AGM PRESENTATION BUILDING A CONVENTIONAL PRODUCTION BUSINESS IN - - PowerPoint PPT Presentation

AOW.ASX ANPOF.OTC

NOVEMBER 2017

BUILDING A CONVENTIONAL PRODUCTION BUSINESS IN TEXAS AND THE GULF COAST

AGM PRESENTATION

2

DISCLAIMER

Extent of Information

This document has been prepared by American Patriot Oil and Gas Corporation Limited (“American Patriot Oil and Gas” or “Company”). This Presentation, including the information contained in this disclaimer, does not constitute an offer, invitation or recommendation to subscribe for or purchase any security and neither the Presentation, disclaimer not anything contained in such forms the basis of any contract or commitment. This Presentation does not take into account your individual investment objective, financial situation or particular needs. You must not act on the basis

• f any other matter contained in this Presentation but must make your own assessment of the Company.

No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information contained in this Presentation, including the accuracy, likelihood of the achievement or reasonableness of any forecast, prospects, returns or statements in relation to future matters contained in the Presentation (“Forward-looking statements”). Any such forward- looking statements that are contained in this Presentation or can be implied by the same are by their nature subject to significant uncertainties and contingencies associated with the oil and gas industry and are based on a number of estimates and assumptions that are subject to change ( and in many cases are outside the control of American Patriot Oil and Gas and its directors) which may causes the actual results or performance of American Patriot Oil and Gas to be materially different from any future results or performance expressed or implied by such forward-looking

• statements. To the maximum extent permitted by law, none of American Patriot Oil and Gas’s, or related corporations, directors, employees, agents nor any other person accepts and liability,

including without limitation arising from fault or negligence, for any loss arising from use of this Presentation or its content or otherwise arising in connection with it.

Exclusion of Financial Product Advice

This Presentation is for information purposes only and is not a prospectus or other offering under Australian law or under any others laws in the jurisdictions where the Presentation might be

• available. Nothing herein constitutes investment, legal, tax or other advice. This Presentation is not a recommendation to acquire shares and has been prepared without taking into account the

investment objectives, financial situation or needs of individuals.

Independent Advice

You should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and seek appropriate advice, including, legal and taxation advice appropriate to your jurisdiction. American Patriot Oil and Gas is not licensed to provide financial advice in respect of its shares.

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INVESTMENT HIGHLIGHTS

Increasing reserves & production with aggressive acquisition & development strategy Low cost, conventional producing assets, economic at low oil prices with existing infrastructure Long-term profitable production with a focus on further lowering operating costs US$40m debt facility term sheet with Arena Investors L.P., due diligence on reserves completed Building a significant production business focused in Texas & Gulf Coast with five acquisitions delivering 2.3mboe reserves, 500boepd and US$83m revenue @ US$50/oil Upside potential through work over, infill drilling and behind pipe strategies

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COMPANY SNAPSHOT

Corporate Snapshot Ticker ASX: AOW, OTCQB: ANPOF Share Price (29 Nov 2017) $0.032 Current Shares on issue 237,074,615 Options 21,621,725 (ex $0.25/expiry Oct 2018) Market Cap $7.6m Cash (30 Sept 2017) $0.36m Debt Nil EV 7.24 Northern Star Rough House

Texas Acquisitions

Project Location Production (boepd) Reserves (1P mboe) PV10 (US$) Revenue (US$M) Peak Energy East Texas 145 895 5,541 22.7 HJH South Texas 104 436 3,785 14.8 Lost Lake/Goose Creek South Texas 100 250 2,892 10.9 Anasazi, CWS, Safari SW Texas 148 758 7,396 33.8 Total 497 2,339 19,614 82.2

Shareholder Type as at 29 November 2017

Board & Management, 11% Top Holders (ex Board & Management), 35% Other Shareholders, 54%

Texas Acquisitions

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MANAGEMENT TEAM

Alexis Clark CEO and Managing Director

Mr Clark is a graduate of the University

• f Adelaide where he obtained a

Bachelor

• f

Economics and

• Commerce. Alexis was appointed MD

and CEO of American Patriot in early 2014, prior to that he was an Oil & Gas Analyst at Patersons Securities covering small to mid cap oil & gas companies and worked as an Energy Analyst at Merrill Lynch covering medium to large cap energy companies; and more recently Shaw Stockbroking where he covered a basket

• f

mid-cap

• il

and gas

• companies. Alexis has had more than

15 years experience in the Institutional banking and finance sector where he held positions at Westpac Institutional Bank, GE Capital and ANZ Banking Group, working on transactions across the Energy & Resources and Infrastructure client base.

