9 October 2012 Armourers Hall, City of London Directors Jim - - PowerPoint PPT Presentation

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9 October 2012 Armourers Hall, City of London Directors Jim - - PowerPoint PPT Presentation

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AIM: SER 9 October 2012 Armourers Hall, City of London Directors Jim Ellerton Chairman of the Board, Sefton Mr. Ellerton has over 30 years of multi-discipline experience in the development and evaluation of oil and gas prospects throughout

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9 October 2012 Armourers Hall, City of London

AIM: SER

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SLIDE 2

Directors

Jim Ellerton – Chairman of the Board, Sefton

  • Mr. Ellerton has over 30 years of multi-discipline experience in the development and evaluation of oil and

gas prospects throughout the major basins of North America. He has major oil company background (Texaco) and independent company start-up and management experience, and is one of the original founders of Sefton Resources. Karl F. Arleth – Non-executive Director, Sefton

  • Mr. Arleth comes to Sefton from Blue River Resources LLC, a Denver-based private oil and gas start-up

firm engaged in the acquisition and development of U.S. producing properties. He has over 30-years of domestic and international oil and gas experience, including 22 years at Amoco and BP. Mark R. Smith – Non-executive Director, Sefton

  • Mr. Smith currently is sole practitioner of law at Mark R. Smith PC in Calgary, Alberta Canada and has been

involved in the energy industry for over 20 years. He has in-depth knowledge of securities law, mergers and acquisitions and oil and gas transactional law and serves on a number of boards and subcommittees of both private and public entities. Tom G. Milne – Non-executive Director, Sefton Mr Milne is a senior financial and management executive with extensive international experience in energy E&P, Pipelines, Oilsands and Communications Technology. He has been Chairman of the Audit Committee for an AMEX-listed Oilsands company; and is currently a Director of TSX-listed Hillcrest Resources Ltd and Canshale Corp (a private company). *We will be adding additional non-executive Directors

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SLIDE 3

Company Overview

  • London Stock Exchange AIM Code: SER.L
  • Shares Outstanding:

512 MM (30/6/12)

  • Management Ownership:

10.0% (approximately)

  • YTD H/L:

4.70p / 1.50p

  • Market Cap. / EV1:

£8 MM / £12 MM

  • 3-Month Average Daily Volume2:

8,000,000 shares/day

  • 2012 Current Production:

150 BOPD 100% Oil

  • Core Areas:

California / Kansas

  • Acreage Gross / Net:

51,772 / 51,772

  • Proved Reserves (31/12/11):

3.8 MMBO (100% oil / 44% PD) $138 MM PV-10 @ $102/Bbl

  • Prospective Contingent &

1.97MMBO + 55.78 BCF Possible Resources $140MM PV-10 @ $95/bbl and $2.50/mcf

  • Potential Pipeline Value

$24MM PV-10 @ $1.25/mcf

  • Fiscal Year End:

31 December Oil & Natural Gas Heavy / Medium Crude Oil Ventura Basin 100% WI / 90% NRI Forest City Basin 100% WI / 87.5% NRI

Denver HQ CA CO KS 3

1 EV = Enterprise Value (Debt + Equity) – at 1.5p/share 2 Source: yahoofinance.com

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SLIDE 4

Our Strategy

  • Acquire long life, partially developed reserves with controlling interest
  • Favor shallow reserves with good access to market and infrastructure
  • Politically stable environment with a minimum Internal Rate of Return (IRR) of

30%+

  • Acquire core assets towards the bottom of the commodity price cycle
  • Develop core assets with own funds, operate and retain high WI%
  • At an appropriate time, leverage remaining growth potential using third party

capital

  • Accelerate growth through acquisitions
  • Maximize shareholder value through asset disposals and/or farm-outs at the top
  • f the commodity cycle or through merger
  • Keep investors informed through a strong Investor Relations program

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SLIDE 5

$0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 2004 2005 2006 2007 2008 2009 2010 2011

Lifting Costs*

$0.0 $1.0 $2.0 $3.0 $4.0 $5.0 2004 2005 2006 2007 2008 2009 2010 2011

Oil Revenue

  • $1.0
  • $0.5

$0.0 $0.5 $1.0 $1.5 $2.0 $2.5 2004 2005 2006 2007 2008 2009 2010 2011

Cash Flow From Operations

Consistent Growth in Results

($M) ($M) ($/Bbl) ($M) 5 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 2004 2005 2006 2007 2008 2009 2010 2011

Capital Expenditures

*2011: $18/bbl lifting costs with no disruption of production.

