: unlocking material value in the uk north sea through ... · some of the key assumptions include:...
TRANSCRIPT
: NOVEMBER 2017
: Unlocking material value in the UK North Sea through development
i3 ENERGY (LON:i3E)
: NOVEMBER 2017 2
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: NOVEMBER 2017 3
forward looking statementsSome of the statements and information contained in this Presentation are forward-looking, including statements regarding the Company's plans with respect to development of its properties, expected drilling results and production
levels from the Company's properties, statements regarding sources of financing for the Company and its development plans, estimates of the quantities of proved reserves, probable reserves, possible reserves and contingent
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: NOVEMBER 2017
4
i3 highlights
TEAMDeep E&P experience: third time creating a North
Sea energy company – proven developers of
overlooked opportunities
PROJECTExpected H2 2018 delivery of 100% i3-owned
Liberator oil development – c.12 MMboe 2P(1) and
over 10,000 boepd(3)
GROWTHMaterial upside opportunity identified in UK’s 30th
Licensing Round – third party Best case recoverable
estimate of 69 MMbbls(2)
FUNDINGOver 80% tightly held (65% management and board
ownership). Development funding unlocks $328 MM
pre-tax NPV10(1) + potential upside.
1. 2P Reserves, production and valuation from AGR Liberator CPR 2017-11-03.
2. Recoverable 2C case Contingent Resources plus recoverable Best case Prospective Resources from AGR 30th Round Target CPR 2017-11-08
3. Initial production rate from Liberator LP1 production well
: NOVEMBER 2017 5
Neill Carson, CEO & Co-founderPrincipal Founder and Executive of both Iona Energy (CEO) and Ithaca Energy (COO)
• Constructed portfolios totaling 75+ MMboe with production of 20 kboepd
35 years international oil & gas experience
• Geophysicist and manager in Europe, Latin America, Middle East, Far East at Amoco/BP
• Discovered 400 MMbbl oil field in the UK
i3 founders and board
Graham Heath, CFO & Co-founderVP Corporate Development and Interim CFO at Iona Energy
• Go-public listing of Iona via RTO in 2011, structured total financing of $670 MM in North America and Europe
19 years oil & gas experience
• Consultant to PanCanadian Petroleum, EnCana Corporation, Cenovus Energy
• Co-founded energy-related tech startups focused on enhanced oil recovery
David Knox, Non-executive ChairmanChief Executive Officer and Managing Director of Santos Limited from 2008 to 2015
Global experience in the Petroleum Industry
• Managing Director of BP Exploration and Production in Australasia
• Management and Engineering roles at BP, ARCO and Shell across Australia, UK, Pakistan, United States, Netherlands
and Norway
Majid Shafiq, Non-executive Director25 years technical and investment banking experience focused on the global E&P sector
Seasoned oil & gas investment banking professional experienced in M&A, A&D, public and private financing
• CEO of Àrgentil Capital Partners (UK) Limited, Managing Director at First Energy Capital LLP, MD at Tristone, Director at
Waterous and Co.
• 13 years at Mobil Oil Corporation in engineering and commercial roles in the UK and the Netherlands
Richard Ames, Non-executive Director34 years broad range experience in the oil and gas industry with senior executive roles in full-cycle oil and gas E&P
VP positions in TNK-BP, Sidanco, and Amoco
• Responsible for government liaison, implementation of business strategies, exploration, new venture management
• Joined Amoco in 1981 as geologist responsible for reserve definition in international petroleum basins including the
North Sea
: NOVEMBER 2017 6
Liberator Phase I
Reserves (2P) MMbbl
STOIIP 38
RF% 28%
Recoverable 11
30th Round Target (West)
Prospective (Best) MMbbl
STOIIP 135
RF% 35%
Recoverable 47
30th Round Target (East)
Contingent (2C) MMbbl
STOIIP 64
RF% 35%
Recoverable 22
i3: development(1)
+ growth opportunity(2)
Liberator + 30th Round Opportunity
Total (2P + 2C + Best Prospective) MMbbl
STOIIP 237
RF% 34%
Recoverable 80
• 100% owned and operated Liberator oil
field under development with expected H2
2018 production above 10,000 boepd.
• Strategic 30th UK Round Bid on material
development opportunity near
infrastructure to be funded from Liberator
cash flow in 2019.