David Shaw Non-executive Chairman

David Shaw is a Melbourne University law graduate, and is currently a practising solicitor with his own firm, Campbell & Shaw Lawyers. He is a director

• n

a number

• f

private company and advisory boards and has a long history with the Australian Football League (AFL) being the Essendon Football Club President from 1992 to 2002 in addition to the former Commissioner of the AFL. David is a Non-executive Chairman of Ambassador Oil and Gas Limited.

Frank Pirera CFO and Company Secretary

Mr Pirera is a graduate of Monash University where he

• btained

a Bachelor of Business (Accounting) and is a Fellow of the Certified Practising Accountants with more than 30 years

• f experience in public practice. Mr

Pirera has a wealth of experience in financial control and management and strategic planning having advised numerous public and private companies throughout his career.

Nick Melosi COO (US Based)

Mr Melosi is a Southern Illinois University geology graduate with more than a decade of experience in the oil and gas industry. Prior to joining American Patriot, Nick worked with medium to large cap companies such as Marathon Oil and Gas, Sanchez Oil and Gas, Carrizo Oil and Gas and BHP Billiton. He is an

• perations,

development and acquisitions geologist with operations and development experience in over 250 horizontal wells across US plays. Nick has developed multiple developmental and engineering driven drilling projects, has performed reserve analysis

• n

multiple acquisitions and has been involved with multiple workover projects.

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STRATEGY - REPEATABLE MODEL

Existing Assets

• Existing assets: Maximise value
• Free carried
• Monetise existing Joint Venture properties
• Acquire value accretive production

Production

• Low cost / distressed conventional producing assets
• Low decline / long life
• End 2017: 500 boepd
• End 2018: +2,000 boepd

Exit Strategy

• Exit after three years
• Track oil price recovery
• Repeatable model

Aggressive acquisition program – targeting 2,000+ boepd by end 2018

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STRATEGY - UNLOCKING VALUE

Focused on growing reserves & production in the USA

Partnering with equity finance providers

• Partner with equity and

hedge funds for equity finance

• Partner with banks for

debt to optimise the capital structure

• AOW has no current

debt outstanding Deal making and

• perational capacity
• Management and deal

making strength to source new

• pportunities
• Competitive advantage

with in-house

• perational capability
• Significant due

diligence with team in place focused on Engineering, Land and environmental DD Increased production delivering returns

• Target significant &

attainable production growth;

• 2017 = 500 boepd
• 2018 mid = 1,000 boepd
• 2018 end = 2,000 boepd
• Mitigate risk by focusing
• n brownfield assets, low

borrowing levels and conservative acquisition assumption

• Target 30% +IRR and

ROO of 3x Growing reserves & production

• Acquire low cost and/or

distressed conventional producing assets

• Targeting four

acquisitions per year

• Expansion of reserves

and resources base, drive efficiencies & aggressive build out

• ver the next 12-18

months

• Maximise reserves &

production from existing acreage Monetise asset

• Build a significant

producing business that captures the benefits of

• il price recovery and

improving market conditions

• Uplist to NASDAQ

exchange in the US

• Exit after three years

plus post achievement

• f production milestone

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TEXAS & THE GULF COAST – GROWING RESERVES AND PRODUCTION

Lost Lake/Goose Creek Anasazi HJH – South Texas Peak Energy – East Texas Anasazi/CWS/Safari

AOW Texas acquisitions

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STRATEGY - WHY TEXAS & THE GULF COAST?

• Access to low cost and low breakeven

conventional producing plays that offer compelling economics vs expensive shale plays

• Proven oil producing basins in targeted

area of focus with production from multiple zones

• Significant

historical production, well control and geological knowledge

• Lower operational and supply chain costs

and significantly reduced drilling costs

• Access

to quality

• perators

and infrastructure with extensive pipeline infrastructure and transportation in place

• Texas government and local community

supportive of the oil and gas industry

• Superior access to qualified and cost

competitive labour force

HJH CWS Lost Lake/Goose Creek Peak Energy Anasazi - Rose Anasazi - Memsa

Texas Mississippi Louisiana

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MARKET OPPORTUNITY – ACCESS TO QUALITY ASSETS

• Strategy to roll up low to middle market development opportunities that are cash flow positive while

majors are focused on larger plays

• Reduced borrowing bases and requiring debt repayment is forcing asset sales and bankruptcies
• Banks are limiting lending to the sector and focusing on selective opportunities
• Acquisitions will be largely underpinned by PDP value at current strip pricing with upside from PUD and

PDNP reserves

• Focus is on assets that are economic at current prices with further efficiency gains and stacked pays
• AOW is taking advantage of this current climate by selectively targeting distressed opportunities in

Texas and the Gulf Coast

• AOW will remain flexible with regard to the funding of future opportunities by offering cash and/or stock

and by partnering with debt/equity providers

Building a significant producing business taking advantage of market opportunities

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TEXAS ACQUISITIONS - OVERVIEW

