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<strong>Corporate</strong> <strong>Presentation</strong><br />

<strong>April</strong> <strong>2013</strong><br />

© Coastal Energy Company 2012 | All Rights Reserved


Forward Looking Statements<br />

This presentation contains ‘forward-looking statements’ as defined by the applicable securities legislation.<br />

Statements relating to current and future drilling results, existence and recoverability of potential hydrocarbon<br />

reserves, production amounts or revenues, forward capital expenditures, operation costs, oil and gas price<br />

forecasts and similar matters are based on current data and information and should be viewed as forward-looking<br />

statements. Such statements are NOT guarantees of future results and are subject to risks and uncertainties<br />

beyond Coastal Energy’s control. Actual results may differ substantially from the forward-looking statements. This<br />

presentation does not contain all of the information contained in the preliminary prospectus of Coastal Energy<br />

Company, which should reviewed for complete information.<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

2


Company Overview<br />

Operational Overview Asset Overview<br />

Production<br />

Current Production (boepd) 25,500<br />

Offshore Production (oil) 23,000<br />

12/31/2012 RPS Reserves 1<br />

2P (Mmboe) 144.3<br />

% Oil 84%<br />

Increase vs. YE 2011 2P 40%<br />

After-Tax 2P PV-10 ($MM) $2,713.1<br />

Prospective Resources (Recoverable - Mmboe) 2<br />

(1) Per RPS Energy, Ltd. Reserve evaluation as of 12/31/2012 (2) Internal estimate -<br />

offshore only<br />

Financial Overview<br />

($US in millions, except shares / share price)<br />

Share Price (at 4/8/<strong>2013</strong>) C$18.60<br />

Shares Outstanding 113.6<br />

Shares Outstanding, Fully Diluted 118.3<br />

Equity Value / Market Cap. $2,200.3<br />

Debt (at 3/31/<strong>2013</strong>) $100.0<br />

Cash (at 3/31/<strong>2013</strong>) $55.0<br />

Enterprise Value $2,245.3<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

486.6<br />

3


Investment Highlights<br />

Highly Prospective Inventory /<br />

Significant Asset Base<br />

Material Exploration Success<br />

During Past 2 Years<br />

Substantial <strong>2013</strong> Drilling Program<br />

Note: 2012 reserve figures per RPS Energy Ltd. report as of March 31, 2012; prospective resource volumes are undiscovered and represent internal estimates<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

Opportunity to de-risk 660 Mmbbls unrisked oil-in-place by year-end <strong>2013</strong><br />

>30 identified prospects comprising 487 Mmbbls offshore prospective resources<br />

0.7 million acres in Gulf of Thailand; Malaysian RSC covering 3 fields<br />

Highly successful drilling program targeting shallow Miocene at Bua Ban North<br />

Added 56 Mmbbls 1P, 68 Mmbbls 2P in 2011 at Bua Ban North; +102% total 2P y/y<br />

Added 40 Mmbbls 2P & 85 Mmbbls 3P in 2012<br />

Two rigs running for entire year; approximately 60% development/40%<br />

exploration<br />

First oil expected in Malaysia in 2H<strong>2013</strong><br />

Industry Leading F&D Costs 5-year F&D cost of $4.66/boe ($6.81/boe including facilities CapEx)<br />

