investor presentation - gulfslope...jan 22, 2015 · 3 corporate snapshot gulfslope focus area...
TRANSCRIPT
Creating Value in the Gulf of Mexico
Investor Presentation January 2015
OTCQB: GSPE
2
Forward-Looking Statements
This presentation may contain forward-looking statements about the business, financial condition and prospects of the Company. Forward-looking statements can be identified by the use of forward-looking terminology such as “believes,” “projects,” “expects,” “may,” “goal,” “estimates,” “should,” “plans,” “targets,” “intends,” “could,” or “anticipates,” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy or objectives. Forward-looking statements relate to anticipated or expected events, activities, and trends. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Forward-looking statements in this presentation include, without limitation, the Company’s expectations of oil and oil equivalents, barrels of oil and gas resources, prospects leased, dollar amounts of value creation, undiscovered resources, drilling success rates, resource information, superior economics, consistent value growth and other performance results. The SEC permits oil and gas companies, in their filings with the SEC to disclose only proved, probable and possible reserves, i.e. Items 1201 through 1208 of Regulation S-K (“SEC Oil and Gas Industry Disclosures”). The estimates of recoverable resources used in this presentation do not comply with the SEC Oil and Gas Industry Disclosures, nor should it be assumed that any recoverable resources will be classified as proved, probable or possible reserves consistent with the SEC Oil and Gas Industry Disclosures. Recoverable resources estimates are undiscovered, highly speculative resources estimated where geological and geophysical data suggest the potential for discovery of petroleum but where the level of proof is insufficient for a classification as reserves or contingent resources. In addition, recoverable resources have a great amount of uncertainty as to their existence, absolute amount, and economic feasibility. Although the Company believes that the expectations reflected in forward-looking statements are reasonable, there can be no assurances that such expectations will prove to be accurate. Potential and existing shareholders are cautioned that such forward-looking statements involve risks and uncertainties. The forward-looking statements contained in thispresentation speak only as of the date of this presentation, and the Company expressly disclaims any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based. Certain factors may cause results to differ materially from those anticipated by some of the statements made in this presentation. Please carefully review our filings with the SEC as we have identified many risk factors that impact our business plan. U.S. investors are urged to consider closely the disclosures in our Forms 10-K, 10-Q, 8-K and other filings with the SEC, which can be electronically accessed from our website at www.GulfSlope.com or the SEC's website at http://www.sec.gov/.
Abbreviations:MM Million $ United States dollarB Billion RTM Reverse time migrationBoe Barrel of oil equivalent GSPE GulfSlope Energy, Inc.EUR Estimated ultimate recovery SEC Securities and Exchange CommissionMcf Million cubic feet Tcf Trillion cubic feetNPV10 Net Present Value discounted at 10%
3
Corporate Snapshot
GulfSlope Focus Area
Shelf
Deep Water
OTCQB GSPE
Market Cap (1/21/15) $66.1 MM
Price (1/21/15) $0.10
Avg. 3 Mo. Daily Volume 200,075
Shares Outstanding 660.7 MM
Insider Ownership 40%
Established 2013
Focus Area Offshore Gulf of Mexico
Target Primarily Shelf Miocene
Seismic 2.2 MM Acres (440 Blocks)
Lease Blocks 21
Portfolio 17 Drilling Prospects
Prospective Resources 2 Billion boe recoverable
4
Investment Highlights
• 2 billion boe of net conventional recoverable resources
• 21 blocks with 17 prospects ranging from 30-280 MMboe
Significant Oil and Natural Gas Exposure
• Gulf of Mexico has some of the lowest breakeven costs in the E&P industry today
• GulfSlope’s prospects offer significant return potential in current commodity price environment
Superior Breakeven Economics
• Former Anadarko executive leadership
• Proven track record of applying technology to find oil and gas
• Specialized technical team with extensive Gulf of Mexico successWorld Class Team
• GulfSlope executive team credited for originally discovering this play
• Strategic advantage from proprietary reprocessed seismic
• Lease sale establishes GulfSlope’s leading acreage position
Leading the Redevelopment of the
Shelf Miocene
• Multiple exploration wells planned by the end of 2016
• Currently focused on pre-drill operations
• Hybrid operating model with preference to operateDrilling Program
5
• 25 years with Anadarko, most recently as CEO
• Board member of ION Geophysical
• BS Geology, MS Geology
Ron Bain, PhDPresident and COO
Clint MooreVP, Corporate Secretary
• 19 years with Anadarko
• Formerly with Sohio and Gulf Oil
• BS Physics, MS Physics, PhD Physics
• 16 years with Anadarko
• Formerly with Diamond Shamrock/Maxus, Murphy and ION Geophysical
• BA Geology, BBA Finance & Econ
• 26 years with Anadarko
• Formerly with Marubeni Oil & Gas
• BBA, Petroleum Land Management
Charles HughesVP, Land
Bill LeflerSenior Staff Geologist
Richard HeaneySenior Staff Geophysicist
• Formerly with Texaco, Mesa, BHP and Woodside
• BS Geology
• Formerly with Amoco, Sohio, BP, Conoco, Repsol and Murphy
• BS Physics, MS Geophysics
Seasoned industry professionals with unparalleled management and technical expertise lead by former Anadarko CEO
• Formerly with Mobil, McMoRan, BP, Maxus, Enron and Repsol
• BS Physics
Alex MacKeonSenior Staff Geophysicist
Terry StellmanSenior Staff Geophysicist
Kevin BainGeophysicist
• Formerly with Shell, Nippon and Vanco
• BS Geology, MS Geophysics
• Formerly with the Institute for Geophysics, Fermi National Accelerator Lab and Marathon
• BS Physics, MS Geophysics, PhD Geophysics candidate
John MalangaVP, Chief Financial Officer
• Former I-banker with Weisser, Johnson & Co., Sanders Morris Harris and Jefferies & Co.
