African Continental Energy An early stage oil development and - - PowerPoint PPT Presentation

African Continental Energy

An early stage oil development and production company focused on high quality discovered reserves opportunities in West Africa

Presentation - March 2014

The information in this presentation is an overview and does not contain all information necessary for investment decisions. In making investment decisions, investors should rely on their own examination of Africa Continental Energy and consult with their own legal, tax, business and/or financial advisors in connection with any acquisition of

• securities. The information contained in this presentation has been prepared in good faith

by Africa Continental Energy. However, no representation or warranty, expressed or implied, is made as to the accuracy, correctness, completeness or adequacy of any statement, estimates, opinions or other information contained in this presentation. Given the highly speculative nature of exploration for oil and gas, there are significant uncertainties associated with forecasting future revenue. Certain information in this presentation refers to the intentions of Africa Continental Energy, but these are not intended to be forecasts, forward looking statements, or statements about future matters for the purposes of the Corporations Act or any other applicable law.

March 2014 Oil and gas development and production company focused on West Africa 2

Forward Looking Statements

Introduction

Incorporated in 2013 to acquire selected development and production opportunities in West Africa initially Nigeria Access to a portfolio of assets at various stages of development including production and development, located in functioning hydrocarbon systems Strong board and management team who have a proven track record, have previously worked together and delivered results in oil & gas, fundraisings, public markets and M&A Strategic alliances with leading oil and gas service companies

Strategy

Acquire and advance a balanced portfolio of oil and gas assets at various stages of development including: – Production – Development – Near field Exploration Opportunity to leverage indigenous experience and to export Marginal Field Development Expertise – Access to local geological and finance expertise – Innovative facilities design – Cost effective development concepts – Third party tie in legal and fiscal agreements – Experience in optimising and maximising production from mature / marginal fields Initial Focus on Nigeria

Investment Themes

West Africa is

• pportunity rich:
• Numerous

undeveloped discoveries

• Rationalisation
• f assets by

majors

• Licencing round

from Government

• World class

reservoirs Strong Management:

• Highly experienced

in West Africa and North Sea

• Access to

technology, project management and capital markets

• Successful track

record in company formation and growth Technology:

• Opportunity for dramatic

production optimisation

• Deployment of modern

technology and knowhow Indigenisation:

• Governments proactively

encouraging local content

• Emerco based in Lagos

Corporate Structure

EMERCO

Nigerian incorporated

African Continental Energy

UK Registered

Nigerian Shareholders

40% * 60%

Onshore / Shallow Water Assets

PSC Agreement

Selective producing Selective development Low risk exploration * Split between ACE and UK shareholders

Equatorial Guinea Gabon Angola Liberia Ghana

Management

Peter r Buchanan CEO PhD Grad Dip Applied Finance

Prior to founding Africa Continental Energys , Peter was the founder and CEO of Valiant Petroleum plc an independent

• il & gas company formed in 2004, and listed on the AIM market of the London Stock Exchange in March 2008. Valiant

was sold to Ithaca Energy in 2013. Peter has had a career spanning 22 years in the oil industry. After a Shell sponsored MSc at Imperial College, Peter completed a PhD in structural geology with BP. This was followed by various senior technical and managerial roles with companies such as Oil Search Limited and Premier Oil plc.. Peter spent five years as a Director on the oil & gas team at The Royal Bank of Scotland with specific responsibility for North Sea structured finance and was involved in several hundred million pounds of debt, mezzanine and equity fundings to independent oil and gas companies

Robert Gherghetta CFO Bcom, , Char artered Ac Accountant ant

Robert is a Chartered Accountant with approximately 20 years experience in the natural resources industry, public practice and investment banking.Robert was co-founder of London-based oil and gas exploration and production company, Valiant Petroleum plc, listed on AIM. Prior to this he held various senior roles with Royal Bank of Scotland and Credit Suisse First Boston, spending several years in London, and Horwath Chartered Accountants Australia.

Andre rew w Macfarl rlane COO

• B. Eng.(

.(Tech) Mech. . Eng.

Andrew has 39 years’ experience in Asset Management, Field Development for Operated and Non Operated offshore oil and gas projects in the North Sea, Indonesia and Kazakhstan with Conoco & ConocoPhillips. His Multi discipline skill set covers the full life cycle of oil and gas field management, field development concept and front-end engineering, reservoir management, major project management, drilling and commercial

Tosin Shobo Business Development Director BSc, MBA, , ACCA

25 Years of International Business Development experience with Centrica Plc., Marathon Oil Corporation, Citibank, Mobil Oil and 5 years of Gulf of Guinea strategy consulting experience for Mid Cap (Market Cap circa US$ 20 billion) oil and gas Exploration and Production companies. UK ACCA qualified Accountant with MBA and BSc Chemical Engineering from University of Lagos.

