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August 2015 Corporate Presentation – Zargon Oil & Gas Ltd

Zargon Oil & Gas Ltd · Aug 13, 2015 · 54 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. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 1
    Corporate Presentation August 13, 2015 zargon.ca
  2. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 2
    Investment Highlights Zargon High operatorship (89%) characteristics. Asset High light/medium oil and liquids weighting (81%). Character Low production decline (14% for oil and liquids). Zargon The current reserve report has…
  3. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 3
    Core Areas Williston Q2 2015 production of 1,741 bbl/d and 0.47 mmcf/d. Basin Proved and probable reserves of 7,930 mbbl and 1.23 bcf at Dec 31, 2014. Proved and probable producing reserves of 7,022 mbbl and 1.20 bcf at Dec 31,…
  4. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 4
    Zargon Overview (August 11, 2015) Capitalization Toronto Stock Exchange: Symbols: ZAR; ZAR.DB Common Shares Outstanding: 30.28 million (basic) Market Capitalization: 67 million (2.22 per share) (1) Net Debt at June 30, 2015: 112…
  5. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 5
    Key Developments Strategic August 13, 2015 Q2 Release and Announcement of Strategic Alternatives Review: Alternatives Board forms a Special Committee to identify and consider strategic and Review financial alternatives available to…
  6. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 6
    Waterflood/drive Well Inventory Drilling Inventory of 65+ net wells. Drilling activities have been curtailed as the Company has been allocating available capital to the Little Bow ASP project. Property Project Net Wells…
  7. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 7
    Long-Life, Low-Decline Oil Volumes Average Annual Decline Rate (%) Zargon Corporate Decline Analysis Total Oil Production Rate 6,000 0 10 20 30 40 50 Gross W.I. Oil Production Rate ( bbl/day ) 5,000 Zargon 4,000 3,000…
  8. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 8
    Capital Budgets and 2015/16 Cash Flows Capital Program 2015 Preliminary 2016 ASP Phase 1 Exploitation Capital (H1) 2 million 1 million ASP Phase 1 Exploitation Capital (H2) 4 million 1 million ASP Phase 1 Chemical Costs 13 million…
  9. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 9
    Production, Price and Cost Forecasts Production Conv. Oil Decline at 14% per year from Q2 2015 rate of 3,640 bbl/d Guidance ASP Oil Use McDaniel 2P Forecast (refer to Slide 40 for more detail) Gas Decline at 10% per year from…
  10. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 10
    Commodity Hedges Hedging Zargon uses hedges to help fund dividends and capital programs during periods Strategy of lower commodity prices. Forward Oil July 2015: 1,000 bbl/d at 80.02 Cdn./bbl (WTI) Sales Aug Dec 2015: 1,500…
  11. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 11
    McDaniel 2014 Yr. End Net Asset Value Waterflood & 2015/Q2 Production McDaniel Reserves McDaniel Waterdrive Oil Gas Oil Gas PV10 Asset Value Properties (bbl/d) (mmcf/d) (mmbbl) (bcf) (million) Williston Basin 1,741 0.47 7.93 1.23…
  12. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 12
    Estimated Tax Pools Category Dec. 31, 2014 Canadian Exploration Expense 58 million Non Capital Losses 102 million Canadian Development Expense 34 million Canadian Oil & Gas Property Expense nil million Canadian Undepreciated…
  13. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 13
    Directors and Officers Craig H. Hansen Jim Peplinski Board of Directors K. James Harrison Ronald C. Wigham Kyle D. Kitagawa Grant A. Zawalsky Geoffrey C. Merritt Officers Craig H. Hansen President and Chief Executive Officer…
  14. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 14
    Key Takeaways Zargons unique low-decline asset provides stability in this challenging low price Balance period. Sheet Protected Bank debt (& net working capital deficiency) of 54 million at June 30, 2015 represents only 49% of…
  15. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 15
    Williston Basin zargon.ca
  16. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 16
    Williston Basin Activity Summary Ongoing Activities Exploit long life low decline pools with horizontal wells and waterflood enhancements. Saskatchewan Manitoba Ralph Frys Weyburn Steelman Elswick Estevan Workman…
  17. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 17
    Williston Basin Property Summary Williston Basin assets are comprised of conventional oil projects located in Saskatchewan and North Dakota The properties are characterized as waterflood and waterdrive systems with significant…
