A Major
j Emerging
g g Oil
Company in East Africa
Corporate Presentation
November, 2013
A Lundin Group Company
2013 – The Proof in the Pudding
• Moving to development
–
Exceeds threshold volumes for development
–
Working with host governments and partners to put development plans in place
–
Appraisal programs initiated (drilling and 3D seismic)
• Still major exploration upside
–
Over 100 undrilled prospects and leads identified
–
4 for 4 in South Lokichar Basin – 9 more prospects yet to drill
–
Recent wells prove petroleum system in Turkana and Anza Basins
–
Five new basin opening wells to be drilled in next 6 months
• Very Strong Balance Sheet
–
Recent $450MM funding means no additional financing required until mid-2015
–
Will likely do an industry deal at that point as reserve growth and development plan comes
into focus
• High impact drilling intensive program – 6 rigs from 4th quarter 2013
2
Location, Location, Location
• First mover advantage in securing
unequalled acreage position in what is
now the world’s top exploration spot
– Over 250,000 sq km or 62 million
acres gross
Rift Basin Area • Four separate petroleum systems
proven to contain multi-billion barrels in
surrounding countries
• At the crossroads for infrastructure
buildup in East Africa (Kenya, Uganda,
Sudan,, Ethiopia)
p )
• Major oil companies now scrambling to
gain a foothold position
3
The Opening of the First New Basin – Lokichar
Ngamia-1 discovery is Tertiary Rift Play Opener - Over 100 undrilled prospects and leads
Tertiary/Cretaceous Rifts
Unrisked Gross Best Estimate of
Prospective Resources 23 BBO1
Exploration Wells:
Tertiary: 7, Cretaceous: 11
North Sea Reserves:
60+ BBO
Exploration Wells: 2,408
Well symbols:
Oil di
discovery
Drilling
Planned
Existing Well
1Please
100 km
100 km
refer to Prospective and Contingent Resources slide detailing specific contingencies relating to the classification of resources and cautionary statements.
4
Lokichar Basin – Low Risk Proven Hydrocarbon System
Lokichar Sub-basin
Time Structure Map
Top Lokhone Shale
Etom
North
Etom
Etuko-1
Discovery
• 100% success rate to date – 4 for 4 on exploration
wells
• Etuko oil discovery confirms extension of productive
fairway eastward into the ‘Rift Flank Play’.
• Numerous low-risk undrilled prospects defined on
t d with
trend
ith existing
i ti seismic
i i
Agete
g
Seismic Section along String of Pearls
Twiga South
Discovery
Agete
Ewoi
Loperot-1
Ekales
Discovery
Twiga S.‐1
Ekales
-Projected-
Ngamia‐1
Amosing
Swala
Etom
Oil in
shallow
b h l
boreholes
Southern String
of Pearls
Ekunyuk
Ngamia
Discovery
Amosing
13T 10BB
5 KM
Ekosowan
* Some prospects renamed to reflect local designations
Prospects
& Leads
20 km
5
Ngamia & Twiga South Discoveries
Ngamia 1:
Ngamia-1:
•
•
•
•
Twiga South
South-1:
1:
Test data confirms excellent reservoir quality in Upper
Auwerwer sands:
– 23-29% porosity
– 50 – 400 md permeability
Produced 3,200 bopd from six tests
With optimized artificial lift equipment this rate would
increase to a cumulative rate of around 5,400 bopd
No formation water or pressure depletion during test
•
Core and test data confirm excellent reservoirs:
– 23-29% porosity
– 100 md - 3 darcy permeability
•
•
•
2,812
2
812 b
bopd
d ffrom 3 ttests
t
Estimated 5,200 bopd potential with optimized artificial lift equipment
No formation water or pressure depletion during test
Miocene
Pliocene
Miocene
Pliocene
Auwerwer
Sandstones
Auwerwer
Sandstones
Lokhone
Shale
Lokhone
Shale
Source
L.Lokhone Ss
L.Lokhone Ss
Note: Transient pressure analysis has been conducted on the Ngamia-1 and Twiga South-1 well tests. No pressure depletion
was recorded over the duration of the tests. Flow periods ranged from 0.5 to 2.5 days and build up ranged between 3 to 12 days.
