funding africa’s oil & gas activities · pdf filefunding africa’s oil &...

Funding Africa’s Oil & Gasactivities

Panel discussion

www.pwc.com

December 2014

PwCDecember 2014

Introductions

Funding Africa’s Oil & Gas • Panel2

Partner, Capital MarketsHead of the International IPO Centre

Clifford Tompsett

E mail: [email protected].: +44 (0) 20 7804 4703Mob.: +44 (0) 7802 918877

PwCDecember 2014

Panel members

Funding Africa’s Oil & Gas • Panel3

Dmitri Tsvetkov

Chief Financial Officer

Mart Resources Inc.

Paul Eardley-Taylor

Head of Investment BankingCoverage for the Energy, Utilities andInfrastructure Sectors

Standard Bank, South Africa

Doug Rycroft

Asset General Manager

Ophir Energy plc

Joseph Carasso

Chief Executive Officer

Citibank, Tanzania

PwCDecember 2014

Global perspective

1

Funding Africa’s Oil & Gas • Panel

PwCDecember 2014

The last six months have seen oil prices fall to their lowest levels inalmost three years as a drop-off in demand has not been met by acorresponding decrease in supply

2Funding Africa’s Oil & Gas • Panel

-

20

40

60

80

100

120

140

160

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Historic real oil price (Brent $/bbl)Last 6 months

• Weaker than expected economicrecovery

• Abundance of US shale oil

• OPEC unwilling to act as marketstabiliser

• Prices may take time to recover orindeed go lower

Source: Federal Reserve Economic Data

60

70

80

90

100

110

120

5

PwCDecember 2014

-

10

20

30

40

50

60

70

80

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85

Avera

ge

co

st

($/b

bl)

Average cost curve for the oil market ($/barrel)

Production (mb/d)

Highest cost producers already being impacted- survival of the fittest


SaudiA

rabia

Oth

er

OP

EC

Russ

ia

Unite

dS

tate

s(e

xcl

Shale

)

Kaza

khst

an

Chin

a

Norw

ay

Oth

er

Non-O

PE

C

Bra

zil

US

Shale

Mexic

o

Canada

Oil

Sands

OPEC average

Global average

Shale lies at the higher end of the non-OPECmarginal cost curve, as infrastructure buildouts, decline rates, and high levels of rigactivity keep costs high

Non-OPEC average

Source: IEA

6

Current oilprice level

Europe and North Americaface high marginal costsrelative to Russia and theOPEC nations

PwCDecember 2014

Will oil follow mining?

50

60

70

80

90

100

110

120

Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14

Coal Iron ore Brent Oil


• Significant asset write downs• Shareholder calls for capital

discipline• Leadership changes• Insolvencies and debt

restructuring• Majors still increasing production

Coal Iron ore

Oil

Note: Commodities are rebased to 100

PwCDecember 2014

Recent oil price falls may have profound effects if notreversed soon


8

• Some upstream companies are very exposed to even short-term price falls

• Previous experience suggests a three-year recovery period even ifprices recover

• A prolonged reduction in prices will have knock-on effects in larger E&Pcompanies, oil field services and even banks with financial exposure

• Over the last few weeks we have seen signs of more serious stress acrossthe sector

• Upstream oil is most exposed, whereas gas and downstream willprobably be slower to react

• Stress will spread across time and reach those companies not yetseriously affected

PwCDecember 2014

3

There are already signs of activity reduction and spending cuts,and some companies are showing signs of financial stress

5

Funding Africa’s Oil & Gas • Panel

40

50

60

70

80

90

100

110

120

Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14

US offshore rigs no. WTI Price

US offshore rigs show a declining trend in line withoil price

Vessel utilisation is showing a similar decline

Bloomberg.com

Seadrill Plunges After Suspending Dividend

“Seadrill Ltd. fell the most in six years after the offshore drillersuspended dividends as the slump in oil prices hurts demand for rigs”

Guardian.com

Petrofac issues profit warning

“Petrofac said the depressed oil price had reduced expected profit for2015 at its integrated energy services business by about $45m”

Energyvoice.com

Another oil major to cut North Sea jobs

“BP [is] launching a cost reduction exercise in the North Sea in line withrivals such as Shell and Chevron which have axed hundreds of roles aslow oil prices and high overheads take their toll”

Houstonchronicle.com

Weakened by lower prices, Hercules cuts jobs

“The rig contractor's decision to cut nearly 15 percent of its workforce,.... comes as lower crude prices have forced oil companies to pull backon offshore drilling”

