azerbaijan bahar erdpsa - greenfields petroleum

Azerbaijan Bahar ERDPSA

Update

October 2017

PSG 1 Rig Recompleting Gas Wells in the Bahar Field

TSX.V: GNF

Forward-Looking StatementsThis presentation contains forward-looking statements. More particularly, this presentation contains statements concerning the anticipated future corporate plans andinitiatives for Greenfields Petroleum Corporation (“Greenfields”). Some of the forward-looking statements can be identified by words such as “expects”, “anticipates”, “should”,“believes”, “plans”, “will” and similar expressions. Specifically, forward-looking statements in this presentation include the anticipated milestones schedule, the amount ofanticipated net annual cash flow and the company’s drilling program. The forward-looking statements contained in this document are based on certain key expectations andassumptions made by Greenfields, including expectations and assumptions concerning timing of receipt of required shareholder, regulatory or third party approvals, theavailability of equity investment, the ability to acquire assets, the success of future drilling and development activities, the performance of existing wells, the performance ofnew wells, the application of regulatory and royalty regimes, the volatility of oil and gas prices, the receipt of cooperation from contractual counterparties where their assistanceis required and prevailing commodity prices and exchange rates.Although Greenfields believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placedon the forward-looking statements because Greenfields can give no assurance that they will prove to be correct. Since forward-looking statements address future events andconditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factorsand risks. These include, but are not limited to, the failure to obtain necessary shareholder, regulatory or other third party approvals to the planned transactions, risksassociated with the availability of capital in the financial markets, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration andproduction; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty ofestimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations anduncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures.The forward-looking statements contained in this document may not be appropriate for other purposes and are made as of the date hereof and Greenfields does not undertakeany obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless sorequired by applicable securities laws.DisclaimerGreenfields’ securities are a highly speculative investment and are not intended as a complete investment program. They are designed only for sophisticated persons who canbear the economic risk of the loss of their investment in Greenfields and who have limited need for liquidity in their investment. There can be no assurance that Greenfields willachieve its investment objective. Target investment goals are not a guarantee of future returns.The attached material is provided for informational purposes only as of the date hereof, is not complete, and may not contain certain material information about Greenfields,including important disclosures and risk factors associated with an investment in Greenfields. This information does not take into account the particular investment objectivesor financial circumstances of any specific person who may receive it. More complete disclosures and the terms and conditions relating to an investment in Greenfields will becontained in Greenfields’ subscription agreement and/or similar offering documents. Before making any investment, prospective investors should thoroughly and carefullyreview such documents with their financial, legal and tax advisors to determine whether an investment is suitable for them.This document and its contents are confidential. It is being supplied to you solely for your information and may not be reproduced or forwarded to any other person, orpublished (in whole or in part) for any purpose.MeasurementWhere amounts are expressed on a barrel of oil equivalent (“BOE”) basis, natural gas volumes have been converted to oil equivalence at six thousand cubic feet per barrel. Theterm BOE may be confusing, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet per barrel is based on an energy equivalency conversion methodprimarily applicable at the burner tip and does not represent a value equivalency at the wellhead.CurrencyAll amounts in this presentation are in US dollars unless otherwise noted.

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Greenfields Petroleum CorporationBackground

• Re-development of giant oil and gas fields in shallow waters of Caspian Sea in Azerbaijan

• Production Sharing Agreement (PSA) provides excellent contract stability

• Existing oil production is exported and gas production is sold domestically in a fixed price Take or Pay contract in USD

• Greenfields is the operator and has controlling interest 80% in PSA

• Recent Seismic on oil field has identified secondary waterflood potential (50+MMB)

• Deeper oil and gas prospects have been identified for Farmout to third parties operators (700 BCF + 50MMB associated liquids)

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Bahar Production Sharing Agreement (PSA) in Azerbaijan• Greenfields (1/3 interest) • Effective October 2010

Greenfields purchased partners remaining 2/3 interest of Bahar project from BVI Court appointed Liquidators (PWC) August 2016.

• Greenfields now has 100% of Bahar Energy and 80% of PSA• SOCAR has 20% of PSA

Bahar Energy Operating Company is redeveloping the Gum Deniz Oil (cumulative 212 MMB) field and Bahar Gas Field (cumulative 4.3 TCF).

