Transcript Document

PetroLatina Energy
Exploration and Production
in Latin America
October 2006
1
Forward Looking Statement
Certain statements contained in this document constitute “forward-looking statements”.
Such forward-looking statements involve risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the relevant entities, or the
results, to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. These forward-looking
statements are based on numerous assumptions regarding the Company’s present and
future business strategy and the environment in which the Company will operate in the
future. There can be no assurance that the results and events contemplated by the
forward-looking statements in this document, will, in fact, occur. The Company undertakes
no obligation publicly to release the result of any revisions to any forward-looking
statements in this presentation that may occur due to any change in the Company’s
expectations or to reflect events or circumstances after the date of this presentation. All
subsequent written or oral forward-looking statements attributable to the Company, or
persons acting on behalf of the Company, are expressly qualified in their entirety by the
cautionary statements contained throughout this presentation. As a result of these risks,
uncertainties and assumptions, a prospective investor should not place undue reliance on
these forward-looking statements.
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Aims and Goals
• To build an independent oil and gas company in
Latin America
• Provide strong growth returns to shareholders
• To do so in a socially aware fashion ensuring:
– Protection of the environment
– Development of the local employees
3
Achievements
• Company Listed on London Stock Exchange on 14th January
2005.
• Operations established in Guatemala.
• Completed two work-overs on the Las Casas structure, one of
which confirmed producible oil.
• Drilled and tested Las Casas 3X, confirmed presence of oil.
• Acquired Licence 7-2005 in recent Guatemalan licencing
round.
• Obtained two exploration licences in Colombia.
• Raised £15 million ($26.25 million) to fund 2006 work
programme in January 2006.
• Acquired Petroleos del Norte (“PDN”), a Colombian producing
oil and gas company.
• Raised £5.17 million ($9.8 million) in August / September
2006 to replace internal funds used to acquire PDN.
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Where we are today
• Two producing licences and five exploration
licences in Colombia and two licences in Guatemala
• Proved, probable and possible reserves of approx.
40 million barrels, with a further 90 million barrels
of potential.
• Current production of 500 barrels a day (“bopd”),
which could rise to 1,500 bopd with secondary
development of Colombian Fields
• Ownership of the Rio Zulia – Ayucucho Pipeline,
that currently generates $1 million in pipeline
revenue.
• Potential fast cash generator in Serafin Gas Project
in Colombia.
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Corporate
6
Shares & Shareholding
• Ordinary Shares $0.10 – 109,757,122
• Diluted
– 150,148,601
Options
Warrants
- 1,322,000
- 39,069,479
• Major Shareholders:
–
–
–
–
–
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Millenium Global Investments
Directors & Senior Management
Och Ziff Capital Management
Artemis Investment Management
Fidelity International / FMR Corp
16.49%
14.98%
10.10%
8.60%
4.23%
Management Team
• Chairman - Greg Smith
• President and CEO – Nicholas Gay
– (Formerly Chief Financial Officer – Petrokazakhstan and CEO,
Bitech Petroleum)
• Chief Operating Officer – Jay Scott
– (Previously Chief Operating Officer, Arawak Energy & Bitech
Petroleum)
• Chief Financial Officer – Ian Refault
– (Formerly Commercial Director, PetroKazakhstan (Downstream
Marketing) & VP Finance / CFO, Bitech Petroleum)
• Geologist – Kevin Dean
– (Previously Chief Geologist Arawak Energy & Bitech Petroleum,
Geologist at Mobil)
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Management track record
• Key members of the Team have:
– Worked together
– A history of generating strong returns to shareholders
(PetroKazakhstan, Arawak and Bitech)
• Successful record in:
– Running international E&P companies
– Public companies listed on the London, New York and
Toronto stock exchanges
– Discovering oil fields
– Developing oil and gas fields
• The team also has extensive experience in debt
and equity fund raising
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Colombia
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Location Map
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Rio Zulia – Ayacucho Pipeline
•183Km long, 10” dia.
