000 m depth) ‐ Existing well control indicates Mezardere, Ceylan and Ham

  11. Slide 11: Tight Gas Play in the Mezardere Formation

    Tight Gas Play in the Mezardere Formation MEZARDERE FORMATION PARAMETER LOW HIGH A A’ Depth (m) 1,000 3,500 Aydede‐1 Yagci‐8 BTD‐1 BTD‐2 DTD‐3 DTD‐7 DTD‐9 Kuzey Kayi‐1 Gross H (m) 500 2,500 Gross sand H (m) 240 900 Net pay H (m) 32 120 Ф (%) 3 15 DTD‐7,9 K (md) 0 2 Frac’d Mezardere Perforations TOC

  12. Slide 12: DTD-1 Well – Example of Stacked Gas Sands

    DTD‐1 Well – Example of Stacked Gas Sands GR (API) Total Gas (Units) Mezardere Shale Mezardere shale  Isolated sands with high mud gas readings  Teslimkoy Sands  Continuous mud gas readings to total depth of DTD‐1 well (1,395 metres) Teslimkoy  DTD‐1 twin well (named Baglik‐1) sands is currently

  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 zones which are gas bearing in Mezardere that require fracs to achieve commercial rates focusing initially on areas within structural closure − 18 well re‐entry fracs completed in 2nd half of 2011 (eight)

  14. Slide 14: 2011 Mezardere Shale & Teslimkoy Sand Frac Results

    2011 Mezardere Shale & Teslimkoy Sand Frac Results INITIAL 7‐DAY INITIAL 30‐DAY PEAK 24‐HOUR CUMULATIVE AVERAGE AVERAGE FRAC DATE NET PAY POROSITY ON‐STREAM PRODUCTION TO WELL ON‐STREAM ON‐STREAM (d/m/y) (m) (%) RATE MAY 5, 2012 RATE RATE (MMcf/d) (1) (MMcf) (MMcf/d) (1) (MMcf/d) (1) Yazir‐2; 1st st

  15. Slide 15: 2012 YTD Mezardere Shale & Teslimkoy Sand Frac Results

    2012 YTD Mezardere Shale & Teslimkoy Sand Frac Results INITIAL 7‐DAY INITIAL 30‐DAY PEAK 24‐HOUR CUMULATIVE AVERAGE AVERAGE FRAC DATE NET PAY POROSITY ON‐STREAM PRODUCTION TO WELL ON‐STREAM ON‐STREAM (d/m/y) (m) (%) RATE MAY 5, 2012 RATE RATE (MMcf/d) (1) (MMcf) (MMcf/d) (1) (MMcf/d) (1) DTD‐11 7/01

  16. Slide 16: Teslimkoy Sand Frac Results & Projections

    Teslimkoy Sand Frac Results & Projections Results to Date (1) Internal Planning Projections (3) PARAMETER RANGE AVERAGE PARAMETER VALUE ESTIMATED ULTIMATE 1.4 – 2.0 RECOVERY PER WELL – Bcf FRAC SIZE ‐ k# sand 6 ‐ 77 35 ESTIMATED NUMBER OF 4‐7 FRAC’D INTERVALS NET PAY ‐ m 4 ‐ 13 7.8 INITIAL RATE PER

  17. Slide 17: TBNG-PTI Planned Drilling First Half 2012

    TBNG‐PTI Planned Drilling First Half 2012 (1) SPUD RIG RELEASE TD WELL LICENCE WELL TYPE STATUS (d/m/y) (d/m/y) (m) Baglik‐1 3931 10/03/2012 06/05/2012 Exploration 3,594 Cased Dogu Karya‐1 3934 04/04/2012 23/04/2012 Exploration 2,022 Cased TSK‐1 3931 05/04/2012 10/04/2012 Exploration 657 Cased Guney