Transaction

• Acquisition of 5 assets in the Texas Gulf Coast in H2 2017
• (Average 80% working interest with mix of AOW Operate/non Operate)

Purchase Price

• USD$5.3m funded via AOW Equity and Debt facility acquisition multiple of $2.30/BOE – low entry price

Proven Reserves

• 1P reserves: 2.3 mmboe; US$19.6m PV10 value, US$81m revenue @US$50/oil – Independently certified

Production

• Production: 500 boepd
• Potential production increase to 1,000 boepd from restarting shut in production & workovers
• Further Upside potential through additional work over, infill drilling and behind pipe strategies

Value Contribution

• Assets produce over US$2m net cash flow at current oil and gas prices = cash flow positive

Value Proposition

• Further acquisitions planned in 2018 to significantly grow the production to 2,000 boepd end-2018

Delivering Material Growth

Production Self Funding Cash Flow Reserves Expansion

• 497 boepd/2,330 mboe

1P reserves certified by independent reserve reports

• Set to grow to +1,000

boepd by early-2018

• AOW cash flow positive

by end-2017

• Assets generate US$2m

in annual net cash flow

• Upside via restarting low

cost conventional shut- in production and work

• ver potential
• 2330 mboe oil and gas

reserves certified by independent third party PV10 of US$19m, Net Cash Flow of US$2m

• Ability to significantly

grow reserve base over next 12 months

• Targeting production and

cash flow growth

• 2017 = 500 boepd;
• 2018-mid = 1,000 boepd;
• 2018-end = 2,000 boepd
• Coincide with oil and gas

price recovery

• Dual list in US and AUS to

expand investor base

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TEXAS ACQUISITIONS - OVERVIEW Growing Reserves base of ≈ 2,300 Mboe, US$82m revenue and US$19.6m PV10

All Revenues in USD M = thousands barrels oil equivalent

Project Location Formation WI (%) NRI (%) Production* (boepd) Reserves** (1P mboe) PV10 (US$000) Revenue US$m Operator Peak Energy/East Texas Harrison, Rusk Smackover 100 76% 145 894.0 5,541 22.7 American Patriot HJH/South Texas Fayette, Lee Austin Chalk 100 75% 104 434.0 3,785 14.9 American Patriot Lost Lake/Goose Creek Harris, Chambers Miocene 100 75-81% 100 250.0 2,892 10.9 American Patriot CWS, Anasazi, Safari La Salle, Gonzales, Goliad Various 50-100 49-87% 148 758.0 7,396 33.8 American Patriot, Alta Mesa, Sanchez Total 497 2,335 19,614 82.3

*Production includes currently shut in production and some re-works *Reserves certified by Independent Petroleum Engineers

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TEXAS ACQUISITION – PRODUCTION/REVENUE SCENARIOS

Cash flow positive at current oil prices with significant cash flow generation potential Oil Price Revenue Scenarios USD (m) Production Scenarios USD (m)

Oil Price USD $40/bbl $50/bbl $60/bbl Production (boepd) 500 500 500 Revenue ($USDm) 7.0 8.8 10.5 Royalties (22%) 1.5 1.9 2.3 Operating Costs ($20/bbl) 3.5 3.5 3.5 Taxes 0.5 0.7 0.8 Net Revenue (net AOW) 1.4 2.7 3.9 Production (boepd) 500 750 1000 Oil Price (USD bbl) $50 $50 $50 Revenue ($USDm) 8.8 13.1 17.5 Royalties (22%) 1.9 2.9 3.9 Operating Costs ($20/bbl) 3.5 5.3 7.0 Taxes 0.7 1.0 1.3 Net Revenue (net AOW) 2.7 4.0 5.3

• 5.00

10.00 15.00 20.00 25.00 $40/bbl $45/bbl $50/bbl $55/bbl

Total Revenue USD (m)

400boepd 600boepd 800boepd 1000boepd

• 1.00

2.00 3.00 4.00 5.00 6.00 7.00 8.00 $40/bbl $45/bbl $50/bbl $55/bbl

Net Revenue USD (m)

400boepd 600boepd 800boepd 1000boepd

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TEXAS ACQUISITION – PEAK ENERGY OVERVIEW

• Peak Energy – East Texas (76% NRI and AOW Operator)
• Harrison, Gregg, Rusk and Upshur Counties
• Deep East Texas Oil and Gas production assets
• Production is: 39 boepd and 630 mcfd gas (post restart shut in production and

re-works)

• 1P Proven reserves: 895 mboe; US$5.3m PV10; US$22m revenue
• Operating costs in this region are a low ~$20/bbl so the wells are economic

down to a low oil price

• Producing formations: Cotton Valley, Travis Peak and Pettit
• Producing wells: 17 gas wells/21 oil wells
• 43 leases holding 4,000 net acres
• Numerous PDNP and behind pipe drilling opportunities

