Corporate presentation Gas to light up Nigeria June 2016
Disclaimer This presentation is for information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in the United States or Nigeria or in any jurisdiction in which, or to any persons to whom, such offering, solicitation or sale would be unlawful. The information contained in this presentation has not been audited by independent auditors or other third parties and is based on internal records and reporting systems. Certain statements in this report regarding our prospects, plans, financial position and business strategy may constitute forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe” or “continue” or the negative of these terms. All forward-looking statements, including discussions of strategy, plans, objectives, goals and future events or performance, involve risks and uncertainties. While we believe these statements to be reasonable, they are merely estimates or predictions and cannot be relied upon. We cannot assure you that future results will be achieved. Factors, risks and uncertainties that may cause actual outcomes and results to be materially different from those indicated, expressed, projected or implied in the forward-looking statements used in this report include, among others: • The concentration of our primary reserves and resources in one geographic region pursuant to one agreement, the Strategic Alliance Agreement; • allegations that negatively portray our business, operations and assets, including but not limited to the Strategic Alliance Agreement, our interest in the OMLs and relationships with third-parties; • a failure to agree upon the interpretation or application of certain contractual terms with our contractual counterparties with respect to the Strategic Alliance Agreement; • logistical and operational difficulties associated with operating in Nigeria; • changes in governmental regulation, including regulatory changes affecting the availability of permits, and governmental actions that may affect operations or our planned expansion; • the exposure to increased market risk and uncertainty as a result of operating in an emerging market; • the inability to obtain funds to maintain our ongoing operations, grow our business and complete planned projects; • delays, disruptions and disputes with third-party operators, partners and other project participants; • limited growth in Nigerian domestic demand for gas and; • price fluctuations in oil, gas and refined products markets and related fluctuations in demand for such products. This list of important factors is not exhaustive. When relying on forward-looking statements, you should carefully consider the foregoing factors and other uncertainties and events, especially in light of the political, economic, social, and legal environment in which we operate. Such forward-looking statements speak only as of the date on which they are made. Accordingly, we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. We do not make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely scenario. These cautionary statements qualify all forward looking statements attributable to us or persons acting on our behalf. 2 July 16
Seven Energy at a glance Seven Energy is the leading integrated gas company in south east Nigeria, with upstream oil and gas interests in the region. We have a deep understanding of the domestic Nigerian gas market, supplying gas to the power generation and manufacturing industries, principally through our own integrated processing and pipeline infrastructure. Highlights Blue chip >$1 billion 452 MMboe investor Invested in gas production, 2P plus 2C reserves & resources processing and distribution increase 9% (2014: 414 MMboe ) base infrastructure in south east Nigeria Indigenous 101 MMcfpd 200 MMcfpd South east gas deliveries Nigerian 130% increase 198 employees of which 92% are Gas processing capacity Nigerians (Q1 2015: 44 MMcfpd) 3 July 16
Nigeria, Africa’s most attractive opportunity
Market overview - supply Nigeria presents significant growth opportunities … Nigeria’s underdeveloped gas resources • Nigeria benefits from having the largest gas reserves in Africa of 180 Tcf – ranked 9 th in the Proved gas reserves (2014) Tcf world for proved gas reserves Nigeria 180 • Nigeria lags behind that of its African peer group at 3.7 Bcfpd – ranked only 22 rd for gas Egypt 65 India 50 production in the world Netherlands 28 UK 9 • Only 14% of gas production reaches the domestic market, with the majority being exported as LNG, flared or used in E&P Total gas production (2014) Bcfpd • Supply for the domestic Nigerian gas market is estimated to remain tight until at least 2020, Netherlands 5 if not 2025 Egypt 5 UK 4 Nigeria • In addition, Nigeria has very little processing and distribution relative to its reserves, 4 India 3 production and potential demand Gas pipelines • Of its c.4,000 km of gas pipelines, only a third is dedicated to domestic consumption with the ‘000 km remaining being dedicated to LNG exports UK 29 India 14 • Although there are a number of ongoing and planned infrastructure projects, Nigeria is likely Netherlands 9 to remain infrastructure constrained for the next 10 to 15 years Egypt 8 Nigeria 4 … for players like Seven Energy with a proven track record of gas delivery 5 July 16
Market overview - demand Strong forecast growth in gas demand … Nigeria’s growth potential • $569 billion – Nigeria is Africa’s biggest economy; forecast to maintain GDP growth (2015) (%) robust growth of 5% per annum (2016-2018) 5.3 5.3 6.3 4.6 • However, the pace of economic growth is constrained by lack of 3.3 investment in infrastructure, chronic power shortages and a reliance on expensive diesel for power generation 2014 2015 2016 2017 2018 • 182 million – Africa’s largest population; projected to reach 263 Population growth (2015) 399 million by 2030, fastest growing population in the top ten most (millions) populous countries in the world 263 • Nigeria has a rapidly growing middle class. Currently estimated at 4.1 182 million households, this is expected to grow at 7.2% per annum , 2015 2030 2050 adding a further 7.6 million middle-class households over the next 16 years. Electric power consumption (2012) • The Nigerian Government, through the Gas Master Plan , actively (kWh per capita) looking to address power supply shortfall – with the solution to Netherlands 6,871 come from new gas fired power stations UK 5,452 Egypt 1,700 • 156 kWh per capita – Nigeria has one of the lowest rates of electricity India 744 Nigeria 156 generation per capita … due to demographic and economic growth and power sector reforms 6 July 16
The Nigerian opportunity Underdeveloped gas resources Market demand to be met Lack of infrastructure Proved gas reserves (2014) Total gas production (2014) Gas pipelines (2013) Tcf bcfpd ‘000 km Netherlands Nigeria 5 UK 180 29 Egypt Egypt 5 India 65 14 UK 4 India 50 Netherlands 9 Nigeria 4 Egypt Netherlands 28 8 India UK 3 Nigeria 4 9 Barriers to entry? Macroeconomic challenges • Weakened oil price • Naira / Dollar convertibility • Counterparty risk • Access to international capital markets • Heightened security risk 7 July 16
Seven Energy’s investors We enjoy continued support from our long term investors and have recently welcomed Historical equity issued ($ million) the IDB Infrastructure Fund II, sponsored by the Islamic Development Bank and other Equity issued Cumulative equity raised institutional investors through their recent 300.0 1,200 255 investment in our business of $50 million 250.0 1,000 200.0 800 154 150.0 600 120 100 100.0 69 77 400 70 68 42 34 33 31 50.0 26 200 19 20 12 15 7 7 3 3 0 0.0 0 Oct-06 Nov-07 Jan-08 Jun-08 Aug-08 Aug-08 Oct-08 May-09 Dec-09 Mar-10 Aug-10 Nov-10 Nov-10 Jan-11 Jul-11 Oct-12 Jan-13 Jan-14 May-14 Jan-15 Feb-15 Feb-16 Total equity funds issued as of March 2016 ($ millions) 1,161 Recent equity issues IDB Infrastructure Fund II, managed by ASMA, a fund with a target size of $2 billion, invests in infrastructure opportunities across Asia, the Middle East and Africa invested $50 million in February 2016 Our five biggest shareholders showed continued support for our business with an investment in February 2016 of $50 million Temasek , a “AAA” rated investment company with a S$266 billion portfolio owned by the Government of Singapore, invested $150 million in May 2014 IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries, invested $75 million in May 2014, along with $30 million from the IFC ALAC 8 July 16
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