•Two pumping stations
•25,000bopd capacity
•Currently transporting 12000bopd
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PDN Assets
• Tisquirama Licence
– Los Angeles field – 50% interest
– Santa Lucia field – 25% interest
• Lebrija Licence
– Dona Maria field – 100% interest
• Three technical evaluation licences
• 100% ownership of the Rio Zulia – Ayacucho
pipeline with 25,000 bopd capacity
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Colombian Producing Reserves
Millions of
stock tank
barrels
Gross
P1
Gross
P1+P2
Gross
P1+P2+
P3
Net P1
Net
P1+P2
Net
P1+P2
+P3
Los
Angeles
3.678
4.665
6.640
1.839
2.332
3.320
Santa
Lucia
2.593
17.363
39.514
0.648
4.341
9.878
Dona
Maria
0.266
0.266
0.266
0.266
0.266
0.266
Total
6.537
22.294
46.420
2.753
6.939
13.464
Table does not include Serafin gas reserves
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PDN 2005 Financial Results
• Turnover – US $7.2 million
• Earnings – US $0.9 million
• Operating Cash flow – US $3.2 million
PDN 2006 Financial Forecast
• Turnover – US $ 3.8 million
• Earnings – US $ 1.2 million
• Operating Cash flow – US $ 2.1 million
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(Post acquisition)
Crude Quality and Pricing
• Santa Lucia crude is:
– 18° API
– Priced against WTI
– Pricing formula = (WTI*0.95)-$6.85
• Los Angeles crude is:
–
–
–
–
–
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13° API
Priced against fuel oil 1
Pricing formula = (Fuel Oil 1*0.84)-$1.30
December 2005 discount to WTI-$18
September 2006 discount to WTI-$29
Los Angeles Field
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Los Angeles Tank Farm
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Santa Lucia Field
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Serafina Gas Well & Pipeline Tie-in
• Plans to work-over gas well on Tisquirama licence.
• High gas demand in Colombia ($2.50 mcf)
• 3.5km tie-in to nearby gas pipeline.
• Potential production 5-8 mmscf /day clean dry gas.
• Investment $0.6 million (net to interest).
• Potential payback – 2.5 months.
• Fast cash generator.
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PetroLatina Exploration Licences
• Midas
–
–
–
–
70% interest
Operator
6 year work programme
First year new and reprocessing of 2D seismic ($1.5
million)
– Potential based on leads – 90 million barrels
• La Paloma
–
–
–
–
65% interest
Non - Operator
4 year work programme
First year new and reprocessing of 2D seismic ($1.0
million)
– Potential based on leads – 20 million barrels
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Colombian Fiscal Position
• PDN
– Royalty 20%
– Ecopetrol back in right
• Exploration licences
– Sliding scale of royalty 5 to 25%
– No EcoPetrol back in right
• Corporate Tax – 35%
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Guatemala
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Guatemala - unexploited opportunity
• Under explored region with high potential
• Proximity and similarity in the geology to Mexico
• Trends in which major Mexican discoveries (e.g.
Nazareth Field) have been found extend into
Guatemala
• Positive and encouraging political and economic
environment
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PetroLatina’s Guatemalan Licences
Tortugas
Area 7-2005
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Licence 6-93
Las Casas
6-93 Licence
• Location – Peten Basin
• Area – 323,000 acres
• Term – 25 years from October 1993
• Reconfirmed production at Las Casas.
• Las Casas 1x - produced at 80 bopd
• Las Casas 3x - encountered oil. Swab test
produced oil.
