oil capital 27th march 2019 - cluffnaturalresources.com · located close to bp operated etap...

OIL CAPITAL

27th MARCH 2019

Cluff Natural Resources Plc |

Important Notice

The information contained in this document (the “Corporate Presentation”) has been prepared by Cluff Natural Resources Plc (“CLNR”). CLNR is a UK company quoted on AIM, a market operated by London Stock Exchange plc. This corporate presentation has not been fully verified and is subject to material updating, revision and further verification and amendment without notice. This Corporate Presentation has not been approved by an authorised person in accordance with Section 21 of the Financial Services and Markets Act 2000 (as amended) (“FSMA”) and therefore it is being provided for information purposes only.

While the information contained herein has been prepared in good faith, neither CLNR nor any of its directors, officers, agents, employees or advisers give, have given or have authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Corporate Presentation, or any revision thereof, or of any other written or oral information made or to be made available to any interested party or its advisers (all such information being referred to as “Information”) and liability therefore is expressly disclaimed. Accordingly, neither CLNR nor any of its directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of, the accuracy or completeness of the Information or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this Corporate Presentation.

The views of CLNR’s management/directors and/or its partners/operators set out in this document could ultimately prove to be incorrect. No warranty, express or implied, is given by the presentation of these figures here and investors should place no reliance on CLNR’s or any operators’ estimates cited in this document.

No assurance can be given that hydrocarbon resources and reserves reported by CLNR, will be recovered at the rates estimated or that they can be brought into profitable production. Hydrocarbon resource and reserve estimates may require revisions and/or changes (either up or down) based on actual production experience and in light of the prevailing market price of oil and gas. A decline in the market price for oil and gas could render reserves uneconomic to recover and may ultimately result in a reclassification of reserves as resources. There are uncertainties inherent in estimating the quantity of resources and reserves and in projecting future rates of production, including factors beyond CLNR’s control. Estimating the amount of hydrocarbon resources and reserves is an interpretive process and, in addition, results of drilling, testing and production subsequent to the date of an estimate may result in material revisions to original estimates. Any hydrocarbon resources data contained in this document are unaudited management estimates only and should not be construed as representing exact quantities. The nature of reserve quantification studies means that there can be no guarantee that estimates of quantities and quality of the resources disclosed will be available for extraction. Therefore, actual production, revenues, cash flows, royalties and development and operating expenditures may vary from these estimates. Such variances may be material. Any reserves estimates contained in this document are based on production data, prices, costs, ownership, geophysical, geological and engineering data, and other information assembled by CLNR (which it may not necessarily have produced). The estimates may prove to be incorrect and potential investors should not place reliance on the forward looking statements contained in this document concerning CLNR’s resources and reserves or production levels. Hydrocarbon resources and reserves estimates are expressions of judgement based on knowledge, experience and industry practice. They are therefore imprecise and depend to some extent on interpretations, which may ultimately prove to be inaccurate. Accordingly, two different independent parties may not necessarily arrive at the same conclusions. The views of management/directors as set out in this document could ultimately prove to be incorrect. Estimates that were reasonable when made may change significantly when new information from additional analysis and drilling becomes available.

This Corporate Presentation may contain “forward-looking statements” that involve substantial risks and uncertainties, and actual results and developments may differ materially from those expressed or implied by these statements. These forward-looking statements are statements regarding CLNR’s intentions, beliefs or current expectations concerning, among other things, CLNR’s results of operations, performance, financial condition, prospects, growth, strategies and the industry in which CLNR operates. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as of the date of this Corporate Presentation and CLNR does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Corporate Presentation. This Corporate Presentation should not be considered as the giving of investment advice by CLNR or any of its directors, officers, agents, employees or advisers. In particular, this Corporate Presentation does not constitute or form part of any offer or invitation to subscribe for or purchase any securities and neither this Corporate Presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever. No reliance may be placed for any purpose whatsoever on the information or opinions contained in these slides or the Corporate Presentation or on the completeness, accuracy or fairness thereof. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient should satisfy itself in relation to such matters.

Neither this Corporate Presentation nor any copy of it may be (a) taken or transmitted into Australia, Canada, Japan, the Republic of Ireland, the Republic of South Africa or the United States of America (each a “Restricted Territory”), their territories or possessions; (b) distributed to any U.S. person (as defined in Regulation S under the United States Securities Act of 1933 (as amended)) or (c) distributed to any individual outside a Restricted Territory who is a resident thereof in any such case for the purpose of offer for sale or solicitation or invitation to buy or subscribe any securities or in the context where its distribution may be construed as such offer, solicitation or invitation, in any such case except in compliance with any applicable exemption. The distribution of this document in or to persons subject to other jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the relevant jurisdiction.

