Zargon Oil & Gas Ltd. September 2014 Corporate Presentation WWW.ZARGON.CA
Zargon: Core Attributes Pressure Supported (Waterflood): 60+ prospective oil exploitation locations in pressure Oil Exploitation supported (low decline) properties. Tertiary (ASP): Exciting Little Bow ASP tertiary recovery…
Zargon: Asset Description Conventional Pressure Supported (Waterflood) Oil Conventional Properties: pressure Properties provide 93% of total oil production (3,827 bbl/d in Q2 2014); very predictable with very low decline,…
Forecast Oil Production Trends 6,000 5,000 ASP Phase 12 increment Oil Production (bbl/day) 4,000 Conv. Drilling Incr. 3,000 2,000 Base Production declines at 15% per year 1,000 History Estimate 0 Q1 Q2 Q3 Q4 Q1 Q2…
Zargon Overview (As at September 3, 2014 unless otherwise stated) Capitalization Toronto Stock Exchange: Symbols: ZAR; ZAR.DB Common Shares Outstanding: 30.18 million (basic) Market Capitalization: 241 million (7.98 per share)…
2014 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 production…
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:…
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 RECENT HIGHLIGHTS ASP facility, oil battery and field construction complete and online in March 2014 (50 million capital construction and startup cost). Through August 2014, have injected more…
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 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 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 In late July 2014, Alberta Energy announced retroactive revisions to the Enhanced Oil Recovery (EOR) Crown royalty program that effectively bring the…
Little Bow ASP Phases 1 & 2 Project Economics (Zargon est.) With new EOR royalties, July 2014 eff. date and McDaniel prices Phases 1 & 2 Economics Little Bow ASP: Phases 1&2 Production Go Forward Full Cycle Base W.F. Phase 1 Phase 2…
Little Bow ASP Phases 3 & 4 Project Economics (Zargon est.) With new EOR royalties, July 2014 eff. date and McDaniel prices ASP Development Forecast - Phases 1-4 Phases 1 4 Go Forward Economics Base W.F. Phase 1 Phase 2 Phase 3…
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 of Q1 proceeds for…
2014/2015 Capital Programs, Dividends and Cash Flows Program Funding Considerations 2014 Updated and 2015 First Look Capital Budgets 2014 2015 Conventional Capital Program 33 million 25 million ASP Development Capital 8 million…
Net Asset Value Breakdown by Property: McDaniel Proved and Probable 2013 Yr. End Reserves Conventional Pressure Q2/14 Oil Q2/14 Gas Prod. McD. Oil Res. McD. Gas FDC Capital PV10 Asset Value Supported Properties Prod. (bbl/d)…
Key Takeaways at Current Share Price (September 3, 2014) Zargon is committed to the current 0.06 per share monthly dividend (9.0 percent yield) During the 2013 ASP heavy spend period, Zargon bridged the spending gap between…
Appendices WWW.ZARGON.CA
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 8 exploitation (mostly…
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…
Production Guidance Scorecard (September 3, 2014 Update) Oil and Liquids Guidance: Q1 2013 5,150 barrels per day (5,113 bbl/d reported) () Q2 2013 4,800 barrels per day (4,930 bbl/d reported) (+) Q3 2013 4,650 barrels per day…
Zargon Oil & Gas Ltd. September 2014 Corporate Presentation WWW.ZARGON.CA
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