• BS Economics, MBA Finance
John SeitzChairman and CEO
• 39 years experience • 40 years experience • 22 years experience
• 35 years experience • 35 years experience • 44 years experience
• 39 years experience • 41 years experience • 26 years experience • 7 years experience
Team In Place to Execute
• Formerly with Amoco, BP, Endeavour and Vanco
• BS Geology, MS Geophysics
Mike NeeseExploration Manager
• 36 years experience
Brady RodgersVP, Development & Engineering
• Former I-banker with JP Morgan
• Former engineer with Venoco, Endeavour and Devon
• BS Petroleum Eng, MS Energy Management
• 15 years experience
6
GulfSlope management has a track record of discovering large oil and gas fields utilizing cutting edge technology, leading to significant shareholder value creation
A History of Value Creation Through Exploration
Algeria
• 3 Billion boe discovered in early 1990s
• New seismic tools designed for the desert allowed reinterpretation of the area
• Major oil companies considered the area played-out
• Largest discovery in 32 years
Alaska
• 500 Million boe discovered in late 1980s
• Deeper horizon was visible upon further seismic analysis, which was previously untested
• Majors considered the area played-out
• 3rd largest Alaska field discovered
Gulf of Mexico
• 150 Million boe discovered in the 1990s
• Global pioneers of sub-salt exploration, which led to deepwater GoM, pre-salt Brazil, and others
• Early vintage sub-salt imaging limited potential
North Sea
• 2.4 Tcfe discovered in mid 2000s
• Exploration success based on regional seismic advantage
• Major oil companies considered the area played-out
• Early independent company entry as majors started to exit
3 Bboe 500 MMboe
150 MMboe
2.4 Tcfe
7
New Opportunities
Focus on Operations in 2015
• Pre-drilling operations started for Phase 1 prospects
• Preparing to drill as operator, which may change with partnering
Corporate Development
• Current commodity prices and simplified capital structure provides GulfSlope with unique
acquisition opportunities
• Capitalize on strategic advantages provided by exploration work to identify undervalued producing
assets
• Additional prospects identified for future lease sales with regional 3D data set of 2.2 million acres
(440 blocks)
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3rd Party Resource Report
DeGolyer and MacNaughton reviewed GulfSlope’s 17 individual prospects:
• Average size is 120 MMboe
• Independent 3rd party evaluation of prospect sizes
• In-line with previous internal company estimates
• Consistent with deepwater Miocene evaluations discovered by major oil companies
• Prospect size range is consistent with offset discoveries from the 1990s
0
100
200
300
Mea
n P
rosp
ect
Size
Mill
ion
Bar
rels
(M
Mb
oe)
17 Prospects
Potentially recoverable resources. See company website for full DeGolyer and MacNaughton report and disclosures. Net of existing farm-out arrangements.
