Investor Presentation - Proactive Investors

proactiveinvestors.co.uk

Investor Presentation - Proactive Investors

Investor Presentation

AIM: GPX

November 2009


Gulfsands Overview

• Strong financial position

– No debt, 2009 year‐end cash balance estimated ~US$55 MM

– 2009 capex of $35MM all funded from operating cash flow (~US$55MM)

• Net production (WI)

– currently 9,500 boepd

– 10,500 boepd estimated by end‐2009

• Exciting stage in evolution of Group :

– Potential to build significant business in Syria

– Major strategic opportunities in Iraq

• Reserves (WI):

– 1P : 22 mmboe, 2P : 40 mmboe, 3P : 64 mmboe

• New Management Team

– Clear vision and strategy

2


Management Team

NON EXECUTIVE CHAIRMAN

• Andrew West ‐ Investment Banker

EXECUTIVE

• Ric Malcolm, CEO (joined Oct 08)

– Geologist : ex OMV, Mobil, Ampolex (Australian E&P), Woodside

• Mahdi Sajjad, President

– Founder of GPX : long experience in Middle East energy & mining

• Andrew Rose, CFO (joined Aug 08)

– Investment Banker : ex CFO of Burren Energy

• Ken Judge, Director Corporate Development & Communications

– Lawyer : background in energy & mining, director of several listed co’s

OTHER SENIOR MANAGEMENT

• Jack Oden, VP Exploration (ex BHP)

• Rick Bresler, VP Project Engineering (ex Worley, ABB)

• Ian Conway, VP Petroleum Engineering (ex BP, Maersk, Exxon)

• Khalid Mugharbel, Operations Manager (ex Schlumberger)

3


Vision

• Gulfsands Petroleum will in the longer term become one of the pre‐eminent

E&P companies in the Middle East and will be viewed as a preferred

operator and partner

• Characterised by:

– Focus

– High impact projects

– Significant interests

• Objective:

– Establish a strong base for

future growth

4


Syria

• 50% operated interest in Block 26 (PSC)

• 2 discoveries in last 2.5 years

• Current production 8,500 bopd (WI)

• Reserves (WI) 1P : 18 mmbo, 2P : 35

mmbo 3P : 58 mmbo

• Current key focus of the company

– Significant exploration upside

– Production above expectations

5


Syria : Statistics

ECONOMY

• President : Bashar al‐Assad (2000)

• Population: 20.4 million (60% < 30)

• Religions : Sunni, Shia, Christian,

Jewish

• GDP US$40 bn (1) , 2009E growth 5.2% (2)

– Agriculture 25%, industry 25%, services

50%

• Main exports : oil & gas

(1)

Source : UK FCo

(2)

Source : IMF

DAILY OIL PRODUCTION

Production rapidly decreasing

ENERGY

• Proved oil reserves : 2.5 bn bbls

• Natural Gas reserves : 8.5 tcf

• Oil production : 2008 398,000 bpd

• Gas production : 2008 230 bcf pa

• Net exports : oil 155,000 bpd

INTERNATIONAL RELATIONS

• Syria Accountability Act 2003

• Thawing of US relations under Obama

administration (re‐appointment of US

ambassador being considered)

• Good relations with EU (France)

6


Syria : Oil & Gas Infrastructure

Block 26

Oudeh, Tishrine and

Sheikh Sulaiman PSA’s

(Tanganyika, sold to Sinopec Dec

08)

Euphrates Graben

(Shell and Total have had

operations in the area since the

1980’s)

Palmyrides

(PetroCanada and INA have

each announced gas

developments)

7


Block 26

Gulfsands Petroleum 50% (Operator)

• Emerald Energy (Sinochem) 50%

• Syrian Petroleum Company (SPC)

represents state interest

• Current exploration period to August 2010

• Option for 2 year extension to August 2012

• Neighbouring fields: > 100,000 bopd

• Export Pipeline 260,000 bopd capacity runs

through KHE field

8


Syria : Block 26 – Production Sharing Terms

• Royalty

• 12.5% of gross oil production

• Cost Recovery Oil

• 50% of gross production less royalty

• Exploration costs recovered 100%

• Development costs at 25% per year over 4 years

• Cost Recovery Oil in excess of the recoverable

costs treated as Profit Oil

• Profit Oil

• Contractor 35%/SPC 65% up to 25,000 bopd

• Contractor 33%/SPC 67% for more than 25,000

and less than 50,000 bopd

• Sliding scale at higher production rates

• Production Bonuses payable to SPC

• $2m payable on reaching 25,000 bopd

• $5m payable on reaching 50,000 bopd

• Taxes

• SPC pays Contractor income taxes from SPC

share of profit oil

• Gulfsands entitlement is 50% of

contractor

BASED ON 2P RESERVES

9


Khurbet East Field Reservoir Performance

• Khurbet East Field: discovered June

2007 and 13 months later production

commenced through an Early

Production Facility

North

KHE-7

KHE-1, 2, 3, 4, 5H, 6H,

10H (Jun 09),11H (Jul 09)

KHE-9

KHE-8

• Gross oil production now 4.5 million

barrels

• Gross production rate reached the year

end target of 16,000 bopd mid Sept.

