sky petroleum: exploration blocks in albania - summary
TRANSCRIPT
September 27, 2010
Sky Petroleum Inc. Exploration Blocks in AlbaniaSummary
1
Disclaimer
▪ This Presentation is a summary of Sky Petroleum Inc.’s Exploration Blocks in Albania and is for information purposes only. No investor should invest in the securities of Sky Petroleum based solely on the information contained in this Presentation. Before entering into any transaction directly or indirectly based on the information contained herein, recipients are advised to conduct their own investigation and analysis of Sky Petroleum and its project and the data contained in this Presentation in order to confirm the validity and accuracy of the said information. Information concerning Sky Petroleum, including risks related to its business and operations, are contained in Sky Petroleum’s filings with the Securities and Exchange Commission available at www.sec.gov (“SEC Filings”).
▪ This Presentation does not constitute an offer or invitation for the sale or purchase of securities or of any other asset, business or undertaking and shall not form the basis of any contract. No offer or sale of securities will be made in any jurisdiction unless registered under the Securities Act of 1933, as amended, and any applicable state securities laws or unless otherwise exempt from such registration requirements, and unless made in compliance with securities laws of applicable jurisdictions.
▪ Except for historical information, the matters set forth herein, which are forward-looking statements, involve certain risks and uncertainties that could cause actual results to differ. Certain factual information is derived from information provided by or otherwise reported by third-parties, which has not been confirmed or verified by Sky Petroleum. You are cautioned against relying on forward-looking statements or third-party information. Potential risks and uncertainties related to forward-looking statements include, but are not limited to, the reliability and accuracy of third-party information, obsolete technologies used in prior exploration programs, the ability to raise capital and fund exploration programs and working capital requirements, the ability to design and implement exploration and development programs in Albania on a timely basis, obtaining drilling equipment and exploration resources on a timely fashion, uncertainty of production from the wells, if any, the competitive environment within the oil and gas industry, the extent and cost effectiveness with which Sky Petroleum is able to implement exploration and development programs in the oil and gas industry, commodity price risk, general market acceptance, political risks associated with exploration and development activities, the successful technical and economic execution of Sky Petroleum’s intended exploration plan, risks related to the estimates and assumptions of management, risks related to valuation estimates, risks related to investments in penny stock and other risks and uncertainties disclosed in Sky Petroleum’s SEC Filings.
▪ Sky Petroleum has not made, does not make and will not make any representation or warranty, express or implied, as to the accuracy or completeness of information contained herein and none of them shall have any liability with respect to use of the information contained herein by their direct or indirect recipient or by any person to whom such information has been properly disclosed. Sky Petroleum does not undertake any obligation to update or publicly release any revisions to this Presentation to reflect events, circumstances or changes in expectations after the date of this Presentation.
2
Sky Petroleum introduction (1/2)
Corporate Profile Management and Board Members
Offices: Austin Texas & Dubai
OTC Bulletin Board: SKPI.OB
Operations
▪ Karim Jobanputra, CEO
▪ Michael Noonan, CFO Interim, VP Corporate, Corporate Secretary
▪ Robert Curt– Previously in ExxonMobil, Qatar Gas – Refining and Supply expert
▪ Oliver Whittle– Previously CEO of Raiffeisen Bank Albania,
Barclays Bank
▪ Albania: PSC signed for Blocks 4, 5 & Dumre
▪ U.A.E: Agreement for offshore Mubarek Field 1
▪ Russia Oil Field investment– Luzskoye field, Komi Republic of
the Russian Federation 1– Via Concorde Oil & Gas plc. 1
1 – investment impaired to zero as of 12/31/09
