Transcript 2. Attractive per well economics

Compeer Area Viking
Resource Play
Focus on Viking light oil resource
plays with new technology
Key Considerations
Certain statements in this presentation constitute forward looking
statements or forward looking information within the meaning of
applicable securities laws (“forward looking statements”). Such forward
looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or
achievements of Strongbow Resources Inc.(“Strongbow” or “the
Company”), or developments in Strongbow’s business or in its industry,
to differ materially from the anticipated results, performance,
achievements or developments expressed or implied by such forward
looking statements. In particular, statements concerning oil and gas
reserves may involve the implied assessment that the resources
described can be profitably produced in the future, based on certain
estimates and assumptions. No independent third party has reviewed
the reasonableness of any such statements, estimates or assumptions.
No member of the Strongbow represents or warrants that such forward
looking statements will be achieved or will prove to be correct. Actual
future results and operations could vary materially from the forward
looking statements. Similarly, no representation or warranty is made
that the assumptions on which the forward looking statements are
based may be reasonable. No audit, review or verification has been
undertaken by Strongbow or an independent third party of the
assumptions, data, results, calculations and forecasts presented or
referred to herein. The recipient acknowledges that neither it nor
Strongbow intends that Strongbow act or be responsible as a fiduciary
to the recipient, its management, stockholders, creditors or any other
person.
Each of the recipients, by accepting and providing this Overview
Memorandum respectively, expressly disclaims any fiduciary
relationship and agrees that the recipient is responsible for making its
own independent judgments with respect to any transaction and any
other matters regarding this Overview Memorandum. Forward looking
statements include all disclosure regarding possible events, conditions
or results of operations that is based on assumptions about future
economic conditions and courses of action. Forward looking statements
may also include any statement relating to future events, conditions or
circumstances. Strongbow cautions you not to place undue reliance
upon any such forward looking statements, which speak only as of the
date they are made. Forward looking statements relate to, among other
things, changes in the resource market; the market focus of Strongbow’s
revenue mix and margin targets; operations priorities; and strategy for its
products and solutions. The risks and uncertainties that may affect
forward looking statements include, among others, the completion and
integration of acquisitions, the possibility of technical, logistical or
planning issues in connection with deployments, the continuous
commitment of Strongbow’s customers, demand for Strongbow’s assets
and other risks detailed from time to time in Strongbow’s filings with the
Securities and Exchange Commission and Canadian provincial
securities regulators. Forward looking statements are based on
management’s current plans, estimates, projections, beliefs and
opinions, and the Company does not undertake any obligation to update
forward looking statements should assumptions related to these plans,
estimates, projections, beliefs and opinions change.
Corporate Profile
Share Information
• Listed on OTCQB under the symbol STBR.QB
• Basic Shares Outstanding:109,686,705 shares
• Insiders & Founders Group Ownership: 50%
• Largest Shareholder: Holloman Corp. - 27.53 million shares
Land Base
• Compeer Area: 8 Sections - 5,120 acres
OTCQB:STBR
Strongbow’s Team
Michael Caetano, CEO and President
• over 15 years of successful business development & leadership
• specializing in capital funding, mergers & acquisitions
• worked in the oil and gas industry for the last five years
Robert Madzej, BBA,SFU- COO
. Over 10 years experience in business operations
. Highly skilled in financial structuring and economical decision making
Technical Team - Apex Energy Consultants Inc.
• Robert Martin, P. Geol.
• over 30 years of petroleum and minerals exploration & exploitation
experience
• Several successful O&G exploration projects and well discoveries
• Doug M. MacLellan, P. Eng.
• over 30 years of management experience with major and junior O&G
companies; technical /engineering, production, operations, and financials
• Michael Kamis, P. Eng., President of Apex Energy Consultants Inc.
• over 34 years of Petroleum Engineering/Geological studies relating to
Western Canada, the United States and international oil and gas fields
OTCQB:STBR
Development Plan
Phase 1 completed
• Drilled 5-29-33-2W4Hz Compeer Area of Alberta.
• Earned 8 sections of land from Harvest Operations Corp.
Phase 2
• Test 5-29-33-2 W4Hz
• Plan to drill 4 wells per section for a total of 31 wells in the Compeer
Area from October 2013 to February 2014
• Raise $37-40 million in equity and/or debt to finance the project
• Currently the Company has one well ready to commence production
OTCQB:STBR
Viking Light Oil
OTCQB:STBR
Viking Light Oil
1. Large OOIP/potential to expand play. Estimated of 6.0 billion barrels of original oil in place
places the Viking play second only to the Cardium in terms of magnitude among emerging tight oil
plays. There is potential for significant expansion of the play.
2. Attractive per well economics,. Estimated IRRs of 188% and breakeven of US$36.00/bbl,
Viking Drilling and completion cost much lower than Cardium or Bakken.
3. Well delineated/low geological risk. Initially discovered in the 1950s, Viking oil pools in
southwest Saskatchewan and SE Alberta have been well delineated with vertical drilling, and
hence there is little geological risk associated with the play.
