BOTSWANA CSG OFFERS HUGE GROWTH POTENTIAL

Transcription

1 BOTSWANA CSG OFFERS HUGE GROWTH POTENTIAL 2018 Good Oil Conference September 2018 Tim Hoops Managing Director Strata-X Energy 1

2 Forward Looking Statements Certain information contained in this presentation constitutes forward-looking information within the meaning of applicable Canadian securities legislation. The use of any of the words "anticipate", "continue", "estimate", intend, potential, "expect", "may", "will", "project", proposed, "should", "believe" and similar expressions are intended to identify forward-looking information. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. In addition, this presentation may contain forward-looking information attributed to third party industry sources. The Company believes that the expectations reflected in such forwardlooking information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking information included in this presentation should not be unduly relied upon. Such information speaks only as of the date of this presentation or such other date indicated herein. In particular, this presentation contains forward-looking information pertaining to the following: expectations regarding growth of the Company; properties; the timing and location of drilling or other operational activities; projections of market prices for oil and natural gas and exploration, oil and natural gas production estimates and targets; development and production costs; oil and natural gas production levels and sources of their growth; supply and demand for oil and natural gas; estimates of resource potential of targets, including without limitation, expectations regarding the ability to raise capital and continually add to statements regarding BOE/d production capabilities; reserves through exploration and development and, if applicable, quantity of reserves and resources relating to the Company and its assets and acquisitions; its value; treatment under governmental regulatory regimes and tax laws, and; capital expenditure programs and estimates relating to timing, cost and cash the use of financing funds by the Company. flow generation related to these programs; Foreign operations and sovereign risk size of the Company s oil and natural gas reserves and resources; the performance characteristics of the Company s oil and natural gas With respect to forward-looking information contained in this presentation, the Company has made assumptions regarding, among other things: timing and ability of the Company to obtain all necessary environmental and regulatory approvals relating to operations; the recoverability of the Company s oil and natural gas reserves and resources; interest rates; exchange rates and the futures prices of oil and natural gas; operating and capital costs; the Company s ability to generate sufficient cash flow from operations and to access capital markets to meet its future obligations; the Company s ability to attract and retain qualified personnel; the ability of the Company to successfully market its oil and natural gas products and the continuing strong demand for oil and natural gas; and stability of general economic and financial market conditions; The Company's actual results could differ materially from those anticipated in such forward-looking information as a result of the risk factors set forth below and in the Company s annual information form dated September 27, 2017: volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves and resources; risks and uncertainties associated with the Company's oil and natural gas and development program; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions and exploration and development programs; adverse claims made in respect of the Company s properties or assets; failure to engage or retain key personnel; geological, technical, drilling and processing problems, including the availability of equipment and access to properties; risks and uncertainties relating to hydraulic fracturing and the enactment of, or changes to, regulations and legislation in relation to hydraulic fracturing; imprecision in estimating capital expenditures and operating expenses; the expiry of leases and the loss of drilling prospect due to the expiry of leases; fluctuations in foreign exchange interest rates and stock market volatility; general economic and business conditions in North America and elsewhere; environmental risks and hazards; risks inherent in the exploration, development and production of oil and natural gas which may create liabilities to the Company in excess of the Company s insurance coverage, if any; uncertainties associated with changes in legislation including, but not limited to, changes in income tax laws and to oil and natural gas royalty frameworks; ability to obtain regulatory approvals; risks and uncertainties associated with liquidity and capital resources and requirements; and other factors referenced at Risk Factors in the Company s historical and current filings. Foreign operations and sovereign risk. Terrorism. These factors are not, and should not be construed as being, exhaustive. In addition, information relating to "reserves" or " resources" is deemed to be forward-looking information, as it involves an implied assessment, based on certain estimates and assumptions that the reserves and resources described can be profitably produced in the future. The forward-looking information contained in this presentation are expressly qualified by this cautionary statement. The Company does not undertake any obligation to publicly update or revise any forward-looking information after the date of this presentation to conform such information to actual results or to changes in the Company s expectations except as otherwise required by applicable Canadian securities legislation. Strata-X Energy 2

