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NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy

Underground Energy · Nov 1, 2011 · 48 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 1
    Underground Energy Corp. Unlocking Shale Oil Opportunities in California & Nevada TSX-V:UGE Corporate Presentation November 2011
  2. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 2
    Investment Highlights Focused on the Monterey and other oil-prone shale formations in California and Nevada currently comprising 83,140 net acres (40,350 in California and 42,840 in Nevada) Focus on de-risking core Asphaltea asset…
  3. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 3
    The Team Built for California Oil Management Independent Board Members Michael Kobler Chairman, President & CEO Bruce Berwager Chief Operating Officer Randy Aldridge - Director 30 years oil & large infrastructure projects 32 years…
  4. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 4
    Capital Structure Snapshot UGE 0.225 Listed on the TSX Venture Exchange October 27, 2011 Closing Share Price 201.9 million 45.4 million Basic Shares Issued and Outstanding Market Capitalization (on Basic Shares) 329.6 million…
  5. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 5
    Growth Strategy Grow primarily through the drill bit Aggressively drill prospects to ramp-up production Enhance Apply advanced drilling, completion and recovery technologies to maximize recovery Shareholder Value Convert…
  6. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 6
    Recent Achievements July 2011 Closed 25.5 million brokered private placement July 2011 Completed extended seismic shoot at Asphaltea (further de-risks key prospects) Entered into AMI in San Joaquin Basin covering 90 square miles…
  7. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 7
    California Focused with Nevada Upside Currently 83,140 net acres under lease in California and Nevada 27,380 net acres prospective for oil CALIFORNIA from Monterey and equivalent shales in Santa Maria and San Joaquin Basins Two…
  8. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 8
    US Shale Oil Comparison Formation Gross Matrix Matrix Total Organic Play Depth (ft) Thickness (ft) Porosity (%) Permeability (md) Content (%) Bakken 7,000-11,000 20-150 3-12 0.005-0.2 2-18 High Profile US Oil-Prone Eagle Ford…
  9. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 9
    Monterey Shale Formation Significant Monterey Shale Basins World Class Source Rock Over 290 billion barrels of oil generated1 San Joaquin Basin World Class Reservoir Rock Has produced over 2.5 billion barrels1 Early onshore…
  10. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 10
    Monterey Shale Type Curves Log Rate vs. Time Deviated Wells EUR = 6,378 Mbbls Horizontal Wells EUR = 645 Mbbls Vertical Wells EUR = 540 Mbbls 1. Source: Occidental Petroleum Corporation, Minerals Management Service,…
  11. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 11
    Key Monterey Players Largest Monterey land holder in State Actively drilling in San Joaquin, Santa Maria and (LA, Ventura and San Joaquin basins) Salinas basins 214,000 net acres 10-15 exploratory wells per year planned Joint 500…
  12. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 12
    California Heavy Oil (MWSS) vs. WTI 25.00 130% California Nov. 2011 Differential MWSS = WTI + 23.01/bbl WTI-MWSS Oil Price Differential swung 30/bbl 20.00 since Keystone Pipeline in operation to Cushing, OK 120% CA imports 62%…
  13. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 13
    Initial Monterey Prospect Asphaltea 2.3 billion bbls OOIP1 109 mmboe prospective resources (91% oil)1 2 Monterey Prospects Conventional naturally fractured play 4 Prospective Zones Analog producing fields close by 180 Well…
  14. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 14
    Asphaltea Location 3 leases covering 5,850 acres (100% WI) Foxen Canyon Trend 2 initial prospects highly fractured, Santa Maria conventional (anticline) structures 207 AAPL to Pentland & Los Angeles 3D seismic in processing…
  15. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 15
    Analog Monterey Fields to Asphaltea1 Cumulative Field Area of Average Wells Average Oil Miles from Field First Drilled Production EUR Reservoir Thickness Drilled To Gravity Asphaltea (MMbbls) (MMbbls) (acres) (open feet) Date…
  16. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 16
