FEEDING A GROWING SOUTHERN AFRICA DOMESTIC GAS MARKET April 2018 Ron Prefontaine Chairman ron@strata-x.com www.strata-x.com Strata-X Energy 1
Botswana Serowe Coal Seam Gas Project Snapshot 3.3 TCF Prospective Resource (1) to be progressively upgraded to reserves 680,000 acres land position 100% Working Interest Similar to Surat CSG in Qld Surrounded by Expanding Domestic Gas Markets Botswana imports all petroleum 750 million liters of imported diesel/year Immediate 12 mmcfd foundation project Strata-X has Proven CSG Developers Previous CSG projects sold for $4 billion Experts in latest CSG completion and production methods Excellent margins expected ASX disclosure note - 5.28.2 - 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. (1) Prospective Resources figures are from an audit report prepared by MHA Petroleum Consultant dated 26 March 2018 following their audit 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. Stated Prospective Resource figures are Best Estimate undiscovered 2 natural gas quantities and net of royalty and are shown at a 100% working interest in the Project. For addition information see the DS-1 Disclaimer at the end of this presentation. Strata-X Energy 2
Strata-X has a proven CSG management team Mr. Ron Prefontaine Chairman A 38 year veteran of the Australian petroleum industry, Mr Prefontaine is a proven CSG expert and company builder. Previously an Executive Director of Arrow Energy that was taken over for $3.5 billion and co-founding Managing Director of Bow Energy taken over for $550 million. Holds a BSc. in Geophysics from the University of British Columbia. He is also co-founder of Wellpro Services, a Queensland based CSG service provider, that is developing new innovative completion and production methods for CSG wells. Mr. Tom Fontaine Market Advisor Tom Fontaine is a professional engineer who has considerable experience in Coal Seam Gas. He was a co-founder of Pure Energy Resources Limited, an ASX listed company involved in CSG in Queensland which was bought by British Gas for over A$1 billion. Tom is active in the Republic of Botswana in developing energy markets, exploring for diamonds and other natural resources. Tom holds a BSc from the University of Alberta in Engineering. Mr. Modisana Botsile Regulatory Affairs & Community Relations 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. 3 Mr. Jeff Claeys Exploration and Operations Mr. Jeff Claeys has been managing mineral and hard rock exploration and development activities in the Republic of Botswana and Canada for over 30 years. As a resident of Botswana, he has lead operations for diamond, gold, nickel, copper, iron, coal and coal bed methane resources. Mr. Claeys holds a BSc from Michigan State University in Geology and Natural Sciences. Strata-X Energy 3
Botswana is low sovereign risk/independent democracy since 1966 Largest Diamond Mine in the world CSG Fairway Strata-X Tenements Regional Capital Gaborone Capital of Botswana Coal power 4 Strata-X Energy 4
Strata-X s CSG project has nearby gas markets and sealed/paved roads Strata-X tenements are adjacent to all weather sealed/paved roads Duel fuel power station. Currently 100% diesel. Coal fired power plant Potential site for natural gas power plant 5 100 km Strata-X Tenements Strata-X Energy 5
A large prospective gas resource has been certified Prospective Resource of 3.3 TCF (trillion cubic feet) has been calculated by MHA Petroleum Consultants (1) Bitumen Highway MHA are recognized CSG reserve certifiers Botswana CSG has similarities to the 30 TCF (2P) Walloon CSG play in the Surat Basin, Queensland (over $US 1 billion sales in 2015 from zero in 2001) (1, 2) Calculated Recoverable Prospective Gas Resources (1) Classification Prospective Resources Independent Qualified Reserves Auditor Effective Date of Estimate Location of Resources Estimated Prospective Resource Gas Volumes Net to Strata-X Interest (Billion cubic feet) Low Best High MHA 26 Mar 2018 Botswana 1,672 3,343 5,016 1. DS-1, see disclaimer at the end of this presentation 2. Technical information on the Walloon CSG play can be accessed at https://www.dnrm.qld.gov.au/ data/assets/pdf_file/0020/238124/petroleum.pdf - 6 Strata-X Energy 6
Botswana energy use is 40% imported petroleum and electricity Over 35% of energy use in Botswana is petroleum (2) All petroleum is imported: 750 million liters of diesel/annum CNG and CSG can displace this trend Botswana Energy Sources 1. Botswana Energy Franklin Pierce University, Botswanaenergyblogspot.com 7 Strata-X Energy 7
Botswana electricity demand has been increasing Total Electricty Sold (1) (GWH) 3500 3000 2500 2000 1500 1000 500 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 39% of rural villages remain without power Power is ~ 50% subsidized by the Botswana Government 1. Botswana Power Corporation, 2016 Annual Report 8 Strata-X Energy 8
34% of the power is consumed by mining companies Botswana Power Consumption by Sectors 1. Botswana Power Corporation, 2016 Annual Report 9 Strata-X Energy 9
Wider growth gas markets in surrounding regions Expected 8,000 Mw shortfall in regional power demand, equates to $US1.6 billion/year Primary CSG Fairway 10 Strata-X Energy 10
A staged appraisal and development program is planned Stage 1 CSG pilot appraisal program Drill and complete inexpensive vertical pilot wells using latest CSG completion methods Goal - to demonstrate commercial gas flows Located adjacent to regional highway and infrastructure Stage 2 CNG demonstration module and reserves for foundation project Once commercial flows established, expand appraisal program Initiate 2 mmcfd (2 million cubic feet per day) CNG demonstration module plant and distribution Convert sufficient resources to reserves for foundation project Stage 3 Foundation project development As development proceeds, add CNG modules as required for distribution to foundation customers Example substitute diesel with CNG at the dual fuel Orapa Power Plant up to 12 mmcfd NPV (10% disc) of = $100 million at $9/mcf for this single project Stage 4 Plus - Progressively build reserves, gas markets and infrastructure With 100% ownership of a large potential resource with immediate and wider domestic gas markets, creates the option for Strata-X to seek alternative funding for the planned appraisal and development work programs 11 Strata-X Energy 11
