Valeura Energy Inc. · TSX:VLE
Valeura Energy — Investor Presentation (June 2017)
60 slides from Valeura Energy's investor presentation, Jun 22, 2017
Slide 1: Business Reset Complete: Deep & Shallow Gas Exploration Drilling Ongoing
A GLOBAL ENERGY COMPANY FOCUSED ON EXCEPTIONAL VALUE CREATION BUSINESS RESET COMPLETE: DEEP & SHALLOW GAS EXPLORATION DRILLING ONGOING CORPORATE PRESENTATION JUNE 2017
Slide 2: Valeura Corporate Profile
Valeura Corporate Profile Valeura Energy Inc. (“Valeura” or “VLE”) (TSX: VLE) is a Canada-based oil & gas company producing high netback natural gas in the Thrace Basin of northwest Turkey Turkey continues to be an attractive international jurisdiction for oil & gas business: − Flat 12.5% govern
Slide 3: Thrace Basin Transactions & Land Position
Thrace Basin Transactions & Land Position 2010 Otto asset Bulgaria purchase (Edirne) Black Sea (Valeura 35% WI) E17-b4-1 E17-c1-1 E17-c2-1 VLE licence application F18 -b3, 2016/2017 Greece F19-a4 November 2015 2013 Banarli licence 1 Statoil Banarli award Farm-in (Valeura 100% WI) F18-b3 F19-a4 TBNG
Slide 4: Capital Structure June 22, 2017
Capital Structure June 22, 2017 Basic shares outstanding at February 24, 2017 58,519,321 Common shares issued pursuant to subscription receipts offering 14,629,000 Basic shares outstanding June 22, 2017 post TBNG Acquisition 73,148,321 Common shares purchasable pursuant to outstanding Options ($0.73
Slide 5: Q1 2017 Financial & Operating Highlights
Q1 2017 Financial & Operating Highlights 3 MONTHS 3 MONTHS 3 MONTHS ENDED ENDED ENDED RESULTS MARCH 31, DECEMBER 31, MARCH 31, 2017 2016 2016 Production Crude oil & NGLs (bbl/d) 3 12 9 Natural gas (Mcf/d) 4,825 4,699 4,697 boe/d 807 795 792 Financial (Canadian $ M, except per boe amounts) P & NG rev
Slide 6: Turkey Pro Forma Reserves Post TBNG Acquisition
Turkey Pro Forma Reserves Post TBNG Acquisition (Company Gross) (1)(2)(3) PRO FORMA RESERVES AND NET PRESENT VALUE AT 10% BEFORE TAX CHANGE YEAR ENDED DECEMBER 31, 2016 % VALEURA(4) TBNG(5) PRO FORMA Reserves Volumes (Mboe) Proved Reserves 1,567 1,318 2,885 84 Proved plus Probable Reserves 4,704 4,1
Slide 7: Land Position In Turkey Post Closing of Transactions
Land Position In Turkey Post Closing of Transactions GDPA awarded TBNG JV two production leases F19-d3-1 & F19-c3-1 on February 2, 2017 TBNG JV relinquished two non-producing exploration licences at Gaziantep in southeast Turkey N39-a1,a4 & N39-d1,d2 on January 17, 2017 LEASES & VALEURA NET AREA
Slide 8: TBNG JV – Now Under Valeura Operatorship
TBNG JV – Now Under Valeura Operatorship I-8 Rig Drilling at TDR-9 8
Slide 9: Key Benefits of TBNG Acquisition
Key Benefits of TBNG Acquisition Highly accretive pro forma acquisition metrics: Pro Forma Accretion Measure Absolute Per Share (1) Cash Flow (2) 78% 43% Production (3) 54% 23% 2P Reserves (4) 89% 51% Transformational transaction for VLE: - Captures operatorship allowing VLE to control the pace
Slide 10: TBNG JV Assets & Operations
TBNG JV Assets & Operations Interests in 16 leases & licences in Thrace Basin (0.34 MM gross acres) Well established shallow gas production and marketing business: - ~85 producing wells (gross) (conventional gas & tight gas) in 15 gas accumulations - TBNG JV owned gathering system, sales lines a
Slide 11: TBNG JV Shallow Gas & Tight Gas Plays
TBNG JV Shallow Gas & Tight Gas Plays SHALLOW GAS Akcahalil-1 Inecik- Aydede-1 YAGCI-8 ND-1 TDR-2 TS-18 DTD-1 KAYI-7 BATI GAZI-1 BATI Danismen & Osmancik 2 KARAEVLI-1 SOUTHWEST NORTHEAST 5 re-entry fracs since mid-2011 (Osmancik) 83 workovers & 20 new DANISMEN 500 m OSMANCIK drills in 2012-201