Management

Rupert Miller Vice President Sustainable Development

Qualified in Human Resource Management with Post Graduate studies include the Executive Leadership Programme at Ashridge Business School and the completion of the University of Cambridge Post Graduate Certificate in Sustainable Business. Over ten years working overseas within the international development sector. Responsible for the planning and delivery of community partnership programmes in West and East Africa including working with MedecinsSans Frontieres in Kenya, Somalia and South Sudan. Advised on the set up and delivery of two international NGO's in Rwanda and Uganda including the relevant monitoring and evaluation processes.

Michael Sullivan General Counsel

• Strong legal, company secretarial and risk management skills gained from working in top tier law firms and

public listed companies

• Highly developed legal skills focusing on oil and gas, mining, public companies and banking and finance;
• Experienced company secretary;
• In depth knowledge of Listing Rules & Business Rules, Corporations Act, Trade Practices Act, Income Tax

Assessment and Duties Act;

• Strong relationships with stock market regulators and Government revenue services gained from working on

large scale and complex transactions

• Strong risk management, corporate governance & compliance skills;

Acquisition of Exploration Licensing Corporate Selection Discovered Oil Opportunities Rounds Acquisitions Criteria Reserves

Nigeria Shallow Water

    Prospectivity

Selected Land

   

Selected Swamp

    Commercial Upside

Equatorial Guinea

Time to production

Offshore

   Fiscal Regime

Gabon

Working Interest and Partnering Strategy

Offshore

    Entry Cost

Angola

Mitigation of political risk

Onshore

  Achievability

Liberia Offshore

 

Ghana Offshore

 

Focus Countries

• Nigeria is an established world class petroleum province,

ranked 10th in world oil reserves and 9th highest for gas resources

• Hundreds of undeveloped discoveries
• Only one third of discoveries in production
• IOCs divesting non-core assets
• Government is encouraging local content and

facilitating incentives for the acquisition of reserves and production by indigenous companies

• Prolific reservoirs, typical productivity of 2-4 mbod/well, high

quality crude, production infrastructure in place, 3D seismic and other technical data available

Nigeria Oil & Gas Fundamentals

Established oil & gas infrastructure

50 100 150 200 250 300

Proven Oil Reserves (Billion Barrels)

300 600 900 1,200 1,500 1,800

Proven Gas Reserves (Tcf)

Technology and know-how

• Opportunity to leverage indigenous expertise derived

from over 100 years of IOC experience in EMERCO

• Leverage North Sea Expertise
• Marginal field technology
• Modern seismic processing and interpretation
• Third party commercial structures
• Project management
• HSE

Nigeria Oil & Gas Fundamentals Cont’d

20 40 60 80 100 120 140 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Mar-94 Mar-97 Mar-00 Mar-03 Mar-06 Mar-09 Mar-12 Oil Price ($/bbl) Oil Production (MMbbls/d)

UK / Nigeria Oil Production

Nigeria Oil Production UK Oil Production Brent Crude Spot Price

Fiscal

• Attractive fiscal regime
• Strong incentives for indigenous companies

Current Fiscal Regime Royalty < 5,000 bopd 2.5% 5,000 – 10,000 bopd 7.5% 10,000 – 15,000 bopd 12.5% 15,000 – 25,000 bopd 18.5% Petroleum Profits Tax < 5 years 65.75% 5 years + 85.00% Investment Tax Allowance 20.00% Capital Allowances 5 yr SL Niger Delta Development Commission Tax 3% of total annual Capex & Opex budget Education Tax 2% of assessable profit

Marginal Field Round 2014

* * Text from the Department of petroleum Resources Nigeria Addressing prospective investors and industry operators during the road show in Lagos, the Director of Petroleum resources, Mr George Osahon stated that the key objectives of the current exercise were to grow reserves and boost production, promote indigenous participation in the upstream sector of the industry and increase Nigerian content development. To be eligible, applicant companies must be duly registered Nigerian companies with:- − At least 51%of the beneficiary interest owned by Nigerian citizens − MEMARTS clearly indicating oil & gas exploration & production as one of the major areas

• f operation

− Demonstration of technical ability with regards to the evaluation and development of the assets would be a competence − Access to funding or evident relationship with a technical partner with adequate capacity and financial resources to operate the field The marginal field round is an acreage licencing round promoted by the government to re- invigorate older discoveries that have not been brought into production by the former

• wners. These owners were often major oil companies. The round is expected to be

launched and finalised this year.