1. Liberator 2P Reserves from AGR Liberator CPR 2017-11-03
2. 30th Round Target Contingent and Prospective Resources from AGR 30th Round Target CPR 2017-11-08
Blake life-to-date recovery
factor above 60%
Above OWC
: NOVEMBER 2017 7
Q4-2017 Q1-2018 Q2-2018 Q3-2018 Q4-2018 H1-2019 H2-2019
Implied Val’n(2) $93MM US$ 279MM US$ 557MM US$ 963MM US$ 1.46B+
Liberator FDP Approved Phase I Development LP1 Prod’n LP2 Prod’n
30th Round Target 30th Round Bid 30th Award FDP Approval 30th Prod’n
unlocking potential value(1)
Production (boepd) Reserves Upgrade (MMbbl)
1. i3 Management view of potential corporate valuation step-up
2. Implied valuation of i3 reserves/resources and production based on 2017 weighted average market comparables of Delek’s acquisition of Ithaca Energy ($16.59/2P boe and $61,902/boepd) and
Verus Petroleum’s acquisition of Wytch Farm ($18.46/2P boe and $55,000/boepd); additionally risked by 50% prior to first oil from Liberator
3. Liberator 3P Reserves from AGR Liberator CPR 2017-11-03 plus 3C Contingent and High Prospective Resources from AGR 30th Round Target CPR 2017-11-08
11
33
80
100+
De-risk and
convert
upside
potential of
up to 234
MMbbl(3)
0
9,200
20,400
: NOVEMBER 2017 8
liberator phase I overview
High quality oil discovery in Captain reservoir
near Blake & Ross Fields
• Liberator analogous to adjacent Blake field with
recovery factor of 60% life to date
• Low development cost: US$ 41MM capex to H2
2018 first oil above 10,000 boepd(1)
• 2 producers, LP1 and LP2, 2018/19 delivery
− Conservative recovery factor of 28% (FDP 41%)
− LP1 and LP2 pay back in less than 1 year
− US$ 350MM cumulative pre-tax cash during first 3
years of production
− 2P post-tax NPV10 break-even below $25/bbl Brent
RESERVES(2) 1P 2P 3P
STOIIP 18 38 58
RF%(2) 25% 31% 31%
Recoverable (MMboe)(3) 4.5 11.7 18.3
Pre-tax NPV10 (US$ MM) $60 $328 $576
1. Initial production rate from Liberator LP1 production well
2. Liberator Reserves and valuation from AGR Liberator CPR 2017-11-03
3. Includes gas converted at 6 mcf to 1 bbl (1P 0.6 MMboe, 2P 1.0 MMboe, 3P 1.4 MMboe)
: NOVEMBER 2017 9
phase I development programme under way• Field will be developed with horizontal wells
• LP1 will have a 4,400 ft horizontal section, drilled from the
Blake development centre (DC1)
• LP2 will be drilled from a second drill centre (DC2)
• Site survey covering both centres completed August 2017
• Joint technical studies nearing completion with Blake
operator (Liberator offtake route)
• OGA-endorsed Field Development Plan submitted – approval
expected Q1 2018
Critical kit secured – 2018 first oil delivery
• 2 trees and wellheads ordered from GE (delivery May
and August 2018)
• Tubulars contract awarded to Tenaris
• Well Management and Operator contract in place with
Petrofac
• Other key supply chain contracts being aligned for H1
2018 drilling and H2 tie-in
L1 Well Trajectory
DC2
DC1
Liberator LP1 developed from producing Blake manifold (DC1). LP2 developed from new
development centre (DC2), tied back to Blake
manifold.