6
Lokichar Basin Exploration through 2014
Etom North
Best-Estimate Gross Resources:
Prospective : 234 MMBO
Gross Best Estimate Contingent (2C)
Resources to date:
368 MMBO (gross)1
Etom Complex – Spud 1H, 2014
B
Best-Estimate
E i
Gross
G
Resources:
R
Prospective : 467 MMBO
1
2013 Competent
p
Persons Report
p ((CPR))
Etom
North
Etuko-1 (2013), TD: 3051m
~40m net pay in Auwerwer & U. Lokhone
Possible 50m net in Lower Lokhone
Agete–1 (2013): Currently Drilling
Best-Estimate Gross Resources:
Prospective : 276 MMBO
Etom
Twiga South-1 (2012), TD: 3227m
>70m net pay: 2,812 bopd constrained
Best-Estimate Gross Resources:
Contingent (2C) : 100 MMBO
Agete
Best-Estimate Gross Resources:
C ti
Contingent
t (2C) : 87 MMBO
Prospective : 132 MMBO
Twiga
South
Etuko
Ewoi
Ewoi– Spud Q1, 2014
Best-Estimate Gross Resources:
Prospective : 317 MMBO
Loperot
Loperot-1 (Shell, 1992), TD: 2950m
18-50m net pay (estimated)
Oil recovered to surface via wirelineProspective Resources:
I l d d with
Included
ihE
Ewoii P
Prospect
Ekunyuk
Ekales
Ekales-1 (2013) TD:2,554m
Pre-Drill Best-Estimate Gross
Resources:
Prospective : 234 MMBO
O
Ngamia-1 (2012), TD: 2340m
>200m net pay: 3,200 BOPD constrained
Best-Estimate Gross Resources:
Contingent (2C) : 180 MMBO
Prospective : 281 MMBO
Amosing- Spud Q4, 2013
Best-Estimate Gross Resources:
Prospective : 172 MMBO
3D Outline:
550 sqkm
Ngamia &
West Ngamia
Ekunyuk– Spud Q2, 2014
Best Estimate Gross Resources:
Prospective : 203 MMBO
Upcoming Wells:
•Agete
g
((drilling)
g)
•Amosing
•Ewoi
•Ngamia West
•Ekunyuk
•Etom
Et
•Ekosowan
•EtukoTest and appraisal
pp
•Twiga appraisal
•Ngamia Appraisal
Amosing
Block 10BB
13T
Seismic:
10BB
Ekosowan
Ekosowan- Spud mid 2014
Best-Estimate Gross Resources:
Prospective : 153 MMBO
10km Block 12A
Resource estimates are gross best estimates of
“Prospective” resources from a Third Party
Independent Resource Assessment, except when
noted as “Contingent”. Please refer to Prospective
and Contingent Resources slide detailing specific
contingencies relating to the classification of
resources and cautionary statements.
•Ngamia-Twiga
Ngamia Twiga 3D
(550 sqkm)
7
Ekales-Twiga-Agete-Etom Prospects
Enlarged Map
Kenya
Etom
Etom Northwest
Best-Estimate Gross
Resources
81 MMBO
COS: 29%
Etom North
Best-Estimate Gross
Resources
234 MMBO
COS: 21-25%
Etom East
Best-Estimate
Gross Resources
42 MMBO
COS: 21-25%
Agete
Twiga
South
Etuko
Ewoi
Etom Complex
Best-Estimate
Gross Resources
467 MMBO
COS: 25-38%
Loperot
Ekales
Ekunyuk
Ngamia
Amosing
Lokichar
Basin
Ekosowan
Block 13T
Block 12A 10km
Block 10BB
Agete
Best-Estimate
Gross Resources
276 MMBO
COS: 54%
Twiga South-1 Discovery
Best-Estimate Gross Resources:
Contingent (2C): 87 MMBO
Prospective: 132 MMBO, (COS: 64%)
Ekales-1 Discovery
PRE-DRILL Best-Estimate
Gross Resources: 234
MMBO, 56% COS
Resource estimates are gross best estimates of prospective
resources from Third Party Independent Resource Assessment
except where noted as “Contingent”. Please refer to
Prospective and Contingent Resources slide detailing specific
contingencies relating to the classification of resources and
cautionary statements.
5 km
Depth Structure Top
Auwerwer Reservoirs
COS: Geologic Chance of Success (%)
8
Ngamia-Amosing Area
Enlarged Map
Kenya
Etom
Agete
Twiga
South
Etuko
Ewoi
Loperot
Ekales
Ekunyuk
Ngamia
Amosing
Ngami West
Ngamia-1
Lokichar
Basin
Ekosowan
Block 13T
Block 12A 10km
Block 10BB
Ngamia Discovery &
Ngamia West Prospect
Amosing
Best-Estimate Gross Resources:
Contingent(2C):180 MMBO
Prospective : 281 MMBO, (COS: 64%)
5 km
Depth Structure Map: Base Auwerwer
COS: Geologic
g Chance of Success (%)
( )
Resource estimates are gross best estimates of prospective
resources from Third Party Independent Resource Assessment
except where noted as “Contingent”. Please refer to Prospective and
Contingent Resources slide detailing specific contingencies relating
to the classification of resources and cautionary statements.