Ghana

• New petroleum province,
• Based
• n

discovery and development of giant Jubilee field (1.5 bboe)

• Opened

up new Cretaceous hydrocarbon play in West African Transform Margin (WATM)

• Catalyst for exploration in WATM
• Material undiscovered oil and gas

potential-Yet to Find Volumes ~ 3 bnboe

• Farm-in opportunities
• Limited number of players
• Investor friendly-Limited barriers to

entry

• Lower political risk

Equatorial Guinea

• Established

petroleum province with multiple basins

• Prolific

reservoirs, high quality crude, production infrastructure in place, 3D seismic and

• ther

technical data available

• 2014 Licencing round
• Presence of Major IOC’s mitigate

political risk

Gabon

• Established petroleum

province,

• Many undeveloped

discoveries

• Prolific reservoirs, high

quality crude, production infrastructure in place, 3D seismic and other technical data available

• Exploration potential still

high

• Limited political risk

Angola

Angola Concessions

• Established world class offshore petroleum province
• 2nd largest oil producer in Africa
• High oil discovery rate
• Under explored onshore basin
• 2014 Licencing round
• Prolific reservoirs, high quality crude, production

infrastructure in place, 3D seismic and other technical data available

Liberia

• Frontier petroleum

exploration province

• Working Petroleum system

proved

• Limited Exploration activity

thus far

• Welcomes New Entrants
• Attracting attention of

super-majors

• Northern North Sea marginal fields,
• Production achieved within two years of submitting field

development plan

• Structural complexity addressed with a mix of well types:

long reach and horizontal producers and injector wells to maximise recovery

• Some wells fitted with submersible

pumps and/or gas lift to enhance recovery

Management’s Previous Marginal Field Development Experience

• Production solutions were innovative and

cost effective.

• Subsea tie-back to floating production

platform shared between two fields

• Early export achieved initially via shuttle

tanker

• ffloading,

then subsequently exported via laid pipeline to 3rd party host platform as access became available

Management’s Previous Marginal Field Development Experience

Low geologic ical al risk

Focus on historic producing ng fo format ations ns

Low execut utio ion n risk

JVs with leading ng O&G service comp mpani anies

Rapid id pro roduc uctio ion

Generat ating ng revenu nues

Po Portfolio io of mult ltis istag age pro rojects

Diversifies es risk Ac Access to Capital al

Valuat luatio ion n underp rpinne inned by resour urces

Scope fo for resource upgrad ade

ACE High calib ibre re Manag ageme ment nt

Proven n track record

Value Drivers

Investment Summary

First Class Entrepreneurial Team World Class Opportunity Proven and Focused Strategy

• Deep and extensive experience in all aspects of oil and

gas production, development and exploration

• >100 years working for IOCs including BP and

ConocoPhillips

• Major North Sea expertise and contacts
• Many years living and working in developing countries
• Divestment of assets by majors underway
• World class petroleum systems
• Hundreds of undeveloped discoveries
• Mature business environment
• Improve recovery through use of modern completion and

stimulation techniques

• Selectively acquire development / production assets
• nshore and shallow water offshore
• Deliver consistent production growth reaching 25Kboepd

in 5 years

• Low risk exploration in and around core assets
• Acquisition target in 5+ years

Accessible Funding

• First round equity funding by founders in place
• Seeking significant equity raise alongside first identified

acquisition (c.$100m)

• Debt funding available from leading international and

local banks (c.$200m)

• Considering IPO

Leverage North Sea expertise Quality assets with ability to scale rapidly Repeating Success

• f Valiant in

Nigeria Nigeria attracting funds from various sources

Expansion Strategy

Raise funds to rapidly grow ACE production Continue to appraise near term production and development opportunities in Nigeria Evaluate non Nigerian opportunities that fit stringent investment criteria :

– Proven hydrocarbon systems – Development potential – Favourable fiscal terms – Established legal system

22

• Acquire first oil producing

and/or development assets

• Raise equity of c.$100m
• Establish RBL debt

facility of $200-300m

• Hedging structures if

required

• Build out team in Lagos
• Seek further operated

development

• pportunities
• Production around

5kbopd

2013-14 2014-15 2015-16 2017/18+

• Established indigenous

Nigerian company

• First round equity funding

in place

• Currently screening

discovered reserves

• pportunities
• Target blocks with

demonstrable upside potential

• Engage with capital

markets

• Establish operatorship
• Exploiting upside

potential in and around assets

• Commence development
• f operated assets
• Exploration of near field

and low risk opportunities

• Production c.10kbopd
• Evaluate M&A

Possibilities

• Continued exploration

and development activities

• Consider M&A
• Production around

25kbopd

• Potential takeover target

Growth

Seed Capital First Equity funding RBL IPO Refinance Debt Corporate facilities

• Company funded through

first phase

• Contract in place with

reputable Nigerian consultancy to screen all

• pportunities
• Discussions being held

with various asset

• wners
• Exploring financing
• ptions in international

markets

Risk and Mitigation

ACE realises that development and production in this part of the world can be challenging and that risks exist around production disruption, security and corruption. ACE will appoint a Community Liason Officer (CLO) to engage proactively with the local communities A number of the management team have previously worked in emerging markets with similar challenges Strict Corporate Governance and anti corruption principles are fundamental to the ACE business Management System that is in place ACE will thoroughly screen JV partners

Contact

Peter Buchanan CEO Email: p.buchanan@afcoen.com Robert Ghergetta Finance Director Email: r.ghergetta@afcoen.com Tosin Shobo Director Email: t.shobo@afcoen.com Andrew Macfarlane COO Email: a.macfarlane@afcoen.com Telepho hone ne +44(0)1344 747456