2 Billion barrels of prospective resources (1)
Existing Field Size Range
Graviton
Tau
Photon
TachyonOnium
5 of the 17 Prospects are Included in Phase 1 Drilling
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$B
$1B
$2B
$3B
$4B
0% 20% 40% 60% 80% 100%
$N
PV
10
IRR
Phase 1 Drilling Program
Photon59 MMboe
Tau252 MMboe
Onium27 MMboe
Tachyon38 MMboe
Graviton247 MMboe
Individual Prospect ReturnsRisked
• GulfSlope has high-graded five prospects with mean unrisked resource potential of 623 MMboe
• Attractive returns in current commodity price environment with F&D costs of $3-$10 per boe
• Leveraged to both oil and gas weighted prospects
1/21/15 Strip Pricing
Based on DeGolyer & MacNaughton 3rd party resource estimates (see company website) and risked at estimated 40% commercial success rate. January 21, 2015 strip pricing for oil(bbl) / gas (Mcf): 2015 – $53.92/$3.22, 2016 – $60.58/$3.48, 2017 - $65.18/$3.70, 2018 - $69.35/$3.89, 2019 - $70.74/$4.07
$N
PV
10
Phase 1 Total Net Present ValueRisked
$7.8 B
$6.2 B
$1.5 B
Price High Strip LowOil (bbl) $75 1/21/15 Price $25Gas (Mcf) $5.50 1/21/15 Price $2.50
10
GulfSlopeShelf
Miocene
DeepwaterMiocene
DeepwaterL Tertiary
Oil SandsSAGD
Utica
Alaska EagleFord
Permian
Bakken Duvernay
Niobrara
$-
$25
$50
$75
$100
$125
Bre
akev
en
-$
/bb
lHow We Compare
New DeepwaterDiscoveries
Gulf of Mexico leads the North American market for lowest cost new oil production
• Previous deepwater discoveries under development benefit from significant costs spent to date, but new Deepwater Miocene fields breakeven at ~$50/boe
• GulfSlope’s full-cycle breakeven costs of $20-$25 per boe allow drilling through commodity cycles
GulfSlope range in breakeven costs vary by water depth and oil vs gas mix
Breakeven defined as neutral NPV10. GulfSlope full cycle breakeven costs estimated internally based on DeGolyer and MacNaughton audited EURs.
Wood Mackenzie’s “North American Oil Plays” October 2014
11
Accelerating Shelf Miocene Activity
Fieldwood (Riverstone)“We are re-shooting all of our large fields [with 3D seismic] to make sure that we didn’t miss anything.”
Shell“[New seismic technology] really allowed us to look underneath the salt and get a more precise image of the subsurface and the potential exploration prospect that were there.”
Apache“Discoveries on the shelf have quicker cycle times, require less capital, and provide more options to bring oil and gas to market”
“New [seismic] techniques have lead the company to previously invisible parts of the Gulf of Mexico”
“We have combined our deepwater and shelf technical teams to focus on sub-salt and other deeper exploration opportunities in water depths less than 1,000 feet, which have been relatively untested by industry.
HessConger Field doubles reserves and returns to peak production 8 years after startup utilizing new seismic technology
Noble EnergyKatmai Discovery of 40-100 MMboe, 4Q’2014
Shelf focused E&P“Today there is better definition of salt and great ability to see seismic amplitudes updip as well as hidden amplitudes underneath [salt] overhangs that previously could not be seen.” - Oct 2014
W&T OffshoreMahogany production increases 550% with benefit of drilling based on new RTM seismic
Higher ReturnShelf Miocene
Boundary
LLOG (Blackstone)20 Blocks leased in Shelf Miocene play at the 2014 Federal Lease Sale
GulfSlope Blocks in Yellow
Greater Miocene Play Prospective Throughout the AreaAuger
Tahiti
K2
Atlantis
Mad Dog
Hickory
Mahogany
Conger
Tanzanite
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Exploring a Proven Petroleum System420+ MMboe discovered in the 1990s in the Shelf Miocene sub-salt play
Conger data based on Wood Mackenzie data, other fields based on reported production to date
Enchilada >43 MMBoeDiscovered - 1995 Production - 1997
GSPE Lease BlocksPrevious Sub-Salt DiscoveriesOil and Gas-Producing Field