    Asphaltea Seismic Acquisition Asphaltea Lease Boundary Initial acquisition of 2D seismic data 2D data quality was excellent and shoot was North Prospect expanded / extended as result 30 miles of data over 6 square miles South…
  17. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 17
    Asphaltea 2D and 3D Seismic Coverage 2D Swath Seismic Coverage 3D Seismic Coverage Asphaltea Lease Boundary Vibroseis Lines Vibroseis Lines Prospect structures 17
  18. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 18
    Asphaltea Economics 350 Parameter Typical Well OXY Shale Oil Well Type Curve 300 (Modeled UGE Curve) Well Depth (MD feet) 8,000-10,000 250 Dry Hole Cost (M) 1,900-2,300 200 BOPD Completion Cost (M) 900-1,200 150 Total Well Cost…
  19. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 19
    Asphaltea Development Profile1,2 Unrisked peak production of 22,300 boepd in 2020 with attractive well economics and conservative horizontal/deviated development well type curves Overall unrisked project before tax NPV 10% of 2.2…
  20. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 20
    Acquisition from Panther Energy Adds 33,037 net undeveloped acres Multiple prospects in each play trend Extended opportunities in Monterey and 2 play trends in Santa Maria Basin analogous shale plays 4 play trends in San Joaquin…
  21. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 21
    Panther Acquisition Overview San Francisco 10 0 10 20 30 40 50 miles Modesto Merced 4.6MM cash + 0.9MM assumed County Stanislaus liabilities County San Joaquin Basin Madera County Expected to close by mid-November Challenger…
  22. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 22
    Zaca Extension and Prospects Santa Barbara County, California San Francisco 10 0 10 20 30 40 50 miles 80% WI (Operator) Modesto 7,750 gross acres (6,200 net acres) Merced County Monterey targets (analog to Asphaltea) Stanislaus…
  23. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 23
    Zaca Well Economics Zaca Field All Historic Wells Typical Well All Wells Recent Wells Normalized Type Curve (61 wells) 250 Type Curve Type Curve 200 Well Depth (MD feet) 3,500-6,000 3,500-6,000 Dry Hole Well Costs (M) 800-1,200…
  24. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 24
    Burrel Redevelopment Prospect Fresno County, California San Francisco 10 0 10 20 30 40 50 miles 80% WI Modesto Merced 10,245 gross acres (8,196 net acres) County Zilch & Vaqueros sand, Monterey & Kreyenhagen shale Stanislaus…
  25. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 25
    Foxtrotter Trend Kern County, California San Francisco 10 0 10 20 30 40 50 miles Modesto Merced 65% WI (Operator) County Stanislaus County San Joaquin Basin 4,934 gross acres (3,396 net acres) Madera County Shallow Monterey…
  26. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 26
    Buttonwillow Deep Prospect Kern County, California San Francisco 10 0 10 20 30 40 50 miles Modesto Merced 80% WI (Operator) County Stanislaus County San Joaquin Basin 1,625 gross acres (1,300 net acres) Madera County…
  27. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 27
    Santa Rita Prospect Santa Barbara County, California San Francisco 10 0 10 20 30 40 50 miles Modesto Merced 80% WI (Operator) County Stanislaus County San Joaquin Basin 1,218 gross acres (974 net acres) Madera County Monterey…
  28. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 28
    Challenger Trend Madera and Merced Counties, California San Francisco 10 0 10 20 30 40 50 miles Modesto Merced 70.49% WI (Operator) County Stanislaus County San Joaquin Basin 18,400 gross acres (12,969 net acres) Madera…
  29. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 29
    Nevada Overview Early mover advantage by building a strong land position ahead of the curve Complex geology, but existing 42,840 net acres discoveries have had very high production rates 7 sites prospective for shale oil Emerging…
  30. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 30
    Nevada Developments Mustang Flats Entered into a Bull Run Deadman development agreement Winnemucca Elko Creek Eureka Co., NV 100% Working Interest Blackburn 11,554 net acres West Mustang Flats 3D seismic option Reno RAILROAD…
  31. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 31
    Mustang Flats Prospect Bull Run Deadman Winnemucca Elko Creek Blackburn West Mustang Flats Reno RAILROAD VALLEY 46.2MMBO Blackburn West Trap Prospect Blackburn Oil Field Springs Flat Top UGE 100% WI (Cum prod over 5…
  32. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 32
