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Navitas Petroleum
Capital Market Presentation
January 2018
Navitas Petroleum Capital Market Presentation January 2018 1 - - PowerPoint PPT Presentation
Navitas Petroleum Capital Market Presentation January 2018 1 Disclaimer Disclaimer This presentation does not constitute and is not to be interpreted as an invitation and/or offer to purchase and/or allocate securities in Navitas Petroleum
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January 2018
This presentation does not constitute and is not to be interpreted as an invitation and/or offer to purchase and/or allocate securities in Navitas Petroleum – Limited Partnership (the “Partnership”) and/or Navitas Buckskin Financing Ltd. (hereinafter: “the Company” and jointly “the Corporations”). The Corporations are a reporting corporation asdefined in the Securities Law, 5728-1968 (hereinafter: “the Law”). As such, they are governed bythe provisions of theLaw,includingtherestrictionsandprohibitionsset forththerein. Thispresentation andthe informationherein are the exclusiveproperty ofthe Corporations. Distribution and/or usethereof incontravention of anylaw and withoutprior,explicitand writtenapprovalfromtheCorporationsisstrictlyprohibited. This presentation was prepared solely for purposes of concision and convenience . The presentation cannot replace perusal of the draft public prospectus or the prospectus that has received permission from the ISA, which include the full and binding information about the Corporations and the securities offered thereby, including a full description of the risk factors to which the Corporations are exposed, prior to making a decision on an investment in the securities of the Corporations. In any event of discrepancy between the presentation and the draft prospectus and/or the prospectus and/or reports to be released by the Corporationsinthefutureasrequiredbylaw,suchdocumentswillprevail. The business strategy of the Corporations and their subsidiaries as presented in the presentation is true as of the date of the presentation and may change in thefuture,interalia,consideringmarketconditionsandthedecisionsoftheCorporations’boardofdirectors. The presentation includes forward-looking information, as defined in the law. Such information includes, inter alia, forecasts, objectives, assessments and estimates, includinginformationpresentedbyway of illustrationsand/or graphsand/ortables, whichrefer tofuture matters and/or events, the materialization
Forward-looking information is based on assessments by Corporation management, which are based, inter alia, on information known to the management of the Corporations on the date of preparation of this presentation, including estimations of the business markets of the Corporations, public and statistical publications and data released by various authorities and bodies, the contents of which have not been independently examined by the Corporations are thereforenotresponsibleforthecorrectnessthereof. The materialization of forward-looking information, in whole or in part or differently than expected, or the non-materialization thereof, will be affected, inter alia, by the risk factors that characterize the business of the Corporations as well as the developments in the economic environment and exogenous factors that affect the Corporationsin their business segments,which cannot be estimated in advance and are not within the Corporations’ control. The Corporations have no certainty that their estimations, plans and expectations will materialize and, consequently, the business results may materially differ from the results estimatedorimpliedbythisinformation.
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Israel Gulf of Mexico East Canada
Buckskin – “auto-pilot” value generator Attractive entry pricing Established activity Right place and time for purchasing value creating assets
Houston
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Navitas has developed a balanced asset portfolio generating quick cash flow in the short term
AssetsValue Time Cash flow from discoveriesunder development 1 Low cost & short timeline to production
10projects in the Gulf of Mexico Area
Discoveries under Development Buckskin High Impact Assets Explorationlicense off the East Coastof Canada
upside potantial
development on opportunityterms
provenarea
development
Labrador and Newfoundland Canada
Total potential for Navitas -~660 million barrels¹