Change in oil prices has hit companies across thevalue chain

Source: Baker Hughes

Source: Baker Hughes

The number of rigs has declinedby 11% in last 6 months

Utilisation has droppedby 10% since April

9

PwCDecember 2014

Signs of stress are suddenly headline news


FT.com

Shares in energy groups fall after Opec decision

“Shares in some of the world’s biggest energy groups have fallensharply .. the plunge in oil prices … could lead to up to $100bn cuts incapital spending worldwide”

Bloomberg.com

Russia’s Oil Giant Battles Debt After $55 Billion Deal

“OAO Rosneft has lost 38 percent of its market value this year in dollarterms”

BBC

Oil Price Plunge Hits Energy Stocks

“Shares in energy stocks fell further as investors continued to react tothe sharp fall in oil prices following Thursday's Opec meeting.” Telepgraph.co.uk

Oil price slump to trigger new US debt default crisis

“Falling oil prices and and US shale drillers drowning in a sea of debtcould be the spark for a new credit crunch”

euronews.com/

Russian economy stumbles under oil price pressure

“This year’s price drop has already cost Russia $100 billion inrevenues”

FT.com

Oil price fall starts to weigh on banks

“Banks including Barclays and Wells Fargo are facing potentially heavylosses on an $850m loan made to two oil and gas companies”

10

PwCDecember 2014

Financing for oil & gas in 2014 likely to be down onprior years and the 2012 peak

Source: Thomson One

* Upstream and oilfield services2

Funding Africa Oil & Gas • Panel

Section 1 – Capital raising trends

7% 10%

23%

8% 7%6% 9%

2% 1%

2%

1% 1%1% 1%

16%

50%

26%

26%

36%

30%

17%

73%

38%

48%

64%

54%

62%

73%

$0bn

$100bn

$200bn

$300bn

$400bn

$500bn

$600bn

2008 2009 2010 2011 2012 2013 2014YTD

Oil & Gas* – money raised (US$ bn)

IPO Follow-On Convertible Bonds Loans

$357bn

$318bn

$476bn

$515bn

$460bn$458bn

* Upstream and oilfield services

$371bn

$25bn $32bn $38bn

$8bn

$31bn$47bn $35bn

$26bn

$58bn

$99bn

$63bn

$28bn

$0bn

$50bn

$100bn

$150bn

$200bn

2011 2012 2013 2014YTD

Investment grade High Yield

Emerging Market Investment Grade Emerging Market

Proceeds from public debt (US$ bn)

Issuerregion

Bank debt % oftotal

Africa $41bn 2%

USA $741bn 43%

Europe $245bn 14%

Rest of theworld

$712bn 41%

Total $1,739bn 100%

Funding African O&G Paul Eardley-Taylor

Oil and Gas, Southern Africa

11 December 2014

1 Focus on Oil and Gas sector

Oil & Gas is one of key sector pillars at Standard Bank

A dedicated Oil & Gas team provides:

– The full corporate and investment banking product range to clients active in the industry

– Oil & Gas expertise

– Local industry knowledge and connections

– Strong client relationships

– Team of 11 in London, with offices in New York, Dubai, Johannesburg, Nairobi and Lagos

Oladele Kuti

Oil & Gas, Nigeria

+234 803 555 5777

oladele.kuti@

stanbic.com

Jose Almeida

Oil & Gas, Angola

+244 226 437 505

Jose.almeida@

standardbank.co.ao

Fernando Docters

Oil & Gas, Americas

+1 212 407-5165

fernando.docters@

standardny.com

Jonathan Ross

Oil & Gas, London

+44 20 3145 8085

jonathan.ross@

standardbank.com

+44 20 3145 8246

simon.ashby-rudd@

standardbank.com

Simon Reeves

Coverage, Middle East

+971 4302 1104

simon.reeves@

standardbank.com

Power &

Infrastructure

Oil & Gas

Mining & Metals

Telecoms & Media

Key Industry Sectors

Iain Campbell

Director – Reservoir Engineer

+44 20 3145 8250

iain.campbell@

standardbank.com

Strong technical

understanding through

reservoir and production

engineer

Charlie Houston

Oil & Gas, London

+44 20 3145 8245

charlie.houston@

standardbank.com

Damien Mauvais

Oil & Gas, London

+44 20 3145 8076

damien.mauvais@

standardbank.com

Standard Bank’s Oil

& Gas Research

team received a top

ranking in the

Euromoney Best

Sub-Saharan Africa

Research House

survey (2013)