3 Strata-X Corporate Snapshot TSX.V Shares: 19,879,035 ASX Listed CDIs: 61,879,035 Total Shares: 81,204,984 Market Cap: (Assumes AUD$0.045/share) Enterprise Value Cash Position: AUD$3.65 million AUD$2.5 million AUD$1.1 million This market cap is equivalent to the NPV of 1 BCF of gas in Botswana. Strata-X has over 3,300 BCF of Prospective Resource potential that have been certified by an independent evaluator. (See DS-1) This is a BIG DISCONNECT that we plan to fix over the coming months! 3 ASX disclosure note The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons. Strata-X Energy 3

4 Strata-X Laying the foundation for growth Foundation Moves Over the past 12 months Extended primary term of the leasehold out to 2025 Transformed unworkable farmin into a 100% equity position with small cash consideration Interpreted high-grade area within CSG fairway that has been overlooked by other operators Acquired additional leasehold within the high-grade area Poised for Growth Now have over 1 million acres Environmental Management Plan currently under review, expect approval within 45 days Funded 2 well drilling program within the high-grade area to begin in the 4 th Quarter Strata-X Energy 4

5 Strata-X in Botswana is a Simple Story for Growth Large Resource Captive and Growing Market Plan To Convert Resource Base Into Reserves Proven Team 5 Strata-X Energy 5

6 Large Resource Key Attributes Are In Place For Success 3.3 TCF Independent Certified Prospective Resource Estimate * 1 TCF within High-grade area* % Gas Saturations from bright, high vitrinite target coals Target depth of meters allow for low cost vertical drilling Strong similarities to the Walloon CSG in the Surat Basin 6 *See DS-1 at the end of the presentation Strata-X Energy 6

7 High-grade Area Identified with Excellent Gas Shows Serowe Main Coal Free gas seen in well SXE Proposed Test 46 km SXE Proposed Test Serowe Coal Lotane Coal Serowe Formation Morupule Formation Lotane Coal 82-87% Gas Saturations Two 2018 Strata-X test wells will offset key show wells 7 Strata-X Energy 7

8 Botswana CSG we have the keys Substantial landholding in CSG Fairway and high-grade area Orapa Diamond Mine The Company now has 100% of 1,030,000 acres granted or applications pending. Coal Fired Power & Transmission Hub Approximately 267,000 acres in high-grade area 100% Working Interest and ~96% Net Revenue Interest Primary tenure to 2025 Gaborone Capital 8 PETRA 9/5/2018 2:09:42 PM Strata-X Energy ,262 40,524 60,786 METERS

9 . Captive and Growing Market Opportunities in both diesel replacement and electrical power Botswana imports 100% of its petroleum 38% used by mines Easy to replace imported diesel with local natural gas Electricity demand is expected to grow 50% over next 8 years, (APA- Gabarone ) Will need to add up to 500mw power by 2040 (Sunday Standard Reporter Aug 5, 2018) Natural gas is a green alternative to coal fired power EIA Ability to connect to the Southern African Power Pool 9 Expect US$8-10/MCF well head price Strata-X Energy 9

10 Botswana energy use is 40% imported petroleum and electricity Botswana energy use is 40% imported petroleum and electricity Over 35% of energy use in Botswana is petroleum (2) All petroleum is imported: ~ 7.3 million barrels / year CNG and CSG can displace this trend economically EIA Botswana Energy Franklin Pierce University, Botswanaenergyblogspot.com Strata-X Energy 10