KHE-12

(Aug 09)

• Negligible pressure loss, ~0.2%

– Strong aquifer support

• Production wells at crest of reservoir

have encountered “vugs” yielding

exceptional reservoir quality

“VUGS “

ENCOUNTERED

• OWC yet to be established

– Oil down to 1570 m SS in KHE‐8

appraisal (basis for 2008 reserves)

– KHE‐12 encountered oil in core

down to 1605 m SS, likely within an

oil‐water transition zone

1 km

Depth Structure Map

Top “Massive”

10


Khurbet East Field Reservoir Quality

KHE-2 from 1935.28 to 1936.28 m

ft

Dark patches are interpreted as open

vugs up to ~10 inches diameter

No. / Cum.%

100

90

80

70

60

50

40

30

20

10

0

0.5

Well KHE-2 from 1930 – 1970 m

d =

0.8 ins

1 5.7 10 100 196.2

Sq.in.

d =

2.7 ins

d =

14 ins

• Centre of field demonstrates exceptional reservoir

quality, permeability from well tests 10 Darcy++

– Vugs present in all production wells to date

– In general terms, the greater the number of large

vugs, the higher the oil‐in‐place and recovery factor

11


Khurbet East Total Field Production

Achieved Y/E production target of 16,000 bopd in mid-September

12


Khurbet East Field & Yousefieh Discovery

3 km

KHE-8

KHE-9

KHE-

10H

KHE-

1,3, 4,11H

KHE-

2, 6H

KHE-7

YOU-1

YOU-3

KHE-12

YOU-2

N

1 km

DEPTH STRUCTURE

TOP RESERVOIR

13


Yousefieh Discovery (November 2008)

SW

1 KHE 2

1 YOUS 2

NE

• Appraisal well Y‐2 (Feb 2009) tested the interpreted eastern limit

of the Field

KHE

7

2

1

3

1 2

YOUS

N

14


Yousefieh Oil Pool

• Yousefieh‐1 discovered 63 m net oil

column in high quality reservoir Nov 08

– Average porosity of 18.6%

– Permeability 600 – 1,100 mD

– Flowed at a rate of 1,460 bopd on 48/64”

choke over 4 hour test period (23° API)

Yousefieh Field

Top Reservoir Depth Structure

• Yousefieh‐2 found 16m net oil column

– Average porosity 16%

– Flowed 17 API oil at 139 bpd under

artificial lift on 2” choke over 12 hour test

Yous-1

Yous-2

• Yousefieh‐3

– Yousefieh‐3 appraisal currently underway

Yous-3

• Future Plans

– Submit commerciality application

– Yousefieh on early production through

the EPF

N

1 km

15


Block 26 Reserves (at year end 2008)

• Khurbet East Field

– 1P 34.2 MMstb gross

– 2P 59.2 MMstb gross

– 3P 99.7 MMstb gross

• Yousefieh Field

– 1P 1.2 MMstb gross

– 2P 11.3 MMstb gross

– 3P 16.7 MMstb gross

• Net Entitlement Reserves

– 1P 8.1 MMstb

– 2P 14.3 MMstb

– 3P 21.9 MMstb

Reserves Determined by:

KHE: RPS Ltd

Yousefieh: Fugro Robertson

16


Khurbet East : Facilities

Central Processing Facility :

• Plan for 33,000 bopd through a

50,000 bfpd Central Processing

Facility

• Completion scheduled for mid‐2011

• Estimated cost ~$50 million

• Award of contracts in December ‘09

Early Production Facility:

• Capacity 18,000 bopd (previously

10,000 bopd)

• Expansion was completed in July ’09

• $600,000 installed cost

• Installation of additional storage &

30km long 8” pipeline to export oil &

replace trucking operation

• Completion anticipated April 2010

17


Block 26 WI Production (actual and target)

Tie in additional wells at Khurbet East EPF

Achieved Y/E WI production target of 8,000 bopd by mid-September

Commission KHE CPF

Khurbet East and Yousefieh Production

18


Unit Profits & Cash Flow / bbl

Syria : Per Barrel Profits and Cash Flow H1 2009

Based on Working Interest Barrels

US$/bbl

Average Brent 51.9

less Discount ‐7.9

Revenue 44.0

Less SPC share / MMS taxes & royalties ‐41% ‐18.0

Net Revenue 26.0

Production Costs ‐2.0

DD&A ‐4.0

G&A ‐2.3

Net Profits Interest (accrued) ‐0.8

Lifting costs ‐9.1

EBIT 16.9

Operating Cash Flow 21.6

19


Exploration ‐ 2009 3D Seismic Programme

• Data acquisition completed in May 2009 of approx 850 km 2

• In conjunction with previously

acquired data, provides approx 1200

km 2 of contiguous 3D seismic data in

Khurbet East / Yousefieh fairway

• Processing near completion in Cairo

with PGS is good quality. Delivery of

final processed data expected in

early October with data

interpretation and prospect

delineation to follow end November

• A number of “leads” have been

identified in the 3D area

20


Inline 971

Exploration ‐ Prospects and New 3D Seismic Leads

N

0 10

kms

1

2

3

6

Khurbet

East

Souedieh

Khurbet

Yousefieh

Inline 1031

9

8

WC

4 5

SPC PA

6

7

2007 3D KHE

9

10

2007 3D NAO-W

Naour West 2009 3D Regional

NHW

K-Dolomite Fm

Fields

Prospects

Disc.

