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TRANSCRIPT
OTTO ENERGYASX Small to Mid Caps Conference
19th MARCH 2009 LONDON
HIGHLIGHTS
International oil producer with attractive exploration and development portfolio across 4 countries
Current net working interest from Galoc production around 2,600 bopd
Galoc gross mid‐case reserves around 20 MMbbls
Current average OPEX around US$16 per barrel
Currently finalising JOA documentation with BHP Billiton to fund deepwater exploration in SC55, Philippines
Busy CY09 exploration and development activity schedule
Exploration drilling in Argentina, Italy
Gas field development in Turkey
Equity raising A$35 million via 15% placement and 3 for 4 entitlement, both at 7 cents / share
Funds for exploration and development projects, reduce corporate debt, working capital
Two major shareholders contributing $14 million to Equity Raising with long term investment strategy
OTTO HAS A BALANCED PORTFOLIO
Philippines – Oil (and gas) focus
Production and reserves at Galoc
Calauit oil appraisal project
SC55 deepwater exploration – HoA in place for farm out to BHPB
Europe – Gas focus
All lower risk and onshore
Turkey gas development project
High impact Italian exploration
Argentina – Oil focus
Lower cost onshore exploration
VALUATIONS ARE BASED ON SUCCESSFUL EXPLORATION
PHILIPPINES
Otto holds 18.28% indirect interest in offshore Galoc Oil Field
Via a 31% shareholding in the Operator, Galoc Production Company, which has a 58% interest
Vitol is the other shareholder in the Galoc Production Company
Otto estimates Gross mid‐case field reserves of the order of 20 MMbbls
First oil 9th October 2008
Production recommenced 25 February 2009 following a M&RS related shut down in Dec 2008
Currently producing at approximately 15,000 bopd gross
Field has produced over 1 million bbls gross
There are a number of incremental development options
NE flank of field
Attic volumes
Galoc North exploration
GALOC OIL FIELD PRODUCTION (SC14C)
Shut down Dec 2008 due to weather related issues and need to reattach Riser to Tether at LRTI with delays in recommencing production due to:
Time required to mobilise divers, parts and equipment over the Christmas and New Year period
Improvements to Mooring and Riser System (M&RS)
Installation of stern mooring arrangement, the Hold Back Mooring System (HBMS)
No FPSO operating costs charged during shut down
Minor costs incurred for upgrades to M&RS
Future benefits from infrastructure and operational improvements expected:Decreased operating expenditure through fuel cost savings
Anticipated increased uptime
Simpler and more controlled disconnections (during typhoon season)
GALOC OPERATIONAL ISSUES
GALOC MOORINGS AND RISER
FPSO
Water Depth 290m
Horizontal Wells
FPSO Mooring Tether
Flow line & Umbilical Riser Trees
Riser Base
Mooring Base
Jumpers
Additional buoyancy added to Upper RTI’
New Hold Back Mooring
System
Lower RTI
CASHFLOW TO FUND PROJECT FACILITIES
Assumptions 2HFY09
Gross production (mmbbls)
(mbopd – average daily)1.3 – 1.5
10.8 – 12.5*Average opex (US$/bbl) ~16
Realised oil price (US$/bbl) 40 50 60
Net Otto share of GPC Cashflow (US$mm) ~6 ~9 ~12
Otto’s Galoc operations funded by non recourse net project debt of US$8.8 million at 28 February 2009
Bullet payment of US$ 1.55 million to be paid by end of March 2009
Remaining GPC debt targeted to be repaid by 2H09, dependent upon
Realised oil price
Performance of two wells and rate of decline
Facility uptime and typhoon interruption* Over 4 months. No production 1st Jan – 24th Feb 09
Galoc Development Options
Otto to farm down from 85% to 25% with BHPB to operate (earning 60%) – Conditional HOA executed
JV partner TransAsia hold 15% interest
Water depths of 300 – 2,000mLarge permit area of 9,000km2
Currently finalising JOA documentation with BHPB to fund deep‐water explorationBHPB drill and cover costs of two deep‐water wells
BHPB pay cost of multi‐prospect 3D seismic survey
BHPB to reimburse Otto back costs.
Otto estimates documentation of farm in expected to be completed Q2 2009 with 3D seismic to follow in 2H 2009 and drilling in 2010.