• Current production 4,000 BOE/d.

PSA valid until October 2040Unrecovered Cost Recovery Pool = $220 MMProfit split 95% of all revenue under PSA and Protocol terms

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Greenfields Petroleum CorporationBahar Summary

Offshore Shallow Water Caspian Sea, Azerbaijan“The Neighborhood of Big Oil and Gas – Billion Barrel and Multi TCF Fields”

Bahar FieldCUM 4.3 TCF , 85 MMBC

REM 1.3 TCF(2)

Gum-Deniz FieldCUM 212 MMBO REM 329 MMBO(1)

Caspian Sea

Sangachal Field3.7 TCF , 800 MMBO

Shah-Deniz Field25.0 TCF& 1,600 MMBO projected Phase II development underway to

add 1.5 BCF/d of gas sales

Guneshli Field9.7 TCF , 14 BBO PSA

extended from 2024 to 2050. Bonus of $3.6 B

Neft Dashlary Field1,200 MMBO

Bahar 2 Exploration Area

(1) 25% recovery factor applied.(2) 75% recovery factor applied.

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Total’s Absheron 11 TCF Project approved for development

BP’s SWAP Area

BP’s SWAP Area

Hovsan Miocene Discovery Well 2015

BP’s SWAP AreaAcquired 1400 sq km

3D & selecting 3 exploration areas

• Building dynamic Reservoir Models based on 3D Seismic - Identified robust waterflood development opportunities and deep gas exploitation and exploration opportunities.

• Data to go to Reserves Auditors (GLJ) in November to prepare Third Party Assessment in December 2017.

• Gas Well Recompletions to continue (operational risks due to mature well stock) which carry base/fixed costs.

• New Opportunities;• Implement/re-establish low risk waterfloods in Gum Deniz and Bahar

fields to increase oil production,• Overall waterfloods potential could add an incremental >50

MMB.• Follow-up with new development drilling in Gum Deniz.• Partner with third parties to test Gum Deniz Miocene prospect and

Bahar Deep gas potential.

Summary of Project Status

Bahar Technical Overview

Gum Deniz 3D

Bahar 2 Area 3D

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Gum Deniz Oil Field

Bahar Gas Field

Bahar 2 Exploration

Area

2D Seismic• 208 lkm 1995 Data• 115 lkm 2011 Data• 50 lkm 2015 Data

Gum Deniz • 2015 3D• 102 Sq.Km.• PSTM and PSDM processing

Bahar 2 Exploration Area • 2012 3D• 100 Sq.Km. (min 60 Sq Km)

Dynamic Reservoir Simulations 2017Gum Deniz FS-X, IX & VIIIBahar FS-X

Current Reserves 12 MMB and 168 BCF

Gum Deniz Oil FieldCumulative production 212 MMBOAverage cumulative production per well of 556 MBOE

QP-SV_BU-90 50 N05-SV

0.20 100NQK

1.40 0.60

2000

3000

-200

0-3

000

VI

SP

X

VIII

V

NKP

PK

KaS

VII

KS

IX

0

1000

Horizon KS

Horizon VHorizon VI

Horizon VIIHorizon VIII

Horizon IX

Horizon X

Horizon FS

Horizon NKP

Horizon PK

Horizon KAS

2,000 meters

3,000 meters

2,500 meters

3,500 meters

• Discovered in 1950’s 484 wells ~1.9+ BB 00IP

• Peak Production of 46,400 B/d in 1964.

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Oil Drilling

Waterfloods

The Gum Deniz oil and gas pools present an attractive and risk diverse asset base.

1. Low risk oil workovers from existing producing zones.

Oil workovers will continue to be the foundation of production from Gum Deniz. Perforation of additional zones, well reactivation and installation of artificial lift are all critical to maintain production levels.

2. Low risk water flood of the BX-FS, BIX & BVIII oil pools.

Socar performed water floods on all major oil pools in the 1970’s to ‘90’s with good success. All of these horizons have all been successfully history matched and forward modeled in a dynamic simulator, indicating that reactivation of water flooding will be very successful, particularly in the BX-FS interval.

