Transcript Slide 1

Providing Marine and Geophysical Services in the
Booming Caspian Region
Forward Looking Statements
Materials in this presentation may contain statements which constitute forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may appear in
a number of slides in this presentation (together with any documents issued by Caspian Services Inc., and
available through its website) and give our expectations or forecasts of future events. You can identify these
statements by the fact that they do not relate strictly to historical or current facts. They use words such as
"anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar
meaning or the negative thereof or other variations thereof in connection with a discussion of future operating
or financial performance. In particular, these include statements relating to future actions, future performance
or results of current and anticipated services, sales efforts, expenses, the outcome of contingencies such as
legal proceedings, and financial results. Actual results could differ materially from the expectations and
projections set forth in this presentation. Such forward-looking statements are based on current expectations
and by their nature involve known and unknown internal and external risks, uncertainties and other factors
which may cause the actual results, performance or achievements to be materially different from those
expressed or implied. The information contained in our most recent Annual Report on Form 10-K or 10-Q,
including information included under the section captioned “Management’s Discussion and Analysis,” as well
as other information included under the caption “Risk Factors” and/or our other filings with the Securities and
Exchange Commission, identifies important factors that could cause such results, performance or achievements
not to be realized. Our forward-looking statements speak only as of the date they are made and we undertake
no obligation to update forward-looking statements to reflect events or circumstances after the date such
statements were made.
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Agenda
1. Market Opportunity
2. Operational Highlights
Marine Service
Geophysical Services
Marine Base
3. Conclusion
3
Market Opportunity
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Focused on Providing Marine and Geophysical
Services in Kazakh Portion of Caspian Sea
Offshore Oil Fields Estimated to Hold
About $4 Trillion in Recoverable Reserves
Field
Recoverable Reserves Value @ $75per Barrel
Low (bb) High (bb)
Low ($B) High ($B)
9 to 13
675 to 975
Darkhan
11
825
Nursultan
9.5
713
6 to 9
450 to 675
Tyub-Karagan
7
525
Karachaganak
2 to 6
150 to 450
Kalamkas
2.3
173
Kurmangazy
1.6
120
Zhambyl
1.3
98
Oman Pearls
0.8
60
Kashagan
Oman
Pearls
Kurmangazy
Kashagan
Kalamkas
Tyub-Karagan
Tengiz
Tengiz
Nursultan
Total
51
62
$
3,788
$
4,500
Source: Energy Information Administration, US Dept. Of Energy
Kashagan field development accelerating under new PSA management team
• CMOC Shell in charge of infrastructure development
• ExxonMobil in charge of drilling
• Transition causing temporary delay in contract awards
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Rapidly Growing Market
Spending on Seismic
Marine Services Fleet
North Caspian Sea
180
180
350
160
300
150
120
140
250
200
330
150
Million Dollars
Vessels
120
100
100
80
60
100
135
40
50
20
0
Onshore
0
2010
Peak
Source: Shell and Company estimates; only reflects Kashagan
requirements for full field development
Offshore
2010
Peak
Source: Company estimates; only reflects exploration phases, not
management or production phases.
Rock Island Construction
Unique Marine Services in North Caspian
• Sea is shallow – 6 to 12 meters – and freezes solid in winter
• Rock islands are built to protect piping from being crushed by winter ice
• Kashagan field estimated to require 80M tons of rock
Million Tons
Construction Rock Transport Demand
Forecast to Boom
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12
10
8
Others
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Oman Pearls
Kashagan
4
2
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Marine Service and Rock Transport Fleets
Need Port Facilities Like CSI Marine Base
Operational Highlights
Caspian Services Inc
History
• Set up in 1999 by UK and Kazakh nationals with marine services experience
Three Business Segments
• Vessels:
(Original) Charters ships on the Caspian Sea
• Geophysical:
(Acquired) Performs seismic work on- and offshore
• Marine Base
(Greenfield) Provides base services for captive and third-party
vessels
Senior Management
• Kerry Doyle (CEO) - Former Veritas-Caspian, Veritas DGC, WesternGeo
• John Scott (COO) - Former Schlumberger
• All have extensive experience in industry and emerging markets
Offshore Marine Services Fleet
Owned: 9 Shallow Draft Vessels
Leased: 6 Shallow Draft Vessels
Marine Vessel Services
Drivers for Growth:
• Just for Kashagan (sour)
• Construction and Drilling: 80 additional vessels including barges
• Increment requirements for Oman Pearls (sweet) and others
• Exploration and Development: Streamer vessel requirements for deeper waters
Competitive Advantages:
•
•
•
•
Barriers to entry – Shortage of suitable vessels, timing, environmental standards.
Infrastructure assets controlled – Marine base
Strong reputation with western and local clients
Experienced management.
Geophysical Services
• Same customer base as Marine Services
• Two basic types of projects
• Exploration
• Management
• Both onshore and offshore capability
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Geophysical Services
Drivers for Growth:
•
•
•
•
Licensing of open acreage by Kazakh Government
Migration from 2D to 3D to 4D
Managing reserves and reservoirs
Estimating reserves for financial reporting purposes
Competitive Advantage:
• Ability to offer turnkey projects
• Strong reputation with western and local clients
• Experienced management
State-of-the-Art Marine Base Located Close
to Major Offshore Field Development
Oman
Pearls
Kurmangazy
Computer Representation of CSI’s Atash
Marine Base on Bautino Bay
Tyub-Karagan
Kashagan
Tengiz
Atash Marine Base
• General marine services facilities
• Targeting rock transport
• Supports drilling activities: mud
plants, cleaning of cuttings and
associated transports
• Waste removal: Compliant with
environment regulations
• $71.8 million capital investment
• Fully operational by July 2010.
MOBY
•70,000m2 available for rock
transport, mud plants,
warehouses and office space
Overall Customer Base
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Conclusion
• Caspian Services Inc. is well positioned to capitalize on Kazakhstan’s booming offshore
oil industry.
• Strong demand for marine vessels with unique shallow draft form factors and ‘rock
island’ construction capabilities
• Growing demand for onshore and offshore seismic surveys
• Marine base positions CSI at forefront of Kazakhstan’s marine and geophysical services
• Strong operational management team
• Unique track record of transparent US GAAP financial reporting in Kazakh marine
services industry
Risk Factors and Backup
Risk Factors
• Concentration of customers: 88% of 2009 revenue was attributable to two customers.
CSI is dependent on the investment and development budgets of a few large
multinational and domestic companies for the bulk of its revenue.
• Crude oil and natural gas prices are volatile: Oil and gas exploration and development
budgets are strongly linked to the market price of oil and gas which historically have
fluctuated widely.
• Access to capital and credit: The marine and geophysical services businesses are
capital intensive. CSI’s liquidity and growth is dependent on the availability of equity
capital, long-term debt and bank credit. At maturity, CSI is not expected to be able to
repay its Convertible Notes in full from operational cash flow and will need to
refinance a portion of the Convertible Notes.
• Political and tax risk: The country in which CSI operates could experience political
change which could adversely impact the ability of CSI to operate or operate
profitably.
Company Structure