3
Sky Petroleum introduction (2/2)
Highlights
▪ US listed independent focused on the Balkans, Middle East and FSU
▪ Focused business model– Strategic focus on near production
opportunities– Low burn rate = positive cash flow– Positive cash on balance sheet – Relationships with proven operators
▪ Raised USD 38 million in 2005– Invested USD 25 million for Mubarek Project,
USD 1 million for Luzskoye– Approximately USD 5 million on balance
sheet (as of Q2 2010)
▪ Signed production sharing contract for 3 Blocks in Albania
▪ Experienced technical, operational, legal and financial capabilities
Trading Fundamentals
▪ Stock performance for the past 2 years, USD
▪ Share Capital– Issued and Outstanding – 59 M (as of 2Q10)
– Insiders and Institutions – approximately 25%
– No debt, convertibles or other derivatives
▪ Near-term catalysts for stock appreciation– Albanian reserve valuation and subsequent
production providing accretive cash flow– Mubarek participation agreement dispute
resolved– Capital appreciation from Concorde
001/201007/2008 07/201007/200901/2009 01/2011
0,2
0,4
0,6
0,8
SOURCE: Datastream
4
Contents
Basic description and unique characteristics
Exploration and development plan for the prospects
Economic value assessment of the prospects
Q & A
5
Basic description: in June 2010, we have been granted exclusive rights to 3 exploration blocks in Albania, covering 5,000 km2 (17% of Albania)
SOURCE: AKBN; Sky Petroleum
Onshore freeSky Petroleum
Capricorn Albania & Dyas Albania
Island International Exploration & Beach Energy
Manas Adriatic
Stream Oil and GasBankers Albania
Offshore free
Onshore licenses Offshore licenses
Sky Petroleum blocks
▪ Block 4– 2,264 km2 (540,000 acres) – 4 prospects– Estimated potential 350
MMBOE▪ Block 5
– 2,076 km2 (498,000 acres)– 5 prospects– Estimated potential 375
MMBOE▪ Dumre
– 623 km2 (149,000 acres)– Estimated potential >150
MMBOE
8
7
1
6
45
3
2
Dumre
E
DB
C
A
F
Kilometers
0 20
6
Basic description: our 10 prospects in Albania build on previous research of OMV and are located close to producing field and recent discoveries
SOURCE: AKBN; CIA; Manas Petroleum; OMV
Sky Petroleum block
Sky Petroleum prospect
Oil and gas in Albania
▪ Surface bitumen mined by Romans near Fier 2,000 years ago▪ Modern exploration in Albania began in 1918, but slowed down
during the communist era▪ Since 1991, Albania reopened attracting foreign exploration (Shell,
Occidental, OMV, …)▪ Three major players in Albania claim 22 billion barrels OOIP in their
blocks, but majority of potential not explored yet
Oil and gas in Sky Petroleum’s prospects
▪ OMV explored blocks 4 and 5 from 1998 till 2006– 1,265 km of 2D seismic data (238 km of new data by OMV)– Deep exploration wells with data in Palokastra and Kanina– Exploration discontinued due to relatively low oil price, cost
overruns and shift in regional focus▪ In June 2010, Sky Petroleum obtained exclusive license to continue
with exploration of blocks 4, 5, and Dumre▪ Our 10 prospects with 435 km2 total area, majority within 20-50 km of
producing fields, are estimated to contain ~900 MMBOE of predominantly oil reserves
Gas field
Oil field
Squepuri oil field discovered 2001
Delvina gas field (1.3 Tcf OOIP), largest in SE Europe) discovered 1988Kilometers
0 20
Manas Petroleum estimates 3,919 MMBOE of recoverable deposits (P90) in its blocks
Patos-Marinza(340 MMBOE) is the largest European onshore oil field
7
▪ Proposed AMBO oil pipeline▪ Capacity 0.8 Mbpd▪ Project currently on-hold
Geography: the prospects are located in proximity of existing and planned oil and gas infrastructure
SOURCE: AKBN; Energy Community; company websites; press search
Proposed oil Pipeline
Sky Petroleum blocks
Refinery
Tanker terminal
Proposedgas pipeline
Gas pipeline
Oil pipeline
Sky Petroleum prospect
▪ Proposed South-Stream gas pipeline (from Russia to Italy)
▪ Capacity 12 Bcm per year▪ Announced completion by 2015, start
date still not agreed upon▪ Most likely passing through Greece
very near south AlbaniaKilometers
0 20
Fier and Ballsh refineries ▪ Owned by ARMO (in 2008
privatized by Anica Enterprises and Mercuria Energy Group Ltd., and United States-based Refinery Associates of Texas)
▪ Capacity 33,000 barrels per day (currently not fully utilized)
Trans-Adriatic pipeline▪ 10-20 Bcm per year▪ Currently optimal route assessment