+27 11 721 7829

paul.eardley-taylor@

standardbank.co.za

Paul Eardley-Taylor

O&G, SA & Southern Africa

Simon Ashby-Rudd

Global Head, Oil & Gas

+27 11 344 5168

khwezi.tiya@

standardbank.co.za

Khwezi Tiya

Coverage, South Africa

Oscar Kang’oro

Coverage, East Africa

+254 20 326 8400

Oscar.kang’oro@

standardbank.com

2 International Benchmarks: Nigerian Indigenisation

US$373mn

45% of OMLs

4,38&41

US$148mn

45% of OML26

US$850mn

45% of OML30

US$585mn

45% of OML42

Elcrest E&P

US$154mn

45% of OML 40

Oando plc

US$1.6bn

ND Western

US$600mn

45% of OML 34

Over US$5bn of assets divested so far by the majors to local players

Marginal Field round prompts local activity Attracting international investment

2010 2011 2012 2013 2014

Africa’s Oil & Gas

industry is

increasingly

attracting the

attention of the

international

investor base

Seplat Petroleum's $500m IPO

– IPO on both London and Lagos Stock Exchanges, valuing the

company at US$1.91bn

– Largest European IPO of a petroleum exploration/production

business since 2008 and first ever dual (Lagos/London) listed

Nigerian Company

Seven Energy/Temasek

– Temasek executed its first deal in Nigeria investing $150m in

equity five months after it spent US$1.3bn to acquire stakes in

gas fields in Tanzania

– IFC also simultaneously invested US$100m in Seven Energy

The divestment

process provides

opportunities for

indigenous oil and

gas companies to

become active

players in Nigeria’s

upstream oil and

gas industry

Divestment process

ongoing…

http://mail.newcrosspet.com/

3 Seplat US$535m IPO on NSE and LSE

Seplat closed its US$500m (N82.5bn equivalent) IPO on 14 April 2014 listing

shares on both the Nigeria Stock Exchange (“NSE”) and London Stock

Exchange (“LSE”). The transaction is notable for many reasons:

– first Nigerian company to have its ordinary shares dual listed on both

the LSE and the NSE

– largest ever IPO in Nigeria

– largest IPO in Sub Sahara Africa (ex SA) since 2008

– largest African Oil & Gas IPO since 2011

Standard Bank/Stanbic IBTC worked with regulators in Nigeria and London to

harmonise listing requirements to ensure a dual-primary IPO including:

– first Nigerian company to obtain UKLA approval to list Shares on the

Main Board of the London Stock Exchange

– first ever equity bookbuild process in Nigeria

– first IPO in Nigeria to settle in T+3 days

Standard Bank/Stanbic IBTC managed an extensive marketing campaign for

the Company, including:

– attending Standard Bank investor conferences since 2010

– extensive pilot fishing early in the IPO process to c. 50 investors

– award winning research analyst, Lionel Therond, publishing a 95 pg

research report sent to c. 1,000 investors globally

– investor education to over 100 investors in 10 days by 2 analysts

– Seplat management conducted a two week IPO roadshow in Nigeria,

UK, Europe, U.S., South Africa and Asia, meeting over 130 investors

The IPO included a global bookbuilding exercise whereby demand from

Nigeria built quickly with sizeable orders from key Pension and Insurance

funds. International and HNW investors showed strong demand such that

the books were covered going into the final week of the roadshow: Standard

Bank delivered early orders to ensure this successful “covered” messaging

The IPO book of demand closed oversubscribed with 310 investors, pricing

at 210p or NGN 576 per share, representing a premium valuation to peers

Standard Bank’s understanding of the Niger Delta and Pioneer Tax status,

which Seplat obtained in Feb-14, meant we were able to generate significant

orders from key international funds at a superior valuation

Standard Bank acted as Stabilisation Agent and Settlement Agent and was

integral to the successful listing debut, where shares traded up 6% in early

LSE trading and 5% “limit-up” on the first day trading on NSE

Term sheet Transaction highlights

Issuer overview Seplat Petroleum Development Company Plc

Listing Nigeria Stock Exchange and London Stock Exchange

Transaction type Initial Public Offering

Standard Bank role Joint Global Co-ordinator, Bookrunner and Joint Lead

Issuing House

Issue size US$500m or NGN 82.5bn (pre over-allotment option)

US$535m or NGN88.3bn (incl. over-allotment option)

Offer price NGN 576 (NGN535-700) / LSE: 210p (195-255p)

Shares offered 143,284,130 primary shares

Over-allotment option 10,336,183 primary shares

NSE / LSE split 52% (NSE) / 48% (LSE)

Pre-Money Valuation US$1.3bn to US$1.7bn

Market cap post money US$1.9bn (pre over-allotment option)

