heritage oil limited · development drilling on oml 30 could commence ... well positioned to play a...

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HERITAGE OIL LIMITED

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Page 1: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

HERITAGE OIL LIMITED

Page 2: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

FORWARD LOOKING INFORMATION

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The information contained in this presentation does not purport to be all-inclusive. Heritage makes no representation or warranty as to the accuracyor completeness of this information and shall not have any liability for any representations (expressed or implied) regarding information containedin, or for any omissions from, this information or any other written or oral communications transmitted to the recipient in the context of thispresentation.

This presentation includes certain statements and estimates provided by Heritage with respect to the projected future performance of Heritage.Such statements, estimates and projections reflect various assumptions by management concerning possible anticipated results, whichassumptions may or may not be correct. No representations are made as to the accuracy of such statements, estimates or projections.

This presentation and the information contained in this document are confidential and may not, directly or indirectly, be reproduced, forwarded toany other person or published, in whole or in part or disclosed by recipients to any other person or used for any purpose other than the purpose forwhich it was distributed.

Page 3: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

HIGHLIGHTS

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Summary Heritage is a private company following the acquisition by Al Mirqab on 30 June 2014. Al Mirqab, which owns 80% of the company is

owned by His Excellency Sheikh Hamad Bin Jassim Bin Jabor Al Thani and his family in a private capacity

Tony Buckingham, Heritage’s founder, owns the remaining 20%Operational highlights OML 30 achieved record peak production since acquisition, of over 60,000 bopd in August 2014

2014 average production from OML 30 net to Heritage of 9,654 bopd (68.25% unreconciled) and net production from Russia of 566bopd (95%)

Work progressing on three onshore licences in Papua New Guinea with seismic acquisition and interpretation completedOutlook – Internal Continued investment in OML 30 during 2015 will result in further increases in production

Development drilling on OML 30 could commence imminently, but is being deferred until oil price increases

Transition to an operating role in Nigeria

Multiple drill ready prospects identified in Papua New Guinea

Farm out exploration projects where possibleOutlook – External Focus on long term oil production with value created through production growth generating dividend income

Opportunities exist in the US, North Sea and Latin America

US opportunities offer greater deal certainty but sellers are limited due to capital markets re-opening. Latin America and sub-Saharan Africa offer greater risk/return opportunities

Invest in minority equity stakes in listed major and super major oil companies

Page 4: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

TANZANIA100% Rukwa South Basin100% KyelaOne drill ready prospect identified

DIVERSIF IED PORTFOLIO ACROSS CORE AREAS

MALTA100% Area 2100% Area 7One drill ready prospect identified

LIBYASahara Oil Well positioned to play a futurerole in the Libyan oil industry

NIGERIAOML 30Major interest in OML 30 through Shoreline Natural Resources

RUSSIA95% Zapadno

ChumpasskoyeProduced 590 bopd

in 2014

PAPUA NEW GUINEA40% PPL 48640% PRL 13

42.5% PPL 4372 drill ready prospects identified

EXPLORATION OTHER

PRODUCTION

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GHANA39.6% in Offshore South West Tano Block38.7% in East Keta Block33.3% in GOSCOAwarded Licences in July 2014, preparatory work ongoingEstablished GOSCO

Page 5: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

WELL POSIT IONED FOR FUTURE GROWTH

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OML 30 INTEREST• A world class asset providing a step change in production, reserves and cash flow• A platform upon which to build within Nigeria and in other core areas

VALUE GENERATION

BALANCED PORTFOLIO

STRATEGIC ADVANTAGE• Look to acquire assets that are underdeveloped or overlooked• Early mover advantage• Ability to make decisions and complete on opportunities in timely manner

TECHNICAL SKILLSET• Discovered four of the five largest onshore discoveries in sub-Saharan Africa (excluding Nigeria)

in the last 13 years• Depth and breadth of industry experience

MANAGEMENT OF RISK• Ability to mitigate risk associated with political and security issues through local partners,

on-the-ground experience and engagement with local communities• Balanced portfolio of exploration and production assets

• Significant production growth expected to continue• Focused exploration activity continues

• Exceptional record of generating value and monetising assets• Raised $2 billion in asset sales with the current management team