surveys ▪ Planned completion year unclear
▪ New 97 MW power near Vlore (oil, possible conversion to gas)
Porto Romano terminal▪ Modern (in operation since April
2009)▪ Owned by the government▪ Current storage capacity
– 20,000 m3 of oil– 10,000 m3 of LPG
▪ Loading/shipping capacity per day– 9,000 tones of LPG– 16,000 tones of oil
Vlora 1 port ▪ Storage capacity 65,500 m3
ARMO oil terminal▪ Storage capacity 30,000 m3
La Petrolifera Italo Albanese oil and gas terminal▪ Close to Italian refineries (120 km
to Brindisi, 200 km to Bari)▪ Connected to railway▪ Storage capacity 65,000 m3
8
History of exploration: significant exploration already done
471291
503
Block 5Block 4Dumre
SOURCE: AKBN; CIA
Sky Petroleum block
Oil seep
Gas discovery
Gas field
Gas condensate field
Oil field
Major thrusts
Sky Petroleum prospect
11
1213
Kilometers
0 20
1,265 km of existing 2D seismicKilometers
39
5
Block 5Block 4Dumre
751 explora-tory wells1
Number
1 Each block contains one deep well with full documentation and a number of shallower ones
99
Unique opportunity: previous Albpetrol, Premier Oil and OMV research concluded significant oil and gas deposits likely…
SOURCE: National Agency of Natural Resources; OMV final report
Dumre
Block 5
Albpetrol identified 2 prospects▪ Dumre▪ Belshi1
Albpetrol identified 5 prospects▪ Llogora▪ Kanina S.▪ Vurgu▪ Butrinti▪ Ramica
▪ 60 km2
▪ Large anticlinal carbonate structure
▪ Abundant, mature source ▪ Region is dominated by both
folding and piercement▪ Oil discoveries within 10 km
▪ 40 km2, over 10 km long structure
▪ 5 km from Vlora-10 and 11 producing wells
▪ Ionian Zone of Albanide fold▪ Original estimate 27% POS
Description
▪ ~500 km of low quality 2D seismic by Albpetrol and Premier Oil
▪ DUM-7 exploratory well 6,119 m, tested concept but missed target
▪ 136 km 2D seismic by OMV▪ KA-1/1 exploratory well by
OMV– 5,362 m, cost USD
37 million▪ Well evaluation▪ Magneto-telluric study
Research done
▪ Initial test well missed carbonates due to poor seismic imagining
▪ Top of carbonates location now estimated better based on well evaluation
▪ New seismic and well needed
Block 4
Albpetrol identified 4 prospects▪ Libohova▪ Konica▪ Palokastra▪ Tomorri
▪ 26 km2, on trend with producing fields NW
▪ Picari structure▪ OMV estimated 78 MMBOE of
reserves with 19% POS
▪ Good quality seismic (in a valley)– 42 km by Albpetrol– 69 km by OMV
▪ PK-1 exploratory well by OMV– 2,605 m– cost USD 7 million
▪ 150 m column with extensive shows of “dead” oil, structure may have been breached
▪ Porosity development is low, but extensive fracturing present
▪ Additional seismic needed to improve structural model
▪ 163 m column of high-density oil did not flow
▪ Low porosity and drilling difficulties made tests inconclusive
▪ Need to develop better structural model and redrill
ConclusionProspect
Further details and geological research on other prospects in the appendix (reserve potential and POS not estimated by OMV)
Block
1 Dumre prospect exploration may identify additional prospects including Belshi, but current data is not sufficient to consider Belshi a viable prospect
▪ 60 km2
▪ Large anticlinal carbonate structure
▪ Abundant, mature source ▪ Region is dominated by both
folding and piercement▪ Oil discoveries within 10 km
10
… and according to our estimates this potential may be even higher
SOURCE: Experts
Block 4
Block Prospect
Mean un-risked reserve potentialMMBOE
875
Ramica 50
Butrinti 75
Vurgu 75
Kanina South 75
Llogora 100
Tomorri 75
Palokastra 75
Konica 100
Libohava 100
Dumre 150
Block 5
Dumre
Total
12
15
7
7
25
15
18
14
12
10
135Total mean risked potential around 211 MMBOE
Exploratory well costUSD millionRationale
Low porosity, bad access
Far from existing production
Oil shows, appears breached
Far from existing production
Good source and seal, modest reservoir expected
Bad access (Cika Mountain)
Positive oil discovery nearby
Production nearby
Similar to Delvina, bad access
Close to producing fields
Probability of SuccessPercent
17
17
25
17
35
17
35
25
25
25
Target depthMeters
4,000
4,500
2,100
2,500
6,400
4,500
4,700
4,200
3,300
3,000
11
Analog fields: several analogs exist from previous exploration and development
SOURCE: AKBN; JS Herold; Wood Mackenzie; OMV
Sky Petroleum prospects
13
Kilometers
0 20
Kanina S.