• Still to test Huapac potential and additional nine
leads
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Licence 6-93 Leads & Prospects
HUAPAC
Area
Size
(acres)
Potential recoverable
reserves (mmbbls)
Las Casas
6,500
17.57
Huapac
4,900
3.1
7 Areas
Average of
4,900 each
2-5 each
2 Areas
13,000 &
26,000
3-10 each
Leads &
Prospects
Drilled /
Encountered
Hydrocarbons
Drilled / P&A
LAS CASAS
Leads /
Prospects
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Refurbished Service Rig
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3X Drilling Rig
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Drilling at 3X
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Tortugas – Licence 7 -2005
• Location – Peten Basin
• Area – 77,718 acres
• Term – 25 years from September 2005
• 13 wells drilled on the licence of which 8
encountered hydrocarbons
• Two main areas of interest Tortugas salt dome and
Atzam
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Guatemalan Reseves
Millions of stock tank
barrels
Las Casas
Proved
Proved &
Probable
Proved,
Probable &
Possible
0.096
1.156
17.657
Huapac
3.310
Tortugas *
0.309
0.596
3.872
Total
0.405
1.752
24.839
* This does not include Atzam which is estimated to be between 5 and 16
million barrels of potential reserves
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Fiscal regime
• Guatemala
–
–
–
–
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Royalty based on API of crude
Profit share, sliding scale linked to production
Cost recovery = 100%
Corporate Income tax at 31%
Marketing Options
XAN Field
Rublesanto
Tortugas
Licence 6-93
Lincence 7-2005
Las Casas
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Piedras Negras
Financial
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Colombian Work Programme
Oct
PDN Assets
Serafin Development
Tisquirama Licence Extension
TEA’s – Seismic re-processing
Midas & La Paloma
Reprocess Seismic
Seismic Acquisition
Well Studies
Geochemical Survey
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Nov
Dec
Q1 2007
Guatemalan Work Programme
Oct
6-93
Well 1x Completion & Testing
A7-2005
Facilities – Atzam / Tortugas
Atzam 2 Work-over
Tortugas Well Work-over
Tortugas 2nd Well Work-over
2D Seismic
New Wells
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Nov
Dec
2007
Likely Guatemalan Well Flow Rates
• Las Casas
– 250 bopd per well
• Atzam
– 200 bopd per well
• Tortugas (2)
– 200 bopd per well
• 2006 /2007 Work programme equals 850 bopd
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Illustrative Cash Flow From Guatemala
WTI= US $60
Production
Price
(net of discount)
Royalty
Opex
(including transportation)
G&A
EBITDA
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Per Barrel
Annual
US $
US $’000s
850
57.00
17,442
(15.39)
(4,709)
(4.50)
(1,377)
-
(2,000)
37.11
9,356
Group Cash Forecast Q4 2006
PetroLatina Energy PLC
Cash Forecast 9th October 2006
Month
US$
October
November
December
7,858,616
5,441,001
4,642,951
Oil sales proceeds
139,262
656,865
1,550,596
Other Income
182,269
156,125
449,626
321,530
812,991
2,000,222
937,451
792,443
729,220
937,451
792,443
729,220
1,539,839
547,406
321,096
261,855
271,192
247,757
0
0
410,000
Total CAPEX
1,801,694
818,598
978,853
Cash Balance c/fwd
5,441,001
4,642,951
4,935,100
Cash Balance b/fwd
INCOME
Total Income
EXPENDITURE
Expenses
Total Expenses
CAPEX
Guatemala
Colombia
Other - Repayment of Convertible Loan
Note: Cash forecast does not include potential oil production / revenues from the
Guatemalan work programme
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Summary
• New E& P Company with Latin American focus.
• Strong management team with extensive oil & gas and
international experience, together with track record of
running public companies.
• Acquired strong position in Colombia & Guatemala is an
under-explored but potentially prolific oil and gas
region.
• Have current production which can be rapidly increased
through secondary development in Colombia and drilling
success in Guatemala.
• Total 3P and potential reserves are approximately 130
million barrels.
• Well positioned for future growth, both organically and
through acquisitions.
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Additional Information
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Guatemalan Fiscal Regime
Licence
Royalty
6-93
20% for 30° API +/1% per degree API
change
7-2005
20% for 30° API +/1% per degree API
change
Estimated royalty 29 to 30%
Rate
Minimum
Government take
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<15,000 bopd =
40%
<20,000 bopd =
30.07%
Maximum
>75,000 bopd =
Government Take 75%
>90,000 bopd =
72%
Guatemalan Fiscal Regime
Cost Recovery
• Cost recovery statements required to be approved
• Only costs related to the defined zone of
commercial production are allowed
• Once allowed, approved cost recovery is fully
deductible in period approved
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Guatemalan - Corporate Income Tax
• Levied against a company’s profits
• Capital expenditure is 100% allowable in year that
it is incurred
• One third of profit share is deductible
• Tax rate is 31%
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