EWS (USA) LLC
A Proposal for Investing in United States
Onshore Producing Oil & Gas Properties
December 2016
Agenda
Executive Summary
EWS’ objectives
The North American Onshore Energy Marketplace
The Opportunity
Who are we
The Team
Partners
In the US
In Israel
Why invest with us?
Investment Strategies
Short Term
Long Term
Proposed Deal Structure
Single Opportunity
2
Executive Summary
EWS (USA) LLC. Which is based in Houston, TX, offers various investment opportunities in producing onshore oil and gas assets in the United States.
Leveraging it’s management team’s comprehensive experience and expertise in the US energy marketplace, and it’s wide network of contacts within the industry with operators, investment bankers, brokers and executives, EWS is able to identify assets that not only offer predictable cash flow, but also appreciation potential and overall above market rate of return performance.
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EWS Objectives
To offer Israeli investors a diversification
investment into onshore mature producing
oil and gas properties in the United States
with the intent of providing lower risk than
other US oil and gas investments and
potentially above market returns.
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The United States Onshore Oil
& Gas Marketplace
Two main factors have reshaped the current United States onshore oil and gas landscape.
1. Resource (shale) Plays. Reallocation of personnel and capital into fracking and
horizontal drilling opportunities have “starved” many mature assets of capital and attention.
Opens opportunities for smaller, more cost effective player.
2. Oil price crash of 2014. The oil crash that began in mid 2014 caused a large
number of highly leveraged, companies to become overextended and unable to meet their obligations.
Distressed asset sales are common and many of these assets include mature producing properties.
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The United States Onshore Oil
& Gas Marketplace
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US R
igs
US $
/BB
L
Horizontal & Vertical Wells
with WTI Oil Price
Crude Oil Prices: West Texas Intermediate (WTI) - Cushing, Oklahoma Horizontal Vertical
Resource (shale) Plays. Many companies have reallocated personnel and capital into fracking/horizontal drilling opportunities. This shift in focus has cause some mature producing oil and gas assets to be capital starved and “neglected”.
1 Baker Hughes Incorporated Website
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Oil price data courtesy of Federal reserve Bank of St Louis
Rig count data courtesy of Baker Hughes Inc.
Oil price crash of 2014. The extended drop in oil prices beginning in mid 2014 has caused a
number of highly leveraged, mostly smaller companies to become overextended and unable to meet their obligations.
“At least 135 oil and gas companies are still in deep trouble, according to Debtwire Analytics, a New York company that studies debt and predicts coming bankruptcies and restructuring.” Source FuelFix Sept. 2016
2
Data courtesy of Haynes and Boone, LLP
The United States Onshore Oil
& Gas Marketplace
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1 26 8 11 13
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27 3034
3844 47
5361
73
8995
99 102 104 105
0
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Cumulative Bankruptcy Filings
Distressed, over leveraged
operators
Late life/ mature assets
which are “neglected” in
current capital constrained environment
Assets that have
opportunities for
production enhancements
and cost reduction
The Opportunity
8
courtesy of USGS
Map Showing Historical Production in
United States
Green = Oil
Reg = Gas
Yellow = Overlapping Oil and Gas Production
Most assets are acquired
through an auction
process rather than a
negotiated transaction.
Timelines for acquisitions
are generally short, with
30-45 days being typical.
The critical element for
acquisition success is the
buyer having the funds to
close quickly.
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The Opportunity
The TeamGad Silberstein, CEO & President ; Co-Founder
Gad is a seasoned business executive who has worked extensively in both the
US and Israel. Prior to joining EWS, Gad was the CEO of Optifile Systems Ltd.,
a Software Development and Systems Integration company that he had
founded. For the last 8 years, Gad was responsible for EWS (Energy) Ltd.’s North
American operations.
Gad earned a B.Sc. degree in Industrial Engineering from the "Technion", Israel
Institute of Technology (Suma Cum Lauda) and an MBA from the Ross Business
School at the University of Michigan.
John Bedingfield, EVP & CTO ; Co-Founder
John is an experienced businessman and scientist focused on value creation
through economically viable resource, reserve and production growth. Before
co-founding EWS John Served as Vice President and an Executive Officer of
Apache Corporation responsible for formulating and executing its new country
entry strategies and new resource play entries in the United States. In this role
John developed an oil focused global strategy successfully targeting deep
water, conventional, unconventional and new technology plays. Prior to that,
John served as the vice president and managing director for Apache’s
Australia region with direct profit and loss and operational responsibilities.
John earned an B.Sc. and M.Sc. Degrees from Northeast Louisiana University in
Geoscience and Geology (respectively). John also graduated from the
Advanced Management Program for Oil & Gas Industry Executives of the
Thunderbird School of Global management.
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The TeamBen Zion (Benny) Rosenberg, EVP of Investors Relations ; Co-Founder
Benny has been active in the Israeli and US NG marketplaces over the last eight
years, and in both he played a leading role in several large infrastructure
projects. Prior to founding EWS Ltd. in 2004, Benny was the SVP of Business
Development, at the Hagai Group, the largest supplier of material and services to
the Construction and Infrastructure Projects Industry in Israel.