3. Low risk exploitation of a proven gas and oil reservoir and moderate risk water flood.

The PK-KaS reservoir in north Gum Deniz has produced for decades. Modern 3D seismic has beautifully imaged the reservoirs, allowing for optimization of new infill drilling opportunities. Additionally, the large original oil in place (350 mmbbls) and low recovery factor (3%) also makes this package an attractive future water flood candidate.

Gum Deniz Opportunities

GumDeniz

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• Initially rapid production rate increase through drilling.

• Water injection starts relatively early in historical period but oil, water and gas production outstrip water injection and reservoir pressure declines.

• Water injection was effective in displacing oil combined with ongoing development program

• Recompletions / Infill Drilling• Simulation Model Results:

• OOIP: 61.9 MMB• Cum Oil: 26.5 MMB• RF: 0.45

• Un-swept oil remains creating opportunity to increase RF by 5% by reinitiating water injection

Gum Deniz BIX Production Provides good analog for the effectiveness of Water Flood in Gum Deniz/Bahar

Water injection

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• Much larger reservoir system than BIX• BX and FS are in partial to full vertical

communication• Overall oil production profile is similar to

BIX• Water injection response in combination

with on-going development program.• Simulation Model Results:

• OOIP: 182.1 MMB• Cum Oil: 66.5 MMB• RF: 0.365

• Opportunity to increase RF by 10+% by reinitiating water injection

Gum Deniz BX-FS Production

Water injection

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Gum Deniz also offers a very large, exciting exploration prospect in the Miocene directly underlying the existing producing oil field.

4. Higher risk exploration prospect in the Miocene.

A large 4 way structural closure in the Miocene has been mapped on the new 3D seismic. The closure has a maximum area of 20 km2 and a maximum vertical structural closure of 900 m. The Miocene is a minimum of 700 m thick and is expected to contain the productive Chokrak and Maykop sections.

This prospect lies very close to the recent discovery of gas in the upper Miocene (Chokrak) at Hovsan (21 MMCFD).

The Gum Deniz Miocene prospect has a much more robust trap configuration than Hovsan and the entire Miocene package can be drilled within reasonable drill depths (5000 m). The well can also be drilled from Gum Deniz island with an 1800 m offset and maximum directional inclination of 270

The prospect has a Pmean of 435 BCF and 13 MMB with a P10 of almost 1 TCF.

Gum Deniz Opportunities – Miocene Exploration

Gum Deniz Island

Potential directional trajectory1800 m offset with maximum inclination of 270

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Bahar Gas FieldCumulative production of 4.3 TCF, 84.0 MMBBL of condensate

SPBL70 -10.0 RT

0.20 100POR

0.25 -0.10

4000

5000

-300

0-4

000

-500

0NKP

VII

VIII

V

IX

KS

NKG

X

SP

VI

I

Horizon I

Horizon VHorizon VI

Horizon VIIHorizon VIII

Horizon IX

Horizon XHorizon SP

Horizon NKP

3,500 meters

4,000 meters

4,500 meters

5,000 meters

Initial production 1969Peak of 591 MMcf/d & 13,900 B/d 1985

OGIP of 6.9 TCFG in 12 stacked reservoirs Currently 63% RF and ultimately 70% RF

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Water Depth 30 to 50 feet

Gas Recompletions

Waterflood

Gas Drilling

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Bahar OpportunitiesBahar gas-condensate and oil pools present an attractive and risk diverse asset base.

1. Low risk gas workovers from existing producing zones.

The BV to BX gas pools contain 4.5 TCF of gas originally in place, with current recovery factor around 70%. We have identified 49 workover well candidates which are expected to result in an increase of production to over 30 mmcfd by 2019.

2. Moderate risk re-development and water flood of the BX-FS oil pools.

SOCAR performed a poorly executed water flood in the 1970’s and ‘80’s in the FS-X reservoirs with limited success. The BX-FS has ~450 mmbbls of original oil in place with a current recovery factor of only 10%, leaving huge potential for incremental oil recovery through infill drilling and water flood reactivation.

