Zargon Oil & Gas Ltd. May 2014 Corporate Presentation WWW.ZARGON.CA
Zargon: Core Attributes 6,662 boe/d (Q1 2014 total production) 4,320 bbl/d stable oil production base Oil Exploitation 60+ prospective oil exploitation locations Exciting Little Bow ASP tertiary recovery project provides years of…
Zargon: Asset Description Conventional Pressure Supported (Waterflood) Oil Conventional Properties: pressure Produce 4,079 bbl/d (Q1 2014) of very low decline oil, Provide substantial inventory of low risk oil supported oil…
Forecast Oil Production Trends 6,000 5,000 Oil Production (bbl/day) ASP Phase 1 &2 increment 4,000 Drilling Increment 3,000 Base Production less than 15% decline 2,000 Base production and drilling increment are funded…
Zargon Overview (As at May 12, 2014 unless otherwise stated) Capitalization Toronto Stock Exchange: Symbols: ZAR; ZAR.DB Common Shares Outstanding: 30.13 million (basic) Market Capitalization: 292 million (9.70 per share) (1) Net…
Q1 2014 Financial Highlights Financially Strong 165.0 million bank line with approximately 51 million drawn at March 31, 2014. 57.5 million Convertible Debenture maturing in 2017, yielding 6% annually. Net debt at March 31, 2014…
2014 Objectives Zargons 2014 objectives are: Finish the commissioning of the Little Bow ASP project on budget, with first chemical injections occurring by the end of the 2014 first quarter. (completed) Deliver Little Bow Phase 1…
Conventional Oil Exploitation Projects Current Drilling Inventory Net Property Project Locations Comments Hamilton Lake Multifrac horizontals 20+ Will require waterflood reimplementation, large upside Bellshill Lake Increase…
Long-Life, Low-Decline Oil Production Base Zargon Corporate Decline Analysis Total Oil Production Rate 6,000 Production Dec 2013 2014 Gross W.I. Oil Production Rate ( bbl/day ) 5,000 Wedge Contribution Decline Rate Base 53%…
Conventional Assets: Low Corporate Decline and High PDP Reserves Average Annual Decline Rate (%) Proved Producing Reserves (% of P+P) 0 10 20 30 40 50 0 20 40 60 80 100 Zargon Average 32% Average 32% Source: Peters & Co.…
Canadian Alkaline Surfactant Polymer (ASP) Projects Alberta Sask. 10 Canadian ASP Projects in Grande Prairie Mooney (Black Pearl) operation 2011 3 additional projects have regulatory approval Edmonton Major operators:…
ASP Enhanced Oil Recovery Process Process: Dilute concentrations of chemicals (Alkali, Surfactant and Polymer) in water are injected into an existing oil pool to scrub out oil that waterflooding alone could not recover. Objective…
ASP Chemical Flooding Injection Sequence 1 ASP Injection 2 Polymer Push 3 Terminal Waterflood A Blend of Alkali, Polymer displaces Completes the Surfactant & Polymer mobilized oil to Displacement mobilizes trapped oil producing…
Little Bow ASP Enhanced Oil Recovery (EOR) With Proven Technology EOR in a mature, southern Alberta Waterflood Little Bow ASP: Phase 1&2 Development Phased Development Alberta 15-18W4 Phases 1 & 2 Project Capital: 62 Million…
Little Bow ASP Project Milestones ACCOMPLISHMENTS ASP facility, oil battery and field construction complete and online in March 2014 50 million capital construction and startup cost (compared to November 2012 estimate of 47…
Little Bow ASP Analog ASP Project: Husky Taber Mannville B Taber Mannville B ASP Project Little Bow Mannville I Most mature Canadian ASP Project; Husky Operated and P Pools (Zargon) Same geological setting, oil quality, reservoir…
Little Bow ASP Development Optimization Study (Phases 1 & 2) ASP Oil Recovery (mbbl) Reservoir simulation model ASP Oil Recovery Zargon 2013 Optimized: 6,500 1,276 cases run Zargon 2013 Economics: 5,200 used to optimize ASP…
