Little Bow ASP Project Update

Transcription

1 Project Update October,

2 Advisory Forward-Looking Information Forward-Looking Statements - This presentation offers our assessment of Zargon's future plans and operations as at September 1, 2013, and contains forwardlooking statements. Such statements are generally identified by the use of words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "project", "should", "plan", "intend", "believe" and similar expressions (including the negatives thereof). In particular, this presentation contains forward-looking information as to Zargon s corporate strategy and business plans, Zargon s ASP oil exploration project inventory and development plans, Zargon s capital expenditure program and the allocation and the sources of funding thereof, ASP production and other guidance and the assumptionscontained therein, Zargon s reserve estimates, Zargon s drilling, development and exploitation plans and projects and the results there from and Zargon s ASP project plans, capital expenditures, costs and the results therefrom. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond our control, including such as those relating to results of operations and financial condition, general economic conditions, industry conditions, changes in regulatory and taxation regimes, volatility of commodity prices, escalation of operatingand capital costs, currency fluctuations, the availability of services, imprecision of reserve estimates, geological, technical, drilling and processing problems, environmental risks, weather, the lack of availability of qualified personnel or management, stock market volatility, the ability to access sufficient capital from internal and external sources and competition from other industry participants for, among other things, capital, services, acquisitions of reserves, undeveloped lands and skilled personnel. Risks are described in more detail in our Annual Information Form, which is available on our website. Forward-looking statements are provided to allow investors to have a greater understanding of our business. You are cautioned that the assumptions, including, among other things, future oil and natural gas prices; future capital expenditure levels; future production levels; future exchange rates; the cost of developing and expanding our assets; our ability to obtain equipment in a timely manner to carry out development activities; our ability to market our oil and natural gas successfully to current and new customers; the impact of increasing competition; our ability to obtain financing on acceptable terms; and our ability to add production and reservesthrough our development and acquisition activities used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Our actual results, performance, or achievement could differ materially from those expressed in, or implied by, these forward-looking statements. We can give no assurance that any of the events anticipated will transpire or occur, or if any of them do, what benefits we will derive from them. The forward-looking information contained in this presentation is expressly qualified by this cautionary statement. Our policy for updating forward-looking statements is that Zargon disclaims, except as required by law, any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Barrels of Oil Equivalent -Natural gas is converted to a barrel of oil equivalent ( Boe ) using six thousand cubic feet of gas to one barrel of oil. In certain circumstances, natural gas liquid volumes have been converted toa thousand cubic feet equivalent ( Mcfe ) on the basis of one barrel of natural gas liquids to six thousand cubic feet of gas. Boesand Mcfesmay be misleading, particularly if used in isolation. A conversion ratio of one barrel to six thousand cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion ratio on a 6:1 basis may be misleading as an indication of value. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation. Estimatedreserve values disclosed in this presentation do not represent fair market value. Discovered Petroleum Initially-In-Place ( DPIIP ) is that quantity of petroleum that is estimated, as of a givendate, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially in place includes production, reserves, and contingent resources; the remainder is unrecoverable. The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year. 2

3 Zargon Development Vision The ASP Facility being constructed at Little Bow is the hub of a phased Enhanced Oil Recovery program, targeting multiple oil pools, and providing significant oil reserves and investor returns. 3

4 Construction Snapshot Construction of the Little Bow ASP facility is well underway. All major equipment has been delivered and set. Efforts now focus on installing process piping and electrical systems. Startup is scheduled for the first quarter of

5 Little Bow Alkaline Surfactant Polymer ( ASP ) Project Enhanced Oil Recovery Using Proven Technology EOR in a mature, southern Alberta Waterflood Little Bow ASP: Phase 1&2 Development Alberta 15-18W4 Project Capital: $60 Million (excludes chemical) o $18.8 million incurred through Q (From 2012/01) Little Bow Little Bow Mannville P Pool o $29 million in H to Phase 1 Startup o 2015: $12 million (Phase 2) Little Bow Mannville I Pool Current Little Bow Oil 400 bbl/d Zargon Land Zargon Wells Phase 1 Area Phase 2 Area First ASP Injection Q Zargon Forecast Incremental Oil Rate: 2014 Exit: 500 bbl/d 2016 avg: 1,350 bbl/d 2018 avg: 1,600 bbl/d Zargon Forecast Incremental Oil Recovery: 4.9 Million Barrels (12% DPIIP) 5

6 Project Evolution Little Bow assets acquired from Masters Energy Inc. Reservoir Studies Lab Work, Facilities Scoping Studies Well workovers, Detailed Engineering, Key Equipment Orders; Reservoir Study Update Construction: Facilities and Pipelines, Chemical Supply ASP Injection Commences 6

7 Phases 1 & 2 Capital Costs Phase 1 Phase 2 Total ($ millions) ($ millions) ($ millions) ASP Facility Battery Pipelines Water Disposal/Source Subsurface/Surface/other ASP Chemical Total Phase 1 costs: $6.5 million in 2012 and $42.0 million in 2013 and early Phase 2 costs occur in Capital reported in as spent dollars. 7

8 Key Project Services and Suppliers Executing an ASP project involves specialized laboratory studies, facility design and equipment. Zargon benefits from the Increasing numbers of commercial ASP projects and the resulting industry experience. Lab work and Simulation ASP formulation SURTEK Colorado, USA ASP formulation Weatherford Labs Calgary, Alberta Reservoir modeling and simulation CMG Calgary, Alberta Engineering Engineering, Procurement & Construction Mgmt Wood Group PSN Calgary, Alberta Major Equipment Supplier Examples Water Treatment Equipment (De-oiling) Ecodyne Ltd. Burlington, Ontario Water Treatment Equipment (De-oiling) Siemens Energy Inc. Louisiana, USA Water Treatment Equipment (Softening) Anderson Water Systems Inc. Dundas, Ontario Polymer Preparation and Injection Equipment SNF Inc. Georgia, USA Tanks Argo Sales Calgary, Alberta Specialty Tanks Precisioneering Ltd. Scarborough, Ont. Process Pumps National Oilwell Varco Edmonton, Alberta Process Pumps Schlumberger Canada Calgary, Alberta Equipment Packaging/Buildings CADO Industries Calgary, Alberta 8

9 ASP Facility Site The Little Bow ASP Facility is adjacent to the existing Zargon Gas Plant and Oil Battery Little Bow ASP: Phase 1&2 Development Areas Battery Travers Gas Plant Zargon Land Zargon Wells Phase 1 Area Phase 2 Area Little Bow ASP Facility 9

10 Recent and Upcoming Project Milestones Q Zargon sanctions construction of Little Bow ASP Facility Little Bow field pipeline upgrades Q ASP Facility Site Preparation Begins Q ASP Site preparation & Piling Deliveries of Tanks & Equipment Q / Q Mechanical / Electrical Construction ASP Chemical Supply Contracts Well Tie-ins Service Wells Operator Training 10

11 Facility Construction Progress Update June 6, 2013 ASP site preparation is underway. Rain and wet conditions slows progress Battery Travers Gas Plant ASP Facility July 31, 2013 ASP Site & Road constructed. Piling is complete. field of view October 2, 2013 All Major Equipment on Site. Piping and Electrical proceeding 11

12 Project Update October,