Zargon Oil & Gas Ltd. December 22, 2014 Corporate Presentation WWW.ZARGON.CA
Dec. 22, 2014 News Release: Key Points Prudent action to protect balance sheet in low oil price environment Dividend reduced from 0.06 per month to 0.03 per month Saves 11 million in 2015 Hamilton Lake property sale closed Provides…
Zargon: Core Attributes Pressure Supported (Waterflood and Waterdrive): 35+ prospective oil exploitation locations in Oil Exploitation pressure supported (low decline) properties. Tertiary (ASP): Little Bow ASP tertiary recovery…
Zargon: Asset Description Waterflood and Waterdrive (Pressure Supported) Oil: Waterflood and Properties account for approximately 95% of oil production Waterdrive Oil after the Hamilton Lake sale; very predictable with low…
Zargon Overview (As at December 19, 2014 unless otherwise stated) Capitalization Toronto Stock Exchange: Symbols: ZAR; ZAR.DB Common Shares Outstanding: 30.18 million (basic) Market Capitalization: 110 million (3.66 per share) (1)…
2014 Corporate Objectives ASP Related: Commission 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 ASP operational and…
Waterflood and Waterdrive Oil Exploitation Projects Current Drilling Inventory The Q4 2014 conventional oil exploitation drilling program includes 3 Williston Basin and 2 Taber wells. The existing oil exploitation well inventory…
Long-Life, Low-Decline Oil Production Base 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…
Canadian Alkaline Surfactant Polymer (ASP) Projects Alberta Sask. 10 Canadian ASP Projects in Grande Prairie Mooney (Black Pearl) operation 2011 2 additional projects have regulatory approval Edmonton Major operators:…
Little Bow ASP Enhanced Oil Recovery (EOR) With Proven Technology EOR in a mature, southern Alberta waterflood Phased Development; ASP injection commenced March 2014 Little Bow ASP: Phase 1&2 Development Alberta 15-18W4 Capital:…
Little Bow ASP Project Milestones RECENT HIGHLIGHTS ASP facility, oil battery and field construction complete and online in March 2014 (50 million capital construction and startup costs). By midDecember 2014, have injected 2.8…
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 a)…
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 Analog ASP Project: Husky Taber Mannville B Taber Mannville B ASP Analog Project Little Bow Mannville I Most mature Canadian ASP Project; Husky Operated and P Pools (Zargon) Same geological setting, oil quality,…
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…
Initial Oil Response at Producers Near ASP Injectors 03/16-31-014-18W4/0 16 Oil Cut: 0.5 % 14 12 Oil (bbl/d) 10 8 6 4 Oil Cut: 0.2 % 2 0 Jul Aug Sep Oct Nov Dec Jan 02/10-32-014-18W4/0 50 Oil Cut: 6.0 % 45 40…
Little Bow Phase 1 ASP Actual and Forecast Data Little Bow ASP: Phase 1 Oil Production 1400 Updated Zargon Forecast 1200 2015 Avg. = 400 bbl/d Ultimate: 5.2 million barrels 1000 800 bbl/d 600 McDaniel TP+P 400 Daily…
Little Bow ASP - Phase 1 Oil Response Little Bow Phase 1 Oil Production 300 All Phase 1 Oil Producers (16) 250 200 11 Selected Oil Producers OIl (bbl/d) 150 100 50 Initial ASP Multi Well Response ASP…
Little Bow ASP Phase 1-4 Development Plan (Incorporates Q2 2014 Acquisition of Phase 3 & 4 Interests) 1519W4 1518W4 W.I. ZAR DOIIP* W.I. (%) (mmbbl) Phases 1 & 2 LB I Pool 100 31 ASP Phase 1&2 LB P Pool 100 8 Phases 3 & 4…
Alberta Modified EOR Crown Royalty Program PROGRAM HIGHLIGHTS AND IMPACT ON ZARGON Announced July 2014. Alberta conventional oil EOR royalties in line with Alberta oil sands and Saskatchewan conventional oil EOR programs. 5…