Little Bow ASP Phases 1 & 2 Economics (BTax) Little Bow ASP: Phases 1&2 Production Phases 1 & 2 Economics Base W.F. Phase 1 Phase 2 Half Cycle Full Cycle 2500 IRR (%) 72.4 17.0 PV10 ( millions) 83.2 31.5 12.1% Recovery 2000 5.2…
Little Bow ASP Development Expansion: Phases 1-4 ZAR W.I. DOIIP* W.I. (%) (mmbbl) Phases 1 & 2 LB I Pool 100 31 LB P Pool 100 8 Followup U&W Unit 75 21 MM Unit 100 5 C8C / X8X 81 7 Total 72 * ERCB DOIIP Data Little…
Little Bow ASP Phases 1 - 4 Post Start-up Economics (BTax) ASP Development Forecast - Phases 1-4 Little Bow ASP: Project Economics Base W.F. Phase 1 Phase 2 Phase 3 Phase 4 Phases 1&2 Phases 14 3000 Zargon W.I. Production IRR (%)…
Little Bow ASP Upside Potential Little Bow ASP Cumulative Undiscounted Cash Flow (Go Forward) (Net Zargon WI - Before Tax) 700 Little Bow ASP Upside 600 Phases 3&4 Development 500 +2% DOIIP Recovery Millions of Dollars…
2014 Property Disposition Program Objective: Conclude property dispositions that highgrade and concentrate the Companys properties on our core oil exploitation business: Completed property sales: 1.5 million in Q1 for Huntoon,…
2014 Capital Programs, Dividends and Cash Flows Program Funding Considerations 2014 Updated Capital Budget Conventional Capital Program 35 million ASP Phase 1 Capital to Complete 8 million ASP Phase 1 Chemical Costs 9 million…
Net Asset Value Breakdown by Property: McDaniel Proved and Probable 2013 Yr. End Reserves Conventional Pressure Q1/14 Oil Q1/14 Gas Prod. McD. Oil Res. McD. Gas FDC Capital PV10 Asset Value Supported Properties Prod. (bbl/d) (mmcf/d)…
Production Guidance (May 2014 Update: Before Dispositions) Oil and Liquids Guidance: Q1 2013 5,150 barrels per day (5,113 bbl/d reported) +missed guidance Q2 2013 4,800 barrels per day (4,930 bbl/d reported) +exceeded guidance Q3…
Key Takeaways at Current Share Price (May 12, 2014) Zargon is committed to the current 0.06 per share monthly dividend. Current 7.4% dividend yield is protected by oil hedges, low payout ratios and an improving balance sheet.…
Appendices WWW.ZARGON.CA
Little Bow ASP Post Startup Zargon Economics Phases 1 & 2 Price Sensitivity: Before Tax PV10 Little Bow ASP Phases I & 2 BTax PV10 vs. Price 140 120 Sask. Type EOR Royalty 100 PV10 ( MM ) 80 Base Price 60 40 20…
Williston Basin Production Trends & Orientation Map Ongoing Activities Exploit long life low decline pools with Saskatchewan Manitoba horizontal wells and waterflood enhancements. 2014 Activities Drill 9 additional horizontal…
Taber South Sunburst Hz Oil Development & Waterflood Core Property Group Taber Area 1,200 2012 Additions Gross W.I. Basis 2011 Additions 2010 Additions 1,000 2009 Additions Producing Oil Rate (bbl/day) 2008 Additions Base…
Greater Bellshill Lake Area Production Trends & Orientation Map Core Property Group Bellshill Lake Group Bellshill Lake 1,000 800 Producing Oil Rate (bbl/day) 600 400 2012 Addi ti ons 2011 Addi ti ons 2013 Q4 Drilling…
Hamilton Lake Viking Oil Unit Horizontal Drilling Large oil resource opportunity Ongoing Activities 3 Wells drilled in Q4/2012 Waterflood was prematurely suspended in the 1980s (160 mm bbl DOIIP, 31 API crude). Initially drilled 5…
Net Asset Value Calculations at 2013 Year End NAV Calculation (Dec 31, 2013) Proved + Prob. McDaniel Est. (PVBT 10%) 469 million Undeveloped Land 17 million Deduct Est. Net Working Capital & Bank/Debenture Debt 116 million Net…
Hedging Strategy and Current Hedges Zargon uses hedges to help fund dividends and capital programs during periods of lower commodity prices. Our oil hedging policies allow for the forward sale of: up to a 70 percent maximum of…
Zargon Oil & Gas Ltd. May 2014 Corporate Presentation WWW.ZARGON.CA
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