Stage 1 is to achieve commercial gas flows State of the art completion and production methods Latest wireline gas saturations and permeability techniques Inexpensive vertical well completions Proprietary downhole and surface methods by WellPro Services Designed to: Shorten time to first gas Maximize gas recovery and peak gas rate 12 Strata-X Energy 12
Stage 2 - CNG and virtual pipeline demonstration module Virtual pipeline offers immediate gas distribution and near term cash flow: CSG from test wells can be manufactured into CNG using a modular approach CSG is compressed into special containers for road transport to the user As gas production increases, additional CNG modules can be added Containers are offloaded to a single end user or CNG distribution unit. Offers early cash flows while building reserves and long term gas customers to justify building pipelines and related infrastructure No immediate need for pipelines to sell gas 13 Strata-X Energy 13
CNG module virtual pipeline offers early cash flow CNG Modular System Scalable to adjust for demand Offers near term cash flow while proving reserves to justify pipeline and other infrastructure Delivered CNG is less costly than diesel fuel Can be delivered over roads directly to the energy market. Replaces expensive, imported government subsidized diesel with domestic gas CNG is domestically sourced greener energy for homes Clean burning fuel, can replace wood burning in homes CNG is better for domestic health Reduces indoor air pollution caused by wood burning Multiple CNG substitutions include Transportation Industrial Mining Power Cooking Fuel 14 Strata-X Energy 14
Stage 3 involves full substitution for CNG for diesel at nearby power station Orapa 90 MW duel fuel power station Currently using 100% diesel About 12 mmcfd of gas equivalent 130 km from Orapa to initial appraisal area Strata-X land position 680,000 acres 3.3 TCF Low Royalty 7 year term Initial appraisal area to supply the foundation project Bitumen Highway 15 50 km Strata-X Energy 15 Regional Capital
Initial Market - Orapa Diamond Mine 90mw dual fuel power generator Orapa Mine Power Plant 90 Mw dual fuels (diesel/natural gas) Currently running on 100% expensive imported diesel 130km to Strata-X CSG Project 16 Strata-X Energy 16
Strata-X s Botswana CSG project has a large gas resource and markets 3.3 TCF of prospective gas resource certified (1) Gas resource is in Botswana which has low sovereign risk Has similar topography, depths and coal thickness to Walloon CSG play in the Surat Basin, Queensland Located adjacent to regional paved highways and infrastructure There are immediate local and huge wider domestic gas markets Key management have done it before Prefontaine and Fontaine have previously grown CSG companies with similar prospectivity Foundation project is a green initiative Gas is greener - CSG to CNG conversion as a substitute for diesel and wood burning Offers early cash flow while adding reserves and building gas infrastructure to supply wider gas markets Gas prices are expected to be in excess of $US8 per GJ $100 million NPV Progressively build reserves, gas markets and infrastructure Once the foundation project is established, it is a well worn path to add substantial reserves, more projects and increased gas sales Future gas sales can feed growing local and wider domestic gas markets in southern Africa that surround Strata-X s gas deposit 17 1. DS-1, see disclaimer at the end of this presentation Strata-X Energy 17
Disclaimer 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 - 5.28.2 - 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. FORWARD-LOOKING STATEMENTS This news release contains forward-looking statements, which relate to future events or future performance, including but not limited to, the completion and size of the Placement, receipt of regulatory approvals and timing thereof, the Corporation s business strategies and plans for the use of such Placement proceeds, capital expenditure programs and estimates relating to timing and costs, and reflect management's current expectations and assumptions, including, but not limited to the timing and receipt of necessary regulatory approvals and third party approvals and completion of the Placement and stability of general economic and financial market conditions. The use of any of the words "anticipate", "continue", "estimate", "expect", 'may", "will", "project", "should", 'believe", and similar expressions is intended to identify forward-looking statements. Such forward-looking statements reflect management's current beliefs and are based on assumptions made by and information currently available to the Company. Readers are cautioned that these forward-looking statements are neither promises nor guarantees, and are subject to risks and uncertainties, including imprecision in estimate capital expenditures and operating expenses, stock market volatility, general economic and business conditions in North America and globally, risks associated with liquidity and capital resource requirements, that may cause future results to differ materially from those expected and the forward-looking statements included in this news release should not be unduly relied upon. See also "Risks Factors" in the Company's Annual Information Form available on SEDAR at www.sedar.com. Those factors are not, and should not be construed as being exhaustive. These forward-looking statements are made as of the date hereof and the Company does not assume any obligation to update or revise them to reflect new events or circumstances save as required under applicable securities legislation. This news release does not constitute an offer to sell securities and the Company is not soliciting an offer to buy securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. 18 Strata-X Energy 18