  18. Slide 18: Turkey Year-End 2011 Reserves (Company Gross)

    Turkey Year‐End 2011 Reserves (Company Gross) (1)(2) TOTAL OIL RESERVES LIGHT OIL NATURAL GAS PV10 BEFORE TAX (3) EQUIVALENT CATEGORY (Mbbl) (Bcf)) (US$MM) (MBOE) PROVED 1 5.0 842 14.7 PROBABLE 3 5.3 892 23.9 TOTAL PROVED PLUS PROBABLE 4 10.4 1,733 38.5 POSSIBLE 2 4.5 751 19.0 TOTAL PROVED, PROBABLE

  19. Slide 19: Thrace Basin Contingent Resources Assessment

    Thrace Basin Contingent Resources Assessment Contingent Prospects Resources and Leads (5 structures)  D&M assessed contingent resources in five fields on TBNG‐PTI lands as at December 31, 2011  Aggregate area (best estimate) of discovered structural closures 10,982 acres (17 sections) (gross)  Ar

  20. Slide 20: Turkey Year-End 2011 Contingent Resources (Company Gross)

    Turkey Year‐End 2011 Contingent Resources (Company Gross) (1) CONTINGENT RESOURCES (40% WORKING INTEREST) (2) FORMATION/UNIT LOW ESTIMATE BEST ESTIMATE HIGH ESTIMATE MEZARDERE ‐ Bcf 0.2 5.7 18 TESLIMKOY ‐ Bcf 2.2 156 378 TOTAL ‐ Bcf 2.4 162 396 TOTAL ‐ MBOE 401 26,987 65,977 (1) D&M estimates of con

  21. Slide 21: Anatolian Basin Transactions

    Anatolian Basin Transactions GAZIANTEP KARAKILISE Source: IHS Energy Group 2010 21

  22. Slide 22: Anatolian Basin Licences

    Anatolian Basin Licences Gaziantep 2677 Licences TURKEY (26% WI) 2674 (Mardin play) Karakilise Licences 4656 (27.5% WI) 4607 (Mardin, Dadas Shale & 4648 Bedinan plays) 4649 100 km SYRIA IRAQ 22

  23. Slide 23: Karakilise Area Licences 2674 & 2677

    Karakilise Area Licences 2674 & 2677 Karakilise‐1 Shell/TPAO Mardin recompletion Joint Venture (currently producing 20‐30 bopd) TransAtlantic Bahar‐1 (drilling) TPAO Ciksor‐3 Perenco (indicated oil discovery) Kastel oil field Altinakar‐1 Mardin Play Fairway EUR: 15 MMbbl (1) deepening (spudded Jan 6

  24. Slide 24: Licence 2674 – Bedinan Prospects and Leads

    Licence 2674 – Bedinan Prospects and Leads  119,265 gross acres 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 Altinakar‐1 2674 to May 30, 2014 Bedinan prospects & l

  25. Slide 25: Turkey Indicative Well Economics

    Turkey Indicative Well Economics (1) PHYSICAL PARAMETERS PER WELL (9) PV10 ATAX (7) RECYCLE PROGRAM IP (3) ATAX RESERVES (2) CAPEX (4) F&D COST (6) ($MM) RATIO (8) (MMcf/d or NETBACK (5)(7) (Bcf or Mbbl) ($MM) ($/BOE) bbl/d) ($/BOE) Thrace Basin ‐ Gas Shallow Gas Drilling 0.4 0.7 0.7 25.68 11.64 0.6

  26. Slide 26: Turkey Revised Capital Budget Outlook 2012

    Turkey Revised Capital Budget Outlook 2012 (1)  Prove‐up the potential of the tight gas play in the Thrace Basin  Sustain the shallow gas business in the Thrace Basin  Fulfill exploration‐focused work programs on high potential licences DRILLING AND COMPLETIONS NON DRILLING TOTAL (2) BUSINESS SEG

  27. Slide 27: Summary

    Summary  Executed six transactions in Turkey since September 2010 and invested $86 MM: ‐ Acquired an established shallow gas production & marketing business in the Thrace Basin ‐ Acquired large land position: 2.1 MM acres (gross); 0.75 MM acres (net) ‐ Exposure to potential significant tight gas re

