Transcript Standard Ophir Presentation

Myanmar Offshore Oil & Gas
Investment Opportunity
May 2015
Reader Advisories
The information in this presentation contains certain forward-looking statements. All statements other than statements of historical fact may be
forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate",
“plan", "continue", "estimate", "demonstrate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend",
“could", "might",
"should", "believe", "would" and similar expressions and include statements relating to, among other things, the anticipated ongoing strategy of
Canadian Foresight Group Pte. Ltd. (CFG) and CFG Energy Pte. Ltd. and development, drilling and acquisition opportunities and plans for CFG and the
anticipated performance of CFG’s properties. Such forward-looking statements or information is provided for the purpose of providing information
about the current expectations and plans relating to CFG and its current and future oil and gas assets (the “CFG Assets"). Readers are cautioned that
such information may not be appropriate for other purposes, including making investment decisions. In particular, this document contains forward
looking statements pertaining to: CFG’s corporate areas of focus; CFG’s capital raising plans; CFG’s operational and development plans and the timing
thereof; the quality and characteristics of the CFG’ Assets; expected performance in 2014 and beyond; the anticipated performance of the properties
to be explored and developed and the timing of certain matters related thereto; CFG’s capital budget requirements; the proposed fundraising, the
price per share, the use of proceeds for such offering, the levels of participation of insiders in such offering and the timing of certain matters related
thereto; the expected operational plans, including preparation, exploration, drilling and optimization activities, and the anticipated results therefrom;
expected capital cost reductions; and matters ancillary or related to the foregoing list. In addition, please note that information relating to estimated
reserves and resources are deemed to be forward-looking information, as it involves the implied assessment, based on certain estimates and
assumptions that the reserves described can be economically produced in the future. The forward looking statements in this presentation are based
on certain assumptions, including, without limitation: the quantity of reserves and resources associated with the CFG Assets; the oil and natural gas
production levels of the CFG Assets; the quality and characteristics of the CFG Assets; the source of funding for CFG’s activities including development
costs; development and drilling plans for those CFG Assets and the timing of results thereof; projections of commodity prices and costs; supply and
demand for oil; potential reserves and future production with respect to the CFG Assets, business strategy and objectives; exploration and drilling
plans; the costs associated with and the timing in relation to drilling wells; the costs of leases; capital expenditures; operating and other costs; the
timing of implementing certain operating techniques; royalty rates and taxes; expectations regarding the ability to raise capital and continually add
to reserves through acquisition and development; the sources of and the uses of cash generated from the business of CFG ; and the treatment under
governmental regulatory regimes, including with its quasi-governmental partner, MOGE. Readers are cautioned such assumptions, although
considered reasonable at the time of preparation of the information in this presentation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements.
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Reader Advisories
CFG’s actual results, performance or achievement could differ materially from those expressed in or implied by, these forward-looking statements
and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of
them do so, what benefits CFG will derive therefrom. These statements involve substantial known and unknown risks and uncertainties, certain of
which are beyond CFG’s control, including: the impact of general economic conditions; industry conditions; changes in laws and regulations including
the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; fluctuations in commodity prices
and foreign exchange and interest rates; stock market volatility and market valuations; liabilities inherent in oil and natural gas operations;
uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions of reserves,
undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in income tax laws or changes in tax laws and
incentive programs relating to the oil and gas industry; geological, technical, drilling and processing problems and other difficulties in producing
petroleum reserves; ability to secure drilling and service equipment; and obtaining required approvals of regulatory authorities. CFG’s actual
decisions, activities, results, performance or achievement could differ materially from those expressed in, or implied by, such forward-looking
statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur
or, if any of them do, what benefits that CFG will derive from them. Readers should be cautioned that the foregoing list is not exhaustive of all
possible risks and uncertainties. These risk factors should not be construed as exhaustive. Any financial outlook or future oriented financial
information in this presentation, as defined by applicable securities legislation, has been approved by management of CFG. Such financial outlook or
future oriented financial information is provided for the purpose of providing information about management's reasonable expectations as to the
anticipated results of its proposed business activities. Management of CFG believe that the expectations reflected in the forward-looking statements
are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included herein
should not be unduly relied upon. These statements speak as of the date hereof. Except as required by law, CFG undertakes no obligation to publicly
update or revise any forward-looking statements.