11 Proven Team Team is experienced with a proven track record! Mr. Ron Prefontaine Chairman Exploration and play development A 39 year veteran of the Australian petroleum industry, Mr Prefontaine is a proven CSG expert and company builder. Degree in Geophysics from the University of British Columbia. Previously an Executive Director of CSG companies Arrow Energy that was taken over for $3.5 billion and co-founding Managing Director of Bow Energy taken over for $550 million. He is co-founder of Wellpro Services, a Queensland based CSG service provider, that has and is developing new innovative completion and production methods for CSG wells. Mr. Tim Hoops CEO Operations Corporate Development With extensive experience in operations and project implementation Mr. Hoops is coordinating the efforts of contractors in Botswana and communication with the government agencies. With a degree in Geological Engineering from the Colorado School of Mines and a Masters Degree in Global Energy Management from the University of Colorado. Previously experience includes Victoria Petroleum, Kestrel Energy, Royal Resources Corp, and Amoco Production Company. Mr. Modisana Botsile Regulatory Affairs & Community Relations 11 Mr. Botsile brings a wealth of knowledge and experience in mining and greenfield projects in his home country of the Republic of Botswana. He has worked with the Botswana Ministry of Mines, Energy and Water Resources, as Principal Minerals Officer, Minerals Affairs Division. Modisana holds a Masters of Science in Minerals and Energy Economics from Curtin Graduate School of Business and also a Bachelor of Engineering in Metallurgy and Material Science Engineering from Liverpool University, United Kingdom. Strata-X Energy 11

12 Completion Experts - WellPro Proprietary reservoir enhancement methods by WELLPRO Services Designed to: Shorten time to first gas. Maximize gas recovery and peak gas rate. State of the art logging, completion and production methods Latest wireline gas saturations and permeability techniques. Inexpensive vertical well completions that induce coal shrinkage. 12 Strata-X Energy 12

13 Pathway - Convert Resource Base Into Reserves Botswana provides low sovereign risk, workable mining act All services locally available Strata-X tenements are adjacent to demand centers and connected by all weather roads Expect $8-10/MCF well head price Funded 2-well drilling program 4 th Qtr Strata-X Energy 13

14 Timetable September 15 October 1 Finalize Acreage Position in High-grade area Resource Update October 30 Completion of Environmental Management Plan October 30 Selection of final locations and drilling contract awarded December 1 1 st -2 nd Qtr Testing wells Start Date of drilling 2 low cost wells in highgrade area By June 30, 2019 By December 2019 Establish commercial gas flows Reserve upgrade 14 Strata-X Energy 14

15 In Summary the Strata-X in Botswana CSG is a Simple Growth Story Known/Large Resource 1 TCF resource base in high-grade area Great Margins Captive and Growing Market Ideal opportunity to replace imported diesel with local gas Expect US$8-10/mcf wellhead price Experienced and Proven Team Management - done this before! Completion Experts Great Local representation Plan To Convert Resource Base Into Reserves Funded through 2018 Plan in place for commercial gas flows in Strata-X Energy 15

16 Disclosures DS-1 Prospective Resources figures are from an audit report prepared by MHA Petroleum Consultant, a qualified reserves auditor, dated and effective 26 March 2018 following their audit in accordance with the COGE Handbook of the available technical data including the geological interpretation, information from relevant nearby wells, analogous reservoirs and the proposed program for the Project, prepared and presented to MHA by Strata-X. 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 project. Prospective Resources have both an associated chance of discovery and a chance of development. A high level of uncertainty exists with the Prospective resources given the lack of historical drilling, available data and other productivity factors that limit the economic viability of coal seam gas deposits. The Report reviewed only Prospective Resources as the project is not sufficiently developed to assign Contingent Resources or additional Petroleum Reserves to it. Stated Prospective Resource figures are Best Estimate undiscovered natural gas quantities and net of a royalty and are shown at a 100% working interest in the Project. The total costs associated with establishing the commerciality of this project are unknown at this time given the early stage of the Project s development. There is no certainty that any portion of the resources will be discovered, if discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. ASX disclosure note The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons. 1P = Proven Reserves 2P = Proven + Probable Reserves bbl = Barrels mmbbl = Million Barrels bopd = Barrels of Oil per Day PIIP = Petroleum Initially In Place NPV = Net Present Value Pj =.947 BCF Proven Reserves = reserves claimed to have a reasonable certainty (normally at least 90% confidence) of being recoverable under existing economic conditions, with existing technology Probable Reserves = reserves which are estimated to have a better than 50% chance of being technically and economically producible Strata-X Energy 16