Mahogany >45 MMBoeDiscovered - 1993Production - 1997
Hickory 47 MMBoeDiscovered - 1998Production - 2000
Tanzanite >30 MMBoeDiscovered - 1998 Production - 1999
Conger 243 MMBoeDiscovered - 1998Production - 2000
Auger
Conger
Mahogany
Hickory
Enchilada
13
Shelf Miocene GeologyGulfSlope is focused on a proven area of the Miocene where significant fields have been discovered
SaltSaltSalt
Lower Tertiary
Upper Miocene
Salt
Salt
Salt
Plio-PleistoceneSupra Salt
30,000'
20,000'
10,000'
0
Shelf Deepwater
North South
Lower Tertiary
TargetZone
5000'
15,000'
25,000'
LowerMiocene
Lower Miocene
Lower Miocene
Upper MioceneUpperMiocene
LafitteMahogany
Hickory Tahiti Jack
SaltSaltSalt
Lower Tertiary
Upper Miocene
Salt
Salt
Salt
Plio-PleistoceneSupra Salt
30,000'
20,000'
10,000'
0
Shelf Deepwater
North South
Lower Tertiary
TargetZone
5000'
15,000'
25,000'
LowerMiocene
Lower Miocene
Lower Miocene
Upper MioceneUpperMiocene
LafitteMahogany
Hickory Tahiti Jack
SaltSaltSalt
Lower Tertiary
Upper Miocene
Salt
Salt
Salt
Plio-PleistoceneSupra Salt
30,000'
20,000'
10,000'
0
Shelf Deepwater
North South
Lower Tertiary
TargetZone
5000'
15,000'
25,000'
LowerMiocene
Lower Miocene
Lower Miocene
Upper MioceneUpperMiocene
LafitteMahogany
Hickory Tahiti Jack
SaltSaltSalt
Lower Tertiary
Upper Miocene
Salt
Salt
Salt
Plio-PleistoceneSupra Salt
30,000'
20,000'
10,000'
0
Shelf Deepwater
North South
Lower Tertiary
TargetZone
5000'
15,000'
25,000'
LowerMiocene
Lower Miocene
Lower Miocene
Upper MioceneUpperMiocene
LafitteMahogany
Hickory Tahiti Jack
SaltSaltSalt
Lower Tertiary
Upper Miocene
Salt
Salt
Salt
Plio-PleistoceneSupra Salt
30,000'
20,000'
10,000'
0
Shelf Deepwater
North South
Lower Tertiary
TargetZone
5000'
15,000'
25,000'
LowerMiocene
Lower Miocene
Lower Miocene
Upper MioceneUpperMiocene
LafitteMahogany
Hickory Tahiti Jack
SaltSaltSalt
Lower Tertiary
Upper Miocene
Salt
Salt
Salt
Plio-PleistoceneSupra Salt
30,000'
20,000'
10,000'
0
Shelf Deepwater
North South
Lower Tertiary
TargetZone
5000'
15,000'
25,000'
LowerMiocene
Lower Miocene
Lower Miocene
Upper MioceneUpperMiocene
LafitteMahogany
Hickory Tahiti Jack
Ultra-DeepGas
Deepwater Miocene & Lower Tertiary
10,000’
20,000’
30,000’
Plio-PleistoceneSuper-Salt
Salt
Salt
Miocene
Lower Tertiary
Miocene
Deepwater
Shelf
GulfSlope Target Section
Lafitte HickoryMahogany
Conger Tahiti Jack
Shelf Miocene
SaltSaltSalt
Lower Tertiary
Upper Miocene
Salt
Salt
Salt
Plio-PleistoceneSupra Salt
30,000'
20,000'
10,000'
0
Shelf Deepwater
North South
Lower Tertiary
TargetZone
5000'
15,000'
25,000'
LowerMiocene
Lower Miocene
Lower Miocene
Upper MioceneUpperMiocene
LafitteMahogany
Hickory Tahiti Jack
Katmai Discovery
14
Technology has Reduced Entry Costs
Technology Evolution• Seismic Processing
– Advanced algorithms maximize accuracy
– Processing is now faster and cheaper
– Reverse Time Migration and other technologies utilized by GulfSlope and industry provide the most accurate view of sub-salt prospects
• Seismic Capture– 1990s: 2D and isolated 3D seismic
– Today: 3D data now standard
Maximize chance of discoveries
Improve resource estimates
Enable a small team to successfully compete
Large E&P companies no longer have singular access to the most advanced seismic processing technologies
1980s 1990s 2000 2005 2012
KirchhoffMigration
Wave EquationMigration
Reverse Time MigrationScalable
Processing
Parallel Processing
Computing Cost
Imaging Capability
Beam Migration
Multi-core Processors
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Applying Proven Technology in the Gulf
“The Cardamom discovery [140 Mmboe] was the result of advances in seismic imaging and extended reach drilling. The potential of Cardamom was first recognized early in the Auger development, but could not be fully assessed due to a layer of salt nearby which affected the quality of traditional seismic images. Advances in seismic imaging helped achieve significant improvements.”