Slide 12: Conventional Shallow Gas Exploration Prospect Inventory
Conventional Shallow Gas Exploration Prospect Inventory Potential Pressure Seal Area 1,500 km2 @~2,500 m Drill Ready Other Prospects Statoil Deep Test 5 km Sariyer-1 Banarli Karanfiltepe-7 Dogu Atakoy-3 Karaca Yamalik-1 Aydinkoy-1 3D Seismic Extension Guney Bati Yayli-1 ~500 km2 Karababa-2 Dogu Osma
Slide 13: TBNG JV Gathering System & Pipeline Infrastructure
TBNG JV Gathering System & Pipeline Infrastructure BOTAS 2 x 36” - Russian Gas BOTAS 12” - Zorlu Distributor TBNG JV Customer Banarli Licences Base TBNG JV 10” TBNG JV 6” TBNG JV 8”-10” TBNG JV - West Thrace Sales Line Sales Line BOTAS TBNG JV - South Thrace - Interconnector TBNG JV Central TBNG JV
Slide 14: Potential Tight Gas Development - Tekirdag Field
Potential Tight Gas Development - Tekirdag Field (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 DTD-6 TDR-14 2.1 MMcf/d 0.75 MMcf/d DTD-19H TDR-9 TD
Slide 15: Banarli – Provides Material Exploration Upside in Shallow & Deep Formations
Banarli – Provides Material Exploration Upside in Shallow & Deep Formations KCA Deutag T-207 Rigging- Up at Yamalik-1 – May 2017 15
Slide 16: Banarli Exploration Strategy
Banarli Exploration Strategy Banarli licence awarded to Valeura (100% WI) in April 2013 (541 km2; 209 square miles) Potential for five exploration play types: 1. Osmancik/Danismen transverse fault play 2. Osmancik/Danismen stratigraphic traps 3. Mezardere/Teslimkoy slope fan/basin floor fan play
Slide 17: Potential Basin-Centered Gas Play Fairway (Play Type 5)
Potential Basin-Centered Gas Play Fairway (Play Type 5) 10 km Mezardere Potential Depth Pressure Structure Seal Area 1,500 km2 CI 100 m Alacaoglu-1 @ ~2,500 m 0.73 psi/ft Hayrabolu-10 Ergene-1 0.75 psi/ft 0.68 psi/ft Kazanci-5 0.77 psi/ft Banarli Banarli F18-c1,c2,c3,c4 F19-d1,d4 Kandamis-1 0.77 psi
Slide 18: Statoil Banarli Farm-in
Statoil Banarli Farm-in Banarli Farm-in transaction closed on Jan 6, 2017; Statoil required to invest at least US$36 MM in three phases to earn 50% interest below 2,500 m in Banarli licences; Valeura retains 100% interest in the shallow formations above 2,500 m Phase 1 commitment (2017): − US$6
Slide 19: Banarli Osmancik/Danismen Prospects (< 2,500 m Depth)
Banarli Osmancik/Danismen Prospects (< 2,500 m Depth) Mid Danismen PSTM Time Structure Banarli Osmancik/Danismen Prospects (<2,500 m) Discoveries Drill Ready Other Prospects (1) Aydinkoy-1 Yamalik-1 Banarli Farm-in 1st Deep Well Bati Yayli-1 Yayli-1 Teslimkoy Fraced Osmancik Temporarily Suspended Ba
Slide 20: Formations & Depositional Environments Within Potential Pressure Seal Area
Formations & Depositional Environments Within Potential Pressure Seal Area Yayli-1 Yamalik-1 Ergene-1 Projected Banarli Licenses 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 PTD 4,000 m Te
Slide 21: Robust Netbacks & Competitive Costs Drive Attractive Natural Gas Economics in Turkey
Robust Netbacks & Competitive Costs Drive Attractive Natural Gas Economics in Turkey Operating Netbacks – $/boe (1) Current Cost Structure – US$MM (gross) 80 TBNG JV BANARLI Netback Opex Royalty CONVENTIONAL GAS VERTICAL WELL (1200 m) (2) 70 Drill & Case (1,200 m TVD) 0.6 NA Sales Price 61.10 Comple
Slide 22: 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 (1,200 m) with Tie- 0.5 0.8
Slide 23: Summary
Summary VLE provides exposure to high operating netback, natural gas pure play in Turkey Statoil Farm-in on deep formations at Banarli has validated potential for a high impact basin-centered gas play on VLE lands in the Thrace Basin VLE retained interest in deep rights of 50% at Banarli and 3