Amosing
Best-Estimate Gross
Prospective Resources1 :
172 MMBO, (COS: 34%)
9
Ewoi-Ekunyuk Prospects- The ‘Rift Flank Play’
Enlarged Map
Kenya
Etom
Depth Structure: Top
o o e Sou
Source
ce Rock
oc
Lokhone
Possible Stratigraphic
Component
Agete
Twiga
South
Large Structural Traps
Etuko
5km
Ewoi
Loperot
Ekales
Ekunyuk
Ngamia
Amosing
Lokichar
Basin
Etuko-1 Discovery (2013)
Ewoi
Best-Estimate
Gross Resources
317 MMBO
(COS: 34%)
Best-Estimate Gross
Resources:
Contingent (2C) : 100 MMBO
Ekosowan
Block 13T
Block 12A 10km
Block 10BB
Loperot-1 Discovery (1992)
Best-Estimate Gross
Prospective Resources:
(Included with Ewoi estimate)
Ekunyuk
Best-Estimate
Gross
G
oss Resources
esou ces
203 MMBO
(COS: 34%)
Resource estimates are gross best estimates
of prospective resources from Third Party
Independent Resource Assessment except
where noted as “Contingent”. Please refer to
Prospective and Contingent Resources slide
detailing specific contingencies relating to the
classification of resources and cautionary
statements.
COS: Geologic Chance of Success (%)
10
South Lokichar Basin Building World Class Resource Base
Unrisked prospect average
size increased from
81 mmbo (2012) to
204 mmbo (2013)
mmbo
1,000
800
Best Estimate (2C) and Upside (3C) Gross Contingent
Resources
851
Lokichar Basin Upside (3C)
Lokichar Basin Best Estimate (2C)
600
400
200
368
56
0
2012
(6)
2013
Best Estimate Gross Contingent Resources
Resources,
Gross Risked and Unrisked Prospective Resources
Drilling program to end
2014 accesses 60% to 70%
of South Lokichar Basin
prospective resources
2C resource
increase of 557%
since 2012
1 This summary table was prepared by Company management for the convenience of readers.
2 Please refer to the Company’s press release dated September 3, 2013 for details of the prospective and contingent resources by
prospect and lead, including the geologic chance of success.
3 Ri k d
3 Risked resources have been calculated and summed by the company after risking prospects and leads individually. Geological Chance of h
b
l l t d d
d b th
ft i ki
t
d l d i di id ll G l i l Ch
f
Success (GCOS) varies with each prospect or lead. 4 Net Prospective and Contingent Resources are stated herein in terms of the Company’s net working interest in the properties. Due to the very immature nature of these Resources, net estimates have not been computed as net entitlement volumes under the PSAs/PSCs. In this regard the volumes stated herein will exceed the volumes which will arise to AOC under the terms of the PSAs/PSCs.
5 There is no certainty that any portion of the Prospective Resources will be discovered. If discovered, there is not certainty that the discovery will be commercially viable to produce any portion of the resources.
6 3C resources not reported for 2012 Gaffney Cline & Associates review
11
Focus on Opening New Basins
• North Turkana (South Omo Block)
¾
S bi W
Sabisa
Wellll proved
d source, seall and
d reservoir
i
¾
Tutule well should prove up trap and concept
• Chew Bahir Basin (South Omo Block)
New seismic identified large inventory of prospects
¾
Prospects supported by direct hydrocarbon indicators
• Western
W t
Shore,
Sh
Lake
L k Turkana
T k
(10BA)
Chew Bahir
North Turkana
¾
¾
Latest seismic confirms large prospect inventory
¾
Several interesting prospects drillable onshore
• South Kerio Basin (Block 10BB)
Western Shore
S. Kerio
Anza
100 km
¾
New seismic identifies Ngamia-style play
¾
Several prospects & leads
• Anza Basin (Block 9)
¾
Drilling campaign to start Q3
Q3, 2013
¾
Potential to extend the Sudan play into Kenya
12
North Turkana Basin (South Omo Block)
• Sabisa-1 TD’d with oil and gas shows
• Possible trap failure
• Tultule
T lt l to
t test
t t upthrown
th
fault-trap
f lt t
Sabisa -1
W
E
Dip Line
A
Depth Structure Map
Tertiary Marker 5
Tertiary Marker 5
Limited
seismic
control
West Sabisa
Best-Estimate
Gross Resources
124 MMBO
Tultule Prospect
Sabisa North
Best-Estimate Gross
Resources
28 MMBO
Sabsa-1
`
Strike Line
A
3km
Limited
seismic
control
Sabisa-1
P&A with shows
Tultule
Best-Estimate
Gross Resources
18 MMBO
Marker 5
TertiaryTertiary
Marker
B
Resource estimates are gross best estimates of prospective resources from
Third Party Independent Resource Assessment except where noted as
“Contingent”. Please refer to Prospective and Contingent Resources slide
detailing specific contingencies relating to the classification of resources and
cautionary statements.
13
Chew Bahir Basin (South Omo Block)
Zorit
Chew Bahir Basin
NESIR
Wemay
Jigra
Sila
Best-Estimate Gross
Resources
241 MMBO
Jigra S.
Shimela
Best-Estimate Gross
Resources
48 MMBO
East BM
Shimela S.
