Project Ozona Economic & Technical Review[8167]

Fénix Proposed Acquisition: General Overview
Project Level Economic Overview (1)
Date 2017 Q1 Q2 Q3 Q4 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Well Count
Current Wells On-line 42 42 42 42 42 42 42 42 42 42 42 42 42 42 42
PUD Wells On-line 0 9 18 27 30 21 30 30 30 30 30 30 30 30 30
Total Wells On-line 42 51 60 69 72 63 72 72 72 72 72 72 72 72 72
Gross Production (Bbl/d)
PDP Production (Bbls/d) 59.7 58.8 57.9 57.1 56.2 57.5 54.1 51.0 48.0 45.2 42.6 40.1 37.7 35.5 33.5
Net Revenue Interest 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 75%
Net PDP (Bbls/d) 44.8 44.1 43.4 42.8 42.2 43.1 40.6 38.2 36.0 33.9 31.9 30.1 28.3 26.7 25.1
PUD Production (Bbls/d) - 111.2 283.0 433.8 512.3 335.1 412.3 308.9 283.3 266.7 251.2 236.5 222.7 209.7 197.4
Net Revenue Interest 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 75%
Net PUD Production (Bbls/d) - 83.4 212.3 325.3 384.2 251.3 309.3 231.7 212.4 200.0 188.4 177.4 167.0 157.3 148.1
Total Net Production (Bbls/d) 44.8 127.5 255.7 368.1 426.4 294.4 349.9 269.9 248.5 233.9 220.3 207.4 195.3 183.9 173.2
Oil Price $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00 $45.00
Differential (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00) (3.00)
Realized Oil Price 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00 42.00
Net Revenue $173,012 $483,234 $977,397 $1,420,994 $1,647,591 $4,529,216 $5,359,678 $4,148,709 $3,808,280 $3,585,964 $3,376,625 $3,188,417 $2,993,896 $2,819,121 $2,654,549
Lease Operating Expense (126,000) (143,000) (171,000) (198,000) (216,000) (728,000) (864,000) (864,000) (864,000) (864,000) (864,000) (864,000) (864,000) (864,000) (864,000)
Production Taxes (9,040) (25,249) (51,069) (74,247) (86,087) (236,652) (280,043) (216,770) (198,983) (187,367) (176,429) (166,595) (156,431) (147,299) (138,700)
Net Operating Income $37,972 $314,985 $755,328 $1,148,747 $1,345,505 $3,564,565 $4,215,635 $3,067,939 $2,745,298 $2,534,597 $2,336,196 $2,157,822 $1,973,465 $1,807,822 $1,651,849
Drilling & Completion Expense (581,250) (1,395,000) (1,395,000) (1,240,000) (38,750) (4,068,750) - - - - - - - - -
EBITDA $(543,278) $(1,080,015) $(639,672) $(91,253) $1,306,755 $(504,185) $4,215,635 $3,067,939 $2,745,298 $2,534,597 $2,364,721 $2,157,822 $1,973,465 $1,807,822 $1,651,849
Net Income to Investor $28,570 $246,938 $594,048 $904,148 $1,059,186 $2,804,322 $3,316,499 $2,410,997 $2,156,442 $1,990,204 $1,833,671 $1,692,939 $1,547,486 $1,416,798 $1,293,739
Yield to Investor 37.3% 44.1% 32.0% 28.7% 26.4% 24.4% 22.5% 20.6% 18.8% 17.2%
Estimated IDC Value to Investors $406,875 $2,848,125
Investor Break-even
34 months
Project Level IRR IRR 55%
MOIC 3.5x
Investor IRR IRR 38%
MOIC 2.7x
Assumptions
■ 30-Day Initial Production Rate: 20
bbls/d
■
Production Decline: 35% initial decline
for first 24 months, followed by a 6%
terminal decline
■ Price Deck: $45.00 flat with a $3.00
differential inclusive of transportation
expense
■
$1000/mo/well lease operating expense
■ Project Level Working Interest: 100%
■ Project Level Net Revenue Interest: 75%
■ Investor Non-operated Working Interest: 80%
■ FPG Working Interest Carried by Investor: 20%
■ 30 well drilling program that begins December, 2017
▬
▬
Spud-to-spud: 10 days
Spud-to-sales: 30 days
Source and Uses
Sources
Equity Contribution $7,525,750
Total Sources $7,525,750
Uses
Asset Acquisition $2,200,000
Additional Equity Requirement $5,325,750
Drilling & Completion Expense 4,650,000
Field Remediation 300,000
(2)
Deal Expense 375,750
Total Uses $7,525,750
1. Model does not include the positive impact the intangible drilling cost deduction will have on individual investor returns
2. Includes legal, title and environmental diligence expense & capital to meet bonding requirement and fees associated with capital raise
5