1


Cluff Natural Resources – Introduction

▪ North Sea focussed oil and gas investing company with a portfolio of low cost, high impact exploration and appraisal projects

▪ Strong supportive shareholder base

▪ Feb 2019 farm-out of Licence P2252 (Pensacola Prospect) to Shell

▪ 3 month exclusive option granted to Shell on Licence P2437 (Selene Prospect)

▪ Shareholders have access to Shell’s technical expertise via a vehicle where exploration success would result in very significant value uplift

3

>2.4TCF (equivalent) of P50 Prospective Resources

7Highly prospective exploration licences within the UKCS

km2 (gross) under licence & 4th

largest position in SNS Carboniferous fairway

1,719

Super major validation of technical work and licensing strategy

Line of sight over 2 future drilling opportunities with Shell as Operator

Multi-asset portfolio and retained equity positions allows for further farm-in or farm-down activity

Cluff Natural Resources Plc | 4

March 2018

• Portfolio consisted of 2 Licences

• Licences only in Southern North Sea/gas

• Gross P50 Resources of 2.4 TCF

• Farm-out process ongoing on two licences

• No new exploration wells drilled in the core SNS area since 2014

• IPGL (Michael Spencer) had acquired an initial stake of 6.3%

• Funded to end Q2 2018

March 2019

• Portfolio now contains 7 Licences

• Portfolio now diversified into oil bearing areas in Central North Sea as well as SNS gas

• Gross P50 Resources of >2.4 TCF across portfolio

• Successfully delivered:• Farm-out to Shell on Licence P2252• Option granted to Shell over Licence

P2437 • 4 wells planned to be drilled in 2019/20 by

other Operators on adjacent SNS prospects

• IPGL has increased stake in CLNR to 11.8%

• £2.75m (gross) raised @ 1.6p and 2.1p

• Improved working capital position following Shell deal

Progress since Oil Capital in 2018

No value currently being attributed to the diversified portfolio or deal worth >USD$10M in carried work programme with Shell


Where We Operate & Key Prospects

Southern North Sea – Rotliegend Area ▪ Mature gas producing region▪ Commercial drivers around infrastructure protection▪ Focus is on overlooked opportunities – technology driven

Southern North Sea – Core Area▪ 4th largest acreage position in Carboniferous fairway▪ Additional multi-level prospectivity – Bunter & Zechstein▪ New and proposed infrastructure locally▪ Significant planned drilling activity on adjacent acreage

Central North Sea ▪ 30th Round Awards - 100% CLNR ▪ Located close to BP operated ETAP infrastructure▪ Oil and condensate – diversifies the portfolio▪ Contains the Tesla [Pentland] discovery and Dewar

Prospect

5


A Strategic UK Asset

▪ Proven gas basin within established operating environment

▪ Recent exploration has targeted mature and new plays and resulted in large discoveries e.g. Pegasus, Tolmount, Cygnus & Breagh

▪ Flexible and reactive regulators with attractive fiscal regime (top quartile globally)

A Growth Market with Premium Pricing

▪ UK gas production meets less than 50% of demand

▪ Demand to increase as gas replaces coal for electricity generation

▪ UK gas price trades at significant premium compared to Henry Hub (US)

SNS - A Low Cost Operating Environment

▪ Assets are located in shallow water environment

▪ Jack-up rig rates are low - $70k/day (v $165/k in 2015)

▪ Existing export infrastructure and supply chain supports future developments

▪ Ideal time to drill

Domestic Production

IN THE PAST

Supply surplus

AT PRESENT

UK imports ~50% of gas

IN THE FUTURE

Major supply deficit

0.0

20.0

40.0

60.0

80.0

100.0

120.0

19

98

20

01

20

04

20

07

20

10

20

13

20

16

20

19

20

22

20

25

20

28

20

31

20

34

An

nu

al p

rod

uct

ion

an

d

dem

and

(b

cm)

Gas Production

Gas Demand

Source: OGA

Why focus on UK Gas?