The information contained in this presentation does not purport to be all inclusive or to contain all information that prospective investors may
require. Prospective investors are encouraged to conduct their own analysis and reviews of CFG and the information contained in this presentation.
Information in relation to the previous experience of CFG’s management is not indicative of the future performance characteristics of CFG. Without
limitation, prospective investors should consider the advice of their financial, legal, accounting, tax and other advisors and such other factors they
consider in investigating and analyzing CFG.
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Highlights
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Canadian Foresight Group Pte. Ltd. (“CFG”) was established to pursue international
E&P opportunities in SE Asia and successfully participated in Myanmar’s inaugural
offshore bidding round.
CFG holds an 80% interest in Myanmar’s offshore Block M15 and is the Operator
Myanmar’s offshore oil sector is dominated by the Super-majors and Majors.
Currently, CFG is the only pure Myanmar offshore investment opportunity
available.
CFG’s directors and management team have extensive expertise in both onshore
and offshore oil/gas exploration and development, particularly in Asia.
Opportunity: Proposed US$30.0 million financing
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Corporate Structure
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Canadian Foresight Group Pte. Ltd and
its wholly owned subsidiary CFG Energy
Pte. Ltd. are Singapore private
incorporated companies.
Shares issued and outstanding:
148,203,555.
Capital raising: Planning to raise US$30
million by 2Q 2015.
CANADIAN FORESIGHT GROUP PTE. LTD.
100%
CFG ENERGY PTE. LTD.
100%
CFG ENERGY PTE. LTD.
(MYANMAR BRANCH)
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Directors and Management
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Songning Shen – Chairman & CEO - Mr. Shen is a Canadian Professional Geologist residing in Calgary. Mr. Shen holds an M.Sc. from the
Norwegian University of Science and Technology. Mr. Shen is recognized as being one of the discovers of China’s biggest offshore
oilfield, the SZ36-1 field. Mr. Shen was a Co-founder, Co-Chairman and Director of Sunshine Oilsands Ltd., a company listed on the Hong
Kong Stock Exchange and the Toronto Stock Exchange, which under Mr. Shen’s leadership grew to over 1.0 million acres of oilsands
leases with a resource base of 4.2 billion barrels.
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Kevin Flaherty - Executive Director - Mr. Flaherty holds a MBA, Finance and resides in Vietnam, where he is a managing director of
Energy & Natural Resource Investments at Saigon Asset Management. He co-founded two natural resources firms in Vietnam: Tiberon
Minerals and Keeper Resources; both of which were subsequently acquired by Asian-based investment firms.
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Greg Turnbull - Director - Mr. Turnbull is a lawyer, currently a senior partner at the Calgary office of McCarthy Tétrault LLP. He
currently serves as a director of a large number of publicly listed oil and gas E&P companies, including Crescent Point Energy Corp.,
Storm Exploration Inc., Heritage Oil Corporation, and Marquee Energy Ltd.
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Raymond Fong – Director - Mr. Fong is a Canadian Professional Engineer. Mr. Fong was a director of China Coal Corporation from 2007
to 2012. He held previous directorships with Abenteuer Resources Ltd., Stealth Ventures Ltd., Zapata Capital Inc., director and
president of Ultra Capital Inc. and a former director of United Rayore Gas Ltd. Mr. Fong is currently serving as a Director for Sunshine
Oilsands Ltd. and Palinda International Group.
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Wei (David) Wu - Director - Mr. Wu has over 30 years of experience as owner and operator of businesses in China. He is a Director of
West Pacific Petroleum and Yunnan Tianli Trading Ltd. He has also been a Manager of Husky Energy Challenge Holdings since
September 2005. Currently, Mr. Wu serves as the Chairman of the Board of Directors of Caiterra International Energy Corporation.
