Buccaneer Energy (LSE:BUCE) — A New Strategic Direction

0:01 Good morning, ladies and gentlemen, and welcome to the Nostradero Oil and Gas Company Investor Presentation. Throughout this quarter presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions at any time and press send. The company may not be in a position to answer every question received during today's meeting. However, the company can review your questions submitted today, and we'll progress your responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. If you give that your kind attention, I'm sure the company would be most grateful. I'd now like to hand over to CEO, Paul Welch. Good morning.

0:33 Good morning, and thanks for the opportunity. So good morning, everyone. I'm here to talk about, kind of a change in direction for Nostraterra. About a month ago, we, made a change in leadership. The previous leader was stepped down after fifteen years. And at that time, we also added a new board member, and we significantly trimmed the GNA. That's commensurate with changing the direction of the company. So in years past, the company focused on US oil and gas and things further afield, and they had a a wide spread of assets, part in East Texas, part in South Texas, and some in the Permian and West Texas. And so what we've done since we've come on board is we've gone through and done a review of all the assets, determined where we were generating, the best return for the company, and then those assets that didn't deliver, we decided to divest.

1:27 So what that meant is that we've focused now primarily on our biggest asset, which is Pine Mills in East Texas. It has a lot of potential. It was generating the most cash. And from years past, we've seen significant upside, which we'll talk about here in a minute. And that meant that we started to divest other assets. So we had assets in West Texas, South Texas. Two of the West Texas assets have been sold already. The third is an auction process. It will likely be sold by the end of July. And then the South Texas assets are in a negotiation phase at the moment where we expect by the end of the summer that we will have divested all of those. So by the end of the summer, we think we will be completely focused on pine mills. And with that cash that we generate from asset sales, we are then focused on putting it back into pine mills.

2:16 Pine mills was a a large field, which we'll talk about in a minute, discovered quite some time ago, had a number of wells drilled in it. But we currently have a number of idle wells, and and we can see the potential to return those to production. And we also have modern three d seismic over all of the field. And from that, we are looking and have discovered, some new prospects, new structures, and there are also four primary horizons. So within that three d, we can also look at, you know, things beyond the sub Clarksville, which has been the main producer. So at the moment, we've found two structures we think are interesting, and there are probably two to three others that we are expect to find something in. But there's lots of potential that still needs to, be developed in our our mind.

3:03 If we look at where Pine Mills is located, for those who don't know, again, it's, it's in East Texas, about a hundred hundred miles from Dallas. Again, discovered in 1949. It's produced today about 12 and a half million barrels. The thing about it is that it's very shallow. It's cheap to develop. We're averaging about 75 barrels a day at the moment from nine producers and four injectors. But, again, we see a lot of potential in just returning wells to production about 80 barrels a day plus. We can see, there are infill drilling opportunities that we'll talk about here in a second. We drilled two in the last two years, and they came on at over a 100 barrels a day. And then we see, again, some optimization that can be deployed here in putting water into areas of the field that haven't had it in the past and, improving the recovery. So there's a lot of potential in these large fields. On the right hand side of the slide, you'll see it's a very long structure.

3:56 It's about 13 miles long. We'll give it dimensions here in a second. Sorry. Let's go back to the next slide here. So, again, discovered this is just looking at pine mills. So on the left, what we have is a structure map. The the points in in black are the wells that have been drilled. The the brownish red lines represent the faults. And so what you have is you have oil migrating from essentially west to east. It gets trapped along those faults, and then you drill wells as close as you can to that fault to get as high up on the structure as possible. Now what's not shown here, this is an old version of this map, and what's not shown is the new version of the map, which we'll show in a second, that has many more of these faults that are show it's a much more complex picture.

4:42 And as a result of that, you know, a field that was discovered, you know, more than sixty years ago, still has a lot of undrained potential. And if people that have followed the story know the Falkwells in the southern portion of the field were drilled two years ago and came in essentially at, at original reservoir condition. So it's very interesting opportunity. Some stats on the field. It's about four miles long, point six miles wide. It's got great quality rock. Average porosity is 24%. The average permeability is over over Darcy, but you can see it's very shallow. So to drill wells here, you're looking at submillion dollars in cost. So it's, when we look at future potential, it's very easy to access. Now it's a large field, 38,000,000 barrels originally in place, but to date, we've only produced 12 and a half. So that's a recovery efficiency of around 33%.

5:35 For a reservoir of this quality that's under active water flood, we should expect something closer to 50%. And so the remaining potential is shown there about six and a half billion barrels. So there's a lot of a lot of running room, and this doesn't include some of the undeveloped fault blocks like we've seen in Falk. If we go to the next slide, this is a a cross section of what we see. So the falls are shown in these, obviously, these lines that slice through the through the rock, and then the reservoirs are shown in this yellow greenish color. And there are four primary horizons out here, and each of them is filled to spill. So the interesting thing about wells that were drilled in the fifties and sixties when the majority of the wells were drilled here is that if they didn't produce, you know, at high rates, and at that time, rates were, you know, over a 100 barrels a day, a lot of them were immediately plugged.

