Afren (Presentation) - Proactive Investors

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Afren (Presentation) - Proactive Investors

Canaccord Adams Global Energy Conference

BEYOND FIRST OIL

24 October 2007


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www.Afren.com - October 2007

2


Agenda

◦ A unique African proposition

◦ Production growth

◦ Reserves growth

◦ Conclusions

www.Afren.com - October 2007

3


A Divider unique Slide African proposition


The Premier African E&P Independent

NIGERIA

◦ Management team with

extensive African experience

◦ Initial strategic focus on West

Africa

SAÕ TOMÉ & PRINCÍPE JDZ

GABON

CONGO

◦ Visible production growth

profile

◦ Material high impact reserve

growth

ANGOLA

◦ Strong financial resources

www.Afren.com - October 2007

5


Extensive African / industry experience

Board

Dr Rilwanu Lukman - Chairman

Guy Pas

Non exec

Evert Jan Mulder

COO

Osman Shahenshah

Chief Executive

Egbert Imomoh

Chairman Afren Nigeria

Peter Bingham

Non exec

John St. John

INTERNATIONAL ADVISORY BOARD

Ennio

Sganzerla

Bert Cooper

Founder

Brian

Ward

MANAGEMENT

Nick Johnson

Expl. & New Ventures

Alan Hunt

Okoro Setu Project

Constantine Ogunbiyi

Afren Nigeria / Counsel

Assoc Director

Galib Virani

Acquisitions / IR

Jeremy Whitlock

Financial Controller

www.Afren.com - October 2007

6


A track record of delivery

Afren Share Price (p/sh)

90

85

80

75

70

65

60

55

50

45

40

Afren

AIM All Share

AIM Oil and Gas Index

◦ Listed on 14 March 2005 on London Stock Exchange

(AIM)

◦ Ticker – AFR.L

◦ 273 mm shares in issue (385 mm fully diluted)

◦ Market capitilisation: US$470 mm (2)

1-Jan 1-Feb 1-Mar 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct

Growing Reserves & Resources base

◦ Okoro Setu 2P reserves

◦ 32mmbbl (NSAI certified)

◦ 42mmbbl (FDP approved)

◦ Unrisked prospective resources: 120mmbbl

Material growth from existing portfolio

◦ Gross production: 15-20,000bopd (mid 2008)

◦ 2008 Revenue (1) : US$340 mm

◦ 2008 EBITDA (1) : US$240 mm

Strong financial position

◦ Cash balance: US$96.1 mm (H1 2007)

◦ US$500 mm raised in debt and equity since

inception

Significant upside

◦ Active New Ventures pipeline

◦ Exploration portfolio: over 25 identified leads /

prospects

www.Afren.com - October 2007

Note: (1) Afren internal estimates (at US$50 price deck). (2) Market data as at close on 18 October 2007,

source Datastream

7


Initial focus on West Africa

Highest growth in proved reserves…

… with significant reserves in West Africa

Africa

Proved Oil Reserves

Total: 50 billion barrels

Proved Gas Reserves

Total: 219 Tcf

Europe

Middle East

South America

77%

81%

Asia Pacific

North America

-50% 0% 50% 100% 150%

Note : Growth over 1985 to 2005 period

18%

Nigeria Angola Equatorial Guinea Congo Gabon

◦ High margin barrels

◦ Established oil industry / infrastructure

◦ Gas commercialisation in infancy

◦ Most prospective accessible exploration province in world

◦ 30 bboe to be discovered in Nigeria (16 bboe onshore)

◦ Majors – mature onshore position

◦ Proved fields overlooked / undeveloped by Majors

www.Afren.com - October 2007

8

Source : Waterous & Co, OPEC Annual Statistical Bulletin 2003, BP Statistical Review of World Energy


Rapid portfolio expansion

Ofa

Eremor

Ogedeh

1

2

3

2

NIGERIA

1

3 4,5

CAMEROON

◦ Q1 05:

◦ Q1 05:

◦ Q2 05:

IPO on LSE

JDZ Block 1, Nigeria-São Tomé &

Príncipe

Iris and Themis Marin blocks and

Ibekelia Licence Area, Gabon

Okoro Setu

Iris Marin,Themis

Marin & Ibekelia

4,5

6,7,8

9

Eq. G

◦ Q3 05:

