LNG FUEL SOLUTIONS FOR E&P COMPANIES ZEUS: LNG-FUELED DRILLING & FRACTURING SEMINAR JUNE 14, 2012
Agenda AGENDA Prometheus Energy Safety LNG Solution Experience & growth Supply diversification Economics Conclusions Questions? 2
Prometheus Overview SPECIALIZING IN NATURAL GAS FUEL SUPPLY SOLUTIONS VIA LIQUEFIED NATURAL GAS (LNG) Headquarters in Houston, Texas Vertically integrated LNG production and supply company Privately held--major Shareholders: Shell Technology Ventures Fund 1 BV (June, 2009) Black River Asset Management (September, 2008) 3
Commitment to Safety Exposure Hours Since Operation* (Employees + Contractors) *Tracked since January 2009 through 4/30/2012 LTIs / Near misses, Safety Observations, Incidents without Injury/ Total Recordable Incidents (YTD) 695,289 STC for 12 Life Saving Rules.80 STC for Defensive Driving Course.80 Regulatory Violations/Citations 0 0/9/1 Prometheus has access to, and adopted, Shell s vast HSSE resources and programs, including: Incident Investigation and Reporting HSSE Auditing Crisis Management Program Contractor Management Program 12 Life saving Rules Journey Management Program Zero LTIs to date demonstrates deeply entrenched commitment to safety. 4
LNG Drilling Solution Natural Gas In Transportation Natural Gas Out GAS Liquefaction LIQUID Onsite storage & regasification GAS LNG Fueled Rig Turnkey Integrated LNG Package: LNG production, supply & transportation Storage equipment Regasification equipment Operation, maintenance and service 5
Experience Drill Rigs Prometheus Energy: Delivering LNG mobile fuel solutions to drilling rig customers since early 2010 (note we also develop/service industrial applications in replacement of #2 oil & propane) Completed over 150 wells using dedicated LNG solutions Currently supplying LNG fuel, LNG equipment and technical services to 7 drilling rigs all dedicated natural gas engines 5 drilling operators Converting drilling rigs to LNG fuel in various applications: Field gas rigs moving into increasing liquid plays Diesel rigs swapping out the gen-sets Purpose built natural gas drilling rigs Bi-fuel & dedicated natural gas Prometheus Energy and its key partners have pioneered and commercially proven the use of LNG as a favorable alternative to diesel for drilling applications 6
Growth & Performance EXCELLENT OPERATIONAL PERFORMANCE & RELIABILITY COUPLED WITH DRAMATIC BUSINESS GROWTH Prometheus Deliveries 2008-2012 Delivery reliability > 99% Note: Reliability calculated for deliveries through January, 2012 Reliability maintained while growing deliveries by 225% in last year 7
Supply & Demand Locations Existing LNG Capacity Owns plant in Lisbon, Utah: 22,000 gpd Sourced from 14 third party supply points Supply portfolio of over 350k gpd capacity Capable of economic supply across States & Western Canada Additional supply positions expected in immediate future Customer Cluster Rig Relocations Growth in Liquid Rich plays through the Bakken, Eagle Ford, Permian, & Anadarko Basins Growth in the northeast through the Marcellus 8
Supply Breakdown Manage customer volatility Manage supply disruptions Balanced portfolio on both supply & demand Surety of supply is critical 9
Sample Economics Key Fuel Assumptions Dedicated Diesel Rig Diesel Price $/gal $ 3.50 Diesel Consumption gal/day 1,500 LNG Consumption gal/day - Bi-Fuel Rig (Diesel/LNG) Percent Diesel Displacement % 60% Diesel Consumption gal/day 600 LNG Consumption gal/day 1,512 Natural Gas Index $/MMbtu $ 2.25 Effective LNG Price $/gal $ 1.72 Dedicated LNG Fueled Rig Percent Diesel Displacement % 100% Diesel Consumption gal/day - LNG Consumption gal/day 2,900 Natural Gas Index $/MMbtu $ 2.25 Effective LNG Price $/gal $ 1.48 Boiler Diesel Consumption gal/day 500 LNG Consumption gal/day 840 Duration months 4 Boiler Savings yr $ 107,000 Key Economic Results Summary of Key Economics Diesel Rig LNG Rig Bi-Fuel Rig Diesel Fuel Cost $/yr $ 1,922,000 $ - $ 769,000 LNG Fuel + Equip Cost $/yr $ - $ 1,569,000 $ 951,000 Total Fuel Solution Cost $/yr $ 1,922,000 $ 1,569,000 $ 1,720,000 Savings of LNG Solution (w/o boiler) - $ 353,000 $ 202,000 % fuel cost savings (w/o boiler) % - 18% 11% Savings of LNG Solution (w boiler) - $ 460,000 $ 309,000 % fuel savings (w boiler) % - 22% 14% * Fuel consumption as represented in SPE/IADC 140357, for 1000hp rigs utilizing 3512B vs. G3516LE engines 10
Hydrocarbon Price Spreads $ p e r M M B T U 25.000 20.000 15.000 10.000 5.000 0.000 USA Hydrocarbon Pricing ($ per MMBTU) Oct 01, 1990 Oct 01, 1991 Oct 01, 1992 Oct 01, 1993 Oct 01, 1994 Oct 01, 1995 Oct 01, 1996 Oct 01, 1997 Oct 01, 1998 Oct 01, 1999 Oct 01, 2000 Oct 01, 2001 Oct 01, 2002 Oct 01, 2003 Oct 01, 2004 Oct 01, 2005 Oct 01, 2006 Oct 01, 2007 Oct 01, 2008 Oct 01, 2009 Oct 01, 2010 Oct 01, 2011 Date Propane #2 Oil Natural Gas Key conclusions: 1. Natural gas is significantly less volatile over time 2. Liquid-gas spread is steadily increasing 3. Any carbon tax will further favor natural gas 1. Source EIA.gov 2. National Average Wholesale Pricing for liquid fuels 3. National Average Wholesale NG Pricing for Commercial Users 11
Conclusions Safety: Success Exceptional safety record with zero LTIs maintain a culture of safety through maintaining, communicating and implementing its HSSE programs Operational reliability: Success Greater than 99%, with 225% annual growth Surety of supply: Success Diversification of supply ensures surety of supply across customer base Economics: Success Significant savings against diesel for both dedicated and bi-fuel solutions Summary of Fuel Savings w/o Boiler w Boiler Dedicated Natural Gas $ 353,000 $ 460,000 % Fuel Savings 18% 22% Bi-Fuel $ 202,000 $ 309,000 % Fuel Savings 11% 14% Prometheus and its partners have commercially proven LNG as a safe, reliable, sustainable and economically attractive solution 12
Questions? Mike Fradette Business Development Manager 425.216.4786 mfradette@prometheusenergy.com Houston Office (HQ) Prometheus Energy Group, Inc. 10370 Richmond Ave, Suite 450, Houston, TX 77042 (o) 832.456.6500 Seattle Office Prometheus Energy Group, Inc. 8511-154th Avenue NE, Building L Redmond, WA 98052 (o) 425.558.9100 www.prometheusenergy.com Integrated LNG Fuel Solutions 13