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Directors and Management
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Perla Woo - Vice President of Corporate Operations - Ms. Woo is Canadian Professional Engineer, with a degree in Engineering from the
University of Calgary. She was a Co-Founder of Sunshine Oilsands Ltd., and was Senior Vice President until September 2008. Ms. Woo
has over 20 years experience working in the oil and gas industry in Canada in the fields of reservoir engineering, exploitation, and
pressure transient analysis.
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Shan Li - Vice President of Finance - Ms. Li has been the Investment Manager of the Strategic Investment Division of the Bank of China
Investment Group since 2010 and previously served as the Vice-President of BOCI Asia Limited. She has been involved in numerous
IPOs and major M&As transactions.
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Kyaw Moe – Myanmar Special Representative – Mr. Kyaw Moe has 15 years of media and communication working experience in both
the corporate and public sector.
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Myanmar 2013 Offshore Bid Round
Offshore Bid Round Results
Blocks
Selected Candidates
Shallow Water Blocks
A-4
Woodside & BG Group
A-5
Chevron
A-7
Woodside & BG Group
M-4
Oil India & Mercator Petroleum & Oilmax Energy
M-7
Fosun & Tap Oil
M-8
Berlanga Holding
M-15
CFG
M-17
Reliance Industries
M-18
Reliance Industries
YEB
Oil India & Mercator Petroleum & Oilmax Energy
Deep Water Blocks
AD-2
Woodside & BG Group
AD-3
Ophir Energy
AD-5
Woodside & BG Group
AD-9
Shell
AD-10
Statoil & ConocoPhillips
AD-11
Shell
MD-2
ENI
MD-4
ENI
MD-5
Shell
YWB
Total
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DOMINATED BY
SUPER-MAJORS
&
MAJORS
Bids Closed : November 2013
Results Announced: March 2014
CFG Contract Signed: March 2015
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PSC Signing Ceremony – March 30,2015
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CFG signed the Production Sharing Contract
for Block M15 on March 30, 2015.
Ceremony attended by 7 Government
Ministers including the Minister of Energy,
the Managing Director of MOGE,
ambassadors, and over 70 government
officials.
Coverage on Myanmar TV and in
Newspaper.
Myanmar views the finalization of the
offshore contracts to be a milestone in the
country’s development and have pledged
full support to CFG and other operators to
implement their
exploration
and
development programs.
The Production Sharing Contract (PSC) signing ceremony at Nay
Pyi Taw, Myanmar on March 30, 2015
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Strong Local Partner
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CFG’s 10% local partner on Block M15 is
“Century Bright Gold”, a subsidiary of the
KMA group, one of Myanmar’s leading
commercial firms.
KMA Group is a diversified conglomerate
controlling the KMA Hotel Group, CB
Bank, CB Insurance, Golden Myanmar
Airlines, etc.
KMA Group has solid governmental
relationships.
Never on the US or European Union
Sanction List.
KMA is carried for all exploration costs on
Block M15 up to the Declaration of
Commerciality.
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Block M 15 - Oil and Gas Prospectivity
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MULTIPLE
TARGETS
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Block MD5 -Shell
Water depths on the block
drop from 30 meters in the
east to about 1600 meters
in the west.
Multiple play types are
present across the block
with multi-TCF prospects.
Block M15 - CFG
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The Kitchen:
Large Volumes of Gas Have Been Generated on Block M15
• Basin Modelling demonstrates
that the rich Oligocene source
rock kitchen on the western part
of Block M15 has generated 80 –
100 BCF per square. kilometer,
more than sufficient to source
the multi-TCF traps on Block M15.
• Deep water prospects directly
overlie source kitchen areas, in
shelf areas, migration pathways
lead directly to prospect
locations.
