SLIDE 59 Page 59 59 Senior Secured ed Bond Issue ue – Corporat ate Present ntat ation ion September er 2013
GENERAL Investing in the Bonds involves inherent risks. Prospective investors should carefully consider, among other things, the risk factors set out below before making an investment decision. This section is not intended to be exhaustive – additional risks and uncertainties not presently known to the Issuer, or that it currently deems immaterial, may also impair the Issuer’s business
- perations or the value of the Bonds. Investors should also read and familiarize themselves with the more extensive description of risk factors included in the Offering Memorandum. The Issuer
and the Parent including to some extent its subsidiaries from time to time, together referred to as the Group. RISK SKS S SPEC ECIFIC TO THE ISSU SUER ER AND THE INDUST STRY Y IN WHICH IT OPER ERATE ATES Hunt ntingt ngton
eld d is in an earl arly stag age e of prod
The Issuer’s main producing asset, the Huntington field, as of the date of this presentation has just established peak design rate through the facilities and is nearing completion of commissioning operations. The Group is dependent on the expected cash flow from the Huntington field to service its obligations, including the Bonds. The estimated future production is uncertain due to the uncertainty involved in estimating reserves, as described below, and the risk in connection with the operation and development of the field. Any failure in the development of the Huntington field, delays in establishing stable dual compression operations, inaccuracies in the estimated reserves and increases in the development costs may have a material adverse effect on the Group's ability to service its obligations, cash flow, liquidity, financial situation and results. Future ure rev even enues es to come e from
ds not curre urrent ntly in prod
uction
Based on the current portfolio of the Issuer, revenues and income for the Issuer will, towards the Maturity Date of the Bond to an increasing extent be dependent on the performance of fields not currently in production and certain fields where an FDP has as of the date of this OM not been sanctioned by DECC. Project delays may delay expected revenues from operations and cost over-runs could make a project uneconomic. Specifically, this relates to the Orlando, Kells and potentially West Wick fields, in addition to potential future license awards and asset acquisitions as the Issuer may conduct at their discretion, as well as maturing of existing licenses within the Issuer’s current portfolio, through the lifetime of the Bonds. The FDPs have not been sanctioned by the DECC, which is a pre-requisite for moving forward with the development towards a producing field. The estimated costs of development and the planned progress for development may therefore be revised before production can commence. In the event production does commence, the size and volume of the reserves of the Orlando and Kells fields may be lower than anticipated. Any failure in the development of the Orlando and Kells fields, delays in start-up of production, failure to reach the estimated production volumes, inaccuracies in the estimated reveres and increases in the development costs may have a material adverse effect on the Group's ability to service its obligations, cash flow, liquidity, financial situation and results. Res eserv erves and nd res esou
rces es infor
ation
epresents estimates which h may be inac accurat rate e or incorre
Estimates of the quantity and value of economically recoverable oil and gas reserves and resources and the possible future net cash flows are based upon a number of variable factors and assumptions, such as, ultimate reserves recovery, interpretation of geological and geophysical data, timing and amount of capital expenditures, marketability of oil and gas, royalty rates, continuity of current fiscal policies and regulatory regimes, future oil and gas prices, operating costs, development and production costs and workover and remedial costs, all of which may vary from actual results. Chan anges es to Develop
ent Plans ans Development plans for the Company's properties are based on management's best estimates and information as of the date of this Presentation. Development plans may change as a result of new information, events or as a result of business decisions. Any such changes could have a material effect on the Company's proposed capital expenditures and the timelines associated with the development of the Company's properties. Prod
uction
be conc
entra rated in in a smal all numbe ber of
ds The Issuer’s production of oil and gas will be concentrated in a small number of offshore fields. Any regularity issues at these fields will therefore have substantial negative impacts on the Group's total
- production. If mechanical problems, storms or other events curtail a substantial portion of the Group's production or if the actual reserves associated with any one of the Group's producing fields are less than
the Group's estimated reserves, the Group's results of operations and financial condition could be adversely affected. Stag age of Dev evel elop
nt An investment in the Issuer is subject to certain risks related to the nature of the Issuer's business in the acquisition, exploration, development and production of oil and natural gas and its early stage of
- development. The Issuer has a limited history of operations and earnings generation and there can be no assurance that the Issuer's business will continue to be successful or profitable. The Issuer may be
subject to growth-related risks, capacity constraints and pressure on its internal systems and controls, particularly given the early stage of the Issuer's development. The inability of Issuer to deal with this growth could have a material adverse impact on its business, operations and prospects.
Summa mmary ry of risk sk facto ctors rs