Growing Oil Production Profile<br />

Strong Management and<br />

Shareholder Support<br />

Current production ~25,500 boepd, >80% offshore oil (+102% vs. 4Q11)<br />

33,000 boepd <strong>2013</strong> guidance (+50% y/y)<br />

Highly incentivized management team and employees<br />

30% of outstanding shares owned by management and founding shareholders<br />

4


Field Overview<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

Offshore Thailand<br />

Bua Ban North<br />

Booked 68 Mmbbl 2P in 2011; added 40 Mmbbl 2P at 3/31/2012<br />

To test 70 Mmbbl of prospective resources in <strong>2013</strong><br />

Bua Ban South<br />

Songkhla<br />

Onshore<br />

Pilot fracking program was successful and two frac wells are<br />

onstream<br />

56 mmbbl of prospective resources at Bua Ban South<br />

34 mmbbl Miocene and 22 mmbbl tight sands<br />

Appraisal & exploration of 89 Mmbbls of prospective resources in<br />

Songkhla area<br />

Sinphuhorm gas field current production ~2,500 boepd<br />

15-year Gas Sales Agreement with Nam Phong power plant<br />

Dong Mun discovery being evaluated for development<br />

10 Mmboe contingent resources<br />

5


(Mmboe)<br />

Substantial Organic Reserve Growth<br />

800<br />

700<br />

600<br />

500<br />

400<br />

300<br />

200<br />

100<br />

0<br />

51.0<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

144 Mmboe 2P reserves at 12/31/2012 (84% oil/offshore, 53% 1P)*<br />

Near-term drilling program could result in significant additional uplift<br />

Opportunity to de-risk ~660 Mmbbls of unrisked oil-in-place through<br />

year-end <strong>2013</strong><br />

*Per RPS Energy, Ltd. Reserve evaluation as of December 31, 2012<br />

Note: Offshore prospective resources reflect internal estimates<br />

102.8<br />

2P YE 2010 2P YE 2011 2P Bua Ban<br />

North Addition<br />

27.3 6.7 7.4<br />

2P Bua Ban<br />

South Addition<br />

144.2<br />

Other 2P<br />

YE2012<br />

51.9<br />

3P<br />

YE2012<br />

10.0<br />

484.8<br />

Contingent Prospective<br />

6


Track Record of Consistent Growth<br />

(Boepd)<br />

Production Growth EBITDA Growth<br />

35,000<br />

30,000<br />

25,000<br />

20,000<br />

15,000<br />

10,000<br />

5,000<br />

0<br />

<strong>2013</strong> production expected to average 33,000<br />

27,000 boepd offshore Thailand, 2,300 onshore Thailand, 3,700 boepd Malaysia (3Q commencement)<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

2008 2009 2010 2011 2012 <strong>2013</strong><br />

Est.<br />

Onshore Offshore Malaysia<br />

($US MM)<br />

1,000<br />

900<br />

800<br />

700<br />

600<br />

500<br />

400<br />

300<br />

200<br />

100<br />

0<br />

2008 2009 2010 2011 2012 <strong>2013</strong><br />

Est.<br />

Note: See EBITDA sensitivity slide for <strong>2013</strong> potential outcomes<br />

$120/bbl<br />

$80/bbl<br />

7


Shares at Discount to 1P & 2P NAV<br />

$25.00<br />

$20.00<br />

$15.00<br />

$10.00<br />

$5.00<br />

$0.00<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

$2.03<br />

$21.13<br />

$0.00<br />

$19.00<br />

Net Asset Value Share Price<br />

Offshore 2P Onshore 2P<br />

8


<strong>2013</strong> EBITDAX Sensitivity<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

Note: Assumes <strong>2013</strong> guidance of 33,000 boepd, $19/boe OpEx and $315 MM capital program<br />

9


Drilling Sequence<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

Rig Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14<br />

Vicksburg<br />

Manta<br />

Songkhla<br />

Development<br />

G5/43 EXPL<br />

Songkhla M<br />

Bua Ban North<br />

Development &<br />

Appraisal<br />

G5/50 EXPL Well<br />

Bua Ban Main<br />

Sidetrack Wells<br />

(Fracs)<br />

MOPU required<br />

Malaysia Appraisal Drilling<br />

Bua Ban South Appraisal<br />

8 Wells<br />

MOPU required<br />

Songkhla H<br />

Development 4<br />

Wells<br />

Exploration Development<br />

Workover / Completion Appraisal<br />

G5/43 EXPL Bua<br />

Ban North Terrace<br />

G5/43 EXPL Bua<br />

Ban Terrace<br />

Bua Ban North Development 8<br />

Wells<br />

G5/43 EXPL<br />

Benjarong South<br />

Water Disposal<br />

/Injection<br />

Note: HWU = hydraulic workover unit<br />

10


Industry Leading F&D Costs<br />

F&D Cost ($/boe)<br />

F&D Cost ($/boe) (Including Facilities CapEx) F&D Cost ($/boe) (Excluding Facilities CapEx)<br />