Gardim
Best-Estimate
Gross Resources
89 MMBO
100 km
•
•
•
•
Possible basin-opener
S d fifirstt wellll end
Spud
d 2013
Large prospect inventory
DHI’s
DHI
s, AVO anomalies
visible over some prospects
Sorene
Chereba
Best-Estimate Gross
Resources
166 MMBO
Chereba S.
Kesami
Best-Estimate
Gross
Resources
20 MMBO
Resource estimates are gross best estimates of
prospective resources from Third Party Independent
Resource Assessment except where noted as
“Contingent”. Please refer to Prospective and
Contingent Resources slide detailing specific
contingencies relating to the classification of
resources and cautionary statements.
Kesami SE
Best-Estimate
G
Gross
Resources
120 MMBO
Shala
Tertiary
Marker 3
10km
14
Chew Bahir Basin Prospects (South Omo Block)
SW
Shimela:
Shi
l 48 MMBO
Best-Estimate Gross Resources
NE
NW
Jigra: 5 MMBO
Best-Estimate Gross Resources
Sila: 241 MMBO
Best-Estimate Gross Resources
SE
CB Marker 3
CB Marker 5
CB Marker 3
CB Marker 7
CB Marker 5
CB Marker 7
Line CB-40
CB 40
Line CB-09
CB 09
Kesami: 20MMBO, Kesami SE: 120 MMBO
Best-Estimate Gross Resources
W
Jigra
Chereba: 166 MMBO
Best-Estimate Gross Resources
E
Sila
Shimela
CB Marker 3
CB Marker 5
Chereba
CB 20
CB-20
Kesami
Kesami SE
10km
Resource estimates are gross best
estimates of prospective resources
from Third Party Independent Resource
Assessment except where noted as
“Contingent”. Please refer to
Prospective and Contingent Resources
slide detailing specific contingencies
relating to the classification of
resources and cautionary statements.
CB Marker 7
Line CB-20
15
Newly-Awarded Rift Basin Area PPSA
• PPSA award follows 3-year Joint Study
• Extends AOC position in Tertiary Rift Basins
Rif B i A
Rift Basin Area
42,519 sq km
• Frontier area, no existing seismic data or wells
• Initial exploration program includes 37,000 sqkm Full
Tensor Gradiometry survey (70% complete) and 400km of
2D seismic
50km
Tar reported
along
l
shoreline
Multiple oil
slicks identified
on landsat
High Resolution
Free Air Gravityy
50km
• Acquired block-wide high resolution
airborne gravity & magnetics in 2011
16
Lake Turkana Western Shore Prospects (Block 10BA)
• 1,350 km of new onshore and
marine seismic significantly
significantl
increased prospect inventory
• S
Seismic
i i acquisition
i iti concentrated
t t d
along western shore
Kiboko
• Large prospects, different play
types, drillable from land
Shaba
Kifaru
Samaki
Lake
Turkana
• Uncertain stratigraphy between
sub-basins
• ‘Bright spots’ seen in new offshore
seismic
• Spud first well, mid 2014
10 km
17
Lake Turkana Western Shore Prospects (10BA)
Line 2012-08
Shaba
Kifaru
Mrkr 5
Western
Shore
Plio. Volcanic
Kiboko
Best-Estimate
Gross Resources
106 MMBO
3 km
Shaba
Best-Estimate
Gross Resources
19 MMBO
Kifaru
Line 2012-32-TZ
Onshore
Samaki
(projected)
Lake
Turkana
Line 2012-08
Marine
Kifaru
Best-Estimate
Gross Resources
333 MMBO
Flat Spots
Line 2012-32TZ
Samaki
Plio. Mrkr
Plio. Volc
(new, from recent
seismic)
Resource estimates are gross best
estimates of prospective resources from
Third Party Independent Resource
Assessment except where noted as
“Contingent”. Please refer to Prospective
and Contingent Resources slide detailing
specific contingencies relating to the
classification of resources and cautionary
statements.
5 km
18
South Kerio Prospects (Block 10BB)
New prospects from
ongoing seismic program
South Kerio
Estimated prospective
resources in the
50-100 MMBO class,
pending CPR audit
Tertiary
Marker 2
S Kerio D
S.
S. Kerio C
100 km
•
•
•
•
S. Kerio B
Possible basin-opener
Ngamia-type
g
yp traps
p
Try to confirm extension of Lokhone source rocks
Spud first well, mid 2014
S. Kerio A
5km
Resource estimates are gross best estimates of prospective
resources from Third Party Independent Resource Assessment
except where noted as “Contingent”. Please refer to
Prospective and Contingent Resources slide detailing specific
contingencies relating to the classification of resources and
cautionary statements.