4. Upside to technology/cost reductions. As with most tight oil and tight gas plays that are
exploitable using horizontal multi-stage fracking, continued technological innovations to completion
techniques have the potential to increase recovery factors and improve economics. In the case of
Viking, the impact of expected cost reductions on per well economics is magnified, because drilling
costs for these relatively shallow wells are already significantly lower."
OTCQB:STBR
Compeer Area
OTCQB:STBR
OTCQB:STBR
Compeer Area Viking Oil
Development Plan
Viking HZ MSF Type
Well Curve
Assumptions
•Oil recovery per well = 2.9 million
Bbls/section divided by ultimately up
to 4 wells/section * 10% Rf = 72,500
Bbls/HZ
•Gas recovery per well = 2.9
Bcf/section divided by ultimately up to
4 wells/section * 20% Rf = 141
MMcf/HZ
•Average (risked) IP of 8 HZ MSF
Viking wells is equal to 46 bbl/d oil &
145 Mcf/d (average over life GOR of
4,000 Scf/bbl)
OTCQB:STBR
Compeer Area Viking Oil
100/5 -29 -33 -2W4 Well
•
•
•
•
•
•
•
•
5 m of net pay
20 % porosity
Sw = 30%
So= 20%
Bo = 1.1
34 o API
2.9 Million Bbls per Section
2.9 Bcf per Section
TYPE LOG
100/5-29-33-2W4
OTCQB:STBR
Metrics
COMPEER:
•Wells IP at 50 BOPD
•Capital of $1,200,000 per well
Compeer Viking Oil Summary (BIT)
$/Bbl
Capital
IRR
Revenue
NPV 10%
Risk Factor
ENPV
Net Reserves (Bbls)
Finding & Development Cost
Operating Costs
OTCQB:STBR
$ 1,200,000
322%
$ 7,887,467 $
$ 4,924,951 $
95%
$ 4,678,703 $
72,500
$
$
Payout
Multiples
108.79
67.93
6.57
4.10
64.53
3.90
16.55
18.92
First Year Production Forecast
40,000
30,000
20,000
10,000
-
Mar-13
Monthly Production (Bbl)
Apr-13
-
May-13 Jun-13
-
-
Jul-13
-
Aug-13 Sep-13
-
OTCQB:STBR
- 1,521
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
1,521
4,943
11,786
20,911
32,318
First Year Projections
Fiscal year ended February 2014
Revenue Summary Total:
Mar-13
Apr-13
May-13
Oil Reserves (Bbl)
Gas Reserves (MMCF)
Total Reserves - BOE
72,500
1,410
307,500
72,500
1,410
307,500
72,500
1,410
307,500
Jun-13
Jul-13
Aug-13
72,500
1,410
307,500
72,500
1,410
307,500
72,500
1,410
307,500
Sep-13
Oct-13
70,979
1,410
305,979
69,458
1,410
304,458
Nov-13
Dec-13
Jan-14
Feb-14
227,641
542,104
956,193 1,467,625
4,583
10,928
19,388
29,963
991,474 2,363,438 4,187,526 6,461,458
Production Bbl
Average Price ($/Bbl)
-
-
-
-
-
-
1,521
105
1,521
105
4,943
105
11,786
105
20,911
105
32,318
105
Product Revenues ($)
Total Production Revenues
-
-
-
-
-
-
159,688
159,688
Operating Costs ($)
Fixed Operating Costs
Variable Operating Costs
Total Royalties
Total Operating Costs ($)
-
-
-
-
-
-
2,000
12,167
22,356
36,523
2,000
12,167
22,356
36,523
6,500
39,542
72,658
118,699
15,500
94,292
173,261
283,053
Net Income from Operations ($)
-
-
-
-
-
-
123,165
123,165
400,285
954,526 1,693,513 2,617,247
Average Net Back per BOE ($)
-
-
-
-
-
-
80.98
80.98
80.98
518,984 1,237,578 2,195,703 3,393,359
With an assumption that the Company raised debt or equity of $37-40 million to complete the development plan.
80.98
27,500
167,292
307,398
502,190
80.98
42,500
258,542
475,070
776,112
80.98
Annual Net Income, Cash
Balances & Capital Expenditures
Summary
$50,000,000
$40,000,000
$30,000,000
$20,000,000
Annual Net Income ($)
$10,000,000
$0
2014
-$10,000,000
Annual Cash Balances ($)
2015
2016
2017
2018
2014
2015
2016
2017
2018
Annual Net Income ($)
(7,336,721)
15,928,315
13,474,348
11,430,810
9,740,104
Annual Cash Balances ($)
(2,130,941)
14,362,386
26,674,913
35,570,028
41,567,852
Capital Expenditures ($)
(37,320,000)
-
-
-
-
OTCQB:STBR
Compeer Area
•Alberta Crown Royalty: 7.5% on each new Horizontal oil well for 18 months or 50,000 Barrels
(HONWRR). 0% to 40% based on flow rate and price thereafter.
•Farm-in on Harvest Petroleum: subject to a sliding scale overriding royalty of 5 to 15%.
Earned 8 sections after first well drilled.
OTCQB:STBR
Contact Information
Office
333 N Sam Houston Pkwy East, Suite 600, Houston, Texas 77060
OTCQB:STBR