    Blackburn West Prospect Bull Run Deadman Winnemucca Elko Creek Big Pole Creek Oil Field Blackburn West Mustang Flats Reno RAILROAD VALLEY 46.2MMBO Blackburn West Trap Prospect Blackburn Oil Field Springs Flat Top UGE 100% WI…
  33. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 33
    Exploration and Development Plan Activity 2Q11 3Q11 4Q11 1Q12 2Q12 Net Cost (MM) 50 kilometres of seismic sunk Asphaltea Drill & Test 2 Wells 5.4 Design Permanent Facilities 0.5 Acquire 3D Seismic 1.3 Zaca Drill 4 Step-out…
  34. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 34
    Uses of Capital Through Mid-2012 Uses of Capital (USMM) California 1.9 MM 8% Panther Acquisition 4.6 3.0 MM Drill 2 appraisal wells at Asphaltea 5.4 13% 7.6 MM Drill 4 development wells at Zaca Extension 5.8 33% Well Recompletion…
  35. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 35
    Capital Structure / Valuation Metrics Underground Current Capital Structure Summary of July Financing (Amounts in millions, except per share amounts) Offering Price preRTO 1.00 Offering Price post-RTO 0.29 October 27, 2011 Closing…
  36. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 36
    Company Timeline 2010 2011 2012 6MM pre-IPO equity financing Farm-in on EQ Energy 28,984 acres, Nevada Santa Barbara County permitting expertise added Entered into San Joaquin / Santa Maria AMIs Development agreement with…
  37. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 37
    Contact Information Underground Energy Corp. President & CEO Mike Kobler 3rd Floor mike.koblerugenergy.com 7 W. Figueroa Street Phone: (805) 845-4700, x18 Santa Barbara, CA, 93101-5109 CFO Peter Ballachey peter.ballacheyugenergy.com…
  38. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 38
    Notes to Disclosure 1. Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective…
  39. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 39
    Appendix
  40. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 40
    Management Team Mike Kobler, Chairman, CEO and President 30 years international project management and engineering experience; Founder of successful OSUM Oil Sands Corp., Calgary Founder and President, UCM Civil Engineering Consulting…
  41. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 41
    Independent Directors Randy Aldridge Independent Director 30 years international oil experience: Chairman- Koch Pipelines, President- Koch Petroleum Canada, President-Koch Oil Co., Chairman-True Energy Corp. Board Member, Energy…
  42. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 42
    History of Monterey Shale 1895: 1st Monterey production in state at t 1 Midway Sunset field 1901: Union discovers Monterey Fractured t 2 play at Orcutt Field, several more Monterey fields developed in Santa Maria Basin from t…
  43. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 43
    Monterey Play Types UEs Initial 2 Monterey Prospects are Naturally Fractured, Conventional Structures South Belridge Cat Canyon-Gato Ridge 540 MMBO 147 MMBO Cuyama Elk Hills North Shafter Pt. Pedernales Hondo Asphaltea 230 MMBO 86…
  44. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 44
    Asphaltea Resource Estimates1 As of June 1, 2011 North Prospect South Prospect Standard Conditions Low Best High Low Best High Estimate Estimate Estimate Estimate Estimate Estimate Undiscovered Petroleum Initially In Place Oil (MMstb)…
  45. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 45
    Asphaltea Stratigraphic Column Biostratigraphy, lithology and petrophysics indicate that the wells did not reach the most productive zones of the Monterey abundant oil shows in the Buff and Brown but poorly tested Gamma Ray…
  46. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 46
    Asphaltea Technical Overview Key Geological Risk Factors Hydrocarbon Source Monterey source rock Union Sisquoc 6 (1946) Quality Reservoir Naturally fractured North Prospect Top Seal on Reservoir Analog field study Trap…
  47. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 47
    Asphaltea Unrisked Economics1,2 North Prospect South Prospect Total Asphaltea Total CAPEX (USMM) 202 563 765 Total Wells 52 131 183 Gross EUR Oil (MMbbls) 28.1 73.5 101.6 Gross EUR Gas (Bcf) 15.1 32.9 48 Cum. Cash Flow (USMM) 2,055…
  48. NOVEMBER 2011 CORPORATE PRESENTATION – Underground Energy – slide 48
    Local Prices based on NYMEX Futures Strip NYMEX Futures Strip Prices as of October 21,2011 Crude Oil Prices Natural Gas Prices WTI Current Current SMV NYMEX Local Gas Local Gas Cushing Differential Differential Crude Oil Henry Hub…

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