$7.00<br />

$6.80<br />

$6.60<br />

$6.40<br />

$6.20<br />

$6.00<br />

$5.80<br />


Robust <strong>2013</strong> Drilling Program<br />

($US MM)<br />

Drilling & Completions<br />

<strong>2013</strong> %<br />

Offshore Thailand 153 18%<br />

Onshore Thailand 21 nm<br />

Malaysia 42 nm<br />

Facilities 81 (50%)<br />

Seismic 7 (82%)<br />

Other 10 (46%)<br />

Total 315 (13%)<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

<strong>2013</strong> FCF of $200 MM post CapEx and taxes<br />

at $100 realized oil price<br />

<strong>2013</strong> CapEx budget of $315 MM ~13% below<br />

2012 due to substantially lower facilities<br />

expenditures while including a 2 rig program<br />

Two MOPUs<br />

1 for Thailand and 1 for Malaysia<br />

Onshore CapEx focused on development<br />

activities at Dong Mun field<br />

12


Thailand Exploration


Exploration Overview<br />

Prospective resource inventory of 486.6 mmbbl<br />

Substantial prospective resources to be tested in Q213<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

Songkhla M – 12.7 mmbbl (recoverable)<br />

Bua Ban Terrace A – 32.7 mmbbl (recoverable)<br />

G5/50 – 23.7 mmbbl (recoverable)<br />

Bua Ban Terrace – 105.5 mmbbl (recoverable)<br />

Additional exploration upside at producing fields<br />

Bua Ban North - 67.5 mmbbl of prospective resources (recoverable)<br />

Bua Ban South – 55.9 mmbbl of prospective resources (recoverable)<br />

Songkhla Basin has significant upside<br />

Recent 3D seismic survey being processed<br />

Survey covers entire Songkhla basin as well as the G5/50 exploration block<br />

Initial data quality is excellent<br />

Data have already produced new leads and structures and initial mapping is in progress<br />

Onshore Exploration<br />

Dong Mun gas discovery (10 mmboe net to Coastal)<br />

Commerciality study has been approved<br />

Expected to begin production in 2015<br />

Q2 13<br />

H2 13<br />

14


Highly Prospective Songkhla Basin<br />

Bua Ban Terrace<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

Bua Ban North<br />

Bua Ban South<br />

Songkhla J<br />

(Buried Hill II)<br />

Benjarong South<br />

(Songkhla N)<br />

Songkhla H<br />

Songkhla L<br />

Songkhla M<br />

Songkhla A<br />

Extensions<br />

Prospects<br />

Eocene<br />

Lower<br />

Oligocene<br />

Lower<br />

Miocene/<br />

Up Oligocene<br />

Pre-Tertiary<br />

Buried Hill<br />

Fields<br />

Eocene<br />

Lower<br />

Oligocene<br />

Lower<br />

Miocene<br />

Note: Prospective resource volumes are undiscovered resources and represent internal estimates<br />

15


Songkhla M Lead<br />

Time Structure : Upper Oligocene<br />

Jerry’s Modifications


Terrace Prospects<br />

A<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

B’<br />

B<br />

A’<br />

Top Eocene Map<br />

EAST TERRACE A<br />

PROSPECT<br />

Miocene (600 acres)<br />

and<br />

Eocene (2700 acres)<br />

Primary Objectives<br />

B<br />

EAST TERRACE A<br />

A A’<br />

Eocene<br />

EAST TERRACE A B’<br />

M50<br />

Eocene<br />

M50<br />

17


Bua Ban South Field<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

Stratigraphic limit of M100<br />

net sand<br />

No Miocene oil water contact encountered yet<br />

Could be materially lower than current depths<br />

A-06 well will test eastern boundary<br />

47 Mmbbls prospective resources (recoverable)<br />

21 Mmbbls associated with fracking success<br />

Fracking of BBS 1 & 3 was successful<br />

Booked 6.7 Mmbbls 2P, 13.7 Mmbbls 3P reserves at<br />

12/31/2012<br />

All associated with Miocene<br />

A-04 and A-05 wells encountered Miocene pay in same<br />

reservoir as Bua Ban Main A-11<br />

18


Bua Ban South Pilot Fracturing Program<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

