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O’BENCO III, LP
O’BENCO III, LP
Annual Investor Presentation March 19, 2011
O’BENCO III, LP 2 2
Presentation Outline
2010 - Corporate Overview
2010 - Financial & Accounting Overview
Asset Reviews
2011 - Corporate Strategy
View From the Top
O’BENCO III, LP
2010 - Corporate Overview
O’BENCO III, LP 4 4
O’BENCO III – 2010 Performance
Increased net daily production (mcf/d)
4,500 mcf vs. 7,000 mcf ( ~ 55% increase year-over-year)
Increased proved reserves
19.24 net BCFE vs. 55.13 net BCFE ( ~ 186% increase)
Increased proved “valuation” (PV-10)
$42.89 MM vs. $58.9 MM (~ 37% increase year-over-year)
Approved by Netherland Sewell and Associates
Compared to same price deck $103 MM ( ~ 150% year-over-year)
Increased liquidity
Borrowing Base increased from $10 to $22 MM
With $10 MM drawn as of 1-1-2011
O’BENCO III, LP 5
O’BENCO III - Net Production
5
1
10
100
1,000
10,000
HHAYNES
2010
Feb
ruar
y 20
10
Mar
ch 2
010
Apr
il 20
10
May
201
0
June
201
0
July
201
0
Aug
ust 2
010
Sep
tem
ber
2010
Oct
ober
201
0
Nov
embe
r 20
10
Dec
embe
r 20
10
2011
NRI Oil (bbl)
NRI Gas (mcf)
O’BENCO III, LP 6 6
O’BENCO III - Net Reserves Summary
Pricing for the scenarios below is based on the NYMEX strip, less differentials, as of their respective date. Reserve Reports are
internally generated by ORLLC & are reviewed by Netherland Sewell & Associates, semi-annually.
Natural gas prices have dropped approximately $1.50/mmbtu (21%) since 10/1/2009.
O’BENCO III, LP 7 7
2010 – Other Notables
Bald Prairie field “record” production – 22 mmcf/d
Operational Achievements:
Kansas D&C cost reduced from avg. $460K - $396K – due to
design changes
Reduced LOE – 2011 < $100K/month vs. $130K/month 2010 avg.
Bald Prairie – drilled cheapest well in field history - $1.42 MM
Business Development
O’BENCO III, LP 8 8
Business Development Overview – 2010
Business Development Strategy:
• Oil exploration
• Gas acquisitions
2010 Results:
1. East Texas Oil Prospect - LOI 2. Enduring/Liberty Acquisition – PSA 3. Eagle Acquisition – Plan to make an offer 4. Bakken Oil Prospect – CA 5. West Gove Prospect in Kansas – Acquired/Direct
Participant Offering
O’BENCO III, LP 9 9
Financial & Accounting
Overview 2010
O’BENCO III, LP 10
Financial Highlights
Closed $100 MM credit facility with UnionBank, N.A., on March 22, 2010
$22 MM borrowing base limit
$10 MM of outstanding debt on credit facility, as of 1/1/2011
Added calendar year 2011 natural gas hedges – Collars
100,000 mmbtu/month at $4.50 X $4.75
100,000 mmbtu/month at $4.50 X $5.05
~ 100% of current OBENCO III volume
Added calendar year 2011 oil hedge – Collar
1,000 bbls/mth at $76.00 X $83.25
~ 56% of current OBENCO III volume
Will evaluate additional hedges with successful Enduring transaction
O’BENCO III, LP 11
Balance Sheet at 12/31/2010
CASH $13,923
ACCOUNTS RECEIVABLE 2,455,691
A/R - OBRIEN RESOURCES, LLC 96,250 ACCOUNTS PAYABLE 1,962,706
PREPAID MANAGEMENT FEE 1,200,000 A/P O'BRIEN RESOURCES 294,534
PREPAID INSURANCE 56,653 DUE TO RELATED PARTIES 17,640
MGT FEE CREDITS NOT APPLIED 719,897 ACCRUED EXPENSES 227,803
TOTAL CURRENT ASSETS 4,542,414 ACCRUED INTEREST PAYABLE 8,330
TOTAL CURRENT LIABILITIES 2,511,013
PRODUCING PROPERTIES 58,869,419 LONG-TERM LIABILITIES:
INTANGIBLE DRILLING COSTS 10,040,492 NOTES PAYABLE - UBOC 10,000,000
WELLS AND EQUIPMENT 2,547,662 TOTAL LONG-TERM LIABILITIES 10,000,000
PREPAID DRILLING COSTS (24,752)
TOTAL PROPERTY & EQUIPMENT 71,432,821 EQUITY:
CONTRIBUTED CAPITAL 63,375,000
ACCUMULATED DDA (5,000,000) CURRENT INCOME (4,910,778)
NET PROPERTY & EQUIPMENT 66,432,821 TOTAL EQUITY 58,464,222
TOTAL ASSETS $70,975,235 TOTAL LIABILITIES & EQUITY $70,975,235