3. Moderate risk exploitation of a proven and prolific gas and oil reservoir.

The NKP reservoir in Bahar is a proven producer with 113 BCF produced to date, from an original gas in place of 500 BCF for an overall recovery factor of only 22%. With additional drilling, a recovery factor of 70% should be expected, for an incremental of over 200 BCF. Wells start producing at 15-20 mmcfd plus liquids.

Bahar

14

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

Jan-

16

Jul-1

6

Jan-

17

Jul-1

7

Jan-

18

Jul-1

8

Jan-

19

Jul-1

9

Jan-

20

Jul-2

0

Jan-

21

Jul-2

1

Jan-

22

Jul-2

2

Baha

r Gas

Pro

duct

ion

(MM

CFD)

Bahar Gas Workovers• We have identified 49 potential workover candidate wells

with 91 individual reservoir targets.

• Wells have been high-graded to target the multi-reservoir wells first to optimise production and reduce operational risk.

• Risked EUR of the combined workover candidates exceeds 300 BCF.

Bahar Workover Wells

Gas workover candidates

Technical and Mechanical Risked Gas Production forecast

Base decline

Risked incremental gas

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BHR-46IP Rate = 14.7 mmcfdCum. Prod. = 8.5 BCFFinal Rate = 13.4 mmcfd


BHR-77IP Rate = 17 mmcfdCum. Prod. = 26.5 BCFFinal Rate = 17 mmcfd

BHR-64IP Rate = 15.8 mmcfdCum. Prod. = 12 BCFFinal Rate = 10.5 mmcfd

BHR-102IP Rate = 13 mmcfdCum. Prod. = 14.2 BCFFinal Rate = 1.0 mmcfd

NKP Depth Structure Map (faults from 2D seismic)



BHR-134IP Rate = 17.4 mmcfdCum. Prod. = 23 BCFFinal Rate =9.4 mmcfd




Bahar NKP Gas Wells - Potential Joint Venture

Wells Abandonedin 1960’s & 1970’sfor uphole gaspotential (highergas rates andflowing pressures)

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Waterflood Offshore LogisticsPhase 1

Utilize existing platform, wells (producers and injector), flowlines and tankage

New filtration, chemical injection, biocide, low pressure pipelines and horizontal ESP’s

Total cost for 60,000 B/d injection

~$15-20 MM

Current Base Bahar Gas Recomp. Reserves: 165 BCF (GLJ) NPV10 = $200 MM(Includes base operating Costs of $16MM/yr.)

Gum Deniz Development Drilling Reserves: 10 MMB (GLJ) NPV10 = $100 MMGum Deniz FS-X Waterflood Resources: 30 MMB NPV10 = $200-250 MMBahar FS-X Waterflood Resources: 25 MMB NPV10 = $200-250 MM Gum Deniz IX & VIII Waterflood Resources: 7-10MMB NPV10 = $50 to 75 MM

USD $600+ MM

Bahar NKP-PK Exploitation JV Resources: 250 BCF +35 MMB liquids

Gum Deniz Miocene Exploration JV Resources: 435 BCF + 14 MMB liquids(PS=40%)

Bahar Potential - Early Stage Scoping Economics

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*Preliminary and subject to certification by GLJ.

Bahar Growth Opportunities

Gum Deniz• Water flood existing oil field (2018 Phase 1)• Resume Oil field development drilling (201 9+)• Horizontal drilling of oil wells (2019+)• Drill deeper Miocene Gas target below existing oil fields (2018) with Industry

Joint Venture

Bahar• Waterflood of the Bahar SP oil rim (2019) • Drill new gas wells in Bahar Gas Fields (2019) with Industry Joint Venture• Gas Export Sales to Europe through Shah Deniz TANAP pipelines (2019)

Bahar 2• Drilling in Bahar 2 exploration area

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Greenfields Petroleum Corporation

John Harkins – CEO Phone: (832) 234-0834Facsimile: (877) [email protected]

Contact Information

TSX.V: GNF 20

Jose Perez-Bello - CFOPhone: (832) 234-0831Facsimile: (877) [email protected]

Official website is located at:www.greenfields-petroleum.com

Bay of Baku is a natural harbor on the shore of the Absheron Peninsula

mailto:[email protected]

mailto:[email protected]

azerbaijan bahar erdpsa - greenfields petroleum

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