19
Anza Graben, Block 9: Extension of the Sudan Play
•
Cretaceous Basin on trend with South Sudan with
over 6 billion barrels of oil discovered along trend
Bahasi-1
SW
•
Play concept confirmed at Paipai well
•
Drill Bahasi and Sala back-to-back, both with
large resource potential
•
•
NE
Tertiary
Play
Tertiary Mrkr1
D illi to commence iin 3rdd quarter 2013
Drilling
Tertiary Mrkr2
AOC Operates (50% WI), Marathon (50%)
TertiaryCretaceous
Unconformity
Paipai-1
Awaiting Test:
185 BCF (or possible light oil)
Best-Estimate Gross Resources
Basement
Sala-1
SW
Surface volcanics
Block 9
Extension of
Sirius oil-prone
sub-basin into
Kaisut sub-basin
Bahasi:
Best-Estimate
Gross Resources
320 MMBO
* Some prospects renamed to reflect local designations
NE
Sala:
Best Estimate
Best-Estimate
Gross Resources
402 MMBO
Ndovu
Tert. Marker
L. Tertiary
Bogal 1 Discovery:
Best-Estimate Gross
Resources
1.88 TCFG
L C
L.
Cretaceous
t
Resource estimates are gross best estimates of prospective
resources from Third Party Independent Resource Assessment
except where noted as “Contingent”. Please refer to Prospective
and Contingent Resources slide detailing specific contingencies
relating to the classification of resources and cautionary
statements.
Basement
20
Basin Opening Strategy 2013/2014
New Basin De-Risking Schedule
New Basin De-Risking
Gross Best Estimate Unrisked Prospective Resources
Best Estimate Net Unrisked & Risked Prospective Resources
Q4
2013
1H
2014
2H
2014
2015+
mmbo
9,000
8,000
7 000
7,000
6,000
Net Unrisked Best Estimate Prospective Resources
Net Risked Best Estimate p
Prospective Resources
8,012
5,696
5,000
4,000
3,000
2,000
1,000
522
690
0
2013/14 Program
1 This summary table was prepared by Company management for the convenience of readers.
2 Please refer to the Company’s press release dated September 3, 2013 for details of the prospective and contingent resources by
prospect and lead, including the geologic chance of success.
y
p y
gp p
y
g
3 Risked resources have been calculated and summed by the company after risking prospects and leads individually. Geological Chance of Success (GCOS) varies with each prospect or lead. 4 Net Prospective and Contingent Resources are stated herein in terms of the Company’s net working interest in the properties. Due to the very immature nature of these Resources, net estimates have not been computed as net entitlement volumes under the PSAs/PSCs. In this regard the volumes stated herein will exceed the volumes which will arise to AOC under the terms of the PSAs/PSCs.
5 There is no certainty that any portion of the Prospective Resources will be discovered. If discovered, there is not certainty that the discovery will be commercially viable to produce any portion of the resources.
Total Prospective Resources
21
World Class Development Project
• Ngamia, Twiga South and Etuko discoveries
prove prolific light oil South Lokichar basin
with significant running room
• South Lokichar Basin exceeds threshold
volumes for development
• Kenyan & Ugandan Presidents agree joint
export pipeline
*
• Concept work on pipeline and offshore
loading complete
• Expect to agree pipeline cooperation
agreement between Kenyan & Ugandan
Joint Ventures imminently
• P
Pre-FEED
FEED activities
i i i on pipeline
i li expected
d to
start imminently
22
*Tullow public disclosure
22
What you will see by end 2014
2013
Basin Openers
1H 2014
Tultule
Bahasi
Sala
Ngamia W
2H 2014
Shimela
S. Kerio
Gardim
W. Turkana
Etom
Lokichar Drill Out
Agete
Lokichar Appraisal
Amosing
Ewoi
Etuko-2 Twiga-2
Ekunyuk
Twiga-3
Ekosowan
Ngamia-2
Ngamia-3 Ngamia-4 Ekales-2
EWT
Gov’t Kenya Pipeline tender & Pre-FEED
Lokichar
Development
Long-term Development Plan Definition
•
•
•
•
Drill 5 Basin Openers
Drill all key Lokichar Prospects
Fully appraise Ngamia and Twiga
Define development way forward
23
AOI Corporate Summary
• Funding
•
$450MM equity issuance completed Oct
Oct-2013
2013
•
Funding in place through mid-2015
•
Expect to enter 2014 with cash in excess of
$500MM
•
$43.5MM Marathon farmout carry – dedicated to
Block 9, Block 12 and Rift Basin Area
2013 Forecast O&G Expenditures (gross): $567MM
63.0 99.9 Drilling
403.8 • Drilling focused 2013 exploration budget:
•
Drilling: 74%
•
Seismic/FTG: 14%
•
Other: 12%
Other
2013 Forecast O&G Expenditures
p
(net):
( ) $209MM
$
• Indicative 2014 net budget: $300MM - $330MM
•
Drilling focused with 6 rigs operational
25.0 29.1 Drilling
• Capital Structure
•
309.5MM Shares
•
13.4MM options
•
Nil warrants
•
Nil debt
Seismic
155.7 Seismic
Other
24
A History of Value Creation
Company
2002
Recent
Notes
Tanganyika
$0.55/share
$13.5 million MC
$31.50/share
$1.9 billion MC
Sold to Sinopec 2008
y
Valkyries
$
$0.45/share
/
$4 million MC
$
$16.00/share
/
$750 million MC
Sold to Lundin Petroleum 2006
Red Back
$1.35/share (2000)
$45.4 million MC
$30.50/share
$8.98 billion MC
Sold to Kinross in 2010
Lundin Petroleum
di
l
U $0.41/share
$
/h
U $101 million MC
$23/share
$
/h
$6.9 billion MC
+ Enquest spin off US $1.5 billion MC
Active
BlackPearl
$0.25/share
$2.1 million MC
$2.18/share
$645 million MC
Active
ShaMaran
$0.175 (2003)
$6.7 million MC
$0.46/share
$377 million MC
Active
9 Year value increase: $173MM => $21 Billion
Average share price increase: 32x
25
Corporate Social Responsibility Commitment
Risk Management and Value Creation
Africa Oil is committed to addressing the challenge of
sustainability - delivering value to our shareholders, while
providing economic and social benefits to impacted
communities and minimizing our environmental footprint.