LlogoraRamica
PalokastraTomorri
KonicaLibohova
Butrinti
Vurgu Delvina
Finiq-Krane
Gorisht-KoculAmonica
Ballsh-HekalDrashovice Cakrran-Mollaj
Frakulla
Seman-P.
Patos-Marinza
Kucove
Ballaj-Divjaka
Kolonja-B.Pekishti
Dumre
Sky Petroleum block
Gas field
Gas condensate field
Oil field
Sky Petroleum prospect
Butrinti▪ 75 MMBOE▪ 3,300m deep
Analog fields
Libohova▪ 100 MMBOE▪ 4,000m deep Cakrran-
Mollaj▪ 131 MMBOE▪ 3,000-4,500m
▪ Cret/Eoc.Carb▪ Since 1977
Dumre▪ 150 MMBOE▪ 6,400m deep
Ballsh-Hekal
▪ 46 MMBOE▪ 1,000-3,000m
▪ Cret/Eoc.Carb▪ Since 1966
Vurgu▪ 75 MMBOE▪ 4,200m deep
Patos-Marinza
▪ 385 MMBOE▪ 0-1,800m
▪ Mess-clastics▪ Since 1927
Ramica▪ 50 MMBOE▪ 3,000m deep Gorisht-
Kocul▪ 100 MMBOE▪ 1,000-2,500m
▪ Cret/Eoc.Carb▪ Since 1965
Kanina South
▪ 75 MMBOE▪ 4,700m deep Kucove
▪ 49 MMBOE▪ 0-1,500m
▪ Mess-clastics▪ Since 1928
Konica▪ 100 MMBOE▪ 4,500m deep Visoka
▪ 42 MMBOE▪ 800-1,000m
▪ Cret/Eoc.Carb▪ Since 1963
Llogora▪ 100 MMBOE▪ 4,500m deep Delvina
▪ 350 MMBOE▪ 2,800-3,400m
▪ Cret/Eoc.Carb▪ Since 1989
Palokastra▪ 75 MMBOE▪ 2,100m deep Amonica
▪ Cret/Eoc.Carb▪ Since 1980
▪ ~14 MMBOE▪ 2,000-2,500m
Tomorri▪ 75 MMBOE▪ 2,500m deep
▪ 27 MMBOEAquila (Italy)
▪ Offshore, 850m▪ Since 1998
Shpiragu
Visoka
12
Legal status: Sky has secured exploration license for 7 years and will automatically get a production license when oil or gas is discovered
SOURCE: Production Sharing Contract
Exploration period
First Second Third
Production period
Guaranteed Extension
2 years 3 years 2 years 25 years 5 years
Minimumexpenditure requirementsUSD
Timeframe
Total 2.65 million▪ 0.15 million
G&G evaluation
▪ 2.50 million(2 exploration wells) or 1 well and 100 km seismic
Total 3.15 million▪ 0.15 million
G&G evaluation
▪ 3.00 million (2 deep exploration wells)
Total 1.50 million▪ 1.25 million
150 km seismic acquisition
▪ 0.20 million G&G evaluation
▪ 0.05 million seismic reprocessing
No license ever terminated by the government in Albania
13
Fiscal regime: modern fiscal regime established and expected to remain in place
SOURCE: Production Sharing Contract; Albanian laws and regulations
100% working interest (exclusive rights)25+5 years production periodGovernment take ▪ Royalty 10% of sales revenues▪ Tax 50% of the realized profit▪ Profit sharing with AKBN 0-4% according to cumulative profitPossibility to export 100% of production and repatriate all net earnings100% cost recovery (however interest charges not tax deductable)Capital commitments: USD 7.3 million for explorationCompetitive local workforce
14
Stability: Albania is an emerging market making good progress towards Europe in its economic development and legal environment
SOURCE: Global Insight HIS; Nationmaster; press search
4.13.42.92.62.41.81.41.31.2
GDP per capitaUSD thousand nominal
0.90.6
0.30.30.30.20.10.20.1
200820072006200520042003200220012000
Foreign Direct InvestmentUSD billion
Rank 112 worldwide – behind Egypt, Bosnia, Paraguay, Guatemala, etc.