Bua Ban South A-01 and A-03 were successfully fracked in Q113<br />

A-01 A-03<br />

Interval Lower Oligocene Eocene<br />

Stabilized IP Rate (bopd) 450 bopd 1,450 bopd<br />

EUR (mmbbl) 0.19 0.39<br />

IRR (@ $100 / bbl realized) 65% 163%<br />

PV10 ($mm) $5.4 $15.9<br />

PV10 / bbl $28.61 $44.14<br />

With further optimization, results can improve while bringing<br />

fracturing costs down<br />

Substantial resources to be exploited in tight sands in Songkhla<br />

basin<br />

Recoverable Oil Assuming 10% Recovery Factor<br />

Songkhla 3.3 MMBO<br />

Bua Ban North 3.5 MMBO<br />

Bua Ban Main & South 23.2 MMBO<br />

Total: 30.0 MMBO<br />

19


A<br />

Songkhla Basin Miocene Trend<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

A’<br />

20


Songkhla N (Benjarong) Prospects<br />

Lower Miocene M200 Time Structure<br />

20 ms contour interval<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

M200 A<br />

M200 B<br />

M200 C<br />

Multiple stacked structural targets in:<br />

Lower Miocene<br />

Upper Oligocene<br />

Lower Oligocene<br />

Eocene<br />

21


Songkhla N (Benjarong) Prospects – Dip Line<br />

Time (sec)<br />

west<br />

colored inversion<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

M200 A<br />

1000 m<br />

Bua Ban North Field<br />

east<br />

M050<br />

M075<br />

M200<br />

U Olig marker<br />

22


Preliminary Results of New 3D Seismic<br />

Fractured<br />

Basement<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

4-way Fault<br />

Closures<br />

Fractured Basement<br />

Stratigraphic<br />

Pinch-outs<br />

23


New Plays Along Basin Margins<br />

Terrace Play<br />

Asri Sub-Basin, Indonesia<br />

300 MMBO in basin<br />

margin ramp/strat play<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

Bua Ban North<br />

Original 3D Limit<br />

Songkhla A<br />

Miocene Ramp Play<br />

Oligocene<br />

Strat Play<br />

24


Malaysian Risk Service Contract


Background<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

Coastal entered into a Risk Service Contract with<br />

PETRONAS for the development of the Kapal,<br />

Banang and Meranti fields (KBM) offshore<br />

Peninsular Malaysia<br />

Coastal is a 70% partner and a local Malaysian<br />

contractor is a 30% partner<br />

The contract requires the drilling of 17 wells: 10<br />

wells at Kapal, 4 wells at Banang and 3 wells at<br />

Meranti<br />

Once the wells are drilled, Coastal will operate the<br />

production facilities and coordinate oil liftings,<br />

operating cost disbursements, etc.<br />

There are existing discoveries at each field.<br />

Coastal estimates recoverable oil could be<br />

anywhere from 15 to 35 Mmbbl<br />

Additional upside from exploration prospects<br />

26


Overview of Terms<br />

The contract duration is 8 years ; the KBM SFRSC model strikes a balance in sharing of risks<br />

with fair returns for development and production of already discovered fields<br />

PETRONAS remains the project owner while Contractors (Coastal and partners) are the service<br />

provider<br />

Contractor will incur upfront costs for Petroleum Development and Operations and will be<br />

reimbursed upon first commercial production; the contractor will also be entitled to a<br />

Remuneration Fee per barrel from a pre-determined percentage of the field revenue<br />

The reimbursement and remuneration are tied to cost and production performances; priority of<br />

payment shall be cost reimbursement of CAPEC and OPEX, followed by Remuneration Fee<br />

Contractors are subjected to the <strong>Corporate</strong> Income Tax Act (CITA) and not the Petroleum<br />

Income Tax Act (PITA). <strong>Corporate</strong> tax payable by the Contractor Group under CITA is at the<br />

prevailing rate of 25%<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

27


Overview of Costs/Timeline<br />

First oil from Kapal field is expected 3Q13<br />

The Capital Expenditure (CAPEX) of KBM Cluster is estimated to be USD320 million over 3 years<br />