Block 7
427 MMBOE
Montreal
Houston
Gulf of Mexico USA
Drilling scheduled for 2018³ Discovery Discovery under development EB 832 -3 MMBOE EB 876 -3 MMBOE EB 915 -6 MMBOE
BFB
25 MMBOE
PL 16
30 MMBOE
EC 158
66 MMBOE
EC 228
23 MMBOE
EB 252
4 MMBOE
EC 228
2 MMBOE²
High Island A403
8 MMBOE
GC 82
24 MMBOE²
Buckskin
39 MMBOE
1. Navitasshareofthepotentialreservesandresourcesintheprojects(whichincludethecategoriesofProspectiveResources(BestEstimates)and/orContingentResources(2C)and/orReserves(2P),accordingtoNSAIreportsof8September2017,accordingtoBOE (BarrelsofOilEquivalent)calculation. GasunitperBOE:6MCF=1BBL. NSAIestimatesofthequantitiesofoilandnaturalgasresources bywhichpetroleumassetsconstituteforward-lookinginformationasdefinedwithintheSecuritiesLaw. Theestimatesaboveare based, inter alia, ongeological, geophysical, engineering and other information obtained from wellsand the reservoir operator and/or expert consultants in the field, and merely comprise NSAI estimatesand conjecture regarding which there is no certainty. The quantitiesofnaturalgasand/oroiltobeactuallyproducedmaydifferfromsuchestimationsandconjectures,interalia,asaresultofoperatingandtechnicalconditionsand/orregulatorychangesand/orconditionsofsupplyanddemandinthenaturalgasand/oroil marketand/orcommercialconditionsand/orasaresultoftheactualperformanceofthereservoirs.Suchestimationsandconjecturesmaybeupdatedinsofarasadditionalknowledgeaccumulatesand/orasaresultofagamutoffactorsrelatedtothepetroleumasset andtheproductionofoilandnaturalgas. 2. Includingdiscoveryandexploration. 3. Theaboveconstitutesforward-lookinginformation,asthematerializationthereof,inwholeorinpart,isuncertain,interalia,sinceitiscontingentondevelopmentsintheeconomicenvironmentandonexogenousfactorsthatarenotwithinthePartnership’scontrol. Insofarassuchdrillingisperformed,thereisnocertaintythatanypartofthespecifiedresourceswillindeedbediscovered,andifdiscovered–thereisnocertaintythatitwillbecommerciallyfeasibletoproduceanypartoftheresources.
New YorkUSA
HoustonCanada
Total existing potential – 660 million barrels1
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Net DCF based on NSAI reports¹
($mm)
Geological Chance
Reserves and Resources
(mmboe)¹
Assets
Discoveries Under Development
1153 Discovery 17.8 Buckskin north Proved+Probable (2P) Discovery 1.4 Buckskin north Contingent NA Discovery 19.3 Buckskin south Contingent
Low cost Projects with short timeline to production 1075 29% -48% 12.5
PL 16
765 48% 7.6
PL 16s
NA 29% -31% 9.8
PL16 (additional prospects)
825 42% -45% 24.9
Bayou Fer Blanc (BFB)
NA 19% until discovery 139.2
Other U.S. licenses
High Impact Assets NA 15% 427.4
Canada License 14
1.Navitasshareofthepotentialreservesandresourcesintheprojects(whichincludethecategoriesofProspectiveResources(BestEstimates)and/orContingentResources(2C)and/orReserves(2P),accordingtoNSAIreportsof8September2017,unrisked,accordingtoBOE(BarrelsofOilEquivalent). 2.InaccordancewithNSAIreportsof8September,2017. 3.TheshareofNavitasinthediscountedcashflowof2Pscenarioin8wellsaccordingtoNSAIreportof9November,2017,withaquantityof178millionbarrelsofoil.10%discountratepost6%royaltiesand35%taxes.Theaforesaidconstitutesforward-lookinginformation.Withrespecttothewarning regardingforward-lookinginformationondiscountedcashflowofreserves,seethewarningregardingforward-lookinginformationinSlide8. 4.TheshareofNavitasinthediscountedcashflowofa2CscenarioaccordingtoNSAI’sreportof9November,2017.Withrespecttothewarningregardingforward-lookinginformationondiscountedcashflowofreserves,seethewarningregardingforward-lookinginformationinSlide8. 5.DiscountedcashflowaccordingtoFootnote1assumingsuccessfulexplorationwell(s)andcommercialdiscovery. ThePartnershipchosetospecifydiscountedcashflowfigureswithrespecttotheProspectiveResourcesintheassetinrespectofwhichanin-principledecisionhasbeenmadebythe Partnershiptodrillawell,subjecttotheexistenceofsufficientfinancialsourcesatthepartnershiplevel,andnottopresentdiscountedcashflowfigureswithrespecttotheotherpetroleumassetsofthePartnership,includingwithrespecttoassetsinwhich,assumingsuccessfulexplorationdrillings,there areContingentResources,sincenoundertakingtodrillawelloradecisionasaforesaidhasyetbeenmadeinrespectthereof.Theaforesaidconstitutesforward-lookinginformation.Withrespecttothewarningregardingforward-lookinginformationondiscountedcashflowofProspectiveResources, seethewarningregardingforward-lookinginformationinSlide8.