Volume of Gas Generated per Square
Kilometer showing Prospect Outlines
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The Prospects:
Numerous Multi-TCF Prospects on Block M15
Prospect
Number
Name
P10
P50
P90
BCF
BCF
BCF
1
Deep Water Turbidite Basin Fan
17323
10055
5736
3
Oligocene Horst Block
1171
645
376
4
Miocene Sandstone Pinchout – AVO
supported
8300
3400
1100
5
Yetagun - Like Basement High
110
75
35
6
Carbonate Buildup
20406
9769
4490
The Leads:
Lead
Number
Name and Description
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Deepwater Turbidite lacks seismic control
3a
Oligocene Horst Block – gravity defined,
may be large in size
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Potential Oligocene oil-prone basins
defined by satellite gravity
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Prospect 1 – Deep Water Turbidite Fan Complex
Isopach of Fan Sequence (Meters) with seismic profile
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Block MD5
-Shell
Block M15
-CFG
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Turbidite Fan Complexes are the “Play of the Decade” and have
spurred the participation of majors and super-majors in Myanmar
Offshore.
Multi-TCF fields are likely.
Block M15 Turbidite Fan Complexes extend onto the adjacent
block held by Shell.
Estimated P50 Prospective Resources: 10.1 TCF.
B
A
Line PCM 04 65
A
4 km line spacing
B
Area 245 sq km
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Prospect 4 - Miocene Pinchout – AVO supported
AVO amplitudes showing interpreted gas-charged area with seismic profile
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B
A
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A
B
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Miocene sandstones are
truncated adjacent to a
large shelf-bounding fault.
A prominent AVO
(Amplitude vs Offset)
anomaly suggests that the
sandstone package is gascharged.
Estimated P50 gas
resources of 3.4 TCF.
Stacked sands may
increase prospective
resources significantly.
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Prospect 6 – Carbonate Buildup
Characterized by underlying flat-zones and cross-cutting channels
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A
Large carbonate buildup displays prominent flat zones.
Cross cutting channels are apparent, separating the
down-dip areas characterized by flat-zones from the
updip portion tested by the well M15-1.
Very high porosity and permeability is expected with
attendant high estimated recoverable resources of P50
9.7 TCF.
B
A
B
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Block M15 Operations Schedule
Accelerated Work Schedule to Maximize Value
2015
2016
2017
2018
2019
2020
2021
Optional
2015
Estimated Capital Expenditures
2016
2017
$17.5 MM $25 MM
2018
$25 MM
2019
2020
$25 MM
2022
Optional
2021
2022
$25 MM
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Seismic Acquisition
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Acquisition costs are the lowest they have
been in 25 years. Estimated cost for a
5000 sq km survey: $17 MM.
“First Mover” advantage in approvals,
costs, and partnerships.
Recent development of Broadband
acquisition technology has significantly
improved gas play identification.
CFG will have a competitive advantage in
acquiring offset Block M16 and in farm-in
discussions with offset Block MD – 5 held
by Shell.
Allow for the rapid testing of plays by the
drill bit on M15, first well Q4 2016.
Area of 3D Survey –
5000 sq km
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Block M15 – Eastern Portion Evaluation
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The entire eastern portion of M15 has sparse
seismic coverage.
Regional satellite gravity suggests that Oligocene
basins are present similar to the oil-prone
Tanintharyi Basin immediately north of Block
M15 .
The area will be evaluated using air gravity, which
can identify potential basins and prospective
structures at low cost - $1.0 - $1.5 MM total
estimated cost for the survey.
Area of 3D
Area of Air Gravity
Seismic Survey – Survey – 8000 sq km
5000 sq km
Area of 3D
Seismic Survey –
5000 sq km
Area of Air Gravity
Survey – 8000 sq km
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Economics
Economic Scenarios
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Two economic models have been
constructed to estimate the NPV and IRR
of gas developments on Block M15.
The Shelf Model assumes development
of gas reserves in water depths of 300 –
400 meters using a fixed platform
solution. The shelf model is applicable to
Prospects 3a, 4, 5 and 6. Resource sizes
of 2, 5 and 10 TCF have been modelled.
The Deepwater Model assumes gas
reserves in water depths 1500 – 2000
meters using a SPAR platform solution.
The model is applicable to Prospects 1, 2
and 3. Resource sizes of 3, 6 and 10 TCF
have been modelled.