6


Recent & Proposed Activity in Adjacent Licence Areas

Breagh Gas Field▪ Carboniferous – Scremerston Reservoir

▪ First gas – October 2013

▪ Approx 600 BCF reserves

▪ Focus of recent M&A activity by INEOS and ONE

CORPORATE ACTIVITY

Dec 2015 INEOS completes acquisition of DEA UK North Sea gas fields for £490M

Mar 2017 ONE acquires STERLING RESOURCES interest in Breagh for USD$163M

May 2017 INEOS acquires DONG ENERGY for USD$1.3B

Dec 2017 SPIRIT ENERGY formed by merger CENTRICA and BAYERNGAS

Feb 2018 NEPTUNE completes acquisition of ENGIE E&P for USD$3.9B

Cygnus Gas Field▪ First Gas flowed Q1 2016

▪ 630 BCF reserves

▪ Produces from Carboniferous

and Leman

▪ One of largest gas fields in the UK

Aurora Prospect• Multi-TCF structure in Fell Sst

• Key analogue for Cadence Prospect

• Drilling proposed 2019

Pegasus West Discovery▪ Drilled 2014

▪ Namurian sandstone target

▪ Flowed >90mmscfd on test

▪ FDP submission expected 2019

Andromeda Prospect▪ Carboniferous Prospect

▪ Exploration well expected 2019

Ossian-Darach Prospect▪ Zechstein & Carboniferous Prospect

▪ Exploration well expected Q2 2019

7

Tolmount Discovery• Discovery well drilled in 2011

• 1 TCF of gas in Lower Leman Sst

• Largest SNS discovery in over a decade

• First gas planned for 2020


Shell UK Farm-in to P2252

8

Overview

▪ Pensacola Prospect is a Zechstein Reef with an Unaudited mean GIIP of 566 BCF (approx. 100 mmboe)

▪ Shell to acquire a 70% working interest and operatorship in Licence P2252

▪ Shell to carry 100% of all costs associated with the agreed work programme (est. value of $10M) through to well investment decision

▪ Agreed work programme includes:

▪ The acquisition of >400km2 of new broadband 3D seismic across Pensacola in summer of 2019

▪ Seismic reprocessing and other sub-surface studies to justify the contingent exploration well

▪ Cluff retains the option to farm down its 30% interest to offset exposure to drilling costs

Work Programme Timelines

➢ 3D Seismic acquisition during summer of 2019

➢ Re-processing, interpretation and sub-surface studies during 2020

➢ Contingent well investment decision in Q4 2020

➢ Exploration well to be drilled as soon as practicable after investment decision – well is classed as a CONTINGENT commitment by the OGA


P2252 – Pensacola Prospect

9

Z2 Zechstein Reef Build-up- Approx 200-250m reefal build-up covering >75km2

- Gas proven in Z2 Formation on block- Crosgan analogue flowed >7mmscf/day on test- New high resolution 3D seismic to be acquired in 2019

- P50 Resource of 309 BCF (Range 118-566 BCF)- GCoS = 20%

Marathon 3D (2013 PSDM Reprocessing) 1994 2D 1991 2D1984 2D

PENSACOLA REEF

S N


Shell UK Option to Farm-in to P2437

10

Overview

▪ Shell granted a 3 month exclusive option to farm-in to P2437 and if exercised:

▪ Shell will receive 50% working interest in return for total consideration of $600k

▪ Shell will pay 75% of the costs associated with the first well to be drilled on the licence up to a gross cap of USD$25M

▪ CLNR to remain ‘Operator’ until well investment decision is made

▪ The Selene Prospect has unaudited mean GIIP of 509 BCF (approx. 91 mmboe)

▪ Located adjacent to the Shell operated infrastructure of the Barque gas field

▪ CLNR retains 50% equity which allows the option to further reduce working interest to offset well costs if appropriate

▪ Appraisal well could be drilled during 2020

➢ Shell and ExxonMobil recently completed a £300M rejuvenation of the Bacton Gas terminal which is fed from the Shell operated Clipper hub

➢ Up to 25% ullage available in the Clipper-Bacton system from 2021

➢ Shell operates the Barque field, located approx. 20kms to the south of the Selene prospect, which in turn feeds gas to the Clipper hub

➢ Access to Clipper-Bacton system provides long term offtake option for the Selene prospect

Location of P2437 and the Selene Prospect


P2437 – Selene Prospect

11

SELENE PROSPECT

Leman Sandstone Structural Prospect - Covers an area of approx. 26km2

- 100% 3D seismic coverage - Down dip well (48/8b-2) in transition zone or on GWC- Analogous to Shell operated Barque field located

25kms to south

- P50 Resource of 291 BCF (Range 105-688 BCF)- GCoS = 39%

Western Geco 1999 Western Geco 1999Shell 1992

SE NW

Well 48/8b-2


Proposed Activity Timeline – Key Licences

12

Q1 2019

Q2 2019

Q42019

Q3 2019

Q1 2020

Q2 2020

1H2021

Q32020

Q4 2020

P2252 Pensacola Processing and Evaluation

Selene Sub-surface EvaluationP2437

Tesla Farm-out processP2352 Sub-surface Evaluation

32nd Licensing Round Technical Evaluation

Well Investment Decision

Cortez 2D Seismic ReprocessingP2424 *

P2428 Cupertino 2D Seismic Reprocessing *

* Subject to farm-out / funding

Farm-out process

Farm-out process


Summary

Shell farm out with carried work programme will lead to a decision on

drilling campaigns on one and potentially two of Cluff’s licences

Shell farm-in is clear endorsement of the portfolio’s potential and the

Company’s strategy

Aim to repeat farm out success with remaining portfolio of exciting

prospects currently held with high working interest

Shell investment and remaining Cluff working interest provides catalyst for potential further farm down to offset

future drilling costs

Agile, debt free and low cost explorer operating in an attractive

regulatory and fiscal regime

13

Improved working capital position from consideration paid for option on P2437 and 100% carry on P2252