◦ Q2 06:

◦ Q2 06:

Ogedeh field, Nigeria

Okoro and Setu fields, Nigeria

La Noumbi, Congo (Brazzaville)

Block 1 JDZ

9

GABON

◦ Q4 06: Cabinda Central Licence Block B,

Angola *

La Noumbi

Cabinda B

10

11

6,7,8

10

11

CONGO

◦ Q4 06:

◦ Q2 07:

◦ Q3 07:

Increase in Ibekelia, Gabon

Ofa field, Nigeria

Eremor field, Nigeria

Near term development

Low cost exploration

High impact exploration

Source: Afren. Note * HoA signed

www.Afren.com - October 2007

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Material high impact reserve growth

Development projects

Exploration

2P Reserves

3P Reserves

Contingent Resources

High impact

Low cost

Recoverable reserves

◦ 2P NSAI certified: 32mmbbl

◦ 2P FDP approved: 42 mmbbl

◦ 10-year average reserve life

Net Prospective Resources

◦ 120 mmboe unrisked

Source: NSAI, Afren

www.Afren.com - October 2007

10


Production growth forecast

90

80

Afren 2P

Appraisal Projects

New Ventures

70

60

'000b/d

50

40

30

20

10

0

2008 2009 2010 2011 2012 2013

◦ 15 – 20,000 bopd by mid 2008

◦ Exploration and development upside in current portfolio

◦ Strong New Ventures pipeline

Source: Afren; indicative projections based on internal targets

www.Afren.com - October 2007

11


Strong financial resources

2008 capital budget

Capital structure

◦ Strong balance sheet (US$ 96.1 mm net cash)

◦ US$200 mm non-recourse debt facility secured

◦ Minimal hedging policy

Share ownership

Wellington Management: 21.3 mm (8%)

Development

Exploration

New Ventures

73%

11%

15%

Other

free

float

Lansdowne Partners: 15.3 mm (6%)

UBS: 12.7 mm (5%)

JP Morgan: 11.0 mm (4%)

Management & Directors: 10.7 mm (4%)

Investec Asset mgt.: 10.6 mm (4%)

IFC: 8.4 mm (3%)

Dresdner: 9.4 mm (4%)

Standard Bank: 9.0 mm (3%)

www.Afren.com - October 2007

Source: Afren. Net cash position as at 30 June 2007. Share ownership as at 30 September 2007

12


Production Divider Slide growth


Nigeria: near term development

Asset summary

Production Peak (1) Local

Start-up ‘000 bopd Partner

Ogedeh

Eremor

N I G E R I A

Ofa

Okoro Setu

Okoro Setu 2008 15-20 Amni

Eremor 2008 4-5 Excel

Ofa 2008 2-3 IEL

Ogedeh 2009 4-5 Bicta

Okoro Setu development

◦ Five-well development (Adriatic VI)

◦ FPSO secured (Armada Perkassa)

◦ Drilling to commence end 2007

◦ First oil early 2008

Appraisal / development

◦ Re-entry of Ofa-1

◦ Completion of Eremor-1 and tie-back

◦ Ogedeh development options under

review

www.Afren.com - October 2007

14

Source: Google Earth. Note (1) : Afren estimates


Okoro Setu: background

3D view of Okoro reservoir sands

N

1000 m.

Okoro-1 Okoro-3,3ST Okoro-2

3ST

Oil water

contacts

◦ Two hydrocarbon bearing zones

◦ 22°API low GOR crude

◦ Development drilling from Q4

2007

◦ In-place volumes (2P): 115

mmbbls (NSAI)