ASSETS
CURRENT ASSETS:
FIXED ASSETS
LIABILITIES & EQUITY
LIABILITIES:
CURRENT LIABILITIES:
O’BENCO III, LP 12
2010 - Income Statement Trend Report JAN 2010 FEB 2010 MAR 2010 APR 2010 MAY 2010 JUN 2010 JUL 2010 AUG 2010 SEP 2010 OCT 2010 NOV 2010 DEC 2010 YEAR TO DATE
OIL SALES (0) 160,176 111,534 218,472 174,716 96,588 167,265 141,873 112,070 180,911 103,613 139,448 1,606,666
GAS SALES (0) 525,590 501,634 429,635 462,390 421,092 556,035 468,704 514,981 541,348 539,479 741,321 5,702,208
PRODUCT SALES (0) 7,880 2,964 12,723 7,387 2,313 11,400 6,310 2,406 8,930 2,586 (0) 64,899
GAIN\(LOSS) ON HEDGING (0) 46,800 38,341 16,805 72,596 102,750 15,286 39,799 99,303 70,725 90,955 27,451 620,811
TOTAL INCOME (0) 740,445 654,473 677,634 717,089 622,743 749,986 656,686 728,760 801,914 736,633 908,219 7,994,584
PRODUCTION TAXES 0 22,167 18,647 23,355 21,610 15,190 23,716 24,602 26,466 34,418 29,527 42,754 282,452
OTHER DEDUCTIONS 0 1,062 1,066 3,133 1,895 632 1,859 1,281 884 1,311 797 0 13,919
LEASE OPERATING EXPENSE 0 107,895 132,175 117,476 119,343 158,015 152,274 116,788 150,998 130,345 99,641 155,765 1,440,716
LOE - ADVALOREM TAXES 0 0 0 0 40 0 12 0 90 3,635 0 185,111 188,889
NON-RECURRING LOE 0 64,279 32,977 36,610 71,460 94,829 43,667 441,012 196,487 51,471 89,066 98,974 1,220,833
LANDMAN EXPENSE 0 840 2,240 1,680 840 3,360 0 5,480 4,480 5,508 0 0 24,428
GEOLOGICAL/GEOPHYSICAL 0 1,815 13,700 3,905 2,374 109,120 13,080 9,442 21,238 5,395 2,944 26,512 209,526
DRY HOLE 0 0 57,326 0 0 305,037 0 0 0 0 0 61,358 423,721
TOTAL OPERATING EXPENSES 0 198,059 258,131 186,159 217,563 686,183 234,608 598,605 400,642 232,083 221,975 570,475 3,804,483
MANAGEMENT FEE TO ORLLC 1,600,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 6,000,000
CREDITS TO MANAGEMENT FEE (813,800) (216,389) (254,259) (224,028) (247,111) (231,159) (246,280) (259,947) (249,239) (260,444) (221,147) (238,207) (3,462,008)
BANK CHARGES 1 0 0 0 0 41 5 83 12 12 13 12 179
UBOC BANK FEES 0 0 50,000 1,111 0 12,542 1,956 0 7,486 0 0 56,378 129,473
FILING FEES 0 1,150 1,062 0 0 0 0 0 0 0 0 0 2,212
DIRECTOR'S FEES 0 0 0 0 0 0 6,000 24,000 6,000 6,000 6,000 6,000 54,000
OFFICE SUPPLIES/EXPENSE 0 3,229 0 0 0 0 0 0 0 0 0 0 3,229
PROFESSIONAL SERVICES 116,667 290,987 7,594 128,027 27,804 6,667 26,072 41,983 11,917 40,635 16,368 13,333 728,054
INSURANCE 0 6,986 6,986 6,986 40,597 29,393 18,189 18,189 18,285 18,285 18,285 23,685 205,867
TRAVEL 0 44,581 9,273 24,731 26,332 5,943 36,895 10,641 29,075 2,850 3,570 25,106 218,997
MISCELLANEOUS EXPENSE 0 0 246 1 241 503 319 107 270 382 536 151 2,758
TOTAL GENERAL & ADMIN EXPENSE 902,867 530,545 220,902 336,828 247,863 223,930 243,156 235,056 223,807 207,720 223,626 286,459 3,882,759
OPERATING INCOME\(LOSS) (902,867) 11,842 175,440 154,647 251,663 (287,370) 272,222 (176,975) 104,311 362,111 291,033 51,286 307,342
INTEREST INCOME (0) (0) (0) (0) (0) (0) 2,988 859 (0) (0) (0) (0) 3,848
TOTAL OTHER INCOME (0) (0) (0) (0) (0) (0) 2,988 859 (0) (0) (0) (0) 3,848
EBITDA (902,867) 11,842 175,440 154,647 251,663 (287,370) 275,211 (176,116) 104,311 362,111 291,033 51,286 311,189
DEPRECIATION EXPENSE 400,000 400,000 600,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 5,000,000
INTEREST EXPENSE UBOC 0 0 0 0 0 0 2,834 12,550 10,417 16,686 29,816 19,765 92,069
INTEREST EXPENSE - OTHER 0 0 0 0 0 129,898 0 0 0 0 0 0 129,898
TOTAL OTHER EXPENSE 400,000 400,000 600,000 400,000 400,000 529,898 402,834 412,550 410,417 416,686 429,816 419,765 5,221,968
NET INCOME\(LOSS) (1,302,867) (388,158) (424,560) (245,353) (148,337) (817,269) (127,624) (588,666) (306,107) (54,575) (138,784) (368,479) (4,910,778)