John Woods, i3’s Chief Developments Officer with Liberator Xmas Tree
: NOVEMBER 2017 10
30th round target overview
Liberator Phase IReserves(1)
1P 2P 3P
STOIIP 18 38 58
RF% 22% 28% 29%
Recoverable (MMbbl) 4 11 17
30th Round Target (West) Prospective Resources(1)
Low Best High
26 135 329
20% 35% 50%
5 47 165
51% chance of commerciality(3)
i3 Portfolio PotentialTotal Reserves + Resources
Low Best High
48 237 490
21% 34% 48%
10 80 234
30th Round Target (East)Contingent Resources(1)
1C 2C 3C
4 64 103
20% 35% 50%
1 22 52
63% chance of commerciality(2)
Target would be strategic acquisition for i3
• Discovery in open acreage available in UKCS 30th Licensing Round
near infrastructure
• i3 submitting material bid, which it believes will secure the block
• Indicative funding proposal received for 30th Round appraisal
programme (c. $13MM) upon award
• Bids due 21st November 2017, Awards Q1 2018
Material upside
• Target discovery fully mapped and technically reviewed by OGA, FDP
under construction
• Successful bid would add Best case recoverable resources of 69
MMbbls to i3’s asset portfolio with high chance of commerciality
• Total Liberator Phase I and 30th Round Target potential of 234
MMbbls
1. Liberator Reserves from AGR Liberator CPR 2017-11-03, 30th Round Target Contingent Resources and Prospective Resources from AGR 30th Round Target CPR 2017-11-08
2. 30th Round Target (East) CoS: 70% chance of finding sufficiently large volume, 90% chance of commercial project reliant on obtaining licence in 30th Offshore Licensing Round
3. 30th Round Target (West) CoS: Geological CoS 56.25%, 90% chance of commercial project reliant on obtaining licence in 30th Offshore Licensing Round
: NOVEMBER 2017 11
liberator delivery and 30th round capture
Q4 2017
Rig Contract
Submitted
Drill LP1
Nov 21st
Upon award, A3 Appraisal planning and permitting
Liberator Phase I
Site Prep & Host Engineering
Environmental Statement
Development Long Leads
FDP Approval Process
Drilling
Subsea Tie-in to Host
LP1 First Oil
Possible LP2 Accelerated Drill
30th Round Bid – Well
30th Round Awards
Planning and Appraisal
Q1 2018 Q2 2018 Q3 2018 Q4 2018
30th Round Target Capture and Appraisal
>10,000 boepd(1)
Potential material reserves and resources upgrade(3)Mar 31st
Final Approval
Drill LP2(2)
Drill A3
1. Initial rate from Liberator LP1 production well
2. Liberator LP2 expected to deliver first oil in 2019, Management aspires to drill in Q4 2018
3. March 31st 2018 Award Date – OGA Guidance
: NOVEMBER 2017 12
LiberatorOpen Acreage
UKCS: Estimated Resources for
discoveries within 20 km of existing hubs
Moray Firth & CNSN 1,542 MMboe
Central NS 1,028 MMboe
Northern NS 1,021 MMboe
West of Shetlands 585 MMboe
Area# of Prospects /
Risked Resources
Moray Firth & CNSN 40 / 700 MMboe
Central NS 24 / 400 MMboe
Northern NS 9 / 150 MMboe
Southern NS 4 / 75 MMboe
West of Shetlands 2 / 20 MMboe
Source: Westwood – Global Energy Group September 2017
beyond liberator – i3 UK opportunity set• i3 strategy is for incremental development growth through accretive acquisition of undeveloped discoveries
• high-impact infrastructure led appraisal and small “e” exploration (effectively appraisal)
: NOVEMBER 2017 13
2017/18 funding requirements
DATE USECOST($MM)
CUM($MM)
Q4 2017 Liberator Long-leads & Rig(1) 10 10
Q4 2017 G&A(1) 2 12
Q4 2017 30th Round Bid Well(2) 13 25 (1,2)
Q1 2018 FDP Approval (Funded to First Oil) (3) 33 58
1. Pre-FDP funding: $12 million required to secure 2018 Liberator delivery (trees, wellheads, H1 2018 rig) and fund G&A. FDP approval expected March 2018.
2. $13 million required to support bid commitments in 30th Offshore Licensing Round (non-binding indicative proposal received from current investor)
3. Q1 2018 funding requirement reduced by $13 million if 30th Licensing Round bid unsuccessful(2)
Support from Current Investors
• A non-binding indicative proposal has been received from an existing investor to materially support both i3's future fundraising
initiatives (25% commitment) and up to $13MM of the Company's proposed work obligations for its 30th Licensing Round bid.
Debt/Credit Facilities
• i3 is in a formal process seeking to secure a $25MM+ credit facility to be used for Liberator’s Phase I development. A senior
lender has confirmed support of up to 50% of this facility subject to completion of due diligence and final approvals.
Potential Joint Venture Opportunities
• i3 in discussion with numerous parties on accretive joint venture deal structure (cash consideration plus promoted development
carry of i3).
: NOVEMBER 2017 14
appendix
: NOVEMBER 2017 15
liberator phase I - subsurface overview
• Reservoirs are high quality Lower Cretaceous
Captain sands
• Reservoir gross thickness of 316 ft, net to gross
reservoir thickness above 95%, average porosity
29%, oil saturation 80%
• Permeability ranges between 2,000 and 3,000
mD
• OWC 5,270 ft tvdss, identical to original Blake
field OWC confirmed by logs and MDT points
• PVT sample analysis indicates under-saturated oil
of similar quality as Blake field - 30.3 API, 1.9 cp
viscosity at reservoir condition and GOR of 340
scf/stb
K50
OWC 5270 ft
: NOVEMBER 2017 16
liberator phase I subsea facilities