◦ Recovery Factor of analogous

fields: 45% – 50%

Okoro Setu reserves

mmboe 1P 2P 3P

Approved FDP case 30 42 58

Exploration / appraisal history

Date Well name Well type Operator Result

Jul-73 Okoro -1 Exploration Japan Petroleum Oil

Nov-74 Okoro -2 Appraisal Japan Petroleum Water wet

May-02 Setu -1 Exploration Amni International Oil & gas

Aug-02 Setu -2 Appraisal Amni International Water wet

Sep-06 Okoro -3 Appraisal Afren (as tech. serv. provider) Oil

Dec-06 Okoro -3 ST Appraisal Afren (as tech. serv. provider) Oil

www.Afren.com - October 2007

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Okoro Setu: FDP approved

◦ Water depth of 50 ft

◦ 12km offshore

Setu

◦ Initial development plan -

5 high angle wells

Okoro

Wellhead platform

3 Phase Production Flowline

Export Tanker

◦ Gravel pack completions

for sand control

◦ FPSO moored 1km south

of field for crude

processing

3 Phase Test Flowline

Gas Lift Flowline

FPSO

With Gas Lift

www.Afren.com - October 2007

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Source: Afren


Okoro Setu: success breeds success

Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08

Q2 08

Agreement with Amni

Rig contract for development

drilling secured

Appraisal drilling

RBL facility / certified reserves

FDP approval

FPSO secured

Long lead items

Development drilling

First oil

Peak production

Complete

In progress

www.Afren.com - October 2007

17

Source: Afren


Okoro Setu: Adriatic VI drilling rig contracted

GSF Adriatic VI rig contracted Drill schedule (1)

◦ Jack-up

◦ Cote d’Ivoire (Foxtrot)

◦ 300 ft water depth

◦ Gabon (Themis Marin)

◦ 25,000 ft drilling depth

◦ Nigeria (Okoro)

www.Afren.com - October 2007

18

Source: Global Santa Fe. Note: (1) as at 19/10/07


Okoro Setu: FPSO secured

Armada Perkassa

◦ 360,000 barrels storage capacity

◦ 27,000 b/d processing capacity

◦ 5-year lease with option to extend

◦ Upgrade: process facilities, test separators,

process controls, etc.

www.Afren.com - October 2007

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Source: Bumi Armada


Okoro Setu: well head platform

◦ Drilling template complete

◦ Decks commencing fabrication

Well Head Platform Schematic

Drilling template

www.Afren.com - October 2007

20


Okoro Setu: community relations

◦ Pro-active within local community - early engagement

◦ Established Community Relations Committee

◦ Active recruitment from within Local Community

- FPSO, drilling rig, etc

Okoro Community

development program

Close Co-ordination

Micro

credit system

12%

Core/admin costs

16%

Okoro project

scholarships

8%

Afren/Amni

Feasibility study

Portable water

Projects

2%

Local Government

Representative

COMMUNITY

RELATIONS

COMMITTEE

Okoro Community

Dev. Foundation

Traditional Ruler

Representative

Health

Centre

24%

Feasibility study

of local jetty

2%

Vocational training

36%

www.Afren.com - October 2007

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Source: Afren


Marginal field strategy: overview

◦ Indigenous partner

Afren provides capital and

technical expertise

◦ Exploration / appraisal history

(well defined structures)

◦ Low cost entry

Eremor

Ogedeh

Ofa

◦ Low development costs

(recovered)

◦ Incremental reserves, production,

cash-flow

◦ Upside development potential

◦ Quick turn-around

appraisal development production

Area of

Interest

www.Afren.com - October 2007

22

Source: IHS Energy


Marginal field strategy: Eremor development

D3 Sand Depth structure map

EREMOR-3

EREMOR-4

Exploration / appraisal

Date Well Type Operator Result

1978 Eremor-1 Exploration Shell Oil

1984 Eremor-2 Appraisal Shell Water wet

1984 Eremor-3 Appraisal Shell Oil

1990 Eremor-4 Appraisal Shell Water wet

2005 Eremor-1re Appraisal Excel Oil

EREMOR-2

EREMOR-1

◦ Covered by 3D seismic

◦ Five hydrocarbon bearing zones

◦ Recovery Factor: 20 – 40%

2kms

Eremor resources

mmboe STOIIP Recoverable

30 10

◦ Good oil samples of low GOR, 20 0 degree

API

◦ Phase-1 FDP approved

- Re-complete existing well and tie-back to

existing infrastructure

www.Afren.com - October 2007

23

Source: Afren


Reserve Divider Slide growth


Exploration portfolio - summary

NIGERIA

Country

W.I. (%)

