Primeline Energy Holdings Inc. July 2015 Primeline Corporate Presentation 1 July 2015
Building a leading Pan Asia/Pacific oil and gas company 1. T SX- V liste d E &P China g as play with c le an ba lanc e she e t a nd str ong mana g e me nt te am. Ye ar e nde d Mar 31 2015 c ash flow fr om L S36- 1 of CAD$53 million. E xpe c te d E BIT DA of CAD$80 million ne t to PE H* in 2015. 2. Me r ge rs with Pr ime line Pe tr ole um Cor poration a nd L oyz E ne rgy e xpe c te d to c omple te by e nd- 2015 to c r e ate a le ading Pan- Asia/ Pac ific E &P c ompany. 3. E nlarge d c ompa ny has pr oduc tion in China a nd T haila nd a nd e xploration upside in both c ountr ie s, Austr alia, the Philippine s and Ne w Ze aland. 4. $700m+ r e g iona l pr oduc tion infrastr uc tur e hub in E ast China Se a in pa r tne r ship with CNOOC has se c ur e d ac c e ss to the high pr ic e pr ovinc iql gas mar ke t. 5. 2015+ plan to mone tise 1T CF + of hig h mar g in hydr oc a rbon upside in the fie ld 5,877 km 2 e xplor and in our ation c onc e ssion. *pr o -fo r ma po st PPC ac quisitio n Primeline Corporate Presentation 2 July 2015
Structure and assets • PE H has a nnounc e d pla ns to ac quir e its affiliate Prime line Pe tr ole um Cor poration (“PPC”). PPC is 100% c ontr olle d by Vic tor Hwa ng, PE H Cha ir ma n/ major ity ansac tion is e xpe c te d to c omple te on July 30 th . shar e holde r. T he tr • PE H has 75% a nd PPC has 25% of Contr ac tor s’ Rig hts in 2 Pe tr ole um Contr ac ts in the E ast China Se a: S36- 1 g a s fie ld (85 km 2 ); Ope ra tor • Bloc k 25/ 34: L : CNOOC (51% ), PE H/ PPC (49% ). 2015 Mc Da nie l Pr ove d + Pr oba ble (2P) r e se r ve s e stimate s of 13.2 Mmboe (Gas: 61.3 bc f, L iquids: 3.0 MMbbl). • Bloc k 33/ 07: 7 ye ar e xploration pe riod of thre e pha se s (3, 2, 2 ye a r s) fr om Nov 2012 (5,877 km 2 ). Ope rator H/ PPC (100% ). 600 km 2 of 3D in 2014 a nd 2 we lls : PE planne d immine ntly. • Contr a c tor s r e sponsible for 100% of e xploration c osts. CNOOC ha s r ight to pa r tic ipate up to 51% inany c omme r c ial de ve lopme nt by paying pr o rata de ve lopme nt/ ope r ation c osts. Primeline Corporate Presentation 3 July 2015
East China gas market - High growth, high price • China’s dyna mic e c onomic g r owth in the past 25 ye ar s has c r e ate d the ld’s 2 nd lar wor ge st e ne r gy mar ke t. • China’s c ur r e nt e ne r g y ne e ds ar e me t mostly by c oal a nd oil (58% of the latte r is impor te d) and, insignific antly, by gas at just 5 % of total e ne r gy mix. • Inc r e ase d g as utilisation has be c ome a foc us of Chine se gove rnme nt e ne rgy polic y. • Muc h of the r a pid inc r e ase in g as de ma nd in E ast China is now me t by impor ts via L NG and long distanc e pipe line s. • Gas pric e s in E ast China ar e str ong a nd r e fle c t the influe nc e of the F ar E ast L NG pr ic e and its position as the most populous/ de ve lope d par t of China. Primeline Corporate Presentation 4 July 2015
Access to Zhejiang gas grid • L S36- 1 is a str ate gic gas fie ld c lose to Zhe jiang Pr ovinc e - population of 50 Ningbo million L NG • 4th lar ge st e c onomy in China. • Cur r e nt Zhe jiang gas gr id usage is at ~6.6 bc mpa (has double d in just 4 ye ar s). • But gas is only 2.8% of total e ne r gy mix. Primeline Corporate Presentation 5 July 2015
East China Sea becoming a significant gas production basin • Pr ove n pe tr ole um pr ovinc e . • Ne w E &P foc us in Xihu T r ough (Basin) in nor the r n E ast China Se a, anc hor e d on two e xisting fie lds: – Pinghu F ie ld: onstr e am in 1998, 386 km 14” pipe line to Shangha i te r minal; and – Chunxiao F ie ld: onstr e am in 2006, 360 km 28” pipe line to Ningbo and 4 pr oduc tion platfor ms. E xpansion de ve lopme nt unde r way. Primeline Corporate Presentation 6 July 2015
LS36-1: Infrastructure hub is completed • Platfor m fac ility • 4 de ve lopme nt we lls • Subse a pipe line : 126.9km to onshor e te r minal • Sale gas pipe line : 32 km - to gr id Primeline Corporate Presentation 7 July 2015
Valuation has not yet reflected impressive operational progress Pro duc tio n sta rte d ODP Ja c ke t a ppro ve d insta lle d De v. Drilling F a b ric a tio n c o mple te d De v. Ag re e me nt Primeline Corporate Presentation 8 July 2015
