Guyana. A Chance to Diversify with Oil. Guyana Manufacturing and Services Association Ltd. Annual Awards Dinner November 2010

Transcription

1 Guyana A Chance to Diversify with Oil Guyana Manufacturing and Services Association Ltd. Annual Awards Dinner November 2010

2 Forward Looking Statements - This presentation contains certain forward-looking statements. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding potential exploration results, hydrocarbons, resources and reserves, drilling plans, and the future plans and objectives of CGX Energy Inc. ( CGX ) are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. With respect to forward-looking statements contained in this presentation, CGX has made assumptions regarding, among other things: commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the price of petroleum; the impact of increasing competition; conditions in general economic and financial markets; access to capital; availability of drilling and related equipment; effects of regulation by governmental agencies; royalty rates and future operating costs. Important factors that could cause actual results to differ materially from CGX's expectations are disclosed elsewhere in documents that are available to the public at including under Risk Factors in CGX s prospectus with respect to the offering described herein. Resource Disclosure - The independent resource estimates with respect to CGX's Corentyne PPL have been prepared by Gustavson Associates LLC in accordance with NI in a report dated March 3, 2010 with an effective date as of February 1, Prospective resources are those quantities of oil and gas estimated to be potentially recoverable from undiscovered accumulations. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources. However, there is no certainty that the prospective resources will be discovered. For further information about the prospective resource estimates contained herein see CGX's annual information form dated May 7, 2010 which is available to the public at Certain information contained herein is considered "analogous information" as defined NI such as the estimate of original oil in place with respect to the Tambaredjo and Calcutta fields onshore in Suriname. Such analogous information has not been prepared in accordance with NI and the Canadian Oil and Gas Evaluation Handbook and CGX is unable to confirm whether such estimates have been prepared by a qualified reserves evaluator. The information has been provided to show that the Guyana Suriname basin in which CGX has an interest has a proven hydrocarbon system.

3 Guyana Chance of oil discovery in 12 months? Global Situation IEA s World Energy Outlook 2010 Guyana Macro benefit from a discovery Guyana Multiplier Effect thru local services 3

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5 Venus Mercury Eagle Jaguar Guyana French Guiana Suriname Sierra Leone Cote d Ivoire Ghana Jubilee Tweneboa

6 Solid State microphone cables for seismic Much clearer images 2D seismic outlines potential targets CGX and Maxus shot 3500 km 2D in 1999 Exxon shot 4500 km 2D in 2008; 4600 km 2D today 3D seismic defines target detail CGX and Repsol shot 2344 sq km 3D in

7 25 km x 25 km 7

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9 Well K2 Takatu - Jurassic Jaguar Cretaceous Turonian Eagle Tertiary Eocene Chance of Success Mean Resource Estimate, million barrels 1/ / /5 300

10 Drilling Considerations Atwood Beacon started Murphy well on November 8 Drilling two wells for Murphy and one for Inpex before drilling Jaguar Water depth ~80 metres Jackup rigs utilize a dry BOP Stack The wellhead riser extends from the sea bed wellhead to the surface BOP Mud line

11 Guyana Chance of oil discovery in 12 months? ~50% Global Situation IEA s World Energy Outlook 2010 Guyana Macro benefit from a discovery Guyana Multiplier effect thru local servces 11

12 Current Policies Scenario Only policies formally adopted and implemented taken into account New Policies Scenario Introduction of new measures to implement broad policy measures commitments that have already been announced to reduce GHG emissions and fossil energy subsidies The 450 Scenario The energy pathway consistent with the goal of limiting the increase in global average temperature to 2 o C, limiting CO 2 to 450 PPM 12

13 IEA WOE

14 IEA WEO

15 42 Trillion Cubic Feet Gas 15.2 Billion Barrels Oil #2 Under- Explored Basin in World USGS 2000 P50 Estimate 15

16 IEA WOE

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18 Conventional oil production has peaked We won t see US$60 crude again Light Sweet Crude will be in short supply The Guiana s can help fill the gap USGS estimate 15 billion barrel resource potential P50 18

19 Guyana Chance of oil discovery in 12 months? ~ 50% Global Situation IEA s World Energy Outlook 2010 Conventional crude production peaked New discoveries needed to maintain plateau Guyana Macro benefit from a discovery Guyana Multiplier effect thru local services 19

20 Discovery 5 x 100 million barrels or 1 x 500 million barrels Production Assumptions 50 million barrels per year 140,000 barrels per day Crude Price $50 per barrel 20

21 Production Sharing Contract Generic Terms - 75% Cost Oil; Profit Oil Split ~ 50:50 Gross Revenue Split Country Share of Cash Flow Other State s % Cash Flow: National Post (Wood Mackenzie) 21

22 Excise Trade CIT PIT VAT Other Tax Non- Tax VAT PIT CIT Excise Trade Other Tax Profit Oil Non-Tax 2007 Revenue G$ 80.3 billion Does not account for multiplier effect Guyana Profit Oil - hypothetical 50 mm bbls per year $50 per barrel 22

23 Brazil Columbia USA UK Mexico Ecuador Iran Russia Canada Iraq Venezuela Guyana Libya Saudi Arabia Norway UAE Quatar Kuwait Barrels per Year per Person Guyana: hypothetical 50 million barrels per year 23

24 Guyana Chance of oil discovery in 12 months? ~ 50% Global Situation IEA s World Energy Outlook 2010 Conventional crude production peaked New discoveries needed to maintain plateau Guyana Macro benefit from a discover Significant impact on GDP and employment Guyana Multiplier effect thru local services 24

25 Exploration Development Production Decommissioning Seismic Exploration Drilling Appraisal Drilling Drilling Wells Engineering Fabrication Construction Recover Resource Transport to Market Completion of Project Removal of Installation Relative Employment Levels 25

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27 Socio-Economic Impact Predictions Nova Scotia Newfoundland British Columbia Actual Impacts Nova Scotia Newfoundland Drilling an Offshore Well 27

28 Like CO 2 in soda pop, natural gas is dissolved in oil Traditionally flared to waste Environmentally insensitive Now, often re-injected to maximize oil recovery Or sold for heat, power and industrial feedstock ~half the cost of oil per btu ~half the emissions per btu

29 140,000 bopd production Assume gas 1500 scf per barrel 210 mmcfd of gas Re-inject 80% Pipe 40 mmcfd to shore Cogenerate 250 MW electricity plus heat 55 to 80% efficiency

30 Bauxite Alumina Aluminum 30

31 Wires Alloys Cables Rods Roofing Materials Tables and Chairs Foil Tubes Bottle Caps Wheels Hose Clamps Ladders Doors and Windows Handicrafts Auto Parts Utensils Pipes Containers 31

32 Silica Glass Solar Panels 32

33 Ammonia Polypropylene Polyethylene Steel 33

34 Guyana Chance of oil discovery in 12 months? ~ 50% Global Situation IEA s World Energy Outlook 2010 Conventional crude production peaked New discoveries needed to maintain plateau Guyana Macro Benefit from a Discovery Significant impact on GDP and employment Guyana Multiplier Effect Significant opportunity for local manufacturers and service companies 34

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36 Billion Barrel Resource Potential Offshore Guyana