Production from – Hosston - Smackover

1P PROVEN RESERVES OIL mbbl GAS mmcf PV10 US$ (000) PDP 210 2,032 3,068 PDNP 25 1,923 2,472 PUD Total 235 3,712 5,540

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TEXAS ACQUISITION – HJH OVERVIEW

• HJH – South Texas (75% NRI and AOW Operator)
• Fayette, Lee, Washington and Burleson Counties
• South Texas Austin Chalk Gas production assets
• Production is: 40 bopd and 374 mcfd gas (post restart shut in wells)
• 1P Proven reserves: 434 mboe; US$3.8m PV10; US$14.8m revenue
• Operating costs in this region are a low ~$20/bbl so the wells are

economic down to a low oil price

• Producing formations: Austin chalk
• Producing wells: 38 wells with multiple recompletions
• 21 leases holding 5,800 net acres
• Numerous PDNP and PUD behind pipe drilling opportunities

1P PROVEN RESERVES OIL mbbl GAS mmcf PV10 US$ (000) PDP 166 844 2,785 PDNP 60 400 1,000 PUD Total 226 1,244 3,785

Production from – Austin Chalk

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TEXAS ACQUISITION – LOST LAKE/GOOSE CREEK OVERVIEW

• 100% GWI/average 75-81% NRI in Harris and Chambers counties

Texas/340 net acres

• Production is currently shut in but can be quickly restarted to 50bopd
• 1P proven reserves of 250 mboe; US$2.8m PV10; US$11m revenue
• Assets acquired from lender Solstice Capital LLC at the Bankruptcy court
• 65 oil wells all producing from the Miocene zones/Salt domes at depths

1,200-3,860 feet

• Operating costs in this region are a low ~$22/bbl wells economic at low

prices

• Cumulative production of 3.1 mmbl oil /230 mmcf gas since the 1950’s
• Existing 2D seismic has identified 8-10 additional infill drilling sites
• Focus is to return the shut-in wells to production and rework behind pipe

zones

• Multiple locations for infill drilling targeting 50-100 boepd per well
• Existing infrastructure in place, wells fully equipped with pipelines in place

1P PROVEN RESERVES OIL mbbl GAS mmcf PV10 US$ (000) PDP PDNP 130 1,724.8 PUD 101 102.9 1,167.1 Total 231 102.9 2,891.9

Production from : Miocene, Frio, Vicksburg, Shows in several sands

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TEXAS ACQUISITION – OTHER ASSETS OVERVIEW

• Anasazi, CWS and Safari assets located in South Texas and Louisiana

(49-87% NRI) (Mix of Operator and Non–Operator assets)

• Located in Goliad, La Salle, San Patricio and Gonzales Counties Texas

and La Salle Parish Louisiana

• Production is: 128 boepd and 123 mcfd gas (post restart shut in

production and re-works)

• 1P Proven reserves: 758 mboe; US$7.4m PV10; US$33m revenue
• Includes the non-operated Williams Gas unit and non-operated

producing oil wells owned by Rose Royalties

• Operators include Alta Mesa and Sanchez Energy large private US oil

and gas companies

• Significant upside potential for PDNP and behind pipe at minimal capex

to grow production significantly

1P PROVEN RESERVES OIL mbbl GAS mmcf PV10 US$ (000) PDP 190 700 2,766 PDNP 219 751 3,456 PUD 56 311 1,174 Total 465 1,762 7,396

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EXISTING ACERAGE – Monetise Assets

• Focused on maximising value from existing assets and monetise existing acreage position
• In discussions with a number of parties to sell acreage position
• Existing assets located in proven hydrocarbon basins in close proximity to producing oil fields
• Multiple projects at various stages of completion

Monetise and exit the existing acreage position

Project Location Basin WI (%) NRI (%) Current Production (boepd) Acres (net) Operator Northern Star Montana Williston 16-30 ~13-24 Nil 12,000 Great Western & Anadarko Rough House Colorado DJ Basin 30 ~22.5 Nil 4,507 Running Foxes Petroleum (RFP) Other Projects Montana, Wyoming, Utah Various 100 ~80 Nil 11,729 American Patriot Oil & Gas

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KEY TAKEAWAYS

Proven financial, geological, geophysical and operational Management team AOW maintain intimate knowledge of area after completing a number of acquisitions Proven and repeatable approach to value creation Building a strong platform capture benefits as market conditions improve Aggressive acquisition strategy outlined for 2018 and beyond Pursuing opportunities that provide a springboard for future activity and growth

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CONTACT INFORMATION

Alexis Clark

CHIEF EXECUTIVE OFFICER & MANAGING DIRECTOR Email Mobile aclark@ap-oil.com +61 401 626 014 +1 303 419 8434

1400 16th Street, Suite 400, Denver Colarado, 80202 USA