IPO % Market cap 28.7%

Demand overview

Demand by bank Demand by geography

Seplat Petroleum Development

Company Plc

April 2014

US$500m / NGN82.5bn

Dual listing on the Nigeria and

London Stock Exchanges

Joint Global Co-ordinator, Joint

Bookrunner and Joint Issuing House

(1) Excluding a Seplat managed order, Standard

Bank generated 39% of demand for the IPO, more

than any other bank

(1)

Insert front cover of

prospectus

4 Overview of senior debt structures available for oil and gas companies

Project/Development

Finance

Based on future cash flows

from a developing asset

Structured around

development risk

Used by E&P companies at

an early stage or as ring-

fenced finance on

particular assets

Tight structuring and

monitoring

Cash flow-based financing Balance sheet-based financing

Reserve Based

Lending

Based on future cashflows

of producing assets

Typically limited or no

development risk

Ideally based on portfolio

of assets but can be based

on a single asset

Used by E&P companies

Relative tightly structured

Corporate RCF

Assessed on a Corporate

level, as opposed to on an

asset level

For more established

companies

Limited/no asset due

diligence

Less tightly structured

Pre Export/Prepayment

Finance

Financing specific

commodity/payment

flow(s)

Typically backed by

corporate credit

Limited asset due diligence

depending on

scale/diversification of

asset base

Increasing asset/corporate cashflows and production

Level of

structuring/

Lender controls

5 Cash flow-based structures are available at different stages of asset life

Exploration

Appraisal

FEED

EPC (s) agreed

Pro

ject d

eve

lopm

ent

So

urc

es o

f F

un

din

g

Project/Development Finance

Reserve Base Lending

FDP

Approval

(Partners)

FDP

Approval (Government)

First

Production Completion

Time

Equity

Construction

Project contract(s) agreed

RCF

6 Project Finance market trends

Key points

Project finance loan

volumes somewhat

declining since

2010; EMEA and

Asia largest markets

(left)

Oil & Gas represents

one of the largest

sectors

Source: Dealogic

Utility & Energy

USD 86,923m

Construction/Building

USD 48,159m

TransportationUSD 36,105m

Oil & Gas USD 34,282m

Chemicals USD 17,936m

Metal & Steel USD

15,705m

Telecoms, USD 9,901m

Finance USD 7,959m

Mining USD 6,603m

Leisure & Property

USD 4,513m

Others USD 15,864m

0

50

100

150

200

250

300

350

400

2008 2009 2010 2011 2012 2013 H12014

US

$ B

n

EMEA Asia Pacific Americas

Global project finance loan volumes Global Project Finance by Sector 2013

7 The Sub-Saharan Africa Eurobond market is growing rapidly

EMBI+ vs SB African Bond Spread Index (bps) SSA Eurobond Market Breakdown by Sector 2014

Sub-Saharan African offshore issuance hit a record US$14bn in 2013. The

SSA Eurobond market has grown at 36% CAGR from 2010 to 2013, while

the wider Emerging Market sector has grown at 21%. In 2014, SSA debt

issuances totalled over US$13bn, with ~39% coming from Corporates and

~60% from Sovereigns

Africa still only accounts for 4% of overall EM volumes. This rarity has

resulted in strong investor demand for African assets

In 2014, SSA issuers have been able to take advantage of favourable

borrowing rates, while investors have been able to maximise yields when

compared with traditional fixed income assets. Africa has been an attractive

investment destination given the high growth levels supported by strong

governments and infrastructure development

Eurobond issuance in SSA has been on the rise, enabling issuers to

diversify funding sources, extend their maturity profiles, and build their credit

profile across the international debt capital markets

CAGR: 36%

2010 - 2013

Source: Standard Bank Debt Capital Markets and Bloomberg. Data is as at 09 December 2014

Offshore Nominal Issuance Growth US$(bn)

Nominal US$$(m)

Corporate Bond-HY 2,328

Corporate Bond-IG

2,010

Sovereign, Local Authority 8,669

Grand Total 13,007

Sub-Saharan Africa Market Overview

Corporate Bond-High

Yield 21%

Corporate Bond-

Investment-Grade 18%

Sovereign, Local

Authority 61%

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

2010 2011 2012 2013 2014

Deal Type Corporate Bond-High Yield Non-US Agency Sovereign, Local Authority

250

300

350

400

450

Dec 13 Feb 14 Apr 14 Jun 14 Aug 14 Oct 14 Dec 14

EMBI+ SB Africa Index

8 O&G Megaprojects

LNG as key example – Mozambique and Tanzania

Large megaprojects will require multiple financing options from actors with different objectives