Rank 84 worldwide – ahead of Egypt, Bosnia, Paraguay, Guatemala, etc.
15
Current oil prices
Exploration and development of Albanian oil fields is attractive compared to alternatives and value-creating at current oil price
90
80
70
60
50
40
30
20
9085807570656055505 45403530252015100
81
6762
53
424133
3328
7510B C D E
F IG
H J
K
Saudi Arabia Spare CapacitySaudi Arabia (MC)Saudi Arabia (FC)Russia (MC)Brazil DW (FC)Venezuelan Heavy Oil (FC)US DW GoM (FC)Russia (FC)Angola DW (FC)Canadian Oil Sands (FC)US Stripper Wells (FC)US 10-30 b/d onshore Low Rate (FC)
Production capacity (2012)Million bopd
Breakeven price1 for oil capacity: 2008-12USD/bbl (real 2008 USD), WTI
Selected Supply Elements
MC = marginal cost capacity (already producing in 2007)FC = full cost capacity (new investments)
2007 liquids production capacity
2012 liquids production capacity
-2
A
L
ABCDEFGHIJKL
Cakrran-Mollaj (FC)
Gorisht-Kocul (FC)
Ballsh-Hekal (FC)
Patos-Marinza (FC)
1 Assumes an IRR of 10% for new capacity additions and cash breakeven for existing production capacity
SOURCE: Wood Mackenzie; EIA; IOGCC
ESTIMATE
16
Other players have succeeded in Albania – Bankers Petroleum
SOURCE: DataStream; Banker Petroleum; press search
Company description
▪ Market cap: USD 1,637 million▪ Enterprise Value: USD 1,610 million▪ Regional presence: Albania (used to
have also some US operations, but these have been spun-off to a newly established public company BNK Petroleum in 2008)
Granted licenses▪ 25 years development license for Patos-
Marinza1
– Proved reserves: 90 MMBOE– the largest onshore oilfield in Europe
▪ 25 years development license for Kucove1
– Proved reserves: 3 MMBOE▪ 7 years exploratory license for Block F
(adjacent to Patos-Marinza; prospective for natural gas)
▪ N/A ▪ Bankers Petroleum drills in Albania since 2004▪ By the end of 2009 Bankers completed 572 wells
(310 producing, 13 water disposal, 249 non-active)
Stock price (BNK at TSX stock exchange)Indexed August 2007 – August 2010
1 Option to renew for additional five-year terms
10,300
6,4385,8754,724
600
2004 20101Q
200920082007
ProductionBarrels of oil per day
Start Exploration Production
0
200
400
600
800
1,000
1.9. 1.11. 1.3.1.3. 1.5.1.9. 1.11. 1.5. 1.9.1.5. 1.9. 1.11. 1.7.1.1.1.7.1.1.1.7.1.1.1.7. 1.3.
2007 2008 2009 2010
DJI Bankers S&P/TSX
January 30, 2008 Bankers acquired a 50% interest in the Kucove field (reserves unknown)
March 3, 2010 Bankers announced increased volume of reserves by 34% to 92.9 MMBOE P90March 26, 2009 Bankers
announced 69.4 MMBOE P90 reserves in their Albanian prospects(Kucove 2.4 MMBOE)
17
0
50
100
150
200
250
300
1.1.1.1.1.1.1.10.1.7. 1.7. 1.7. 1.7.1.4. 1.10. 1.4. 1.10. 1.4. 1.10.