Slide 24: 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 Corporation’s 2017 work program,
Slide 25: Reader Advisories (Cont’d)
Reader Advisories (Cont’d) Other Advisories: INITIAL ON-STREAM PRODUCTION RATES: The initial on-stream production rates and short production test rates disclosed in this presentation are preliminary in nature and may not be indicative of stabilized on-stream production rates. Initial on-stream produ
Slide 26: 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 the AIF and, unless the context otherwise requires, shall have the same meanings herein as in NI 51-101 or the AIF, as applicabl
Slide 27: Reader Advisories (Cont’d)
Reader Advisories (Cont’d) Reserves Definitions: "reserves" are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, from a given date forward, based on: (a) analysis of drilling, geological, geophysical, and engineering
Slide 28: Supplementary Information
A GLOBAL ENERGY COMPANY FOCUSED ON EXCEPTIONAL VALUE CREATION SUPPLEMENTARY INFORMATION
Slide 29: Our Heritage
Our Heritage Senior Management Board of Directors 29
Slide 30: Past Successes of Management & Board
Past Successes of Management & Board Sold 2009 $360 mm Market Cap 3x ROI (’04-’09) ~$5,132 mm CAGR 22% Market Cap at Trust Conversion Sold in 2004 $916 mm $228 mm 35x ROI (‘94-’03) 5x ROI (’99-’04) CAGR 51% CAGR 43% Sold in 2006 Sold in 2014 $306 mm $1,800 mm 1.4x ROI (’03-’06) 2x ROI (’11-’14) CAGR
Slide 31: Why Turkey?
Why Turkey? Prospective Proven petroleum systems Under-explored & under-exploited conventional & TBNG-PTI 2011 Initial TBNG acquisition Acquisition unconventional plays (natural gas & light/medium oil) opportunity Opportunity to deploy modern technology Thrace Basin main gas producing region
Slide 32: Organization Chart
Organization Chart BOARD OF DIRECTORS Bill Fanagan Jim McFarland Claudio Ghersinich Ron Royal Tim Marchant Stephanie Stimpson, Corporate Secretary PRESIDENT & CEO Jim McFarland CFO COO Steve Bjornson Sean Guest VP VP VP VP BUSINESS ENGINEERING OPERATIONS EXPLORATION DEVELOPMENT Don Shepherd Lyle Mar
Slide 33: Senior Management
Senior Management President & CEO: Jim McFarland, P. Eng. 44 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, up
Slide 34: Senior Management (Cont’d)
Senior Management (Cont’d) COO: Sean Guest, Ph.D. 25 years oil & gas experience Former Chief Executive Officer: Bukit Energy Inc. (private) (Indonesia); and Pexco Energy (private) (Australia, Indonesia, Malaysia, Ethiopia) 5 years in leadership roles with Woodside Energy: General Manager, Austra
Slide 35: Senior Management (Cont’d)
Senior Management (Cont’d) VP Engineering: Don Shepherd, P. Eng. 43 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
Slide 36: Senior Management (Cont’d)
Senior Management (Cont’d) VP Business Development: Barry Wihak, P. Geol. 33 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, Netherla
Slide 37: Board of Directors
Board of Directors 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 & former EVP Business Development, Vermilion Energy Trust Former Director, Vermilion Ene
Slide 38: Turkey YE 2016 Reserves (Company Gross)
Turkey YE 2016 Reserves (Company Gross) (1) LIGHT & MEDIUM TOTAL OIL NATURAL GAS NPV10 BEFORE TAX NPV10 AFTER TAX CATEGORY OIL EQUIVALENT (Bcf) ($MM) ($MM) (Mbbl) (Mboe) PROVED DEVELOPED 6 2.8 470 9.3 9.3 PRODUCING PROVED DEVELOPED NON- - 2.4 405 6.9 6.2 PRODUCING PROVED - 4.2 692 4.7 3.1 UNDEVELOPE
Slide 39: 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 40: 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 Koseilyas-1 s