•To create a working environment such that we cause no harm to
people, and where we minimize our impact on the environment.
•To
To create a secure and safe working environment for our people
and assets
•To conduct our business in an honest and ethical manner.
•To enter into dialogue and engagement with key stakeholders,
conducted in the spirit of transparency and good faith.
•To
To deliver tangible and sustainable benefits that contribute to the
social and economic well being of citizens in our host countries.
•To support the development of financial transparency and good
governance mechanisms.
mechanisms
•To support and protect internationally recognized human rights.
26
Opportunity Summary
• Africa Oil has the best onshore acreage position in East Africa
Africa, and
perhaps the largest upside portfolio in the world
• The Ngamia,
g
Twiga,
g Etuko and Ekales discoveries have significantly
g
y
de-risked the South Lokichar Basin – expect very high future success
rate
• Th
The C
Company currently
tl h
has 5 active
ti rigs
i and
d are iin process off
mobilizing 2 additional lightweight rigs to Lokichar Basin with at least
20 wells planned in 2014
• New basin opening wells have chance for high impact growth and
step change in share valuation
• Research coverage from 25 analysts with an average target price of
$12.55/share
27
AOI has a Strong Management Team
Keith Hill, President and CEO
Mr. Hill has over 25 years experience in the oil industry including international new venture management and senior exploration positions at Occidental Petroleum and Shell Oil Company. His education includes a Master of Science degree in Geology and Bachelor of Science degree in Geophysics from Michigan State University as well as an MBA from the University of St. Thomas in Houston. Prior to his involvement with Africa Oil, Mr. Hill was President and CEO of Valkyries where he led the company through rapid growth and ultimately a highly successful $700 million takeover by Lundin Petroleum. In addition, Mr. Hill was one of the founding directors of Tanganyika Oil which was recently the subject
ultimately a highly successful $700 million takeover by Lundin Petroleum. In addition, Mr. Hill was one of the founding directors of Tanganyika Oil which was recently the subject of a $2 billion takeover by Sinopec International Petroleum.
Ian Gibbs, CFO
Ian Gibbs is a Canadian Chartered Accountant and a graduate of the University of Calgary where he obtained a bachelor of commerce degree. Ian Gibbs has held a variety of prominent positions within the Lundin Group of Companies; most recently as CFO of Tanganyika Oil Company Ltd. where he played a pivotal role in the recent $2 billion acquisition by Sinopec International Petroleum Prior to Tanganyika Mr Gibbs was CFO of Valkyries Petroleum Corp which was the subject of a $700 million takeover.
acquisition by Sinopec International Petroleum . Prior to Tanganyika, Mr. Gibbs was CFO of Valkyries Petroleum Corp which was
the subject of a $700 million takeover
Nick Walker, COO
Mr. Walker has 27 years of industry experience including 17 years with Talisman Energy Inc. where he served as Executive Vice‐President of International Operations West as well as country manager positions in the UK and Malaysia/Vietnam. He started his career as a petroleum engineer with BP plc. and also worked in senior management positions at Bow Valley Energy Inc. He previously served on the Board of Oil & Gas UK, the trade association representing the UK oil and gas business. His education includes a Bachelor of Science Degree in Mining Engineering from Imperial College in London a Master of Science Degree in Computing Science from University College in London and an MBA from
Science Degree in Mining Engineering from Imperial College in London, a Master of Science Degree in Computing Science from University College in London and an MBA from City University Business School, also in London.