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SLIDE 6

Ventura Basin California

  • Steam flood exploitation project (Yule Zone)
  • Sefton controls 262 gross and net acres
  • 100% WI and 90% NRI
  • 19 wells on production making ~120 BO/d
  • Cyclic steaming throughout 2012
  • 5 remaining infill locations
  • OOIP 11 MMBO
  • 2.5-acre spacing with 1-acre down-spacing

potential 1 mile

N

Tapia Field

  • Development exploitation project (marine/miocene

Sandstones)

  • Sefton controls 1,510 gross and net acres
  • 100% WI and 83.3% NRI
  • 4 wells on production making ~10 BO/d
  • 2 remaining infill locations
  • At least one wildcat well, from geology/geochem

data

  • 27° API sweet crude

Eureka Canyon Field

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  • JV & Acquisition

Targets

Tapia Steam Flood Analog

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SLIDE 7

Tapia Field Economics

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Working Interest: 100% Net Revenue Interest : 90% Completed Well Cost: $850,000 to tanks Well-head Oil Price: $100.00 Bbl @ wellhead API°: 17-19 Operating Costs: $18.00 Bbl Production Taxes: 6% - $6.00 Bbl Trucking: Offset by quality adj. Royalty: $6.50 Bbl G&A $35 (@150 Bopd) Total Deducts $65.50 Net Back: $34.50 Bbl Gross Reserves/well 140 MBO (assuming 50% rec.) Net Reserves/well 136 MBO

Bbls 25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 Primary Recovery Cyclic Steaming Steam Flood Total EUR High Case EUR* 21.7%

  • f OOIP

13.3% 15.0% 50.0% Up to 70% * High case dependent upon steam response

Per-well EURs Type Well Assumptions

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SLIDE 8

Tapia history/development I

  • Always has been a secondary/tertiary recovery project
  • Water disposal system/improved completion techniques (gravel pack)
  • Drilling/ongoing surface facility upgrades
  • Pilot cyclic/continuous steam programs
  • Thermal stimulation study (geologic model)

– Intermediate step – enlarged cyclic steaming – Power plant requirements/development scenario(s)

  • Upgrade surface facilities/permit(s)

– Water disposal/tanks etc – Expansion loops in the flow lines – Unitization of field (and permits)

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SLIDE 9

Tapia history/development II

  • Enlarged cyclic steaming program

– 2nd/3rd steam generator – Water treatment facilities

  • Full steam flood

– Power plant – Drilling of injector/collector wells

  • Operation awards
  • Remain cash flow positive

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SLIDE 10

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Tapia Expected Growth

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  • Dr. Farouq Ali / Petrel – Tapia
  • Geologic & Engineering Model has 50 layers and 500,000 grid cells
  • Each grid cell contains detailed engineering values that are modeled in the steam

simulation

  • Drilling program locations are a good fit with modeled engineering parameters
  • Currently undergoing upgrade based on data from new wells drilled
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SLIDE 12

Forest City Basin Kansas

  • Los Angeles County
  • CBM and conventional oil and gas potential
  • Shallow horizons
  • Sefton controls 43,000 gross and net acres
  • 100% WI and 87.5% NRI
  • Net coal thickness exceeds basin average
  • Midstream infrastructure: SER controls 22

miles of pipeline and 10MMCFD gas plant

Anderson and Franklin Counties

  • CBM and conventional oil and gas potential
  • Shallow horizons shut-in due to lack of

infrastructure

  • Sefton controls 7,000 gross and net acres
  • 100% WI and 87.5% NRI
  • Targeted acquisition potential
  • Midstream infrastructure: SER controls 50

miles of pipeline (Vanguard, LAGGS)