Fiscal and legal stability crucial element in unlocking financing solutions

Array of social, political, economic, financial interests leads to complexity

Key points

Megaprojects, such as

LNG, require multiple

financing solutions

from an array of

actors

Unlocking deals key

given complexity with

diverse interests and

impacts of such

projects

Multiple Funding Routes

Funding

ECA

Equity

DFI

Banks

National

Content

Shareholder

Returns

Return on

Capital

Additionality

9 Unlocking O&G Megaprojects: Mozambique LNG

Standard Bank Process Key points

Preliminary

work begins

May/June

Enabling

Law

Assembly

Decree

Law

Council of

Ministers

FID

APC

Standard

Bank

Report

APC

Negotiations

APC

Advisors

Specialist

Economists

Mozambique

Political/Economic

Expert Input

Sustained , Two-

way APC

Engagement

Standard Bank

Analysis

Private

channels –

1 August

Public

(indirect)

channels –

19 August

3Q 2015 2019

Ongoing

negotiations for

two years

Passed –

20 August

Completed 31 July

While it is still early in the process, some key

success factors emerge:

• Transparency in analysis and data sources

• Consideration and alignment with

Government priorities

• Alignment with mainstream development

literature

• Direct input from key Mozambican insiders

• Conveying insights from the above to client

• Leveraging our in-country expertise and

network

The Macroeconomic Study has made a major contribution to the Project debate, with the

highest stakeholder level aware of the study and its key conclusions

In developing the

Report, SB combined

rigorous analysis with

expert input on the

Mozambique economy

and political

landscape

Sustained

engagement with

client help guided the

Report as well as

influenced the client’s

own strategy

Opportunity for key

stakeholders to

consider findings

before public release

In under 3 weeks, the

Report helped

advance 2 years of

protracted

negotiations

25 Nov approved by

Council of Ministers –

awaiting Assembly

ratification

10 Disclaimer

This presentation is provided for information purposes only on the express understanding that the information contained herein will be regarded as strictly confidential. It is not to be delivered

nor shall its contents be disclosed to anyone other than the entity to which it is being provided and its employees and shall not be reproduced or used, in whole or in part, for any purpose other

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solicitation of an offer for the sale or purchase of any financial product, service, investment or security. The investments and strategies discussed here may not be suitable for all investors; if you

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www.martresources.com

MART RESOURCES:Funding Africa’s O&G activitiesDecember 11, 2014

Mr. Dmitri Tsvetkov (CFO & Director)


DisclaimerInformation Reserves Disclosures

Funding Africa’s O&G activities

December 11, 2014, Dar es Salam, Tanzania

Certain statements contained in thispresentation constitute “forward-lookingstatements” as such term is used inapplicable Canadian and US securitieslaws. These statements relate to analysesand other information that are basedupon forecasts of future results, estimatesof amounts not yet determinable andassumptions of management. Inparticular, statements concerning thetiming of the drilling of the upcomingwells, the future success of such wells,the ability of the Company to successfullycomplete and commercially produce,transport and sell oil from such well, themaintenance of current production levelsfrom existing wells and future wells, futurecrude oil pricing levels and the ability to ofthe Company to fund future drillingoperations from future cash flow, pipelineinterruptions on existing or futurepipelines, timing of completion of theUmugini pipeline, estimates of pipelinelosses and events or projectionsreferenced or implied herein should beviewed as forward-looking statements. Allreserves estimates and estimates offuture net revenue do not represent fairmarket value. Any statements thatexpress or involve discussions withrespect to predictions, expectations,beliefs, plans, projections, objectives,assumptions or future events or are notstatements of historical fact and shouldbe viewed as “forward-lookingstatements”. Such forward lookingstatements involve known and unknownrisks, uncertainties and other factorswhich may cause the actual results,performance or achievements of theCorporation to be materially different fromany future results, performance orachievements expressed or implied bysuch forward-looking statements. Inparticular, there is no assurance that theadditional export capacity allocated to theUmusadege field and other fields in thearea (collectively, the “Cluster”) will beavailable. Total export capacity allocatedto the Umusadege Field is subject tochange depending upon production levelsby other fields in the