James Phillips, VP Business Development
Before joining Africa Oil, Mr. Phillips was Vice President Exploration‐Africa and Middle East for Lundin Petroleum AB where he played a pivotal role in securing the majority of Africa Oil’s current portfolio. Mr. Phillips is a graduate of the University of California, Berkeley and San Diego State University where he obtained BS and MS degrees, both in Geology. He has over 25 years of experience in the oil industry including senior positions with Shell Oil company and Occidental including heading up Oxy
Geology He has over 25 years of experience in the oil industry including senior positions with Shell Oil company and Occidental including heading up Oxy’ss African African
exploration ventures.
Paul Martinez, VP Exploration
Dr. Martinez, most recently Director of International Business Development with Occidental Petroleum Corporation, has over 21 years of domestic US and international senior management experience in oil and gas exploration and development, including projects in the Texas Gulf Coast, Permian Basin, Rockies, Latin America, Africa, Middle East, and Russia He has held overseas management positions for Oxy in Libya Oman and Peru Dr Martinez holds a doctorate in petroleum geology from Stanford University and a
Russia. He has held overseas management positions for Oxy in Libya, Oman and Peru. Dr. Martinez holds a doctorate in petroleum geology from Stanford University and a Bachelor of Science degree in geology from the University of Texas at Austin. Dr. Martinez is based in the Africa Oil Calgary technical office and is responsible for all geological and geophysical activities of the Company.
Alex Budden, VP External Relations
Before joining Africa Oil Alex Budden served as a Diplomat for the British Foreign & Commonwealth Office for 21 years. His international experience has seen him serve in Africa, Asia, the Middle East, Russia, the Balkans and North America. Throughout his career he has focused on international security, conflict, governance, human rights, energy and environment issues and specializes in government and security relations, complex stakeholder management and strategic communications work.
28
Cautionary Statements
This document has been prepared and issued by and is the sole responsibility of Africa Oil Corp. (the “Company”) and its subsidiaries. It comprises the written materials for a
presentation
t ti to
t investors
i
t
and/or
d/ industry
i d t professionals
f
i
l concerning
i th
the C
Company’s
’ b
business
i
activities.
ti iti
B
By attending
tt di thi
this presentation
t ti and/or
d/ accepting
ti a copy off this
thi document,
d
t
you agree to be bound by the following conditions and will be taken to have represented, warranted and undertaken that you have agreed to the following conditions.
This presentation may not be copied, published, distributed or transmitted. The document is being supplied to you solely for your information and for use at the Company’s
presentation to investors and/or industry professionals concerning the Company’s business activities. It is not an offer or invitation to subscribe for or purchase any securities
and nothing contained herein shall form the basis of any contract or commitment whatsoever This presentation does not constitute or form part of any offer or invitation to
whatsoever. sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the Company in any jurisdiction nor shall it or any part of it nor the fact of
it di
its
distribution
t ib ti fform th
the b
basis
i of,
f or b
be relied
li d on iin connection
ti with,
ith any contract
t t commitment
it
t or iinvestment
t
td
decision
i i iin relation
l ti thereto
th t nor does
d
it constitute
tit t a recommendation
d ti
regarding the securities of the Company. The information contained in this presentation may not be used for any other purposes.
This update contains certain forward looking information that reflect the current views and/ or expectations of management of the Company with respect to its performance,
business and future events including statements with respect to financings and the Company’s plans for growth and expansion. Such information is subject to a number of
risks, uncertainties and assumptions, which may cause actual results to be materially different from those expressed or implied including the risk that the Company is unable to
obtain required financing and risks and uncertainties inherent in oil exploration and development activities. Readers are cautioned that the assumptions used in the
preparation
ti off such
h information,
i f
ti
such
h as market
k t prices
i
for
f oilil and
d gas and
d chemical
h i l products,
d t th
the Company’s
C
’ ability
bilit tto explore,
l
d
develop,
l
produce
d
and
d ttransportt crude
d oilil and
d
natural gas to markets and the results of exploration and development drilling and related activities, although considered reasonable at the time of preparation, may prove to
be imprecise and, as such, undue reliance should not be placed on forward-looking information. The Company assumes no future obligation to update these forward looking
information except as required by applicable securities laws.
Certain data in this presentation was obtained from various external data sources, and the Company has not verified such data with independent sources. Accordingly, no
representation or warranty, express or implied, is made and no reliance should be placed, on the fairness, accuracy, correctness, completeness or reliability of that data, and
such
hd
data
t iinvolves
l
risks
i k and
d uncertainties
t i ti and
d iis subject
bj t tto change
h
b
based
d on various
i
ffactors.
t
No reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its completeness. The Company and its members, directors,
officers and employees are under no obligation to update or keep current information contained in this presentation, to correct any inaccuracies which may become apparent,
or to publicly announce the result of any revision to the statements made herein except where they would be required to do so under applicable law, and any opinions
expressed in them are subject to change without notice, whether as a result of new information or future events. No representation or warranty, express or implied, is given by
the Company or any of its subsidiaries undertakings or affiliates or directors, officers or any other person as to the fairness, accuracy, correctness, completeness or reliability
off the
th information
i f
ti or opinions
i i
contained
t i d iin thi
this presentation,
t ti
nor h
have th
they iindependently
d
d tl verified
ifi d such
h iinformation,
f
ti
and
d any reliance
li
you place
l
th
thereon will
ill b
be att your sole
l risk.
i k
Without prejudice to the foregoing, no liability whatsoever (in negligence or otherwise) for any loss howsoever arising, directly or indirectly, from any use of this presentation or
its contents or otherwise arising in connection therewith is accepted by any such person in relation to such information.