Gross unrisked

Resources

mmbbl

Net unrisked

Resources

mmbbl

Nigeria-Sao Tome JDZ

Block 1 4.41% 1,000

44

CAMEROON

Gabon

Themis Marin 12.86% 100

Iris Marin 12.86% 100

Ibekelia 20.00% 40

13

13

8

Congo (Brazz)

Block 1 JDZ

Iris Marin,Themis

Marin & Ibekelia

1

2

1

2

Eq. G

GABON

La Noumbi 14.00% 225

32

Angola

*Cabinda Central Block B 5.00% 250 13

1,710 123

La Noumbi

3

Cabinda B

4

3

4

CONGO

www.Afren.com - October 2007

25

Source: Afren, HOA signed in Angola


Conclusions

Divider Slide


2007/08 key objectives

Achieved

Okoro Setu Development

Field Development Plan – Gov’t approval

FPSO contract

Debt facility, certified reserves

Development drilling (5 well program)

First oil

Marginal Fields Development

Ofa well test

Development planning

Development drilling

First Oil

Exploration

Congo - La Noumbi seismic & exploration well

Gabon – Themis exploration well

New Ventures

Additional Nigerian undeveloped reserves

Asset acquisitions in West Africa

1Q 2007 2Q 2007 3Q 2007 4Q 2007 1Q 2008 2Q 2008

Complete

In progress

Source: Company

www.Afren.com - October 2007

27


The Premier African E&P Independent

The management team to deliver new African oil

◦ Preferential access, delivery and execution

◦ Track record: 11 assets in 5 countries

Strong production growth profile

◦ 15-20,000 bopd by mid 2008

Material high impact reserves growth

◦ NSAI 2P certified (32 mmbbl); FDP (42 mmbbl)

◦ 120 mmbbl unrisked resources

Strong financial position

◦ US$96.1 mm net cash

◦ US$200 mm non-recourse debt facility

www.Afren.com - October 2007

28


Appendix Divider Slide


Background

Founded in late 2004

◦ Team including Dr Rilwanu Lukman (Chairman) and Osman

Shahenshah (Chief Executive)

Trading

◦ Listed on 14 March 2005 on London Stock Exchange (AIM)

◦ Ticker – AFR.L

◦ 273 mm shares in issue (385 mm fully diluted)

◦ Market capitilisation: US$470 mm (1)

Presence

◦ Offices in London and Lagos

◦ Assets in Nigeria, Congo Brazzaville, Gabon, Angola, São Tomé &

Príncipe

www.Afren.com - October 2007

30

(1) Market data as at close on 18 October 2007


Executive management

Osman Shahenshah

Chief Executive

◦ 20 years experience of oil and gas

finance

◦ One of the founders of Afren

◦ International career began with

Credit Suisse First Boston

◦ Senior positions in the oil and gas

finance groups of the

International Finance Corporation

(private sector arm of the World

Bank), and the investment

banking divisions of Dresdner

Kleinwort Wasserstein and

Mediocredito Centrale

◦ More than 15 years experience in

the African Oil & Gas sector

working with Shell, Chevron,

Total, ENI and Nigerian National

Petroleum Corporation

◦ PhD from University of

Pennsylvania, MSc from Columbia

University and a BA from Brown

University

Evert Jan Mulder

Chief Operating Officer

◦ Over 25 years industry experience

◦ Addax, Shell, Weatherford and

Halliburton

◦ Over 13 years experience in Nigeria

◦ Most recently COO of Addax,

Nigeria’s largest independent oil

producer

◦ Responsible for increasing

production from 30,000 bopd to

75,000 bopd in 24 months, while

maintaining reserves at Addax

◦ Over 10 years with Shell (Head of

Commercial Planning in Nigeria and

Head of Production Technology for

Shell Expro)

◦ Formerly Business Development

Manager and the Global Manager of

Reservoir Description for

Halliburton

◦ MSc in mining engineering from the

Technical University of Delft,

Netherlands

Egbert Imomoh

Exec. Chairman, Afren Nigeria

◦ 36 years experience with Shell in

Nigeria, UK and Netherlands

◦ Formerly Deputy Managing

Director of Shell Petroleum

Development Company (Nigeria)