  28. Slide 28: Disclaimer/Forward Looking Information

    Disclaimer/Forward Looking Information Certain information contained herein constitutes forward‐looking information under applicable securities legislation. Such forward‐looking information is provided for the purpose of providing information about management's current expectations and plans relatin

  29. Slide 29: 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

  30. Slide 30: Supplementary Information

    A GLOBAL ENERGY COMPANY FOCUSED ON EXCEPTIONAL VALUE CREATION SUPPLEMENTARY INFORMATION

  31. Slide 31: Our Heritage

    Our Heritage Senior Management Board of Directors 31

  32. Slide 32: Recent Successes of Management & Board

    Recent Successes of Management & Board Sold 2009 $360 mm Market Cap 3x ROI (’04‐’09) ~$579 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

  33. Slide 33: 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 ASSISTANTS Kumari Campbell Shari Lemon MANAGER MANAGER VP VP CFO BUSINESS GEOSCIENCES ENGINEERING OPERATIONS DE

  34. Slide 34: Management - Officers

    Management ‐ Officers President & CEO: Jim McFarland, P. Eng. 39 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

  35. Slide 35: 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

  36. Slide 36: 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

  37. Slide 37: Board of Directors

    Board of Directors Abby Badwi, P. Geol. President & CEO, 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 & for

  38. Slide 38: Valeura's Corporate Strategy

    Valeura’s Corporate Strategy  Target creation of large global E&P company in 5 ‐ 7 years ‐ Goal to achieve NAV growth rate of 20 ‐ 25% per annum  Build E&P portfolio in 1 or 2 regions of the world ‐ Mediterranean Basin/Central Europe/MENA regions are of prime interest currently but may pursue oppo

  39. Slide 39: 1Q2012 Financial & Operating Highlights

    1Q2012 Financial & Operating Highlights 3 MONTHS 3 MONTHS 3 MONTHS RESULTS ENDED ENDED ENDED MARCH 31, 2012 DEC. 31, 2011 MARCH 31, 2011 Production Crude oil & NGLs (bbl/d) 59 56 54 Natural gas (Mcf/d) 9,074 10,801 611 BOE/d (@6:1) (1) 1,572 1,856 156 Financial ($ except per boe amounts) P & NG reve

  40. Slide 40: 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

  41. Slide 41: 2012 Proposed Thrace Basin Seismic

    2012 Proposed Thrace Basin Seismic 10km 2011 3D Seismic Acquired (413 km2)  Drilling on 2D seismic only prior to 2012  2011 3D seismic shoot completed (413 km2) to 2012 Proposed 3D Seismic (260 km2) extend pool boundaries, expand prospect and 2012 Proposed 2D Seismic (264 km) lead inventory and im

  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 Program

    Edirne Licence 3839 (35%) 2011 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 Follow‐up locations on original 3D Arpaci‐2 Prospects and leads Workover Dokuztepe‐1 Kirmizihoyuk Karayusuf

  44. Slide 44: Licence 2674, 2677 & 2678 – Earning Program

    Licence 2674, 2677 & 2678 – Earning Program Seismic  Completed 227 km 2D seismic shoot N  US$2.7MM (net – 100% basis) cost 2678  Identified 20+ prospects & leads on 2674 & 2677 2678 Karakilise‐1 2D seismic grid New 2D seismic grid in Bedinan and Mardin formations recompletion  Licence 2678 relin

  45. Slide 45: Turkey Natural Gas Infrastructure

    Turkey Natural Gas Infrastructure 45

  46. Slide 46: Turkey Oil Infrastructure

    Turkey Oil Infrastructure 46

  47. Slide 47: 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

  48. Slide 48: 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

  49. Slide 49: Canada Year-End 2011 Reserves (Company Gross)

    Canada Year‐End 2011 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 102 8 0.7 16 236 3.0 PROBABLE 164 5 1.3 53 444 4.9 TOTAL PROVED PLUS PROBABLE 266 13 2.0 70

  50. Slide 50: 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

  51. Slide 51: 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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