Coastal expects to fast track development of the fields using MOPUs and FSOs similar to how it<br />

has fast tracked development of its Gulf of Thailand assets<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

28


Appendix


Further Exploration Potential<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

Richest source facies in the Songkhla basin are found within the lower<br />

Oligocene balanced-fill lake phase, an extensive carbonate‐rich<br />

interval with analogies to the Qingshankou and Nenjiang source strata<br />

in the Songliao Basin of China<br />

Reservoirs associated with this lake type include lake marginal<br />

carbonate strata, lake marginal beach deposits, and deltaic facies that<br />

would tend to be restricted to the lake margin<br />

Source rock is currently sitting in oil window; start of oil window is<br />

estimated to be between 6,250 - 10,000 feet<br />

Thickness of source rock ranges from 77 feet to 300 feet in the center<br />

of the basin<br />

Total Petroleum System Evaluation<br />

Contour (ft) Acres Barrels of Oil (possible)<br />

Barrels Recoverable<br />

(assuming 10% recovery factor)<br />

10,000.00 17,078.73 19,877,199,359.56 1,987,719,935.96<br />

8,000.00 96,577.08 14,499,833,844.09 1,449,983,384.41<br />

6,250.00 88,006.43 13,213,058,545.69 1,321,305,854.57<br />

10,000 & 8,000 Total 3,437,703,320.37<br />

Total 4,759,009,174.94<br />

30


Bua Ban North<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

Additional 63.0 mmbbl of prospective<br />

resources at Bua Ban North<br />

Discovered Oil<br />

Oil Well<br />

Prospect or development location M100 penetration<br />

point<br />

Interval wet<br />

Interval tight or absent<br />

31


Songkhla H Field<br />

Main Field<br />

Downthrown Closure<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

• Songkhla H Development<br />

• 3 Oil Producers<br />

• 1 Water Injector<br />

• Exploration<br />

• Well Downthrown Closure<br />

• Reserve Exposure 14mmbbls STOOIP<br />

32


Dong Mun Field – Onshore Gas<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

Likely Commercial Development<br />

Potential CNG for Natural Gas Vehicles<br />

53 km pipeline to Nam Phong<br />

24 Mmscfd gross from 4 wells (20 yrs)<br />

60 Bcf contingent (recoverable) net to<br />

Coastal’s 40% interest<br />

107.4 Bcf net incremental prospective<br />

resources (recoverable)<br />

Dong Mun-3st (1Q12)<br />

Confirmed G/W contact<br />

Improved reservoir<br />

Milestones<br />

Commerciality approval (DMF) by 1Q13<br />

Gas Sales Agreement by 2Q13<br />

EIA/ONEP Approval by 3Q13<br />

First Gas 4Q14<br />

33


Comparison Between Malaysia PSC and SFRSC<br />

* Petroleum Income Tax Act<br />

**<strong>Corporate</strong> Income Tax Act<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

*<br />

**<br />

34


<strong>2013</strong> Projected Tax<br />

Assumes production, expenses and capital program outlined in <strong>2013</strong> guidance<br />

Tax calculation includes Petroleum Income Tax and Special Remuneratory Benefit<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

Realized Offshore Cash Tax Rate Effective Tax<br />

Crude Price EBITDAX ($MM) (Due in <strong>2013</strong>) Rate<br />

$85.00 543.5 26.7% 45.5%<br />

$90.00 587.1 25.5% 48.1%<br />

$95.00 630.6 24.2% 50.6%<br />

$100.00 675.8 23.0% 53.0%<br />

$105.00 723.7 22.0% 54.6%<br />

$110.00 771.7 20.9% 56.5%<br />

$115.00 819.7 20.2% 57.6%<br />

$120.00 867.7 19.6% 58.6%<br />

Note: Tax rate expressed as a percentage of EBITDAX<br />

Cash tax rate reflects actual amounts due in <strong>2013</strong> and is inversely related to commodity<br />

prices given large proportion of fixed amounts related to 2012 taxes<br />

Effective tax rate reflects taxes incurred in <strong>2013</strong> and includes amounts payable in 2014<br />