Little Bow ASP Phases 1 & 2 Project Economics (Zargon est.) 80C/bbl Flat (Edm) with new EOR royalty & January 2015 eff. date Little Bow ASP: Phases 1&2 Production Go Forward 2500 IRR (%) 90 Phase s 1&2 PV10 (million) 106 12%…
Little Bow ASP Phases 3 & 4 Project Economics (Zargon est.) 80C/bbl Flat (Edm) with new EOR royalty & January 2015 eff. date ASP Development Forecast - Phases 1-4 Phases 1 4 Go Forward Economics 3000 Phases 3 & 4 Phases 1 4 Zargon…
Little Bow ASP Project Excellent Go Forward Netbacks and Recycle Ratios The Little Bow ASP project, provides a welldefined, highreturn reinvestment program through the end of the decade; and will be allocated the majority of Zargons…
2014 Property Disposition Program Objective: Conclude property dispositions that highgrade and concentrate the Companys properties on our core oil exploitation business: Completed 2014 property sales: 1.5 million of Q1 proceeds…
2014 Updated and 2015 Capital Programs 2014 (Oct. update) 2015 ASP Phase 1 Construction Capital 8 million nil ASP Phase 1 Exploitation Capital 2 million 2 million ASP Phase 2 Development Capital nil 6 million ASP Phase 1 Chemical…
Production Guidance and Cost Targets Oil and Liquids Guidance: Q1 2014 4,300 barrels per day (4,320 bbl/d reported) (+) Q2 2014 4,200 barrels per day (4,096 bbl/d reported) () Q3 2014 4,200 barrels per day (4,194 bbl/d reported)…
Net Asset Value Breakdown by Property: McDaniel Proved and Probable 2013 Yr. End Reserves Waterflood Waterdrive Q3/14 Oil Q3/14 Gas Prod. McD. Oil Res. McD. Gas H1/14 CF PV10 Asset Value Properties Prod. (bbl/d) (mmcf/d) (mmbbl) Res.…
Key Takeaways at Current Share Price (December 19, 2014) Due to a sharp declines in oil prices, Zargon monthly dividend has been reduced to 0.03 per share. Zargon has reduced its dividend to balance cash inflows and outflows in a…
Appendices WWW.ZARGON.CA
Williston Basin Waterflood and Waterdrive Property Summary Historical Current Assets 2008 2009 2010 2011 2012 2013 2014 2900 2800 2700 The Williston Basin properties have been 2600 developed with horizontal producers and 2500 2400…
Williston Basin Activity Summary and Orientation Map Ongoing Activities Exploit long life low decline pools with Saskatchewan Manitoba horizontal wells and waterflood enhancements. 2014 Activities Drill 8 exploitation horizontal…
Taber South Waterflood Property Summary Taber S Production Contribution by Drilling Program Date (29 hz wells) 1,000 Pre 2008 2008 2009 2010 Q1 2011 Q3 2011 Q4 2012 Q4 2013 Q2 2014 The Taber South waterflood property has 900 been…
Taber South Future Sunburst Hz Oil Development 2014 Activities Drilled 2 hz Sunburst wells in Q2 Plan to drill 2 hz Sunburst wells in Q4 (1 MM/well) Injector conversion in south pool (04/61 hz) in Q4 (300 M) Oil tank…
Little Bow Waterflood Property Summary Existing assets prior to ASP increment Little Bow Core Area Production 800 700 600 Oil Rate (bbl/d) 500 Zargon Operated Oilwells 400 No Drilling Activity Well…
Bellshill Lake (Waterdrive) & Killam Glauconite (Waterflood) Property Summary The Bellshill Lake waterdrive property has been developed with vertical producers and high volume lift. The Killam Glauconite property is a less mature…
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…
Estimated (unaudited) Tax Pools (June 30, 2014) Category June 30, 2014 Canadian Exploration Expense 55 million Non Capital Losses 113 million Canadian Development Expense 51 million Canadian Oil & Gas Property Expense 2 million…
Zargon Oil & Gas Ltd. December 22, 2014 Corporate Presentation WWW.ZARGON.CA
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