Benny, who brings to EWS 25 years of business experience, has earned a
B.A. degree in Economics and Philosophy from the Hebrew University of
Jerusalem, Israel.
Partners: In order to ensure compliance with all regulation while maximizing investors net returns, the following will consult and monitor EWS (USA) operations: 11
Ram Belnikov, Investments EVP
Ram brings expansive business and leadership experience to our venture. Prior to
joining EWS (USA) llc. he held numerous key positions in both the Israeli public and
private sectors, including as the General Manager of the Ministry of Interior and the
Director of the Budget Division at the Ministry of Finance.
Ram has also held prominent roles in the Israeli energy and telecommunications
industries, leading many companies beyond their competitors. Among these positions
were President & CEO of HOT, President & CEO of 012 Golden Lines.
Ram holds a B.A. in Economy and International Affairs as well as an M.B.A. from the
Hebrew University. In addition to his professional work Ram has served on the boards of
directors of several public and private social institutions.
Why Invest with Us
60 years of cumulative experience in
the North American Oil & Gas
industry , thirty of which are directly related to production and
exploration activities
Diverse team with great depth of
technical and business acumen
Cross functional team that can
address and resolve all legal,
regulatory and taxation issues to maximize the investors’ net returns
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Investment Strategies
Focused and disciplined acquisition of mature oil and gas proved
developed producing (PDP) assets with upside.
Deal Size:
Deals in the $5-50 MM range. Most deals expected to be between $8-15 MM.
Short Term:
Target assets intended to be PDP rich with reservoirs that have low decline rates
(<15%) and proven long life reserves.
These properties expected to have additional opportunities or upside that are
not valued in the purchase price. Investors may have right of first refusal to
invest in upside opportunities related to the assets, such as exploration and
development opportunities.
EWS will choose an operator that has a demonstrated track record of successful
management of similar assets and a cultural focus on cost control and
production enhancement.
Assets will ideally be held for 7-10 years before liquidating positions.
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Investment Strategies
Focused and disciplined acquisition of mature oil and gas proved
developed producing (PDP) assets with upside.
Longer Term:
Acquire assets with exploration/exploitation upside. These types of
assets carry more risk but if successful, may yield higher returns and
stronger cash flows than PDP only assets.
Evaluate sale vs. development of successful upside projects to
maximize investor returns.
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Proposed Deal Structure
Investors will:
Own an interest in a special purpose vehicle (SPV) that
will then invest in an entity to be jointly owned with an
operator (which entity will own directly the assets).
Receive 100% of the SPV’s net income until 100% of the
initial investment is recovered PLUS 7% IRR is realized
Receive 80% of the SPV’s net income thereafter
Management team will :
Receive annual fee of 2% of initial investment until
payout
Receive 20% of SPV’s net income thereafter
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The base case involves investment
by all parties through flow-through
(i.e., fiscally transparent entities).
Base Case
Operator
SPV 2 LLC
SPV 1 LLC
EWS USA LLC
Israeli Investors
US R/E
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Proposed Deal Structure:1
OwnersInvestors
OperatorSPV
1
Royalty
Owners
SPV2
Opex
& tax
Royalties
Share
Share
Actual Expense
EWS
PayoutYes
80% SPV 2
Share
20% SPV2
Share
2% Fee
on initial
investment
No
PayoutYes
No
100%
SPV2
Share
WI 100%
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Proposed Deal Structure:1
Recent Texas Gulf Coast Example
of Distressed Sale Opportunity: Deal “Alpha”
3.1X34%
2.3X23%
1.9X16%
2.6X27%
2X18%
1.6X11%
2.1X20%
1.6X11%
1.3X6%
$55/bbl
Realization Multiple & IRR
$50/bbl
$45/bbl
Acquisition Price6 MM$ 8 MM$ 10 MM$
Deal “Alpha”Summary
~61 wells producing an aggregated ~270 BOPD at time of purchase. Historical decline rate of 2-3% annuallyOpex ~ $20/bbl
Ave
rag
e O
il
Pric
e
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Realization Multiple = Cumulative Distributed Returns
Paid-In Capital
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$8,000,000
$5,878,935
$3,707,683
$1,760,513
$40,807
$1,513,293
$2,910,093
$4,249,293
$5,526,559
$6,745,735
$7,954,903
$(10,000,000)
$(8,000,000)
$(6,000,000)
$(4,000,000)
$(2,000,000)
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
0 1 2 3 4 5 6 7 8 9 10
Deal “Alpha”Cash Flow Curves
$8 MM Acquisition & $50 Oil
BTCF Cumulative Cash Flow
Contacts InfoEWS(USA) llc.
3720 Kirby Rd., Suite 1200
Houston, TX 77098
Tel: US +1 713 8316827
Gad Silberstein
M US +1 631 2589391
M IL +972 54 6391084
John Bedingfield
M US +1 713 2134233
Benny Rosenberg
M IL +972 54 4801609
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