35


Overview of Thailand Fiscal Terms


“Thai I” Regime (Onshore)<br />

12.5% royalty rate<br />

Petroleum Income Tax (PIT) assessed at 50% of taxable income (revenues – allowable<br />

deductions)<br />

Allowable deductions for PIT are as follows:<br />

Operating Expenditures<br />

Hedging Losses<br />

G&A expenses related to the petroleum operations<br />

Capital expenditures under the following depreciation rules<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

o Pre-production intangibles are depreciated straight line over 10 years<br />

o Post-production intangibles are fully expensed in the year incurred<br />

o Tangibles are depreciated straight line over 5 years<br />

Royalties are not deductible; however, the operator receives a PIT credit for royalties paid,<br />

lowering the effective tax rate<br />

37


“Thai III” Regime (Offshore)<br />

Royalty payable on a sliding scale determined by monthly production volume (5 – 15%)<br />

Daily production of 25,000 bopd results in an approximate 11% royalty rate<br />

Petroleum Income Tax (PIT) assessed at 50% of taxable income (revenues – allowable<br />

deductions)<br />

Allowable deductions for PIT are as follows:<br />

Royalties<br />

Operating Expenditures<br />

Hedging Losses<br />

G&A expenses related to the petroleum operations<br />

Special Remuneratory Benefit (“SRB”) payments<br />

Capital expenditures under the following depreciation rules<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

o Pre-production intangibles are depreciated straight line over 10 years<br />

o Post-production intangibles are fully expensed in the year incurred<br />

o Tangibles are depreciated straight line over 5 years<br />

38


Special Remuneratory Benefit (“SRB”)<br />

Designed as a “Windfall Profits Tax” for high oil price environments<br />

Assessed on a sliding scale basis determined by “Revenue per Meter Drilled”<br />

Petroleum Revenue is adjusted for inflation and exchange rate fluctuations since<br />

inception of the concession and then divided by total meters drilled on the concession<br />

Coastal’s offshore concessions provide a 600,000 meter “allowance” to be added to<br />

actual drilling footage<br />

Resulting metric determines the SRB rate (0 – 75%)<br />

Tax assessed on “Petroleum Profit”<br />

Allowable deductions are: Royalty, Hedging Losses, Capital Expenditures, Operating<br />

Expenses, G&A<br />

All Capex is expensed as incurred, with a special 35% “uplift” on facilities capex<br />

Allows for full capital recovery plus uplift<br />

Coastal had an approximate $165MM loss carryforward for SRB purposes at year end 2011<br />

SRB is deductible for PIT purposes<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

39


Legal Disclaimer<br />

The information contained in this presentation (“<strong>Presentation</strong>”) has been prepared by Coastal Energy Company (“Company”) and is being delivered for informational purposes only to a limited<br />

number of persons to assist them in deciding whether or not they have an interest in investing in the Company. The <strong>Presentation</strong> has not been independently verified and the information contained in<br />

it is subject to updating, completion, revision, verification and further amendment. The <strong>Presentation</strong> does not purport to contain all information that a prospective investor may require. While the<br />

information contained in it has been prepared in good faith, neither the Company nor its shareholders, directors, officers, agents, employees, or advisors give, has given or has authority to give, any<br />

representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this <strong>Presentation</strong>, or any revision thereof, or of any other written<br />

or oral information made or to be made available to any interested party or its advisers (all such information being referred to as “information”) and liability therefore is expressly disclaimed.<br />

Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct, express or implied,<br />

contractual, torturous, statutory or otherwise, in respect of the accuracy or completeness of the information or for any of the opinions contained in, or for any errors, omissions or misstatements or for<br />

any loss, howsoever arising from the use of this <strong>Presentation</strong>. In furnishing this <strong>Presentation</strong>, the Company does not undertake or agree to any obligation to provide the recipient with access to any<br />

additional information or to update this <strong>Presentation</strong> or to correct any inaccuracies in, or omissions from, this <strong>Presentation</strong> which may become apparent.<br />

Information contained in this <strong>Presentation</strong> is confidential information and the property of the Company. It is made available strictly for the purposes referred to above.<br />