Cluster. There us no assurance thatadditional pipeline export volumes will beavailable to the Umusadege field co-venturers within the timeframes indicatedor at the volumes indicated. Such risksand other factors include, among others,costs and timing of exploration andproduction development, availability ofcapital to fund exploration and productiondevelopment; political, social and otherrisks inherent in carrying on business in aforeign jurisdiction, the effects of arecessionary economy and such otherbusiness risks as discussed herein andother publicly filed disclosure documents.Although the Company has attempted toidentify important factors that could causeactual actions, events or results to differmaterially from those described inforward-looking statements, there may beother factors that cause actions, events orresults not to be as anticipated, estimatedor intended. Investors are cautioned thatsuch forward-looking statements involverisks and uncertainties. There can be noassurance that such statements will proveto be accurate as actual results and futureevents could vary or differ materially fromthose anticipated in such statements.Accordingly, readers should not placeundue reliance on forward-lookingstatements contained in this newsrelease. The forward-looking statementscontained herein are expressly qualifiedby this cautionary statement. Forward-looking statements are made based onmanagement’s beliefs, estimates andopinions on the date hereof and theCompany undertakes no obligation toupdate any forward-looking statementscontained herein whether as a result ofnew information, future events orotherwise, except as required byapplicable law. A detailed description ofrisks associated with forward lookingstatements and with the Company’sbusiness and operations are set out inMart’s most recent Annual InformationForm filed on SEDAR

All information contained in thispresentation regarding reserves and netpresent value of future net revenue hasbeen derived from the Company’s Form51-101 F1-Statement of Reserves Dataand Other Oil and Gas Information forthe year ended December 31, 2013(“Statement of Reserves Data”) whichreport, along with the Form 51-101F2-Report on Reserves Data and Form 51-101F3-Report of Management andDirectors on Reserves Data and OtherInformation are available for review inMart’s Annual Information Form for theyear ended December 31, 2013 andthe Company’s Form 51-101FI havingan effective date of March 31, 2013 atwww.sedar.com and on the Company’swebsite at www.martresources.com.

Reserves: Reserves are volumesof hydrocarbons and associatedsubstances estimated to becommercially recoverable from knownaccumulations from a given dateforward by established technologyunder specified economic conditionsand government regulations. Specifiedeconomic conditions may be currenteconomic conditions in the case ofconstant price and un-inflated costforecasts (as required by manyfinancial regulatory authorities) orthey may be reasonably anticipatedeconomic conditions in the caseof escalated price and inflated costforecasts.

Possible Reserves: Possible reservesare quantities of recoverablehydrocarbons estimated on the basis ofengineering and geological data thatare less complete and less conclusivethan the data used in estimates ofprobable reserves. Possible reservesare less certain to be recovered thanproved or probable reserves whichmeans for purposes of reservesclassification there is a 10% probabilitythat more than these reserves will berecovered, i.e. there is a 90%probability that less than these reserves

will be recovered. This categoryincludes those reserves that may berecovered by an enhanced recoveryscheme that is not in operation andwhere there is reasonable doubt as toits chance of success. RPS Energy onlydetermines possible reserves whenspecifically requested to do so.

Proved Reserves: Proved reserves arethose reserves that can be estimatedwith a high degree of certainty on thebasis of an analysis of drilling,geological, geophysical andengineering data. A high degree ofcertainty generally means, for thepurposes of reserve classification, that itis likely that the actual remainingquantities recovered will exceed theestimated proved reserves and there isa 90% confidence that at least thesereserves will be produced, i.e. there isonly a 10% probability that less thanthese reserves will be recovered. Ingeneral reserves are considered provedonly if supported by actual production orformation testing. In certain instancesproved reserves may be assigned onthe basis of log and/or core analysis ifanalogous reservoirs are known to beeconomically productive. Provedreserves are also assigned forenhanced recovery processes whichhave been demonstrated to beeconomicallyand technically successful in thereservoir either by pilot testing orby analogy to installed projects inanalogous reservoirs.

Mart’s reserves have been evaluated byRPS Energy Canada Ltd. (“RPSEnergy”), an independent reservesevaluator. The reserves definitions usedby RPS Energy conform to the reservesdefinitions set forth in CanadianNational Instrument 51-101, “Standardsof Disclosure for Oil and Gas Activities”and its companion policy, whichreserves definitions are set out below.

Probable Reserves: Probable reserves(also called Probable Additionalreserves) are quantities of recoverablehydrocarbons estimated on the basis ofengineering and geological data thatare similar to those used for provedreserves but that lack, for variousreasons, the certainty required toclassify the reserves are proved.Probable reserves are less certain to berecovered than proved reserves; whichmeans, for purposes of reservesclassification, that there is 50%probability that more than the Provedplus Probable Additional reserves willactually be recovered. These includereserves that would be recoverable if amore efficient recovery mechanismdevelops than was assumed inestimating proved reserves; reservesthat depend on successful work-over ormechanical changes for recovery;reserves that require infill drilling andreserves from an enhanced recoveryprocess which has yet to be establishedand pilot tested but appears to havefavorable conditions for successfulapplication.