6:30 So we can come back today and, know, look for opportunities that come in at, you know, fifty, sixty barrels a day that are very economic today that weren't economic back then. So there's a lot of potential, a lot of reentry, and the majority of the focus was on the sub Clarksville. But as you can see, there are a number of other reservoirs here that haven't really been fully developed. And so our potential or our opportunity is to use the three d that we have now and to go and look for these newer horizons that have not been fully exploited, put wells in them, or recomplete into them, and then produce oil almost at original reservoir condition. So it's a it's a tremendous opportunity. So we'll see a result of that on the next slide here, but, there are a lot of great opportunities, we think.

7:19 Go to the next slide. So here's one. This is the what this is the Falk area. So we're looking in the southern portion of the field. The areas, in red red dots are the wells that have been drilled. And then the two wells you see right here are the Falk 1 and the Falk 2, and they were drilled two years ago. And the production from those wells is shown on the left hand side. That's daily production, so it's a little erratic, but you can see that these wells came in at over a 100 barrels a day each, in the field, again, discovered in the forties where the average well to date is making, 10 barrels a day. These wells came in, produced clean oil at a 100 plus barrels a day, and they're in these tiny sliver fault blocks that couldn't be seen until we started to look at modern three d. Now within the Falk area, we have identified one new prospect. We're calling it the fault three.

8:15 And because the field rules have changed from the minute this well is drilled and if it's successful, that well can start producing at over a 100 barrels a day. So the field allowable is then a 124 barrels a day. And so from the sub Clarksville in this area, we can produce, you know, a 124 barrels a day. So this is one opportunity and one horizon. But as you can see, as we started to map the this field with the new three d, we see other faults that are very interesting. And, also, the placement of these faults has moved. So in the old days when we had two d seismic, we couldn't pinpoint exactly where they are, and so some of this attic oil is left behind. So as you can see in the Falk area, because we knew precisely where the fault sat, we could drill these wells snug up against it and pick up all the oil that was potentially there.

9:07 That same opportunity exists in other parts of the field today because we have good quality seismic. We can pinpoint these wells much more accurately, and we can pick up some opportunities that we believe we have missed. So that's why we have continued to focus on pine mills because in an area where we have existing infrastructure, adding new volumes is incredibly cheap. And when they come in at over a 100 plus barrels a day, it's the best place, to spend the cash that we've generated through the asset sales and other parts of our business. Go to the next slide. Sorry. So to kinda sum up, I know it was brief. What we're what we're doing here is we're Nostradero is still focused on, along that conventional US production.

9:55 We are gonna fully develop our Pine Mills field, which is located in East Texas. It's a shallow field, low decline, has very low operating and development costs. And in our view, it has significant, you know, upside potential. There has not been a dedicated workover campaign in the field since 2019 when the field was originally purchased. And so, you know, what we're doing in the next couple of months to six months is to kind of fill in or take care of issues that should have been addressed years ago and that are incredibly profitable because, you know, wells that were just shut down, for instance, a pumping unit failed, and they decide to spend the money in West Texas rather than returning that well to production, you spend $15,000

10:41 and you can get back on, you know, eight to 10 barrels a day. So it's a very, very profitable set of opportunities. I came on board about a month ago to kind of change the direction of the company. Last week, we also added a new board member, by the name of Jim Newman. He's also the current share largest shareholder. He is from a, from the Permian. He comes from a domestically focused E and P background. He has been working for thirty five plus years in the mature well space, and we think through, his hindsight, his insight, and his experience, we can bring these wells back to production, not only cheaply, but quickly and perhaps most importantly, most efficiently.

11:29 So, you know, it's a combination of team things that have changed that are changing the team up that we think will make us successful here. The review of the assets is has now been completed. And as I said, we decided to dedicate our resources to the the part of the business that we think is gonna generate the most production. West And South Texas assets are being sold, and that those sales will be complete by the end of the year. By selling those assets, we've reduced, not only our operating costs, but our G and A, and that the cash that we've generated is gonna be put back into pine mills to turn these wells on. And not only to do that, but also to improve the infrastructure. So, you know, we're investing in the facility to keep the, uptime of the wells, improved from where it was and, you know, just doing the basic work that hasn't been done for the last six years to kind of maintain what we think is an incredible asset.

12:28 On the left hand side of the slide, it shows some of the statistics for the for the company. I think the most important thing here is, the current market cap of the company is is about £1,000,000. The current NPV 10 is about 9.1. That's before we make all these changes. So, you know, the focus of, the new management, the board is to close this gap, this kind of yawning gap between, you know, what the market thinks the the company's worth and what the assets are really worth. And so, you know, we're dedicated to essentially closing that gap and then also increasing that NPV 10 because through the efforts of, you know, the workovers, the technical work on the three d seismic, you know, we see a tremendous amount of of opportunities here.

