7th african petroleum conference presentation - april 2010
TRANSCRIPT
Session 3: Hunting Grounds & The Continent’s Oil/Gas & Economic Future
Presentation by Victoria Oil & Gas (VOG) Tapping Gas Value in Cameroon
13th April 2010
7th African Petroleum Forum
Tapping Gas Value in Cameroon Contents
o Introduction
o VOG Corporate Snapshot
o Executive Summary
o Logbaba – Cameroon Potential
o Logbaba Discovery
o New Wells VOG Logbaba (La 105 & La 106)
o Further Exploration - Passive Seismic Overview
o Production Facilities & Pipeline
o High Impact Events
o Conclusion
2
VOG Corporate Snapshot
o Listed on AIM in July 2004 o 60% of the Logbaba gas
field in Cameroon o 2P reserves of 104 Bcf o First appraisal well
completed as a producer in January 2010
o 100% of West Med gas and condensate project in Russia o Located close to
World’s largest gas field o Prospective resources
of 1.1Bnboe
Share Structure Background
3
VOG Trading Liquidity
% o
f Mar
ket C
ap
Free Float (80.79%)
Noor Petroleum (5.6%)
Management (6.2%)
Hydrocarbon Tech. (3.05%)
Barclays (4.36%)
Price: £0.040 Shares: 1.4bn Market Cap: £56 MM
* As at close 12 April 2010
12 month Daily Trading Volume
Executive Summary
o Victoria Oil & Gas Plc (VOG) is emerging as a significant player in natural gas production
o Logbaba gas and condensate field in Douala, Cameroon, is the only onshore gas discovery in the country
o The West Medvezhye (West Med) project in Siberia has independently estimated recoverable prospective resources of over 5 Tcf of gas
o Logbaba is poised to deliver first cash flows and profits for VOG
o Over 300 feet of gross sandstone pay in first well
o In-principal agreements signed with Industrial Customers
o First revenues from Logbaba targeted in H2 2010
4
Logbaba: First Mover Advantage o The Logbaba field represents a unique opportunity to dominate
the nascent natural gas market in Cameroon
o Competitive advantages:
The field lies beneath the major industrial city in the Central African Region
Agreements for gas off-take already signed with industrial customers in Douala
The only onshore gas discovery in the country
All facilities (drilling, processing and pipeline) will be owned by VOG
Pipeline will be the only municipal gas pipeline in sub-Saharan Africa
o Plans announced to triple Cameroon power generation capacity in the next 10 years
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Government priority for domestic market for next 30 years: 75 MMcf/d for electricity and 25 MMcf/d for industry
Cameroon: Heart of Central Africa o Cameroon is a member of the
Economic Community of Central African States (ECCAS) o Members share trade
markets and currency
o Douala is the deep-water port and industrial heart of the region o The city is the most
expensive in Africa o Major companies such as
Guinness and Nestle have facilities there
o Rio Tinto Alcan have a major aluminium smelter at Edea close to Douala
o Douala handles around 95% of import/exports for Cameroon, Chad and CAR
o Logbaba is located in the eastern suburbs of Douala
6
ECCAS
Logbaba: Discovery
7
o Logbaba was discovered in 1950s by Elf SEREPCA
o Four wells were drilled by Elf:
o All encountered gas and condensate in multiple reservoir layers
o No gas-water contacts in any sands encountered
o Three wells tested over limited intervals with individual sands testing 10 – 20 MMcf/d per well
o In 2008, RPS Energy calculated 2P reserves of: o Gas – 104 Bcf o Liquids – 4 MMbbl o NPV10 – $168 MM*
* Attributable to VOG
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Logbaba: Exceptional Progress Winter 2008 Spring 2009
Autumn 2009 Summer 2009
Logbaba: Well La-105 Drilling/Completion
o La-105 was drilled to a total depth of 2,718 m (8,920 feet) on 1 January 2010
o Multiple gas-bearing sands with over 300 feet of gross pay were encountered between 1,836 and 2,540 m correlating to La-103
o A 7” liner has been run and cemented
o La-105 has been completed as a production well and testing was conducted in the first quarter 2010
9
La-105 Drilling
Logbaba: Well La-105 Testing
o Multiple pay zones were tested over a period of two weeks at depths between 7,005 - 8,500 feet.
o Over the testing period, various zones of La-105 flowed at rates between 11 - 56 million standard cubic feet per day (MMscf/d) of natural gas and 210 - 1,000 barrels per day of condensate. Flowing wellhead pressures varied between 2,750 - 4,552 psi.
o The gas is sweet, with a high calorific value and the condensate has an API gravity of 47 degrees. 10
La-105 Testing
Logbaba: Well La-105 Testing continued
o The test covered horizons of the Lower Logbaba formation, which had not been tested before, and the Upper Logbaba D sands.
o The Upper Logbaba A through C sands, although indicated as the best quality hydrocarbon-bearing sands encountered in the well logs, were not tested as the well indicated more than sufficient production capacity to meet initial gas demand of 8 MMscf/d.
o The Upper Logbaba A - C sands will be perforated and added to the completion interval when required for production.