  18. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 18
    Long-Life Oil Asset - Sustainability Williston Basin Decline Analysis - Total Oil Production Rate 2,600 2,400 Gross W.I. Oil Production Rate ( bbl/day ) 2,200 Williston Basin portfolio are long-life assets in 2,000 1,800…
  19. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 19
    Ralph Midale - Twp 7, Rge 13 W2 Water Injection Wells PPUD Direct Line Drive Established waterflood Strong stratigraphic trap Attic Oil OIP 25MMbbl Current RF 8% Long life sustainable asset Conventional horizontal infill…
  20. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 20
    Midale Huntoon - Twp 6, Rge 10 W2 Phi*H (m) R10 R9W2 Large OOIP 15-20+ MMbbl S I D143.1 D D EEI 18.6 E VV VJ E 53.3D J SE 224.6 JE 93.9 J T7 6 S I J79.7142.8 E E V DI V E G D J 20.2 V V V 5 VV E V…
  21. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 21
    Steelman Midale and Frobisher Production Conventional R5 R4 R3W2 V EV V C V E V EV V G E IV VI E V E E G E C E ECEA I I S EE V IV S I E S GU E C A AE C VV V Large OOIP and low recovery factors G E E E E JD G J V E CE E…
  22. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 22
    Steelman Midale Waterflood Twp 5, Rge 4 W2 Steelman Midale Steelman Midale Voluntary Unit No. 8 Sect.4 Twp 5 Rge 4 W2M Sect.2 Twp 5 Rge 4 W2M Secondary Development Primary Section 4 Midale Oil Play Development Attic Oil…
  23. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 23
    North Dakota Large OOIP Haas Upside, bypass pay potential Stable production; 15.1 MMbbls oil produced to date Undeveloped land, Exploration opportunities Infrastructure and disposal in place WI 97.6% to 100% ownership…
  24. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 24
    Alberta Plains North zargon.ca
  25. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 25
    Alberta Plains North Overview Plains North assets are mainly comprised of oil projects in Alberta, from east central W4 to the Carrot Creek area The properties are characterized as waterdrive or waterflood pressure supported…
  26. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 26
    Bellshill Lake Oil Rate (bbl/day) 900 800 700 600 500 400 300 200 100 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 Medium gravity oil in high permeability Dina sands Continued development has produced a platform of…
  27. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 27
    Killam Glauconite Property Oil Rate (bbl/day) 1,000 100 10 2010 2011 2012 2013 2014 2015 Data to May 31, 2015 Significant oil-in-place medium gravity Glauconite oil property Extensive infill development potential of…
  28. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 28
    Morinville Leduc Property Zargon operated Leduc light oil project Existing battery with water disposal facilities in place Development potential for 2 infill oil wells defined on 3D seismic 29
  29. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 29
    Carrot Creek Cardium 90 80 70 W.I. Oil Rate (bbl/day) 60 50 40 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 Unitized Cardium light oil waterflood projects (1 operated and 2 non-operated) Existing battery…
  30. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 30
    Alberta Plains South zargon.ca
  31. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 31
    Alberta Plains South Overview Taber - Conventional oil development with horizontal wells and waterflood Taber S main Sunburst oil pools Horizontal wells Future drilling locations & waterflood enhancement Taber SE offsetting…
  32. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 32
    Taber South Sunburst Oil Horizontal Development 31 Horizontal wells drilled since 2007 - current production 600 bbls/d Waterflood expanding to north - currently 5 horizontal injectors 5 additional locations identified -…
  33. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 33
    Taber South Sunburst Hz Oil Production Growth Data to April 2015 34
  34. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 34
    Taber South Sunburst Hz Oil OOIP and Recoveries OOIP South Pool 15.5 million bbls North Pool Recovery to date 9.7% API 20 deg Forecast ultimate recovery* PDP-15.8%, PDP+P-18.3% OOIP North Pool 6.7 million bbls Recovery to date…
  35. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 35
    Taber Sunburst Oil Project Areas Taber S Sunburst Horizontal Development Taber SE Sunburst Oil 36
  36. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 36
    ASP Performance zargon.ca
  37. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 37
    Little Bow ASP EOR in a mature Southern Alberta Waterflood Capital Summary - Timeline Total to YE 2014: 62 million March 2014: ASP facility, oil battery and field construction 2015 Optimization: 6 million (total) complete and…