OTHER EXPENSE
INCOME
OPERATING EXPENSES
GENERAL AND ADMINISTRATIVE EXPENSE
OTHER INCOME
O’BENCO III, LP 13 13
Asset Reviews
O’BENCO III, LP 14
Bald Prairie and North Bald Prairie Robertson & Limestone Counties, TX
O’BENCO III, LP 15
Land
As of 2/1/2011– 26,286 Net Acres in Bald Prairie
14,124 acres net HBP
As of 2/1/2011- 9,360 gross and 6,696 net (+13 Net)
2,000 acres net HBP
Development Update
• Record Production – 100% increase in production
• Devon 5-2 – Second High Rate Czajkowski Completion
• Increased Field Gathering Capacity to handle 28 mmcf/d
2011 Plans
Drill 4-8 wells in 2011 – 4 wells in first half of 2011
Focus on Czajkowski & CVL locations
Currently leasing acreage in Robertson County outside of the
existing AMI
Acreage will be offered to the OBENCO III “direct participants”
The prospect targets Czajkowski sands identified from well-control
Possible well to be drilled in 4Q 2011
Bald Prairie & North Bald Prairie
O’BENCO III, LP 16
Bald Prairie - Production Graph
> 20 MMCF/D
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Robertson County
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Oil (bbl)
Gas (mcf)
Water (bbl)
O’BENCO III, LP 17
Czajkowski Seismic Cross-Section
O’BENCO III, LP 18
Stockman
O’BENCO III, LP 19
Stockman: Production
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STOCKMAN FIELD
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O’BENCO III, LP 20
Stockman: Development Update
2010 - 2011
Minimal increase in acreage position
3,072 Gross Acres & 2,964 Net Acres
• Limited Activity due to low prices in
2010 & limited activity planned for 2011
all acreage HBP
O’BENCO III, LP 21
Kansas
O’BENCO III, LP 22
Kansas Production – Operated Wells
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Kansas
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Oil (bbl)
Gas (mcf)
O’BENCO III, LP
Land 86,500 Gross Acres & 84,905 Net Acres
~ 10,000 acres expired in 2011
Primarily in Cheyenne County
2010
More than doubled production year-over-year
70 bopd – 150 bopd
Increasing reserves/well, Completion %, and
reducing well-cost
2011
Expect to drill 8 -12 wells in 2011
Borealis Project
Prairie Wind Project
McCoy Lane County Prospect
McCoy operated – Wildhorse Prospect
West Gove Prospect
Kansas: Development Update
23
O’BENCO III, LP 24
Eagle Prospect: Lawrence County, IL
O’BENCO III, LP
10,373 Net Acres (+305 net acres since 3-1-2010)
Performed three (3) CBM recompletions
Will flow-test in spring 2011
Drilled 4,500’ Emma Collins #1-1 exploration oil well
Oil volume in swab tests were falsely reported
Plan to recomplete up-hole in 1st half of 2011
Eagle Prospect – 2010 Overview
25
O’BENCO III, LP 26 26
2011 Corporate Strategy
O’BENCO III, LP 27 27
2011 Corporate Strategy
1) Bald Prairie Asset Area:
Complete “Enduring/Liberty Acquisition” for ~ $48MM
56.25% W.I. in Bald Prairie field
Drill 4-8 wells in Bald Prairie field – First Half of 2011
Eagle Acquisition of Proved Producing assets
2) Continue working toward closing two (2) oil acquisitions & begin development
3) Limited gas-related “development” activities
4) Selectively develop Kansas prospects
5) Non-core asset optimization:
Reduce LOE (Waskom), increase production via workovers & recompletes
(Hallsville), divest (MS)
Non-core asset strategy:
Identify and inventory gas-related projects
Immediately perform oil-related projects – Hallsville Oil HZ
O’BENCO III, LP 28 28
Enduring-Liberty Acquisistion
Expected to close March 25th
Calling all Equity - $23.625 MM
Total borrowing base determination
for OBENCO III - $41.5 MM
O’BENCO III, LP 29
O’BENCO III 2011
O’BENCO III, LP
O’BENCO III, LP
Annual Investor Presentation March 19, 2011