heritage oil limited · development drilling on oml 30 could commence ... well positioned to play a...
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HERITAGE OIL LIMITED
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.
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
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
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
OML 30 – DRIVING GROWTH
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.
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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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.
RUSSIA
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.
EXPLORATION ASSETS
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%
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%
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
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
SUMMARY AND OUTLOOK
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
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