Transcript Proposed Placing Investor Presentation April 2013

OPERATING IN COTE D’IVOIRE
UK - Cote d'Ivoire Trade & Investment Forum
London
30 October 2013
OVERVIEW OF RIALTO IN COTE D’IVOIRE
 Key shareholders include a number of UK and Australian institutions plus the International
Finance Corporation (part of the World Bank group)
 Entered Cote d’Ivoire via acquisition of majority interest in existing operator in 2010
 More than US$ 150 mln spent to-date on activities including 3D seismic survey and drilling of two
new wells (plus one sidetrack)
 Around US$ 13 mln spent to 30 June 2013 on “true” local content, eg local staff, contracts, social
fees etc
 Local operating company Rialto CdI Limited 100% Ivorian - 10 employees / contractors
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COTE D’IVOIRE BLOCK CI-202 OVERVIEW
Proven basin with five discovered, undeveloped oil and gas fields
• Proven basin (15 wells drilled all of
which have encountered
hydrocarbons), but geologically
complex
• April 2013: Vitol Farm-In for 65% of
Rialto Cote d’Ivoire
Gazelle (1977)
Addax (1977)
Impala (1978)
Bubale (1981)
Hippo (2000)
Virgo
(2010)
Gas
Discovery
Belier
Belier
Ibex
(1985)
~77 bcf
(1974)
20
mmbbls
Gazelle EEA is located
within Block CI-202:
25 year production
licence granted for
Gazelle pursuant to
the Block CI-202
* Upon completion, Vitol will hold 65% of Rialto Cote d’Ivoire
** Excluding Gazelle EEA, for which Rialto’s working interest is 74%
Kudu
(1984)
~200 bcf
Eland
~100 bcf
Party
Participating
Interest
Effective
Interest
Rialto Cdl*
95%
85%**
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OUTLINE PLAN FOR DEVELOPMENT OF GAZELLE
 Low cost, minimum facilities:
 3 production wells planned (plus one contingent) targeting around 40 bcf P90 / 85 bcf P50;
 Conductor supported offshore facility;
 Multiphase pipeline to beach (ca. 8 km);
 Minimum processing
 Schedule and Costs:
 14 to 18 months from Final Investment Decision to first gas;
 Ca. $140 – 150 mln total capex to First Gas
 First step in area development plan
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REGIONAL DEVELOPMENT CONCEPT
Mature Gas Market
and Onshore Infrastructure
 Cote d’Ivoire has a mature power
generation network and exports
electricity from gas fired power stations
 Major new energy-intensive mining
projects planned
 Current gas supply deficit and
increasing demand predicted
Regional Infrastructure
Concept
 Existing discoveries on Block CI-202,
e.g.:
• Gazelle
• Hippo/Bubale
• Stranded discoveries in neighbouring
blocks
• Additional exploration targets in CI-202
and neighbouring blocks
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SIGNIFICANT PROJECTED DEMAND FOR NATURAL GAS
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SO IS THERE POLITICAL RISK IN COTE D’IVOIRE?
 Conventional political risk insurance tends to cover the following matters:
 Political violence, such as revolution, insurrection, civil unrest, terrorism or war;
 Governmental expropriation or confiscation of assets;
 Governmental frustration or repudiation of contracts;
 Business Interruption; and
 Inconvertibility of foreign currency or the inability to repatriate funds.
 Generally in Cote d’Ivoire (and indeed the continent as a whole), whilst there have been examples
of civil unrest, occurrences of other forms of political risk which affect the oil industry have been
rare
 In fact, the UK is far more “politically risky” from an investment standpoint given the periodic
revisions to economic terms!!
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OUR EXPERIENCES – GOVERNMENT RELATIONS
 Constructive engagement with Ministry of Energy (Directorate Hydrocarbons – DGH) and State Oil
Company (Petroci)
 Relatively high degree of competence given industry history in Cote d’Ivoire
 Key aim is to create good relations at all levels:
 Local staff key – they are the “front office” for your company on the ground, not your chaperones for when you visit
from abroad. Good, motivated Ivorian staff available
 Understand the political and governmental environment and constraints in which Govt. department/ state partner
works
 Engage constructively with other O&G operators
 A Company needs to build confidence which is best done by outperforming on commitments
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OUR EXPERIENCES – LEGAL, FISCAL AND FINANCIAL
 Some ambiguity of interpretation in PSC, e.g. cost oil / gas allocation
 Some disagreement regarding approach to negotiating new PSC for CI-202 – shallow water,
marginal discoveries as opposed to deepwater exploration. “It’s in the model PSC” not always
appropriate justification.
 Good availability of local legal and fiscal expertise:
 French speaking legal support with relevant experience a must
 Recent DGH and Petroci financial audits conducted co-operatively, some disagreement on
recoverability of certain costs
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OUR EXPERIENCES – ENVIRONMENTAL MANAGEMENT
 Communications could be improved with Environmental Regulator (ANDE)
 Lack of direct relationship with operators, as all must be via locally approved ESIA companies
 Lack of updates or changes to environmental laws communicated directly to operators preparing ESIAs.
 Extensive list of local companies (provided by ANDE) with average experience of preparing ESIAs
to international standards
 Emergency Response:
 Local security company and medivac available
 Lack of Emergency Response equipment (stockpile) available in-country to tackle any major incident if it occurs.
Operators must source internationally, which is very costly.
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OUR EXPERIENCES - INFRASTRUCTURE
 Abidjan airport better than Heathrow
 Easy entry into country (3 month visa, also “urgent” Visa On Arrival capability)
 Roads, hotels and offices in Abidjan are good standard
 Communications:
 Internet to international countries not great. Infrastructure within country not established to allow high speed
connection (ie. fibre optic). For consistent, stable connection to international office, satellite is the most viable option
but very expensive
 Service companies, supply bases:
 Some availability of international companies, but limited competition
 With regards to local companies:
 There is a general lack of awareness to approved & certified companies.
 Only a limited number have experience of E&P, so they can be more expensive than sourcing a company from abroad
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OUR EXPERIENCES – SOCIAL, EQUIPMENT AND TRAINING
EXPENDITURE
 Each PSC contains “Social, Equipment and Training” expenditure obligations
 Ongoing discussions with DGH regarding allocation of funds, particularly social – clear
preference of oil companies to fund activities (1) directly rather than pay to Government and (2) in
area of operations
 To-date, Rialto has constructed two schools in its area of activities, but we could have done and
do more – proposed restoration works to local orphanage and provision of medical equipment to
local hospital not yet approved, so funds remain unspent.
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SUMMARY
 Cote d’Ivoire remains under-exploited but future looks bright
 The relevant authorities understand the Energy Industry and consequently relations are largely
constructive and focused on results
 There are and will continue to be daily frustrations, but we at Rialto are excited by the
opportunities and are proud to be active operators in the region
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