SC55 EXPLORATION
1,000km DEEP W
ATER OIL & GAS TREND
Shell/Conoco Phillips oil discovery
SC 55Deep Water
Licence
SC 55Deep Water
Licence
SC55 PROSPECTS AND LEADS
ADDITIONAL PHILLIPINES APPRAISAL/EXPLORATION
SC50 Appraisal of Calauit Oil Discoveries (85%)Otto OperatorUp to 75MMbbls STOIIP Seeking farm‐in partner
SC51 Exploration (80%) Otto Operator11 prospects and leads on 2D & 3D recorded in 2007Combined potential in this offshore block is 500MMbbls STOIIP (mid case)Seeking farm‐in partner
SC69 Exploration (70%)Otto OperatorMinimal committed work program seismic with 1 well commitment in last year of 7 year term
EUROPE
Otto 35% Working Interest
Incremental Petroleum /TransAtlantic (Operator ‐ 55%)
Gross discovered volumes of between 10‐20 Bcf
6 gas discoveries 100% success rate + numerous prospects on 3D
Turkish gas prices remain robust ~US$12/Mscf
Gas Sales Agreement under negotiation
Development underway with first gas expected late 2009/early 2010
Gross CAPEX less than US$10 million expected to be paid for by gas buyer
TURKEY: EDIRNE DEVELOPMENT
Otto farming in for 50% WI
1 firm + 1 contingent well @ US$5million/well (dry hole)
Operated by AIM‐listed Ascent Resources Plc
Gazzata 1 targeting up to 350 Bcf gas
Strong Direct Hydrocarbon Indicators (DHI) on seismic ‐ on trend with producing gas fieldsProven producing province ‐ Po Valley has produced 15.6 Tcf gas
Existing nearby infrastructure and robust regional gas prices
Drilling first exploration well, Gazzata‐1 Q2 2009
Significant follow‐up potential with targets 50 to 500 Bcf
ITALY: PO VALLEY EXPLORATION
Gazzata‐1
Rubiera
Gazzata‐1
Rubiera
Gas Field
Gas FieldGas FieldGas FieldsGas FieldGas FieldGas Fields
Gas Field
Oil Field
ARGENTINA
SANTA ROSA EXPLORATION
EXISTING OIL
FIELDS
SANTA-ROSA OIL PROSPECT
COMBINED PORTFOLIO
NON OPERATED, ONSHORE OPERATED, OFFSHORETurkey, Italy, Argentina Philippines
PROJECT PIPELINE
SC55 Oil
SC51 Oil
SC69 Oil
Italy Gas
Argentina Oil
Galoc Phase 1
Exploration Development & Appraisal Production
Galoc Phase 2
SC50 Calauit
Turkey Gas
Turkey Gas
OFFSHOREOIL, S.E ASIA
ONSHORE GAS, EUROPE
FUTURE POTENTIAL
Phase 1 Galoc forecast
Discovered undeveloped Galoc Phase 2, Calauit, Turkey
Potential profile assuming just one exploration success across either Philippines, Italy or Argentina
Ultra deep water (SC55) potential off the chart.
Permits also contain multiple prospects with follow up potential.
+ DEEP WATER & NEAR DISCOVERY FOLLOW UP
POTENTIAL
RICK CRABB CHAIRMAN
(NON - EXECUTIVE)B JURIS (HONS) LLB MBA
JAAP POLL DIRECTOR
(NON - EXECUTIVE)PHD PHILOSOPHY AND
GEOLOGY
RUFINO BOMASANG
DIRECTOR (NON - EXECUTIVE)
NORASIAN CHAIRMAN
IAN MACLIVER DIRECTOR
(NON - EXECUTIVE)
JOHN JETTERDIRECTOR
(NON – EXECUTIVE)
Mr Rick Crabb holds a degree in law and business administration from UWA. He practised as a solicitor from 1980 to 2004, specialising in resources. He is now a full time Director, also being Chairman of Paladin Resources and other resource companies.
Dr Jaap Poll is the founder of the company with a distinguished 40 year career in petroleum management worldwide. He has extensive work experience in the Middle East, Europe, Central America, Africa, Asia and Australia.
Mr Rufino Bomasang, originally a mining engineer, has held numerous senior positions in Philippines industry and DoE. Including being former head of the Philippines DoE and former President of PNOC-EC.
Mr Ian Macliver is Managing Director of Grange Consulting Group Pty Ltd, which provides specialist corporate advisory services. He has many years experience as a senior executive and director.
Mr Jetter is a solicitor and barrister, a member of the Australia Law Society and has extensive international finance and M&A experience, including being the former CEO and head of investment banking in JP Morgan in Germany.