Slide 41: 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 Bati Gurgen-1 Osmancik 2015 3D: IP30 3.4 MMcf/d 152 km2 Gurgen-1 IP30: 3.3 MMcf/d (Osm) Yayli-1 Bati Gurgen-2 Gurgen-2 Teslimkoy fraced Osmancik IP30: 3.3 MMcf/d (Osm) Os
Slide 42: 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 Bati Gurgen-1 Producing fields (1) Aydinkoy Osmancik Banarli prospects (2) IP30: 3.4 MMcf/d Merged Banarli, Tekirdag EUR: 4.9 Bcf & Osmanli 3D seismic (~550km2) Ba
Slide 43: 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 Bati Gurgen-2 Teslimkoy Basin Floor Fans 43
Slide 44: Time Horizon Slice - Similarity Seismic Image
Time Horizon Slice - Similarity Seismic Image Yayli-1 5 km Bati Gurgen-1 Bati Gurgen-2 44
Slide 45: 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 Bati Gurgen-2 Mezardere Slope Channel Osmancik Shorelines 45
Slide 46: 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 47: 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 48: Teslimkoy/Kesan Multi Frac Type Curve (Vertical Wells)
Teslimkoy/Kesan Multi Frac Type Curve (Vertical Wells) (1) 2P Type Curve - Multi Frac Vertical Wells 1600 0.8 1400 0.7 CUMMLATIVE PRODUCTION (RAW) - Bcf 1200 0.6 RAW GAS RATE - MMscf/d Vertical Well, 2P - 0.8 Bcf, Rate vs. Time 1000 0.5 Vertical Well, 2P - 0.8 Bcf, Cum. Production vs. Time 800 0.4 6
Slide 49: Shallow Gas (2,000m) Type Curve (Vertical Wells)
Shallow Gas (2,000m) Type Curve (Vertical Wells) (1) 2P Type Curve - 2,000m MD Vertical Wells 3000 1.5 2500 CUMMLATIVE PRODUCTION (RAW) - Bcf RAW GAS RATE - MMscf/d 2000 1.0 Vertical Well, 2P - 1.35 Bcf, Rate vs. Time 1500 Vertical Well, 2P - 1.35 Bcf, Cum. Production vs. Time 1000 0.5 500 0 0.0 0 1
Slide 50: Shallow Gas (1,200m) Type Curve (Vertical Wells)
Shallow Gas (1,200m) Type Curve (Vertical Wells) (1) 2P Type Curve - 1,200m MD Vertical Wells 1000 1.0 900 0.9 Vertical Well, 2P - 0.517 Bcf, Rate vs. Time 800 Vertical Well, 2P - 0.517 Bcf, Cum. Production vs. Time 0.8 CUMMLATIVE PRODUCTION (RAW) - Bcf 700 0.7 RAW GAS RATE - Mscf/d 600 0.6 500 0.5
Slide 51: 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 52: TBNG JV New Drill Spuds In 2012 – 2017 YTD
TBNG JV New Drill Spuds In 2012 – 2017 YTD Hayrabolu Hayrabolu-10 Kazanci-5 Deep Exploration 2926 Sariyer-1 Area Kuzey Atakoy-1 3659 Guney Atakoy-2 F18-c1, c2, c3, c4 F19-d1, d4 5122 Karanfiltepe-5, 6 Guney Karababa-1 Guney Kayi-1 Atakoy-8 Biyikali-2ST Dogu Atakoy-3 Kayi Derin-1 Tavanli-1 Gurgen-1,2
Slide 53: 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) JUNE 22, 2017 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 54: TBNG JV New Drill Spuds 2013 – 2016
TBNG JV New Drill Spuds 2013 – 2016 SPUD RIG RELEASE TD STATUS WELL LICENCE WELL TYPE (d/m/y) (d/m/y) (m) JUNE 22, 2017 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 55: TBNG JV New Drill Spuds 2017 YTD
TBNG JV New Drill Spuds 2017 YTD SPUD RIG RELEASE TD STATUS WELL LICENCE WELL TYPE (d/m/y) (d/m/y) (m) JUNE 22,2017 Dogu Atakoy-3 F18-D 24/01/2017 03/02/2017 Conventional 1,303 Producing Dogu Kilavuzlu-2 F19-D 22/05/2017 31/05/2017 Conventional 1,260 Tying-in Sariyer-1 F18-D 07/06/2017 Conventional
Slide 56: Thrace Basin Seismic
Thrace Basin Seismic 2926 F18-c1, c2, c3, c4 F19-d1, d4 365 5122 9 F17-c2, c3 F18-d1, d2, d4 F18-c4-2 F18-c3-1 F19-d4-1 F19- F19-d3-1 F19-c3-1 F18- d4-2 d3 3860 3861 3860 G19-a1-1 G18-b1 G18-b2 10 km 2015 Banarli 3D (152 km2) Drilling on 2D seismic only prior to 2012 2013 Osmanli 3D (232 km2) 20
Slide 57: Turkey Natural Gas Infrastructure
Turkey Natural Gas Infrastructure 57
Slide 58: Turkey Oil Infrastructure
Turkey Oil Infrastructure 58
Slide 59: 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 60: 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