13:19 And with that, I will open it up for questions. So thank That's great, Paul. Thank you very much indeed for updating investors. Ladies and gentlemen, could I please ask you to continue to submit your questions just using the q and a tab situated on the right hand corner of your screen. But just while Paul takes a couple of moments to review your questions submitted already, I'd just like to remind you that we're recording this presentation along with a copy of the slides and the published Q and A will be accessed via your Investor Meet company dashboard. Paul, as you can see, you've had a number of questions from investors throughout your presentation. So thank you to everybody for your engagement, if I may. Paul, just hand back to you if I could ask you to read out the questions, and then I'll pick up from you at the end. Okay. So will the new management give serious consideration about changing the name? Yes. We will. That's something that we've been discussing.

14:05 We haven't come to a landing on that, but if people have some ideas, feel free to submit them, and we'll we'll consider them. But it's something we're definitely considering. Okay. What are the expected timelines and funding requirements for developing the new locations in the Pine Mills Field?

14:20 So it's a great question. So the timeline is essentially now. We've identified the first nine. As said, we have 10 idle wells. We've identified the first nine. The cost range from simple as $15,000 to changing, you know, the pumping unit out to $200,000 to, you know, run new casing in a well. We are looking the funding will come from a combination of, you know, increased prices, so we're getting good good good price, good value at the moment. So we're generating cash. And the asset sales, something like a new Falkwell or, you know, two or three fault blocks where we see new potential, that will require some sort of partnership to to develop because we don't have the resources in house. But, again, you know, we see the next the next six to twelve months as being the time in which we wanna implement most of these changes, particularly the 80 barrels a day that we see in the workover program.

15:22 Okay. Next one. What are your immediate priorities and long term vision for Nostradera? So the immediate priorities are, again, returning these wells to production, essentially doubling production from where we are and more than doubling our cash flow. And then after that, what we see is we see kind of an organic growth from the Pine Mills area. So there are a number of opportunities in East Texas that we see as potential farm in, farm out opportunities and acquisitions perhaps. But what we'd like to do is we have an existing facility there that's underutilized. We have, you know, staff, pumpers, everyone available. So we wanna maximize the use of that facility. So it's gonna be kind of an organic growth story that's gonna emanate from East Texas and focus solely there. We really wanna operate in areas where we can generate positive cash flow. And so that's that's the plan.

16:22 There's a question here about, the previous, CEO, which I I think the best way to describe it is that he's no longer part of the discussion. And so, there's anything that he did is not going to be germane in us how we move this forward. The question is why another question is why hasn't the basic work, as you stated, not been done in the past six years? I think it was just a matter of priorities for the previous management team. They were more focused on expanding the footprint of the company going into the Permian, looking for opportunities that they didn't see. The skill set of the of that team was different from the skill set of the current team, where we're more focused on petroleum engineering and and essentially, understanding what we have as assets.

17:14 So it's just a complete different focus, and they did what they did because that was what they wanted to do. We have changed the direction of the company. We don't intend to pursue that path any further. And so that's why you're seeing this shift to focusing on our biggest asset that we feel hasn't been invested in properly for the last six years. What is the next question is what is the current debt and what are the plans, to tackle it? The current debt is around $4,000,000, and the plan is to pay it down. That's what we would like to do. We are focused on paying it down. The debt is very stable. It's got a very, reasonable coupon rate, And so we're not in any, you know, great hurry to do that, but, we feel we're a little too there's a little too much there, we'd like to reduce it, as much as possible.

18:02 That's great, Paul. You're kindly taking all the questions from investors. If any further questions, Paul, do come through, we'll make those available to you post today's meeting, and we can add those responses if appropriate to do so. Paul, I know investor feedback will be particularly important to you. I'll shortly redirect those joining us on today's call for their thoughts and their expectations. But if I may do so, just ask you for a couple of closing comments, and then I'll send investors for their feedback. Okay. Well, listen. Thank you very much. I appreciate everyone taking the time to to listen to the story, the change in direction. You know, we're we're currently producing around a 100 barrels a day. We think through these workovers, we can add another 80, with redirection in the waterflood, probably another 30. So we can see doubling in the production in the near term. We're excited about that because it allows us to generate, you know, two more than two times our cash flow and then prioritize investing into pine mills and reducing our debt and improving shareholder value. And so that's what we're focused on. So, again, any questions, anything, any ideas on the name change, please let me know. But, again, thank you so much for your attention, and I look forward to updating you as we progress, through this journey.

19:05 Appreciate your time. That's great, Paul. Thank you once again for updating investors. I could please ask investors not to close this session as we now automatically redirect you for the opportunity to provide your feedback in order the company can better understand your views and expectations. On behalf of the management team of Nostrachero Oil and Gas, we'd like to thank you for attending today's presentation. Wish you all a rest good rest of your day.