Other players have succeeded in Albania – Petromanas
SOURCE: DataStream; Manas Petroleum; Petromanas; press search
Stock price (PMI at TSXV stock exchange)Indexed August 2007-August 2010Company description
▪ Market cap: USD 204 million▪ Enterprise Value: USD 204 million▪ Regional presence: Assets only in Albania, Parent
Manas Petroleum also has assets in Canada
Manas Adriatic obtained licenses for a totalof 6,000 km2 in Albania▪ Blocks A, B, D and E since December 2007▪ Blocks 2 and 3 since July 2009
▪ 2D Seismic – >4,000 km done before Petromanas– 694 km added by Petromanas in 2008-09– 230 km planned for 2010-11
▪ Main prospects identified– 9 in blocks A, B, D and E– 3 in blocks 2 and 3
▪ Ready to drill an appraisal well in Shpiragu
▪ First drilling expected to start in early 2011
Manas Petroleum
DWM Petroleum
Manas Adriatic
Petromanas Energy (formerly WWI Resources)
Sold in Feb 2010
32% of shares of Petromanas given to DWM
Start Exploration Production
S&P/TSXVDJIPetro ManasManas Petroleum
2007 2008 2009 2010
Feb 24, 2010 Manas Adriatic acquired
March 18, 2010 Manas Petroleum estimated total reserves in its blocks at 3,919 MMBOE P90
Dec 2007 License for blocks A, B, D and E
July 2009License for blocks 2 and 3
May 27, 2010 raised USD 75 M for Albania exploration and development
18
Contents
Basic description and unique characteristics
Exploration and development plan for the prospects
Economic value assessment of the prospects
Q & A
1919
Sky Petroleum will start with the most promising prospects in each block
SOURCE: Experts
Block Prospect
Dumre
▪ Dumre
Block 5
▪ Kanina
Techniques
▪ Data reprocessing
▪ Seismic 50 km▪ Well
▪ Existing data reprocessing
▪ Additional seismic acquisition
▪ Well
Rationale
▪ Dumre 7 Redrill prospect has excellent structural model, proven source rocks and good drilling data
▪ Block contains multiple analog prospects which will be validated by success in the Dumre 7 prospect
▪ Very high reserve potential – 150 MMBOE in Dumre 7, an additional 100 MMBOE in analog features
▪ Kanina 1 proved hydrocarbons in the system; reservoir rock is present
▪ Need to re-evaluate porosity development and technology to deal with low porosity, high density oil
▪ Attractive prospect reserve potential – 75 MMBOE
Block 4
▪ Palokastra ▪ Existing data reprocessing
▪ Additional seismic acquisition
▪ Well
▪ Initial test well indicated the presence of hydrocarbons and producible reservoir rocks
▪ Need to develop a better structural model▪ Terrain conducive to good seismic data acquisition▪ Attractive prospect reserve potential – 75 MMBOE
2020
Sky Petroleum has a staged investment plan to develop the prospects to maximize their value at minimum risk
SOURCE: Experts
Exploration period
First (2 years) Second (3 years) Third (2 years)
Development activity Timing
▪ Q4 2010▪ Q1 2011▪ Q4 2011
▪ Q1,2 2011▪ Q3,4 2011▪ Q2, 2011▪ Q3 2012
▪ Q4 2011▪ Q2 2012▪ Q3 2013
InvestmentUSD million
1.51.5
25.0
0.50.51.0
18.0
0.51.07.0
Condition to proceed
▪ None▪ None▪ Preparation of improved structural model for
well path planning
▪ None▪ None▪ None▪ Positive indications from reservoir and
structural modeling
▪ None▪ None▪ Positive indications from structural modeling
PRELIMINARY
1 Includes gathering and assimilating of all previous data on all three blocks
▪ Dumre– Seismic reprocessing– Additional seismic acquisition – Exploratory well
▪ Kanina– Seismic reprocessing– Reservoir modeling studies– Additional seismic acquisition– Exploratory well
▪ Palokastra– Seismic reprocessing– Additional seismic acquisition– Exploratory well
1
21
Contents
Basic description and unique characteristics
Exploration and development plan for the prospects
Economic value assessment of the prospects
Q & A
22
Multiples
▪ Based on Enterprise Value of publicly traded E&P companies divided by P90 reserves
▪ Compared to Sky Petroleum expected P90 reserves
1
2
Value of Sky Petroleum’s Albanian is estimated at roughly USD 1-3 billion dependent on POS and reserve estimates
Stochastic DCF model
▪ NPV of individual prospects based on Discounted Cash Flow
▪ Real option valuation (option to quit after unsuccessful exploratory well)
▪ Monte Carlo simulation of stochastic inputs to capture uncertainty
USD 1-3 billion(estimated)
1
Stock price reaction