The <strong>Presentation</strong> and any further confidential information made available to any recipient must be held in complete confidence and documents containing such information may not be reproduced,<br />

used or disclosed without the prior written consent of the Company. This <strong>Presentation</strong> must not be copied, published, reproduced or distributed in whole or in part at any time without the prior written<br />

consent of the Company and by accepting the delivery or making to it of this <strong>Presentation</strong>, the recipient agrees not to do so and to return any written copy of this <strong>Presentation</strong> to the Company at the<br />

request of the Company.<br />

This <strong>Presentation</strong> should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisors. Each party to whom this<br />

<strong>Presentation</strong> is delivered or made must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular,<br />

any estimates or projections or opinions contained in this <strong>Presentation</strong> necessarily involve significant elements of subjective judgement, analysis and assumption and each recipient should satisfy<br />

itself in relation to such matters. Neither the delivery or making of this <strong>Presentation</strong> nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with<br />

any transaction and the right is reserved to terminate any discussions or negotiations with any prospective investors. In no circumstances will the Company be responsible for any costs, losses or<br />

expenses incurred in connection with any appraisal or investigation of the Company.<br />

This <strong>Presentation</strong> does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to subscribe for or purchase any securities in the Company, nor shall it, or<br />

the fact of its delivery, making or distribution, form the basis of, or be relied upon in connection with, or act as any inducement to enter into, an contract or commitment whatsoever with respect to<br />

such securities. Any such solicitation or offer will be made by means of a prospectus to be issued by the Company in due course and any decision to subscribe for securities in the Company should<br />

be made solely on the basis of the information contained in such prospectus.<br />

The delivery, making or distribution of this <strong>Presentation</strong> in or to persons in certain jurisdictions may be restricted by law and persons who receive this <strong>Presentation</strong> should inform themselves about,<br />

and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the relevant jurisdiction. In particular, this <strong>Presentation</strong> has not been<br />

approved by an authorised person pursuant to Section 21 of the Financial Services and Markets Act 2000 (“FSMA”) and accordingly, it is being communicated in the United Kingdom only to persons<br />

to whom this <strong>Presentation</strong> may be communicated without contravening the financial promotion prohibition in Section 21 of the FSMA. Those persons are described in the Financial Services and<br />

Markets Act 2000 (Financial Promotion) Order 2005 (“Order”) and include persons who fall within the category of person set out in Articles 19 and 49 of the Order. Any investment activity to which<br />

this <strong>Presentation</strong> relates in the United Kingdom is available to, and will only be engaged with such persons and this <strong>Presentation</strong> should not be acted or relied upon in the United Kingdom by persons<br />

of any other description. This <strong>Presentation</strong> has not been approved as a prospectus by the UK Financial Services Authority (“FSA”) under Section 87A of the FSMA and has not been filed with the<br />

FSA pursuant to the United Kingdom Prospectus Rules. No offer of securities in the Company is being or will be made in the United Kingdom in circumstances which would require such a prospectus<br />

to be prepared.<br />

The securities proposed to be issued by the Company (the "Common Shares") have not and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and may<br />

not be offered or sold in the United States except pursuant to an exemption from, or transactions not subject to, the registration requirements of the Securities Act. In addition, other than to a limited<br />

number of persons reasonably believed to be qualified institutional buyers (as defined in Rule 144A under the Securities Act), neither this <strong>Presentation</strong> nor any copy of it may be taken or transmitted<br />

into the United States or America or distributed directly or indirectly, in the United States of America or to any resident thereof except in compliance with the applicable U.S. securities laws. Any<br />

failure to comply with these restrictions may constitute a violation of applicable U.S. securities laws.<br />

By accepting this <strong>Presentation</strong>, the recipient represents and warrants that it is a person to whom this <strong>Presentation</strong> may be delivered or distributed without a violation of the laws of any relevant<br />

jurisdiction. This <strong>Presentation</strong> is not to be disclosed to any other person or used for any other purpose and any other person who receives this <strong>Presentation</strong> should not rely or act upon it.<br />

<strong>Corporate</strong> <strong>Presentation</strong> <strong>April</strong> <strong>2013</strong><br />

40

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