Discounted cashflow by project (prior to U.S. corporate tax deduction)
7 ▪ In July 2017, Navitas completed bonds offering of 472mm NIS under a European financing model toward financing the development of the Buckskin project ▪ In December 2017, Navitas completed bonds offering of another 248mm NIS, by expansion of the current series towards financing of the project development, where Navitas’ share increased to 7.5% project ownership ▪ Budget Update
̶ Since the bonds issuance, the development budget was reduced by ~22% ($697mm to $541mm)
▪ Operational Update
‒ Development plan progressing on track ‒ Commence drilling of production wells – January 2018 ‒ Forecast for Initial Production – July 2019
▪ Bonds impact on future transaction flow
‒ Navitas is considered as a new and active player in the Gulf of Mexico, US ‒ Following the offerings success, Navitas was approached by leading companies in the are for potential collaboration
▪ Development plan progress forecast¹ –
Order and procurement of production platform equipment Installation of subsea facilities Commence drilling of production wells Connect to production platform and initiate production
Financial closing of development financing 07/2017
Order and procurement of subsea facilities Complete drilling of production wells
Value creating events along development of the Buckskin project1
07/2019 48 116 202 01/2018 IPO
Buckskin – value generator on auto-pilot²
Navitas share in DCF ($mm)
Modification of production platform
Buckskin project
Closing of development financing 07/2019 Initial Production
Ownership Resources¹ (mmboe) Operator Water depth (meters) Castex 32.5% 24.9 5,640 2
Bayou Fer Blanc (BFB)
Navitas 100% 7.6 4,115 17
PL 16s
100% 12.5 4,115 17 Navitas
PL 16
42%-45% 6.0 48% 7.5 48%2 7.5 Geological Chance of Success Dry HoleCost³ ($mm) 2018 26 years 2019 9 years 2018 17 years Target first oil Years of production 82 76 107 NPV104 ($mm)
Low risk at low price Fast track to years’-long production High profitability
2018 drilling plan
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1.NavitasshareintheProspectiveResources(BestEstimate),accordingtotheNSAIreportof8September,2017.accordingtoBOE(BarrelsofOilEquivalent). 2.ChanceofSuccessforthemaintarget,accordingtotheNSAIreportof8September,2017. 3.Navitasshare(approximately). 4.Intheeventofadiscovery,NavitasshareaccordingtotheNSAIreportof8September2017,usingacashflowdiscountrateof10%(asisstandardinthe sector),fortheproductionofprospectiveresourcesundertheBestEstimatecategory,unrisked,aftertaxesandroyaltiesandunderNavitas’assumptionsregardingdevelopmentandproductioncosts. Caution–itisclarifiedthatthediscountedcashflowinformation,whethercalculatedunderaspecificdiscountrateorwithoutadiscountrate,representcurrentvaluebutnotnecessarilyfairvalue.ThereisnocertaintythatanypartofthespecifiedProspectiveResourceswillindeedbediscovered. Ifdiscovered,thereisnocertaintythatitwillbecommerciallyfeasibletoproduceanypartoftheresources.TheprospectiveinformationisnotanestimationofReservesandContingentResources,whichmaybeestimatedonlyaftertheexplorationdrilling,ifatall. Cautionregardingforward-lookinginformation–theaforesaiddiscountedcashflowinformationconstituteforward-lookinginformation,withinthemeaningthereofintheLaw.Theabovedataarebasedonvariousassumptions,includingwithrespecttothequantitiesofgasandoiltobe produced,therateanddurationofnaturalgassalesfromtheproject,operatingcosts,capitalexpenditures,abandonmentexpenses,royaltyratesandsaleprices,thematerializationofwhichiscompletelyuncertain.Itisnotedthatthequantitiesofnaturalgasand/oroiltobeactuallyproduced,if any,theaforesaidexpensesandtheaforesaidrevenuesmaymateriallydifferfromtheaforesaidestimationsandconjectures,interalia,duetothefactthatnobindingcontractshavebeensignedyetinrelationtothesaleofoiland/ornaturalgasfromtheproject/s,andasaresultofoperating andtechnicalconditionsand/orregulatorychangesand/orthepricesofoilontheglobalmarketand/ornaturalgaspricesontheU.S.marketand/ortheproject’sactualperformanceand/orasaresultofthesalepricesandthequantitiesactuallydeterminedincontractstobesignedforthesale