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Elf La-103 Flow Test Results
1,780 to 1,789m 4.75 MMcf/d
2,019 to 2,038m 12.25 MMcf/d
2,051 to 2,063m 9.1 MMcf/d
2,364 to 2,378m 12.25 MMcf/d
La-105 Targets
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Logbaba: Well La-106 o La-106 is being drilled from La-104
pad and is planned to twin the La-101 well at its bottom hole location o Well spudded on schedule on 6
February 2010 o Planned TD is 2,000 m TVDSS
but will drill deeper due to good hydrocarbon potential in Lower formations
o La-101 was drilled in 1955 and blew out before being brought under control and completed o The blow-out lasted 38 days,
producing approx 0.9 Bcf o The well was then tested at
15.5 MMcf/d o La-106 targets the Logbaba
formation sands
Logbaba: Further Exploration
o 90% of the block is as-yet unexplored
o In late 2009, a passive seismic survey was commissioned o Passive seismic is a
direct hydrocarbon indicator
o Significant new structure outside current drilling location
o Best location on the current structure is as yet undrilled
o The new accumulations lie outside the area evaluated by RPS
Passive Seismic Survey
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Pipeline Route
Wells 105+106 and processing
facility
Approx 85% of industrial market
within 10km
VOG plans to install and commission a gas processing facility and its own gas pipeline to the industrial customers
14
VOG: High Impact Events o VOG is targeting first revenues in H2-2010
o While La-106 is drilled, La-105 was tested
o Test data and superior modern logs will be submitted to RPS for reserve re-estimation
o Installation of the facility and construction of the pipeline is expected to be completed relatively quickly once concept agreed
15
Conclusion
o VOG can exploit competitive advantages to lead the gas market in Cameroon
o Logbaba is an existing discovery with first well confirming gas prospectivity
o Ready-made, captive market lies above the field with high barriers to entry for offshore competition
o Gas agreements in place.
o Government initiative to treble power generation in next 10 years
o VOG has the appetite for further expansion in Africa
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Appendix
o VOG will install and commission its own processing facility and pipeline
o Processing: o Phase 1 will be a basic separation and dehydration process to
produce sales gas and liquids
o Phase 2 will add processing capability to extract additional Natural Gas Liquids (NGL)
o Pipeline
o A c.10km high-pressure gas pipeline will be laid underground to the industrial customers
o The initial section will only access the nearest customers to the well-site, but this covers about 85% of the market
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Processing & Pipeline Strategy
Raw gas Separation & Dehydration Process
Sales gas
Liquids
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Key Management Team
Radwan Hadi
COO VOG
Sam Metcalfe Assistant Project
Manager Senior petroleum engineer with over 30 yrs experience in oil and gas including in Nigeria, Ghana and Equatorial Guinea. Former Head of Planning in ADCO
Over 25 yrs oil industry experience, worldwide. Has brought several North Sea gas projects into production for major corporations
Kevin Foo
Chairman
39 yr career in the resources sector including 19 years in the FSU; former MD of Celtic Resources Holdings
Steve Jorgensen Cameroon
Country Manager
Jonathan Scott-Barrett Commercial
Director
Francois Nguene Gov’t Relations
Manager
Ex-Cities Service drilling engineer with 15 yrs experience in the oil industry specialising in drilling, completion and permitting
Former Exploration and Production Manager for SNH in charge of Chad-Cameroon Pipeline
Former CEO of Eureka Mining Plc & executive director of Celtic Resources Plc
TEC
HN
ICA
L C
OM
MER
CIA
L Geoff Gill
Senior Petroleum Engineer
15 yr career in oil and gas, predominantly with Schlumberger Testing and then senior petroleum engineer with Blackwatch
Kamal Jardaneh Drilling
Supervisor
30 yrs of oil and gas experience, 23 yrs as drilling superintendent / senior drilling engineer for BP and currently a drilling consultant
Logbaba Elf Cross-section
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RPS Independent Valuation
RPS Energy undertook an evaluation of the Logbaba field in July 2008
65Bcf of 2P reserves with an NPV10 valuation of $169MM
The evaluation only encompassed a small section of the total 64km2 licence area
RSP Energy Competent Person’s Report Net Attributable Reserves and Resources
1P 2P 3P Total Liquids MMbbl 0.28 2.35 4.51
Natural Gas Bcf 7.92 64.53 123.91
Total MMboe 1.71 13.97 26.81
NPV valuation at 10% $MM 18.17 168.65 412.16
RPS review area (~6km2)
Source: RPS Energy
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Social Responsibility
o VOG, through its local entity Rodeo Development Ltd (RDL), has strived to be an excellent corporate citizen:
o During rig mobilisation, 300 local people were employed
o RDL currently employs about 100 people on the rig (roustabouts, medics, safety officers, guards etc)
o VOG has also invested in the local infrastructure with the local council
o Local community members have seized on business opportunities created by RDL
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Abbreviations Bnboe Billion barrels of oil equivalent
MMboe Million barrels of oil equivalent
MMbbl Million barrels of oil
bbl/d Barrels per day
mcf Thousand cubic feet of natural gas
mcf/d Thousand cubic feet per day
MMcf/d Million standard cubic feet of gas per day
Bcf Billion cubic feet of natural gas
Tcf Trillion cubic feet of natural gas
$MM Million US$
$Bn Billion US$
km2 Square kilometres
m Metres
MMBtu Million British thermal units
MW Megawatts
tpa Tonnes per annum
CFA Central African Franc
VICTORIA OIL & GAS PLC HATFIELD HOUSE
52-54 STAMFORD STREET LONDON SE1 9LX
Tel: + 44 (0)207 921 8820 Fax: +44 (0)207 921 8821
www.victoriaoilandgas.com [email protected]