EC

Massive Fm

AGZ

Prod

Field

Field

Appr.

3D

Leads

21


22

Provisional Timeline


USA

• Non‐operated interests in 30 oil & gas

producing fields, shallow GOM

• Working interests range from 2% to 53%

• Original business of Gulfsands

• Current production 1,300 boepd (WI)

• Reserves: 4mmboe 1P, 5 mmboe 2P

• Mature asset base, limited further upside in

existing portfolio

23


Group WI Production (actual and target)

Commission KHE Full Production Facility

Expand Khurbet East EPF

24


Iraq

• Strategic business focus

– Seeking to build a long‐term E&P business

– Active since 2003

• Maysan Gas Project

– Turning flared gas into condensate, LPGs

and dry gas for electricity generation

• E&P Opportunities

– 73 discovered fields of which 50 remain

undeveloped

– Proven reserves 115 billion barrels of oil

25


Strategy

• Maximise potential in Syria :

– Capture Block 26 upside before expiry Aug 2012

– Pursue new projects : capitalise on strong local relationships

• Build significant business in Iraq

– Maysan project & and other new opportunities

– Limit corporate capital commitment and risk exposure

• Maintain value of USA assets

– Prudent investment to maintain value

– Look to divestment when “fair value” realizable

• Concentrate on organic growth in near term

– Seek “ground floor” opportunities

– Acquisitions only if compelling justification exists

• Maintain strong balance sheet and cash flow headroom

26


Summary Investment Case

• In Syria:

– Exploration ‐ potential for multiple

discoveries in 2010

– Oil production likely to continue to

increase

– New projects being sought

• In Iraq:

– Maysan Gas Project ongoing

– Exploring opportunities to partner with

Major oil companies

• The Company:

– Established track record in exploration,

appraisal & development

– Clearly defined vision and strategy

– Strong balance sheet and cash flow

27


Appendix

H1 2009 Financials

28 28


Income Statement

Unit prices -49%, volumes +260%

Depl’n / boe: $6.7 Syria vs. $12.5 in US

Lower disc. rate on US P&A liabilities

Includes excess P&A costs of $0.2 MM

($2.3 MM H1 08)

Staff increases, new offices UK & Syria

c.£6 MM of cash kept in £ sterling

Total repair cost $5.5 MM, insurance

claim ~ $0.9MM ($2.7MM expensed 08)

No tax liability likely in US for some

years

Note : owing to rounding the column subtotals may not add exactly

29


Cash Flow Statement

Increase in deferred sales proceeds

$12.4 MM before w/cap movements

Decommissioning costs paid more

than funded by escrow releases

Options exercise

Note : owing to rounding the column subtotals may not add exactly

30


Balance Sheet

Escrow cash backing US decomm. liabilities

Includes $9.9 MM of deferred sales proceeds

Pro-forma $41.8 MM with deferred proceeds

Total provision $30.8 MM (incr. of $4.5 MM)

Note : owing to rounding the column subtotals may not add exactly

31


Segmental performance

Note : owing to rounding the column subtotals may not add exactly

32


33

Unit Profits & Cash Flow / bbl


34

Syria : Realised Sales Price vs. Brent (inception to date)


2009 Updated Guidance

• Group average 2009 WI Production ~ 7,750 bopd (unchanged from June)

– Syria : 6,400 bopd

– US : 1,350 boepd (slower than expected recovery from Hurricane)

• Past costs in Syria will be fully recovered by year‐end 2009

• Group Operating Costs ~ $16 MM

– Excludes DD&A, P&A costs

• Operating Cash Flow : ~ $55MM @ average Brent $60/bbl

– Previously $50 MM @ average Brent $55/bbl

• Capex : ~ $35MM

– Previously $47MM : all central production facility capex now deferred to 2010

• Estimated year‐end free cash balances ~ $55 MM

– Previously $40 MM

– Excludes escrow cash for US decommissioning liabilities

35


www.gulfsands.com

This presentation is designed to provide information about Gulfsands Petroleum plc and its business and operations. It is intended as general

information only and is not to be relied upon for any particular purpose. In particular, no information contained in this presentation

constitutes, or shall be deemed to constitute, an invitation to invest or otherwise deal in any securities of Gulfsands Petroleum plc.

Although we endeavor to ensure that the content of this presentation is accurate and up‐to‐date, Gulfsands Petroleum plc gives no

representation or warranty as to the accuracy or completeness of any information contained in this presentation.

More magazines by this user
Similar magazines