Page 6: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

OML 30 – DRIVING GROWTH

Page 7: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

OML 30, NIGERIA

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45% interest in OML 30 through Shoreline Natural Resources Limited (“Shoreline”)1

Onshore Nigeria, located less than 50 kilometres east of Warri

Lease covers 1,097 square kilometres with eight producing fields; Afiesere, Eriemu, Evwreni, Kokori, Oroni, Oweh, Olomoro-Oleh, Uzere West

Potential to significantly increase to c.300,000 bopd in the long term, according to RPS evaluation

Combined field infrastructure capacity of c. 395,000 bpd

Shoreline is in discussions with Government regarding operatorship

OML 30 owns and operates the 850,000 bpd capacity Trans Forcados Pipeline to the export terminal. Other operators tie-in and pay a capacity tariff¹ OML 30 is 55% owned by Nigerian Petroleum Development Corporation (“NPDC”), Shoreline equity split is 45% Heritage, 55% Shoreline Power Company.

Page 8: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

OML 30 – THE OPPORTUNITY

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• Over 200 wells have been drilled on the licence since 1961 with most drilling completed prior to 1992• All wells are producers as the reservoirs are underlain by a strong aquifer• Sporadic drilling as the licence was not considered core and therefore over-looked and under developed• Remaining 2 P Reserves in excess of 1 billion

• Production from the licence commenced in 1963 and peaked in 1971 at c.280,000 bopd • Over the period 2006 to 2009 production was severely impacted by both security and funding issues• These issues are less relevant for Shoreline making it easier to bring production back on• Engaging with communities through a Non-Governmental Organisation has been successful

OML 30 HISTORICAL OIL PRODUCTION, ‘000 BOPDOML 30 HISTORICAL DRILLING

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Page 9: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

SUMMARY OF MAJOR F IELDS IN OML 30

Major Fields Afiesere Eriemu Evwreni Kokori Olomoro-

Oleh Oroni Oweh Uzere West OML 30Total

STOIIP (mmbbls) 897 1,003 412 1426 1,592 395 412 647 6,784

Productionto date(mmbbls)

189 76 52 383 383 40 40 122 1,285

Remaining Technical Resource(mmbbls)1

368 49 170 260 78 65 130 1,120

Discovered 1966 1961 1967 1960 1962 1965 1964 1963 -

FirstProduction 1968 1964 1969 1966 1963 1970 1966 1965 -

Number of wells 41 20 14 40 40 8 11 16 190

9¹ Based on RPS evaluation. Afiesere and Eriemu combined in RPS’s production forecast analysis.

Page 10: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

RUSSIA

Page 11: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

RUSSIA

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95% equity interest in Zapadno Chumpasskoye Licence1

Licence located in Western Siberia (region accounts for more than 60% of Russia’s oil production)

RPS certified 65 MMboe and $336 million NPV10 in 2012

Production in 2014 averaged 590 bopd Production is from four producers (well 363 is horizontal, 226

vertical, and P3 and P4 are deviated) shown below Production is sold to the local refinery market. Since December this

market has become unstable due to large drops in refined products prices and fluctuations in crude sales prices

Rouble exchange rate has increased from 35 to 67 per USD. Crude sales prices are largely USD based, converted to Roubles, but impacted by Brent drop to c.$60/bbl

¹ Acquired 95% ownership stake in Russian company ChumpassNefteDobycha Limited, 100% owner of the licence.

Page 12: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

EXPLORATION ASSETS

Page 13: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

GHANA

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Two high impact exploration licences, Offshore South West Tano (“OSWT”) Block and East Keta Block

Favourable economic terms and fiscal regime

Petroleum Agreements awarded and ratified by Parliament in July 2014

Local partner is Blue Star Exploration Ghana Limited

Offshore South West Tano Deep water, located adjacent to Jubilee Block oil

producing block with all infrastructure in place

Prospects already identified by legacy 3D seismic

Early production capability as existing infrastructure will fast track production

Single well commitment during first exploration period

East Keta Deep water, located on border with Togo

Opportunity to open up a significant new basin in Ghana

Low cost seismic option during first exploration period

Offshore South West Tano 175 sq. km 39.6%East Keta 2,239 sq. km 38.7%

Page 14: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

PAPUA NEW GUINEA

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Three licences, PPL 486, PRL 13 and PPL 437PPL 486 (ex 319) and PRL 13 Heritage has earned a 40% working interest in PPL