T
2018 drilling plan
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New York Montreal
Block 3 BP Noble Energy Hess Block 4 BP Noble Energy Hess Block 8 BP Noble Energy Hess Canada
Block 7 Navitas
Delek Group
▪ Navitas led its joint bid (30%) with Delek Group (70%) for Block 7, consisting of ~2,000 km², in the West Orphan basin
▪ A Beicip² report presented potential of ~25.5 billion barrels of petroleum and ~20.6 TCF of natural gas for the West Orphan basin ▪ Some of the world’s largest oil and gas companies, including BP, Shell, Chevron, ExxonMobil and Statoil are investing billions of dollars in exploration and development in east Canada - ~3 billion barrels have been developed in the east Canada region thus far³ ▪ Hess, BP and Noble Energy won the three blocks adjacent to the Navitas block, undertaking total commitments of ~CAD 413 million⁴ ▪ Navitas and Delek won Block 7 in consideration for a CAD 48 million operations commitment ▪ Navitas purchased a 2D seismic survey for the main prospect area. After processing and interpreting the information, Navitas mapped out a 400 km² prospect with potential of ~1.4 billion barrels¹
Block 7, Canada – Prospect of ~1.4 billion barrels¹
▪ Navitas is having discussions to purchase 3D seismic survey in collaboration with working interest owners of nearby blocks
Undeveloped discovery³
Houston
Navitas prepares together with partners to purchase
Gulf of Mexico USA
Crisis in oil and gas prices Cheap assets – Formation of a buyers’ market Decrease of development and production costs Preparing for oil price recovery¹ Resurgence
in the U.S.² 10
1.ThePartnershipestimationsdescribedaboveconstituteforward-lookinginformation, based,interalia,oninformationknowntothePartnershipmanagementatthetimeofpreparationofthispresentation,includingestimationsofthePartnershipbusinessmarkets,publicandstatistical publicationsanddata,thecontentsofwhichhavenotbeenindependentlyexaminedbythePartnership,andthePartnershipisthereforenotresponsibleforthecorrectnessthereof.Thematerializationofforward-lookinginformation,inwholeorinpartordifferentlythanexpected,orthenon- materializationthereof,willbeaffected,interalia,bythedevelopmentsintheeconomicenvironmentandexogenousfactorsthataffectthePartnershipinitsoperatingsegments,whichcannotbeestimatedinadvanceandwhicharenotwithinthePartnership’scontrol.
Exploiting a unique opportunity for purchasing development assets
The successful project financing of the Buckskin development created a relative advantage for Navitas
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Time Value Exploration and Evaluation Development Production
Financial Closing
$116mm²
Refinance Value
$202mm³ Example – Buckskin North (excl. south section)
Initial Production FID
Value creation curve for assets under Navitas’ core focus
1.Illustrationforsimulationpurposesonly. 2.PleaseseeSlide6. 3.TheshareofNavitasina8%discountedcashflow asofcommencingproduction(July2019),inaccordancewithNSAIreportof9November2017.
Navitas identifies a unique situation for generating value by acquiring assets in the development phase
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Jan.-Mar. 2017 July 2017 Sept. 2017 Dec. 2017
Positive developments since bonds IPO
472 60 60 248 840
Debt
Total
Capital Debt Capital
Navitas successfully raised 840mm NIS in 2017
5% Buckskin Project Positive updates from Buckskin’s operator Additional 2.5% Buckskin Project U.S. corp. tax reform completed Expand activities to include producing assets WTI oil barrel price exceeds $60
Successful bonds and equity offerings in addition to other positive developments
60 60 472 248
840