Water Depth and Type of Production
Platform Modelled
Shelf Model
Deepwater
Model
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Economics before Capital Recovery
Revenue
Contractor
Capital Recovery
Contractor
Netback
Govt Profit Share
Royalty
Corporate Tax
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Myanmar Fiscal Terms Summary
Marginal government take of >70%
Key Fiscal Terms Summary
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12.5% royalty rate.
60% cost recovery threshold.
Sliding scale state profit allocation of 55-80%
in the deepwater and 60-90% on the shelf
depending on daily production rate.
25% corporate tax (five year tax holiday from
first production) levied on profit oil only
25% sales gas domestic market obligation
sold at 90% of fair market value.
20% MOGE participation after commercial
discovery (25% if reserves are >5 Tcf)
MOGE fully carried before back-in,
contractor repaid from state’s allocation of
cost gas.
(1) Calculated assuming maximum production rate in each tranche applicable
Illustrative Contractor Netback
($12.5)
($48.1)
$100.0
($9.8)
$29.5
Revenue
Royalty
Govt Profit Corporate Tax Contractor
Share (55%)
Netback
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Indicative Field Characteristics
Range of discovery sizes and locations modelled for shelf (300–400 M water depth) and
deepwater (1500–2000 M water depths)
Regional Overview
Development Scenarios
• Range of scenarios considered around water depths, recoverable
volumes and distance to tie-in.
• Illustrative field assumptions based on Yetagun field characteristics
for the shelf prospects, and Shwe field characteristics for the
deepwater .
• Shelf prospects lie in water depths of 300 – 400 m, the reservoir
depth from seafloor is 2,000 m and estimated resources are 4.5 - 20
Tcf gas – condensate. Cases modelled are 2, 5 and 10 TCF.
• Deepwater turbidite prospects lie in water depths around 1600m,
reservoir depths from seafloor are 2000 – 3000 m, and estimated
resources are 5.7 - 17 Tcf dry gas.
• Tie-in to Yetagun facilities is possible due to declining Yetagun
100 KMS Radii - Distance to Kanbauk Metering Station
Gas Prospects
production, current capacity is 1 BCF/D. Tie-in distances is about
110 kms.
• A dedicated pipeline to the Kanbauk metering station is required for
larger outputs. Tie-in distance is about 280 kms.
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Shelf Indicative Development Solution
1-3 WHP with a processing platform with gas piped to Yetagun (110 kms) or
alternately to Kanbauk 240 km
Assumed Development Details
Indicative Development Schematic
• $145mm E&A costs: four well exploration and appraisal programme with semisubmersible rig assumed from 2016/2017.
• Multiple WHP development solution assumed.
• All in production well costs ~$25 mm per well including topsides drilling
100 km pipeline to Yetagun
Or
300 km pipeline to Kanbauk
Kanbauk
Landfall
infrastructure costs.
• Peak well flow rate of ~45 mmcf/d based on available information on the Shwe
Gas project.
• 20” Pipelines to Yetagun or alternately to Kanbauk, with an assumed maximum
flow rate of 225 mmcf/d per pipeline.
• Pipeline costs to Yetagun account for ~30% of total development capital costs, and
FSU
to Kanbauk up to 55% of total development capital costs.
• Does not consider any sharing of infrastructure or costs with other potential
Source: Genesis Engineering - Tho Chu Field
Development
discoveries.
• Current modelling is based on single, standalone, discoveries.
Source: IHS Que$tor
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Deepwater Indicative Development Solution
Caisson spar buoy indicative development solution with gas piped to Yetagun (150
km) or to Kanbauk 280 km
Indicative Development Details
Indicative Development Schematic
• $300mm E&A costs: three well exploration and appraisal programme with drill-ship assumed from
Landfall
2017/2018.
• Caisson spar buoy development solution assumed for both the deepwater and shelf with water
depths of >1,500m.
– Subsea development challenged given high number of wells.
– Current maximum for Tension Leg Platform development ~1,600m.