486 and PRL 13 by contributing to back costs andshooting seismic

Heritage operated acquisition of ~230 km of 2Dseismic and reprocessed 434 km of legacy 2D data

Identified drill ready Tuyuwopi prospect with potentialfor ~ 600 bcf mean resources in gas case and125MMbbl of oil with 375 BCF of associated gas inthe oil case

Farm out process has started

PPL 437 Heritage has a 42.5% working interest in PPL 437

Heritage operated acquisition of ~104 km of 2Dseismic and reprocessed ~800km of legacy 2D data

Identified drill ready Malisa prospect with potential for~ 300 bcf mean resources

Farm out process has startedPPL 486 2,025 sq. km 40%PRL 13 160 sq. km 40%PPL 437 1,530 sq. km 42.5%

Page 15: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

TANZANIA

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Awarded Rukwa PSA in October 2011 and Kyela PSA in January 2012

Operations have commenced across the licences;

Rukwa - 2,300 km of legacy 2D seismic data reprocessed. Acquisition and processing of an additional 600 km of 2D seismic data to infill this legacy data has completed. Results have identified several prospects in the South Rukwa licence which are geologically analogous to the Kingfisher discovery in Uganda

Kyela - full tensor gravity survey acquired, which has now been interpreted in conjunction with 100 km of new 2D seismic data. The presence of tilted fault blocks and structural features has been confirmed, reinforcing prospectivity. A geochemical survey has been acquired and interpreted with further encouraging results

Identified drill ready Rukwa-A prospect with potential for ~ 200 MMbbl mean oil resources

Heritage considers these blocks as sharing geological similarities with the Albert Basin of Uganda where the Company had considerable exploration success

South Rukwa 4,395 sq. km 100%, operatorKyela 1,934 sq. km 100%, operator

Targeting +200 MMbls of oil resources in the basin

Fast track development if successful by exporting crude by rail cars

Farm out process started

Page 16: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

MALTA

Two areas; c.18,000 sq. km

Heritage has 100% working interest and is the operator

Structures identified on Areas 2 & 7 have >1 billion bbl resource potential

Structures analogous to producing fields offshore Libya and Tunisia including the giant Bouri Field where IHS estimate reserves of 630 MMbbl and in excess of 8 TCF of gas

Oil and gas shows close to Area 7

Water depths of 250 to 300 metres

1,023 km of legacy 2D seismic reprocessed

1,400 km of 2D seismic acquired processed and interpreted

High-impact exploration well planned subject to necessary government approvals and international boundary agreement

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International boundary dispute with Libya

Licence on “care and maintenance” until resolved

Farm out licence following resolution

Page 17: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

SUMMARY AND OUTLOOK

Page 18: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

SUMMARY

181 In order to be prudent, the Group has changed the accounting policy for the proportion of Shoreline it consolidates into its results and it now proportionally consolidates Shoreline’s financial results.

Highlights Production increasing:

o OML 30 recently achieved peak gross production, since acquisition, of c.60,000 bopd

Exploration programmes continuing:o With seismic reprocessing in PNG leading to identification of three prospects and multiple leadso Continued the work programmes in Tanzania with the processing and reprocessing of 2D seismic, generating a drill ready prospect

within South Rukwa and further enhancement of prospectivity on Kyela

Cash generation increasing:o Generated revenues1 of approximately $432 million in 2013

Catalysts Production increases from OML 30:

o Uzere West has recommenced production after being shut-in for nearly two yearso Maintenance to continueo Working over existing wellso Development drilling of OML 30, Nigeria, scheduled to commence in the second half of 2014o Appointment of operating role in Nigeria

Heritage net production for 2014 is estimated in the range of 14,500 to 18,000 bopd, including Russia

Future Growth Targeting growth opportunities through third party transactions

Page 19: HERITAGE OIL LIMITED · Development drilling on OML 30 could commence ... Well positioned to play a ... • A platform upon which to build within Nigeria and in other core areas

CONTACT DETAILS

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HERITAGE OIL LTD

PAUL ATHERTON

• Tel: +44 (0)1534 835 400 • Email: [email protected] • www.heritageoilltd.com

ROBERT FAGG

• Tel: +44 (0)207 518 0820• Email: [email protected] • www.heritageoilltd.com