– Shell Oil
Shell adds 140 MMboe to 25 year old field with new seismic technology
Mahogany production up ~550% since 2011 [with new drilling] as the field continues to grow
Advancement in seismic improve understanding of sub-salt targets [Mahogany]
New discovery in the T-Sand in June 2013• Deepest production to date [19 years after
initial field discovery]• 370’ of net oil pay from most recent well, 108’
from the newly identified T-Sand• Additional pay to be developed in the newly
identified M, N, and O-Sands with future drilling - W&T Offshore
W&T Offshore continues to grow the initial Shelf Miocene discovery
20 years later with new seismic imaging technology
Auger Field Mahogany Field Conger Field
• New seismic processing used to identify undrained reserves 8 years after startup
• Redevelopment late in life doubled the reserves
• Field returned to peak production
Hess doubles reserves with new seismic
Shell Oil
0
15
30
45
60
2001 2007 2013
Daily Production
Gas
Oil
Mboe/d
Advanced seismic required to fully
develop Mahogany
16
Why We Like the Shelf: Proven Economics
Based January 21, 2015 strip pricing for oil(bbl) / gas (Mcf): 2015 – $53.92/$3.22, 2016 – $60.58/$3.48, 2017 - $65.18/$3.70, 2018 - $69.35/$3.89, 2019 - $70.74/$4.07. Based on Wood Mackenzie data where available or company estimates.
Conger Field Hickory Field
Production (EUR) 243 MMboe 47 MMboe
Commodity 61% Oil 28% Oil
NPV10 $2.7 B $520 MM
IRR 47% 49%
Breakeven Commodity Price $17.03/bbl + 1.70/Mcf 19.82/bbl + 1.98/Mcf
Discovery to Production 2 years 2 years
Exploration Spend at Today’s Cost $105 MM $42 MM
Development Spend at Today’s Cost $977 MM $353 MM
F&D ($/boe) $4.45 $8.46
Discovering E&P Hess Anadarko
Development Sub-sea Platform
Water Depth 1,594’ (Floating Rig Depth) 320’ (Jack-up Rig Depth)
Reservoir Depth 19,845’ 15,970’
What do previous Shelf Miocene fields look like at today’s costs and commodity prices?
Income Actual production history priced on 1/21/15 stripExpenses Modern service costs estimates (mid-year 2014 estimate)
17
Valuation: Cobalt Analog
Cobalt
At IPO (1/2010)
GulfSlope
Today (1/2015)
Regional Focus • Sub-salt GoM & W Africa • Sub-salt GoM
Mgmt History • Ex-Unocal & BP • Ex-Anadarko
Asset Acquisition Lease blocks from federal government at annual lease sale
Resource Estimate • 8.2B Boe (1) • 2B+ Boe (1)
Prospect Generation Strategy
• Build veteran team of highly skilled explorationists
• Utilize regional seismic data with newest technology (RTM) to identify and capture high value prospects
Strategy• Drill high impact Miocene prospects
• Establish JVs with E&P partners to diversify risk
GSPE Target Area
Cobalt Target Area (+W Africa)
Source: Company data and public company filings. (1) Based on DeGolyer & MacNaughton Resource Reports. (2) Enterprise value divided by 3rd party recoverable Resource Estimate.
GulfSlope has significant valuation upside vs Cobalt IPO pricing
Valuation (2) • $0.45 / boe • $0.04 / boe
0 12 24 36 48 60 72 84 96 108 120
Shelf
Deepwater
Exploration Drilling
Appraisal Drilling Permitting Construction & Development Drilling
1 2 3 4 YEARS 5 6 7 8 9
+/- 3 Years
+/- 9 Years1
GulfSlope Advantage: Shorter Cycle Times
Value of GulfSlope is approx. $1 billion assuming Cobalt IPO valuation
“Most of the value destruction occurs in the in the appraisal phase when you drill too many wells before making he final [development] investment decision.” – CEO of Deepwater E&P
18
GSPE continues to execute on its strategy of exposing investors to multiple high-impact exploration opportunities
Building Momentum
Announce Drilling Plans
and File Permits
Uplist to National Exchange
Annual Lease Sale March 2015
Drilling Rig Commitment
Spud 1st
Exploration Well Late ’15/Early ‘16
19
• On track to drill late 2015/early 2016
• Actively drilling through the oil price downturn with lowest breakeven prices in North America
• 2 Billion boe of potential oil and natural gas resources
• Leading the industry redevelopment of the Shelf Miocene play
• Proven leadership with track record of finding significant oil and gas fields
• Team fully aligned with investors
Investment Highlights“Deepwater size prospects at shallow water costs and with shorter cycle times”
20
Investor Relations Contacts
OTCQB: GSPE
GulfSlope EnergyBrady [email protected]
www.GulfSlope.com
MZ GroupDerek [email protected]