▪ Based on stock price reaction(net of index evolution) to capacity announcements of other players in Albania
▪ Normalized to MMBOE of reserves
3
Estimates by all 3 methods depend heavily on POS and reserve estimated
Detailed model mechanics and assumptions in the backup
23
Simplified1 stochastic DCF model mechanics
Cash flow, NPV
Capex
Opex
Revenue
Stochastic input
Key inputs Method Key parameters/illustrative curves
Probability of success
▪ Estimated per prospect▪ Based on source rock, reservoir
rock, trap and migration assessment
▪ Range 10% (Libohova) – 35% (Dumre)
Oil price prediction
▪ Based on long-term EIA forecast
▪ Normal distribution 02010 2015 2020 2025 2030 2035
Percent of reservesProduction profile
▪ Based on analogous fields in Albania (peak 7% of recoverable reserves 5 years after production start)
Addressable reserves
▪ Estimated per prospect (P50)▪ Based on estimated reservoir
size and saturation▪ Log-normal distribution
▪ Range 50 MMBOE (Ramica) –150 MMBOE (Dumre)
▪ TOTAL 875 MMBOE▪ Expected mostly oil
0
20Opex per BOE
▪ Based on typical Opex curve▪ Calibrated for Albania
Exploratory Capex
▪ Estimated per prospect▪ Driven by exploratory well cost▪ Based on analogous well costs
in the region
▪ Range USD 8 million (Palokastra) –USD 26 million (Dumre)
Development Capex
▪ Estimated per prospect▪ Based on exploratory Capex
0
2
USD per barrel
USD per barrel of production
USD per BOE of reserves
0
10
1 Full details in backup
1
24SOURCE: Experts
Block 4
Block Prospect
Mean un-risked reserve potential MMBOE
875
Ramica 50
Butrinti 75
Vurgu 75
Kanina South 75
Llogora 100
Tomorri 75
Palokastra 75
Konica 100
Libohava 100
Dumre 150
Block 5
Dumre
Total
Prospect specifics driven by mean reserve potential and probability of success assumptions1
90
30
80
90
90
90
90
90
90
90
Share of oil in the discoveryPercent of total reserve
Exploratory Well CapexUSD million
Oil
Gas
Exploration startYear
2010
2017
2018
2012
2019
2016
2011
2013
2015
2014
25
12
15
7
7
15
18
14
12
10
Probability of SuccessPercent
17
17
25
17
35
17
35
25
25
25
Total mean risked potential around 211 MMBOE
25
NPVUSD billion
100%
-2 0 102 4 6 8
3,02,52,01,51,0
0 NPVUSD billion
0,5
Under current assumptions, the mean NPV of the project isUSD ~2.1 billion (estimated)
▪ The probability of positive NPV is ~94%1
▪ Mean NPV is USD 2.1 billion(minimum USD -0.1 billion, maximum USD 13.6 billion, standard deviation USD 1.4 billion)
▪ The downside is very limited thanks to the staged investment decisions
▪ Dumre block is the main driver of the overall NPV with a mean valueUSD 0.4 billion
SOURCE: Monte Carlo simulation: 100,000 iterations
1
1 Assuming independent prospectsCautionary Note: NPV is complex and these valuations may not be indicative of the actual value.
Probability density
Cumulative probability of NPV<x
5% 90% 5%-0.13 4.70
0 42 6-2 8 10
6%
26
The market currently values Albanian P90 reserves at USD 10-30 per barrel, putting Sky Petroleum at USD ~1-3 billion (estimated)
1 One week before the event until two weeks after the event, net of index change for the same period2 Kucove field at the end of production life (discovered 1928, ~50% reserves depleted)Cautionary Note: Valuations based on the results of others may not be indicative of the actual value of Sky Petroleum.
▪ Bankers announced 45.3 MMBOE P1 reserves (1.7 MMBOE increase)
▪ Market cap grew by USD 24 million1
▪ Bankers acquired 50% of Kucove field2 (~24 MMBOE increase)
▪ Market cap grew by USD 240 million1
▪ Bankers announced 54.0 MMBOE P1 reserves (8.7 MMBOE increase)
▪ Market cap grew by USD 194 million1
▪ Bankers announced 92.9 MMBOE P1 reserves (23.5 MMBOE increase)
▪ Market cap grew by USD 763 million1
Event and stock reactionPrice per reservesUSD/MMBOE
32
22
10
142007
2008
2009
2010
Total potential value of Sky Petroleum’s Albanian assets is USD ~1-3 billion
Assuming ▪ USD 10-30 per BOE of
reserves▪ P90 reserves at 105
MMBOE based on the following– Mean risked
reserve potential 211 MMBOE corresponds to P50 reserves
– P90 reserves are typically ~50% of P50 reserves
– Mubarek field not included
SOURCE: Company reports; DataStream; press search
3
27
Contents
Basic description and unique characteristics
Exploration and development plan for the prospects
Economic value assessment of the prospects
Q & A
Exploration and development plan for the prospects