The Information uses the terms “netback per barrel” and “operating net backper barrel” which do not have astandardized meaning underInternational Financial ReportingStandards (IFRS) and may not becomparable to similar measurespresented by other companies. Thesenon-IFRS measures are calculatedunder the heading “Net back per bbl”.The Company uses “operating net backper barrel” and “net back per barrel” tohelp evaluate its operatingperformance. Readers are cautionedthat these non-IFRS measure shouldnot be construed as an alternative toboth net income and net cash fromoperating activities, as indicators of theCompany’s performance, cash flows oras a measure of actual return. Readersshould refer to the Company’s financialstatements and management’sdiscussion and analysis available atwww.sedar.com.

2


MART Overview Mart is an independent international oil & gas company focused on production and

development opportunities in the prolific Niger Delta region of Nigeria.

Mart is publicly traded on the Toronto TSX Exchange (MMT) with 357 million shares on issue

and an estimated market cap. around C$300 million.

The Umusadege field (“Umusadege”) in Nigeria’s Niger Delta region is Mart’s core strategic

asset which is being developed in partnership with Midwestern Oil and Gas Company

Limited (Operator) and SunTrust Oil Company Nigeria Limited.

Mart’s net petroleum sales revenue for nine months ended September 30, 2014 was $144

million (9 months 2013 - $99 million). During 2012 - 2014 Mart paid dividends

aggregating to C$168m (C$0.475 per share).

Mart is well positioned for potential growth through further increases in Umusadege field

reserves, gaining access to proven marginal fields to be awarded by the Nigerian government,

and fields available via future IOC divestments.

December 31, 20132P Reserves

16.9 mmbbls

December 31, 20132P Reserves

16.9 mmbbls

9 months 2014Petroleum Sales

$144 m

9 months 2014Petroleum Sales

$144 m

Dividends per share paidduring 2012 – 2014 YTD:

C$0.475

Dividends per share paidduring 2012 – 2014 YTD:

C$0.475

3Funding Africa’s O&G activities



2014 Highlights Reserves reported at December 31, 2013 – 16.9 MMbbls proved and probable

Quarterly dividends of C$0.05, C$0.015, and C$0.01 per share were paid in April2014, July 2014, and October 2014 respectively

Record Umusadege daily field production of 17,777 bbls on October 20, 2014

Moved to mainboard TSX listing on April 2, 2014

Secured term loan facility was increased to $232.5 million

2014 Developments UMU-3STH well, a horizontal side track well, was drilled in June - July

2014 and the testing of the VI sand yielded an oil rate of 4,893 bopd inJuly 2014

UMU-4STH well, a horizontal side track well, was drilled in August2014 and the testing of the VII sand yielded an oil rate of 4,700 bopd inSeptember 2014

UMU-12H well, a horizontal well, was drilled in September-October2014 and the testing of the VIII sand yielded an oil rate of 5,366 bopdin October 2014

Spudded UMU-13 on 28 October 2014 to appraise the East Prospect

the Umugini pipeline is completed and injections to Trans Forcadospipeline started at the beginning of December 2014

Mart participates in consortium to acquire 45% interest in OML 18

Record Daily FieldProduction in Oct 2014

17,777 bbls

Record Daily FieldProduction in Oct 2014

17,777 bbls

Qtrly Dividend

Q1- Q3 2014 - C$0.075Qtrly Dividend

Q1- Q3 2014 - C$0.075




Umusadege Field History and Sources of FundingDevelopment drilling to increase

production to > 12,000 bopd(funded by debt from local

banks and cash flows from ops)

Fielddiscoveryin UMU-1

First CommercialOil Production

(Initial development funded byIssue of equity through

private placementsof shares listed at the

Toronto StockVenture Exchange)

Expansion of Central productionfacilities to 35,000 bpd

(Funded by cash flowsfrom operations)

Field Extension with UMU-9,UMU-10 & UMU-11 & 3 horizontal &1 appraisal wells were drilled in 2014

(funded by debt from a localbank and cash flows from ops)

2008-20112008-2011

2012-20142012-2014

2008200819741974 20032003

Umusadege’sSignificant Oil Reserves


December 11, 2014, Dar es Salam,


Future productiongains will berealized by :

Increased pipelinecapacity

Production fromexisting wellsincreased significantlywhen pipelinecapacity wasincreased

Development drilling

Exploration potential

Future productiongains will berealized by :

Increased pipelinecapacity

Production fromexisting wellsincreased significantlywhen pipelinecapacity wasincreased