For additional details on the Company, please see the Company’s profile at www.sedar.com.
29
Prospective and Contingent Resources
There is no certainty that any discovered resources referred to in this presentation will be commercially viable to produce. There is no certainty that any portion of the undiscovered resources
will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
Risks associated with discovering oil:
The estimation of prospective resource volumes for high-risk and poorly calibrated basins can be subject to large variation from the introduction of new information. The estimates presented
herein are based on all of the information available at the effective date of the resource estimate. New data or information is likely to have a material effect on the resource assessment values.
provided, the Company
p y has continued to actively
y explore,
p
with multiple
p 2D seismic crews operational
p
and several exploration
p
wells drilled.
Since the effective date of the resource estimates p
While discoveries have been made at Ngamia-1, Twiga South-1, and Etuko-1 in the Lokichar basin of the Tertiary rift in Kenya, there is no certainty that any additional resources will be
discovered. Once discovered, there is no certainty that the discovery will be commercially viable to produce any portion of the resources. Given that most of the resources in the portfolio are in
leads that require additional data to fully define their potential it is likely that significant changes to the resource estimates will occur with the incorporation of additional data and information.
Risk Associated with the Estimates:
In the event of a discovery, basic reservoir parameters, such as porosity, net hydrocarbon pay thickness, fluid composition and water saturation, may vary from those assumed by the
p y independent
p
third p
party
y resource evaluator affecting
g the volume of hydrocarbon
y
estimated to be p
present. Other factors such as the reservoir p
pressure, density
y and viscosity
y of the
Company’s
oil and solution gas/oil ratio will affect the volume of oil that can be recovered. Additional reservoir parameters such as permeability, the presence or absence of water drive and the specific
mineralogy of the reservoir rock may affect the efficiency of the recovery process. Recovery of the resources may also be affected by well performance, reliability of production and process
facilities, the availability and quality of source water for enhanced recovery processes and availability of fuel gas. There is no certainty that certain mineral interests are not affected by
ownership considerations that have not yet come to light.
Substantial Capital Requirements:
Africa Oil expects to make substantial capital expenditures for exploration, development and production of oil and gas reserves in the future. The Company's ability to access the equity or debt
markets may be affected by any prolonged market instability. The inability to access the equity or debt markets for sufficient capital, at acceptable terms and within required time frames, could
have a material adverse effect on the Company's financial condition, results of operations and prospects.
Ability to Execute Exploration and Development Program:
It may not always be possible for Africa Oil to execute its exploration and development strategies in the manner in which the Company considers optimal. Execution of exploration and
development strategies is dependent upon the political and security climate in the host countries where the Company operates and agreement amongst the Company joint venture partners.
The Company's exploration and development programs in East Africa may involve the need to obtain approvals from relevant authorities who may require conditions to be satisfied or the
exercise of discretion by the relevant authorities. It may not be possible for such conditions to be satisfied.
Absence of a Formal Development Plan including Required Funding:
There is no certainty the Company will prepare and have approved a development plan for any portion of the contingent resources or that the Company will be successful in funding any
development should such a plan be prepared. General market conditions, the sufficiency of such a development plan and the outlook regarding oil and gas prices are some factors that will
influence the availability of funding or the Company’s ability to attract oil and gas industry partners to participate in the project.
Access to Infrastructure:
Currently there is limited local infrastructure for the production and distribution of oil and gas in the countries in which Africa Oil operates. Export infrastructure to enable other markets to be
accessed has not yet been developed and is contingent on numerous factors including, but not limited to, sufficient reserves being discovered to reach a commercial threshold to justify the
construction of export pipelines and agreement amongst various government agencies regulating the transportation and sale of oil and gas. Africa Oil is working with its joint venture partners
and government authorities to evaluate the commercial potential and technical feasibility of discoveries made to date and potential future discoveries.
Additional Risks:
Additional risks associated with the estimate of the prospective and contingent resources include risks associated with the oil and gas industry generally (i.e. financing; operational risks in
exploration, development and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of estimates and projections
related to production; costs and expenses; health, safety, security and environmental risks; and the uncertainty of resource estimates), drilling equipment availability and efficiency, the ability
to attract and retain key personnel, the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with dealing with governments and obtaining regulatory
approvals, and the risk associated with international activities.
30