("SPDC") producing 1 mm bopd

◦ Held various senior positions

throughout the Shell group from

Chief Petroleum Engineer in

SPDC, Technical and Planning

Manager to Deputy MD of SPDC

◦ Member of the Society of

Petroleum Engineers and has

served on the SPE board as

regional Director for Africa

◦ BSc in Mechanical Engineering

from Birmingham University

www.Afren.com - October 2007

31


Okoro Setu development – location map

Setu

Okoro

Area of

Interest

www.Afren.com - October 2007

32

Source: IHS Energy, Afren


Nigeria: Ogedeh development

Exploration / appraisal

Date Well Type Operator Result

1993 Ogedeh-1 Exploration Chevron Oil

◦ Two oil bearing ‘A’ and ‘D’ sands

◦ Covered by 3D seismic

◦ Certified resources up to 15 mmbbls

(Senergy)

◦ Low cost development

◦ Close to existing infrastructure

◦ Joint development options under

consideration

www.Afren.com - October 2007

33

Source: IHS Energy, Afren


Nigeria: Ofa development

Exploration / appraisal

Date Well Type Operator Result

1970 Ofa-1 Exploration Shell Oil

1998 Ofa-2 Exploration Shell Gas condensate

Ofa-1 Well

Location

◦ Covered by 3D seismic

◦ 8 oil-bearing zones @ 6,670 and

7,280 feet

◦ STOIIP of 75 to 150mmbbl

(Gaffney, Cline & Associates)

◦ Low-cost entry and development

◦ Tie-back to nearby infrastructure

◦ Re-entry well completed: August

2007

Area of

Interest

Source: IHS Energy

www.Afren.com - October 2007

34


Congo: La Noumbi - high impact exploration

Doungou

La Noumbi

Cabinda ‘B’

Nanga

Area of

Interest

◦ High impact exploration – adjacent to

M’Boundi

◦ Vandji play on trend through to La

Noumbi

Afren 14% interest

◦ Operator Maurel et Prom (48.5%) and

partner Burren (37.5%)

◦ 912 km of recently acquired 2D seismic,

now being processed

◦ Doungou well completed in October 2007

- Working hydro-carbon system

established in Djeno and Vandji

Formations

◦ Active drilling programme 2008

◦ Unrisked EUR: 225 mmbbls

Source: IHS Energy, Afren

www.Afren.com - October 2007

35


Angola: Cabinda Block B – high impact exploration

◦ Strategic Angola entry

Area of

Interest

◦ HoA with GER for 5% interest

◦ Multiple reservoir targets. On trend

with M'Boundi (Vandji play)

◦ 32 wells (1957-1971) without

seismic data; 4 wells tested light oil

(1,000 bopd) and 7 wells with oil

shows

◦ Force Majeure expected to be lifted

in 2007

◦ Unrisked EUR: 250 mmbbls

Cabinda ‘B’

Source: IHS Energy, Company

www.Afren.com - October 2007

36


Gabon: low cost exploration

Area of

Interest

◦ 12.86% interest in Themis and Iris

Marin

◦ 20% interest in Ibekelia Study Area

◦ Operated by Sterling Energy with

partners Petro SA, Addax and Premier

◦ Admiral prospect in Themis Marin to be

drilled Q4 2007

◦ Charlie prospect in Iris Marin to be

drilled in 2008

◦ Many other prospects/leads identified

◦ Unrisked EUR: 240 mmbbls

Source: IHS Energy, Company

www.Afren.com - October 2007

37


JDZ block 1: high impact exploration

Area of

Interest

◦ Obo -1 discovery in 2006 proved

JDZ as a significant oil and gas

province

◦ Block 1 technical studies ongoing

prior to further drilling

◦ On trend with Nigerian deep water

world-class oil fields

~500 million bbls

~1 billion bbls

Obo-1

- Akpo and Egina (Total): 1,500

mmbbl

◦ Block 1 gross potential estimated

at circa 1 billion bbl

◦ Multi firm well programme on

Blocks 2, 3 and 4 from 2008

Exploration drilling

2008

Block 1

Chevron (45.9%)

Addax (40%)

Sasol (5.1%)

Dangote (4.49%)

Afren (4.41%)

Source: IHS Energy, Company

www.Afren.com - October 2007

38

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