Development drilling

Exploration potential

AGIP ExportPipeline

Disruptions

AGIP ExportPipeline

Disruptions

Capacity constraint –AGIP export pipeline

Daily field productionrecord of 17,777 bblson 20 October 2014

Daily field productionrecord of 17,777 bblson 20 October 2014

UMU-7UMU-7

UMU-6UMU-6

UMU-1UMU-5UMU-1UMU-5

UMU-8UMU-8

UMU-10UMU-10

UMU-9UMU-9

Umusadege Field Production Profile

Note: Mart’s share of production is dependenton stages of cost recovery as prescribed underthe RSA (ranging from 50-82.5%)

BO

PD




Umugini pipeline

12” x 51.4km, initial anticipatedgross transportation volume is45,000 bbl/day out of which 75% isallocated to Umusadege

Umugini pipeline status

The pipeline started injection ofcrude into the Trans Forcadospipeline at the beginning ofDecember 2014

Umugini pipeline

12” x 51.4km, initial anticipatedgross transportation volume is45,000 bbl/day out of which 75% isallocated to Umusadege

Umugini pipeline status

The pipeline started injection ofcrude into the Trans Forcadospipeline at the beginning ofDecember 2014

Field Location & Export Infrastructure

Pipeline capacity

11,000 – 13,000 bbl/day capacity available through AGIP pipeline

30,000 – 35,000 bbl/day capacity is available to Mart and co-ventures through Trans Forcados pipeline

Pipeline capacity

11,000 – 13,000 bbl/day capacity available through AGIP pipeline

30,000 – 35,000 bbl/day capacity is available to Mart and co-ventures through Trans Forcados pipeline




Netback per bbl

Source: Mart Financial Information. Note: Due to rounding, certain columns may not add exactly.

US$ 2014 ytd (Q1-Q3) 2013 annual 2012 annual

Sales 110.20 110.62 103.43

Royalties and NDDC (16.03) (17.43) (15.92)

Net sales 94.17 93.19 87.51

Production costs (17.50) (26.07) (12.82)

Operating net back per bbl 76.67 67.12 74.68

Tax on venture production (9.54) - -

Tax benefit contribution - (2.32) (5.72)

General and administrative expenses (7.68) (11.93) (8.84)

Business development and corporate costs (2.12) - -

Depletion and depreciation (DD&A) (23.47) (21.10) (16.52)

Net finance expense (4.14) (1.32) (1.05)

Discontinued operations (6.24) - -

Other expenses (1.35) (1.30) 2.56

Income tax expense (9.65) (4.85) (13.64)

Netback per bbl 12.48 24.29 31.47

Netback after DD&A and discontinued operations are added back 42.19 45.39 47.99




Umusadege Reserves Growth (Net, Mart Share)

Mart

Sh

are

of

Um

usad

eg

eN

et

Reserv

es

(MM

bb

l)

Reservesgrowth :

Ongoing fieldappraisal

Exploration wells

Reservesgrowth :

Ongoing fieldappraisal

Exploration wells

As at December 31, 2013




Mart Participates in Consortium to acquire 45% in OML 18Total acquisition costs > $1 bn, incl. equity & debt componentsDebt in form of RBL funded by a consortium of African banks

Significant upside potential inacquiring 45% interest in OML18 divested by Shell, Total andAGIP

1,035 sqkm license area in theBayelsa State, onshore Nigeria

Production levels in recentyears ranged between 20,000 to30,000 bopd from appx 30 wells.

Cumulative oil production from1970 is approximately 1,060million barrels of crude oil

Peak production in 1971 of140,000 bopd

Consortium signed AssignmentAgreement to acquire 45%interest in OML 18

Mart’s indirect working interestin OML 18 will be approximately10%

10

Bonnyterminal

OML 18OML 18Block

Boundary

Funding Africa’s O&G activities



CONTACT DETAILS :

Mr. Wade Cherwayko (CEO & Chairman) E: [email protected]

Mr. Dmitri Tsvetkov (CFO & Director) E: [email protected]

Calgary Office310, 1167 Kensington Cres. NWCalgary, Alberta T2N 1X7Tel: (403) 270-1841Fax: (403) 521-0443

Mart Energy ServicesPlot 1717, Mike Adenuga Close VictoriaIsland, Lagos, NigeriaTel: +234 (01) 271 1752Fax: +234 (01) 271 1751

UK Correspondence OfficeUnit 5 – Chelsea Wharf 15 Lots Road Dares Salam, Tanzania, England SW10 0QJTel: 011-44-207-351-7937Fax: 011-44-207-351-6935

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