Strategy leverages infrastructure hub to monetize upside • De ve lopme nt c omple te d for L S36- 1 gas fie ld, se c ur e d mar ke t ac c e ss and Newly acquired built r e gional 600 km 2 of 3D seismic pr oduc tion infr astr uc tur e hub. • F ar m- out unde r way for high impac t e xplor ation in the imme diate vic inity 737 km 2 of existing 3D and the r e st of the seismic data Bloc k anc hor e d ar ound the pr oduc ing L S36- 1 fac ility. Primeline Corporate Presentation 9 July 2015
High margin resource additions from both our blocks • 2015+ plan to mone tise 1T CF plus of high margin hydr oc arbon upside in the 5,877 km 2 e xplor fie ld and in our ation c onc e ssion. • Substantial possible r e se r ve s a nd prospe c tive r e sour c e s in the fie ld itse lf, thr ough “phase 2 de ve lopme nt dr illing”. • Sig nific a nt pote ntia l in ne arby pr ospe c ts that have be e n de fine d by 1300 sq. km plus of 3D se ismic data. • Additional hydr oc a rbon pote ntia l suppor te d by e xisting 2D se ismic e valuation along the tr e nd to nor th adds 2- 4 time s mor e gas pote ntial in same play type . • Se ve n re g ional we lls in a nd a r ound the basin ha ve hydr oc a rbon shows or flows. • F ar m out pr oc e ss unde r way with funding se t to c omple te for 2 additional we lls to be dr ille d immine ntly. Primeline Corporate Presentation 10 July 2015
Prospective resources of 1.4TCF (McDaniel) Pro spe c tive Re so urc e s - Na tura l Ga s Riske d (2) Pro spe c tive Re so urc e s - Unriske d (1) Cha nc e o f Re so urc e s Suc c e ss Pro spe c t L o w Me dium Me a n Hig h Me a n MMc f MMc f MMc f MMc f MMc f % L S36-1 Pa le o c e ne -M1-0 2,725 5,513 6,370 11,087 4,644 73 L S36-1 Pa le o c e ne -M1-1 So uth 1,759 3,965 4,779 8,931 3,484 73 L S36-1 Pa le o c e ne -M2 5,046 14,464 18,934 38,513 11,360 60 L S36-1 Pa le o c e ne -M3 14,187 31,725 37,210 67,032 26,047 70 L S36-1 Pa le o c e ne -L 1 8,351 23,772 32,862 69,109 16,431 50 L S36-1 Pa le o c e ne -L 2 2,379 5,363 6,444 11,822 2,577 40 L S30-8 Pa le o c e ne -M2 9,136 27,070 36,195 73,148 7,601 21 L S36- 1 De ve lopme nt Are a (Sub tota l) 43,584 111,871 142,794 279,641 72,145 L S30-3 Pa le o c e ne -M1-1 14,631 32,007 38,820 71,810 10,870 28 L S30-3 Pa le o c e ne -M1-2 43,387 178,831 315,221 727,991 88,262 28 L S29-2 Pa le o c e ne -M1-2 19,016 47,306 60,442 117,561 14,506 24 L S29-3 Pa le o c e ne -M1-2 7,090 22,601 32,984 70,620 7,124 22 L S35-1 Pa le o c e ne -M1-2 14,592 38,521 51,441 105,723 7,407 14 Bloc k 33/ 07 3D Se ismic Ar e a (Sub tota l) 98,715 319,266 498,907 1,093,706 128,170 142,299 431,137 641,701 1,373,347 200,314 T ota l (3) (1) T he re is no c e rta inty tha t a ny po rtio n o f the pro spe c tive re so urc e s will b e disc o ve re d. I f disc o ve re d, the re is no c e rta inty tha t it will b e e c o no mic a lly via b le o r te c hnic a lly fe a sib le to pro duc e a ny po rtio n o f the re so urc e s. (2) T he se a re pa rtia lly riske d pro spe c tive re so urc e s tha t ha ve b e e n riske d fo r c ha nc e o f disc o ve ry, b ut ha ve no t b e e n riske d fo r c ha nc e o f de ve lo pme nt. (3)T o ta l b a se d o n a n a rithme tic a g g re g a tio n o f a ll the Pro spe c t/ Zo ne s a nd a s suc h the re is >90 % c ha nc e o f e xc e e ding the o ve ra ll L o w T o ta l a nd <10 % c ha nc e o f e xc e e ding the o ve ra ll Hig h T o ta l. Primeline Corporate Presentation 11 July 2015
Additional resources in lower zones • Cur r e nt Pr oduc e r s ar e in M1- 1 an M1- 2 sands. • Additional gas in othe r s. sands and in lowe r tight r e se r voir Cross-section of LS36-1 M11 M12 M2 M31 M32 L1 L2 Primeline Corporate Presentation 12 July 2015
Reserve additions via Phase 2 drilling from platform E xisting we lls sho wn in b la c k LS36-1 M1 1 Sth well LS36-1 M1 0 well 30-8 Exploration Prospect Wells LS36-1 M2 & M3 LS36-1 M1 1 SW well wells • 8 lo c a tio ns a nd we ll tra c ks se le c te d a s c a ndida te s fo r re se rve a dditio ns Primeline Corporate Presentation 13 July 2015
M1 0 untested sand • De signe d as de viate d we ll ge te d to thic k M1 0 tar se c tion. e M1 0 • We ll pe ne tr ate s e ntir str atigr aphic se c tion. • M10 GIIP c alc ulate s with Top M1 0 3D Horizon Pr ospe c t Range of: Shaded to show M1 0 Isochore P90: 6.8 P50: 13.3 P10: 26.0 Bc f LS36-1 M1 0 Isochore Thickness Primeline Corporate Presentation 14 July 2015
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