– Analogue spar development on Shell’s GoM Perdido development (~2,500-2,900m)
• Production wells drilled from Tender Support Vessel (“TSV”).
– All in well costs ~$50mm per well including topsides drilling infrastructure costs.
– Peak well flow rate of ~45 mmcf/d and recovery of 333 Bcf based on available information on
Caisson spar buoy
development with
drilling facilities
150 km
(Or
280km pipeline)
the Shwe Gas project.
• Pipelines assume a maximum flow rate of 225 mmcf/d per pipeline and nominal diameter of 20
inches. Pipeline costs to Yetagun (150 kms) for a development in deepwater account for
approximately 30% of total capital costs while costs to the Kanbauk landfall (320 kms) account for
55% of total capital costs.
• Does not consider any sharing of infrastructure or costs with other potential discoveries.
• Current modelling is based on single, standalone, discoveries.
Source: IHS Que$tor
Development
wells drilled
with TSV
Source: IHS Que$tor
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Prospect NPV10 / IRR Analysis
Contractor Full Life-Cycle NPV10 at Various Prices and Reserve Sizes
9.0
Shelf - 5 Tcf / 110km
Pipeline to Yetagun
8.0
Shelf - 10 Tcf / 110km
Pipeline to Yetagun
7.0
Deepwater 3 Tcf /
150km Pipeline
6.0
Deepwater 6 Tcf /
150km Pipeline
5.0
26%
Shelf - 2 Tcf / 110km
Pipeline to Yetagun
23%
20%
10 TCF Shelf
$4.25 BBN
Deepwater 10 Tcf /
150km Pipeline
IRR (%)
NPV10 (US$bn)
10.0
Contractor IRR at Various Prices and Reserve Sizes
17%
10 TCF Deepwater
$1.4 BBN
4.0
14%
3.0
2.0
11%
1.0
-Wellhead Export $6.5
Domestic Price $5.8
$7.0
$6.3
$8.0
$7.2
$9.0
$8.1
$10.0
$9
$11.0
$9.9
8%
$12.0 Wellhead Export $6.5
$10.8 Domestic Price $5.8
$7.0
$6.3
$8.0
$7.2
$9.0
$8.1
$10.0
$9.0
$11.0
$9.9
$12.0
$10.8
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Economic Summary
• Shelf Gas developments of 10 TCF yield NPV10 of $4.25 BBN
assuming the most likely $8 /mcf gas price.
• Deepwater gas developments of 10 TCF yield NPV10 of $1.4
BBN assuming the most likely $8/mcf gas price.
• Rates of return are heavily dependent upon discount rate and
gas price, however they are relatively insensitive to partner
carry and capex.
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Summary
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Multi-TCF prospects on Block M15 have
strongly positive economic valuations.
Exploration and investment by the Super
Majors and Majors in the Myanmar
offshore oil and gas sector increases the
value proposition for CFG.
With most of the Myanmar offshore
acreage taken up by the Super-majors and
Majors, CFG is a unique opportunity for
investors to participate in Myanmar’s
offshore oil & gas sector.
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Contact Information
SONGNING SHEN
Chairman of the Board and Managing Director
Canadian Foresight Group Pte. Ltd.
Mobile: 1-403-875-2129
Office: 1-587-353-3711 ext. 1120
Email: [email protected]
CANADIAN FORESIGHT GROUP PTE. LTD.
Calgary Office:
Suite 800, 717 7th Avenue SW, Calgary, AB T2P 0Z3, Canada
Office: 1-587-353-3711
Fax: 1-403-452-0907
PERLA WOO
Vice President
Canadian Foresight Group Pte. Ltd.
Mobile: 1-403-827-6328
Office: 1-587-353-3711 ext. 1121
Email: [email protected]
Yangon Office:
Unit 8, 3rd Floor, Cooperative Business Center, Corner of
Sayarsan Road & New University Road, Bahan Township,
Yangon, Myanmar
www.canadianforesight.com
KEVIN FLAHERTY
Executive Director
Canadian Foresight Group Pte. Ltd.
Mobile: +84 978 706 255
Email: [email protected]
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