Leavenworth County

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Leavenworth Midstream

  • 26 miles of pipeline
  • Access to interstate

pipelines/potential gas storage

  • Third-party gas can be

transported

Vanguard Pipeline

Major Interstate Pipeline

LAGGS Pipeline

  • 20 miles of pipeline
  • Access to interstate pipeline
  • Adjacent wells being acquired
  • Potential for Sefton equity gas

and third party gas transport

LAGGS Cholla Assets Gas Storage Facility

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SLIDE 14

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Leavenworth Upstream

  • Primary objective:

conventional oil & gas

  • Secondary
  • bjective: CBM
  • Both exploration

and acquisition (local)

  • pportunities
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Kansas Prospects Mississippian Erosional Surface

  • Identified by “3rd order residual” mapping
  • Multiple drilling objectives - 3 types of hydrocarbon trapping

mechanisms

  • Proven reserves for each trap type in eastern Kansas
  • Current mapping shows many similar prospect corollaries in proximity to

Sefton’s pipeline system

Mississippian Erosional Surface Buried Hills Channel Sands Truncation Traps

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Kansas Exploration & Development

IDENTIFICATION OF PROSPECT DRILLING TARGETS USING 3RD ORDER RESIDUAL ANALYSIS (LEAVENWORTH)

1 2 3 Present Day Structure Map

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Kansas Exploration & Development

3RD ORDER RESIDUAL MAP

  • Maps paleo-surface
  • Identification of productive

wells in relation to surface

  • Geologist correlates with

reservoirs

  • Results in acreage acquisition,

high-grading & prospect development

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SLIDE 18

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Value Summary* (31/12/11)

  • Oil: ¡ ¡5708 ¡MBO ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡• ¡ ¡Gas: ¡ ¡56 ¡BCF ¡
  • Total ¡undiscounted ¡value ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡• ¡ ¡Total ¡PV10 ¡value ¡

¡ ¡ ¡ ¡ ¡ ¡ ¡$529 ¡million ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡$253 ¡million ¡

* US GAAP price of $102 per barrel as of 31/12/11 (average price for the preceding 12 months).

Sefton Reserves & Resources

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SLIDE 19

2012 - 2013 Outlook

California Corporate Kansas

  • Grow cash flow through developing existing assets - 2012 - 2013
  • Strengthen balance sheet – 2012 - 2013
  • Utilize outside capital sources for core area growth and acquisitions – 2012 and beyond
  • Improve I.R. program – 2012 and beyond
  • Tapia: Increase production through water disposal management, drilling, cyclic steaming, and

design full steamflood – 2012 and beyond

  • Eureka: Identify farm-out candidates for deeper pool test and infill wells - 2013
  • Pursue regional JV opportunities – 2012 and beyond
  • Bolt-on acquisitions – 2012 and beyond
  • Leavenworth Project:
  • Consolidate regional pipeline assets – 2012 and beyond
  • Activate acquired pipelines - 2012
  • Aggregate Sefton and third-party production – 2012 and beyond
  • Geologic studies/leasing program – 2012 and beyond
  • Anderson County:
  • Evaluate CBM and conventional oil and gas exploitation - 2012
  • Evaluate midstream assets for gas-gathering opportunities - 2012
  • Geologic studies/leasing program – 2012 and beyond
  • Bolt-on acquisitions – 2012 and beyond

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Summary

  • Undervalued oil assets
  • Gas interests give further value upside
  • Diversified asset base with prudent oil/gas mix
  • Big growth potential based on the current assets alone
  • Asset independently valued at £178m (vs. £8m market cap)
  • Utilize outside capital for core area growth and acquisitions/

mergers

  • Comprehensive IR program to get this message to investors

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SLIDE 21

AIM: SER