BOARD OF DIRECTORS
Distinguished board with ‘big company’ experience (Paladin, PNOC, Shell, Woodside, JP Morgan)
With the vision and capability to oversee the growth of Otto
INDICATIVE WORK PROGRAM
Activity Date
Galoc back on production 25 Feb 2009
Complete BHPB SC55 documentation Q2 2009
Sign Turkey Gas Sales Agreement Q2 2009
Drilling of 350 Bcf target (Gazzata‐1 well) in Italy Q2 2009
Drilling of up to 950 MMbbl target in Argentina Q2 2009
Farm‐out of Philippines projects (SC50 and 51) 2H 2009
Conduct 3D seismic in SC55 in Philippines 2H 2009
Commence gas production in Turkey Q4 2009/Q1 2010
Drilling in Philippines SC55 2010‐2012
Galoc Phase 2 and Calauit oil field appraisal/development 2010/2011
DETAILS OF CAPITAL RAISING
Placement
S.708 Placement under Company’s 15% capacity
73.9 million shares at 7 cents per share
Gross proceeds of A$5.2 million
All placees firm on entitlement
Entitlement Issue
3 for 4 share entitlement at 7 cents per share
Gross proceeds of A$29.7 million
Fully underwritten by Euroz
Equity raising of A$35 million via Placement and Entitlement Issue
Otto’s two major shareholders and Directors remain strong supporters
Participating in Entitlement Issue and Sub‐Underwriting to extent of A$14 million
Directors also providing a short term unsecured loan facility of A$1.53M and participating in the Entitlement Issue to approximately A$1 million
USE OF FUNDS
A$ Million*
Repay Shareholder & Director Loans 12.9
Italy Drilling 8.5
Argentina Drilling 2.5
Turkey Development 1.8
Working Capital / G&A / Contingency / Costs 9.3
Total 35.0
Assumes shareholder and Director loan facilities are fully drawn in order to pay the US$1.55 million March 31 2009 bullet payment on the Galoc project non recourse debt facility
* Assuming USD exchange rate of 0.65
TRANSACTION TIMETABLE
INDICATIVE TIMETABLE
Trading Halt Pre‐market, Tuesday, 17 March 2009
Firm bids to Euroz by 7pm (AEDT) Wednesday, 18 March 2009
Allocations advised 10am (AEDT) Thursday, 19 March 2009
Return of signed Confirmation and Settlement Advice by 2pm (AEDT) Thursday, 19 March 2009
ASX Announcement and return to trade Thursday, 19 March 2009
Ex entitlement date Tuesday, 24 March 2009
Expected DvP Settlement of Placement Shares Friday, 27 March 2009
Entitlement Issue Record Date Monday, 30 March 2009
Entitlement Issue Opens Thursday, 2 April 2009
Entitlement Issue Closes Monday, 20 April 2009
Shortfall Notice to Sub‐Underwriters Thursday, 23 April 2009
Settlement – Entitlement Issue Tuesday, 28 April 2009
POST RAISING CAPITAL STRUCTURE
million
Issued capital (fully paid ordinary shares) 492.7
s.708 Placement shares 73.9
3 for 4 share Entitlement Issue 424.9
Director Shares (subject to shareholder approval) 5.0
Total shares on issue 996.5
Existing unlisted options held by Directors and Staff ($0.20 – $0.60) 45.5
Sub‐underwriting options to be issued (subject to shareholder approval) 56.0
Total shares and options 1,098.0
Market capitalisation at 7 cents per share (excluding out of the money options) A$73.7
Cash at 28 February 2009 adjusted for equity raising proceeds (before issue costs)* A$37.3
Shareholder Loans at 28 February 2009* A$7.7
Galoc project non recourse debt facility at 28 February 2009* A$13.5
* Assuming USD exchange rate of 0.65
SUMMARY
Fully funded after capital raising with strong support from major shareholders and board
Galoc oil field back on production 25th Feb 09, first million barrels produced, Reserves of ~ 20MMbbls with further upside
Major Farm‐out deal with BHPB on SC55
Documentation to be completed Q2 2009
BHPB to fund 3D seismic program this year
Otto carried in deep water drilling in 1 well 2010 and 1 well 2011.
High impact exploration drilling campaign to commence Q2 2009
Low risk onshore gas drilling Italy ‐ Target up to 250 Bcf recoverable
Onshore oil drilling Argentina ‐ Target > 100MMbbls recoverable
Turkey onshore gas development production late 2009/early 2010
Galoc Phase 2 development 2010 onwards
DISCLAIMER
This presentation does not constitute an offer to sell securities and is not a solicitation of an offer to buy securities. It is not to be distributed to third parties without the consent of Otto Energy Ltd (the “Company”).
This presentation contains forward‐looking statements that are not based on historical fact, including those identified by the use of forward‐looking terminology such as statements containing the words “believes”, “may”, “will”, “estimates”, “continue”, “anticipates”, “intends”, “expects”, “should”, or the negatives thereof and words of similar import.
Management of the Company cautions that these forward‐looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied by the statements. Management believes that the estimates are reasonable, but should not unduly be relied upon.
The company makes no representation, warranty (express or implied), or assurance as to the completeness or accuracy of these projections and, accordingly, expresses no opinion or any other form of assurance regarding them. Management does not intend to publish updates or revisions of any forward‐looking statements included in this document to reflect the Company’s circumstances after the date hereof or to reflect subsequent market analysis.
OTTO ENERGY32 Delhi StreetWest Perth WA 6005Ph: +61 (8) 6467 8800Fx: +61 (8) 6467 8801Email: [email protected]