Contact

14

APPENDIXFollow CLNR at


Management Team

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Algy Cluff – Chairman In 1972 Algy Cluff formed CCP North Sea Associates to bid for North Sea oil licences in the UK sector and subsequently founded Cluff Oil Ltd. CCP discovered the Buchan Field, the 14th commercial oil field in the UK North Sea, in 1975. He then founded and became Chairman of Cluff Resources plc. From the early 1980s, Cluff Resources plc began to focus on mineral exploration in Africa and made several significant discoveries including the Geita Mine in Tanzania, the Freda Rebecca Mine in Zimbabwe, the Ayanfuri Mine in Ghana and in Côte d’Ivoire, Yaoure the largest undeveloped gold deposit in West Africa. Algy Cluff was the Founder, Executive Chairman and Chief Executive of Cluff Gold (now Amara Mining Plc) from 2004 to December 2010, Executive Chairman until July 2011 and subsequently Non-Executive Chairman up to April 2012, when he stepped down to concentrate on Cluff Natural Resources.

Graham Swindells – Chief ExecutiveJoined CLNR as Chief Financial Officer in May 2013. He previously worked in corporate finance and M&A, during which time he specialised in advising midand small-cap public companies. Before joining CLNR, he was a Director in Corporate Finance at Ernst & Young. Previously, he was a Director in CorporateFinance at Arbuthnot Securities where he gained significant natural resources experience acting as nominated adviser and broker to a variety of companiesin the sector. He qualified as a Chartered Accountant in Scotland with BDO and subsequently spent two years at PricewaterhouseCoopers in corporaterecovery and restructuring.

Andrew Nunn – Chief Operating OfficerAndrew Nunn is a Chartered Geologist with over 20 years of experience working on exploration, mining and geo-environmental projects in Europe,Australasia and Africa. For the last 10 years he has worked on a wide variety of UK and European conventional and unconventional gas projects with aprimary focus on Carboniferous aged reservoirs. Andrew’s previous role was as Exploration Manager for Dart Energy. He holds a B.Sc. (Hons) in EconomicGeology and an M.Sc. in Environmental Management.

Peter Cowley – Non-Executive DirectorPeter is a geologist with 45 years of international experience in the minerals industry and has been involved in the discovery and development of a number of gold mines in Africa. Peter Cowley was previously Managing Director of Ashanti Exploration Limited and Group Technical Director of Cluff Resources Plc. He holds M.Sc and MBA degrees and is a Fellow of I.M.M.M. Until recently he was also a Non-executive Director of Banro Corporation and Amara Mining Plc.

Mark Lappin – Non-Executive Director Mark Lappin has over 35 years of experience in the oil and gas industry. Mark is currently Technical Director at Caudrilla and prior to that was Sub-Surface Director for UK and Netherlands at Centrica. Mark began his career as a Geophysicist at Phillips Petroleum and has held senior technical and commercial roles with Conoco Phillips, Exxon Mobil and Dart Energy.


Investor Base and Capital Structure

Key Shareholders (at 28 February 2019)

▪ IPGL (Michael Spencer) 11.8%

▪ Hargreaves Lansdown (Nom) 11.3%

▪ Fiske 6.9%

▪ Interactive Investor Trading 6.8%

▪ Janus Henderson 6.0%

▪ Jarvis 5.5%

▪ Guinness Asset Management 5.0%

▪ Barclays Wealth 4.9%

▪ Halifax Share Dealing 3.7%

▪ Lloyd Dorfman 3.2%

16

Capital Structure

Shares In Issue 549m

Options 47m

Free Float 85.4%

Cash at 30 June 2018 (unaudited) £0.9m

Cash raised post 30 June 2018 (gross) £2.0m

Debt NIL


Contact

17

Cluff Natural Resources Plc

Third Floor5-8 The SanctuaryLondonSW1P 3JS United Kingdom

Tel: +44 (0)20 7887 [email protected] Follow CLNR at

oil capital 27th march 2019 - cluffnaturalresources.com · located close to bp operated etap...

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