  38. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 38
    Phase 1 Response vs. Forecast Little Bow ASP Oil Production 1800 McDaniel TP+P 1600 2015 /16 increment = 132 / 797 bbl/d Ultimate: 2.45 million barrels 1400 June - August production impacted by injection line 1200 outages to…
  39. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 39
    2015-16 ASP Forecast Production Period McDaniel YE 2014 Phase 1 Actual Production Proved & Prob. (bbl/d) (bbl/d) Q1 2015 4 50 Q2 2015 66 80 Q3 2015 164 - Q4 2015 294 - 2015 Avg. 132 - 2016 Avg. 797 - ASP project oil cuts have…
  40. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 40
    Little Bow ASP: Phase 1 Production Little Bow ASP: Phase 1 Production Oil Rate Oil Avg. Oil Cut Oil Cut Avg. Despite encouraging oil cut improvements, oil production growth stalled in Q2 350 7 300 6 Oil cut improvements were…
  41. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 41
    Phase 1 Northern Region Northern Region Production 250 10 Production Data to: August 08, 2015 200 9 Oil (bbl/d) 150 8 100 7 50 6 0 5 -50 4 Oil Cut (%) -100 3 -150 2 -200 1 -250 0 Oct Nov Dec Jan Feb Mar…
  42. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 42
    Phase 1 Central Region Central Region Production 250 10 Production Data to: August 08, 2015 200 9 Oil (bbl/d) 150 8 100 7 50 6 0 5 -50 4 Oil Cut (%) -100 3 -150 2 -200 1 -250 0 Oct Nov Dec Jan Feb Mar Apr…
  43. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 43
    Phase 1 Southern Region Southern Region Production 250 10 Production Data to: August 08, 2015 200 9 Oil (bbl/d) 150 8 100 7 50 6 0 5 -50 4 Oil Cut (%) -100 3 -150 2 -200 1 -250 0 Oct Nov Dec Jan Feb Mar…
  44. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 44
    Phase 1: 2015 H2 Optimization Item Production Drill 2 new oil producers Improved downhole equipment (pumps & tubulars) to improve operating efficiencies Scale inhibition: chemical and electromagnetic technology Recompletions…
  45. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 45
    ASP Background zargon.ca
  46. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 46
    Canadian ASP Projects 10 Canadian ASP Projects in operation. 2 additional projects have regulatory approval. Major operators: Husky, CNRL, Cenovus, Crescent Point. Significant implementation in Saskatchewan: historically (no…
  47. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 47
    ASP Enhanced Oil Recovery 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 will not recover. a) Water Injection:…
  48. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 48
    ASP Injection Sequence 1) ASP Injection 2) Polymer Push 3) Terminal Waterflood A blend of Alkali, Surfactant & Polymer displaces mobilized Return to waterflood to Polymer mobilizes trapped oil oil to producing wells complete oil…
  49. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 49
    Little Bow ASP Project Analog Taber Mannville B ASP Analog Little Bow Mannville I and P Pools (Zargon) Most mature Canadian ASP project; Husky Operated Same geological setting, oil quality, reservoir size and pre- ASP depletion…
  50. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 50
    Phases 1-4 Original Development Plan 1519W4 1518W4 Zargon W.I. W.I. DOIIP* (%) (mmbbl) Phases 1&2 Phases 1 & 2 Area LB I Pool 100 31 LB P Pool 100 8 1419W4 1418W4 Phases 3&4 Phases 3 & 4 Area U&W Unit 97 26 G Unit 95 10 G,…
  51. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 51
    ASP Phase 1 & 2 Performance History ASP Startup Apr/2014 Phase 1&2 ASP injection commenced April 2014 (just in Area the Phase 1 area) Facility, injection and well optimization will improve oil production rate Increasing…
  52. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 52
    Phases 1 & 2 Model Economics at 75 WTI Little Bow ASP: Phases 1&2 Production Full Cycle Go Forward 2500 IRR (%) 14 61 Phases 1&2: PV10 (million) 30 101 12% Recovery (5.2 mmbbl) 2000 F&D (/bbl) (1) 30 18 Phase 1 1500 Netback…
  53. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 53
    Phases 3 & 4 Model Economics at 75 WTI ASP Development Forecast - Phases 1-4 Go Forward Economics 3000 Phases 3 & 4 Phases 1 4 Zargon W.I. Production IRR (%) 33 55 2500 Phases 1&2 Phases 3&4 PV10 (million) 50 150 11% Recovery…
  54. August 2015 Corporate Presentation – Zargon Oil & Gas Ltd – slide 54
    Alberta Modified EOR Crown Royalty Program Highlights and its Impact on Zargon Announced July 2014 - Alberta conventional oil EOR royalties in line with Alberta oil sands and Saskatchewan conventional oil EOR programs. 5 percent oil…

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