Q3 Q3 20 2012 Presentation 24 October 2012 This presentation is - - PowerPoint PPT Presentation

Q3 Q3 20 2012

Presentation 24 October 2012

This presentation is provided for information purposes only. It should not be used or considered as an offer to sell or a solicitation of an offer to buy any securities. Any opinions expressed are subject to change without prior notice. Although all reasonable care has been taken to ensure that the information herein is not misleading, Crudecorp makes no representation

• r warranty expressed or implied as to its accuracy or completeness. Neither Crudecorp, its employees, nor any other person connected with it, accepts any liability whatsoever for

any direct or consequential loss of any kind arising out of the use or reliance on the information in this presentation. This presentation is prepared for general circulation and general information.

2

Q3 Highlights

Construction for initial cyclic steam operations completed 16 injection wells and 4 production wells drilled Oil sale of 6,043 bbls in Q3 (4,450 in Q2) Average oil price USD 98.14/ bbl in Q3 (USD 100.34 in Q2) Sales Construction Post 30.09 Commenced steam flood on 8 October Received entire loan amount of the USD 30 million from Credit Suisse Company now fully funded

3

Financial Highlights

Q3 2012 Q3 2011 % change Oil sale (bbls) 6 043 2 093 189 % Achieved Oil Price ($/bbl) 98,14 102,3

• 4 %

Revenues, MUSD 0,422 0,173 144 % COGS, MUSD

• 0,661
• 0,180

267 % OPEX (other opex and salary), MUSD

• 0,598
• 0,847
• 29 %

Other expenses*, MUSD

• 3,157

EBITDA, MUSD

• 3,994
• 0,855

367 % Depreciation, MUSD

• 0,693
• 0,152

356 % Capital expenditure, MUSD 7,920 5,246 51 % Net cash from operating activities (as per 30.09), MUSD

• 2,406
• 0,904

166 % Cash position (as per 30.09), MUSD 10,404 10,142 3 % Book equity (as per 30.09), MUSD 29,590 25,871 14 % Unaudited * Provision of calculated loss compared to MTM value (market to market) on Credit Suisse facility

4

Profit & Loss

(MUSD) Q3 2012 Q3 2011 Comment Revenues 0,422 0,173 Increase in revenues due to production from additional wells. Production cost

• 0,661
• 0,180 Larger steaming volumes and higher activity

Salaries

• 0,465
• 0,473 Change in principles, actual salary for Q3 2012 is KUSD 606.

Depreciation

• 0,693
• 0,152 Increased fixed assets

Other operating expenses

• 0,133
• 0,375 Q3 2012 is credited with KUSD 458 due to accruals of costs related to loan

Other expenses*

• 3,157

Calculated loss om MTM value on Oil swap agreement Credit Suisse facility Operating profit / EBIT

• 4,687
• 1,007

Net financial items

• 2,558

0,967 Material variations due to change in USD/NOK exchange rate Taxes

• 0,013

0 Paid tax for 2011 Net profit/(loss)

• 7,258
• 0,040

Unaudited

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Balance Sheet

Assets (MUSD) 30.09.2012 31.12.2011 Comment Fixed Assets 32,9 15,6 Increase due to investments for oil production Production Rights in oil field 8,0 7,5 Other non-current assets 2,3 0,3 Third parties' share of investments (10 % owners) Note 6 in interim report Total non-current assets 43,2 23,3 Total Current Assets 12,0 15,4 Decrease in cash due to increased investments for oil production Total assets 55,2 38,7 Equity and Liabilities (MUSD) 30.09.2012 31.12.2011 Comment Equity 29,6 36,2 Long Term Debt 22,8 1,7 Credit Suisse, bond issue, derivatives and liability to previous owner Short Term Debt 2,8 0,8 As per 30.09.12: 2,3 MUSD consists of accounts payable Total equity and liabilities 55,2 38,7 Unaudited

6

Cash Flow

Cash flow from operating activities 30.09.2012 30.09.2011 2011 Cash flow from operations

• 2,373
• 0,904
• 0,961

Interest paid

• 0,02

Taxes paid

• 0,01

Net cash from operating activites

• 2,406
• 0,904
• 0,961

Cash flow from investing activities Purchase of tangible fixed assets

• 17,766
• 9,188
• 14,834

Loans to third parties

• 1,998

Net cash flow from investing activities

• 19,763
• 9,188
• 14,834

Cash flow from financing activities Issue of ordinary shares 16,601 28,456 Bond Issue 3,685 Credit Suisse facility 15,000 Net cash from financing activities 18,685 16,601 28,456 Net change in cash, cash equivalents and bank overdrafts

• 3,485

6,508 12,662 Cash, cash equivalents and bank overdrafts as of 1 January 14,757 3,511 3,511 Exchange rate gain-/loss on cash, cash equivalents and bank overd

• 0,869

0,122

• 1,415

Cash, cash equivalents and bank overdrafts at end of period 10,404 10,142 14,757 Unaudited

• Crudecorp is now developing the Etchegoin sands in

the Chico Martinez property at depth of 400 – 1000 feet

• Most probable STOIIP estimated to 50.5 MMBbls

– Competent Person’s Report by Gaffney, Cline and Associates – 0.6 MMBbls (approx 1.1%) already produced – Current planned development addresses 28% of STOIIP – More of the Etchegoin STOIIP to be developed when cash flow is established, and more knowledge has been gained from the reservoir

7

Location Reserve estimates

The Chico Martinez Oil field in California

Chico Martinez Oil field (gross reserves)* 1P 2P 3P Gross Field Oil Reserves (MMBbls) 3.35 4.79 5.22

• Location: San Joaquin Basin west of Bakersfield, California
• 2P production in 2015 is estimated at 2,390 bopd, with current

development plan (28% of STOIIP). (from GCA report)

• Intention is to develop the rest of the field (100% of STOIIP), thereby

lifting production rates and extending field life

• Current 10 years, but potential for 25-30 year field life
• Operating cost USD 20 - 25 per bbl (in 2014)
• NRI is 77.7% to Crudecorp (net after royalty)

Key facts

San Joaquin Basin west

• f Bakersfield, California
• 5 independent engineering studies (1988-2008)

estimate oil in place in the Etchegoin formation between 55 and 63.5 MMBbls, with potential recovery of 32 -67%

• 3D seismic shows upside potential for discoveries in existing

field and lower formations on lease (Monterey formation)

*1P:Probable, 2P: Probable+Proven, 3P: Probable+Proven+Possible

8

Initial development through Cyclic Steam Circulation The “Huff and puff” method

Initial development through “Huff and Puff” Permanent steam flood to reservoir to be established Phase 2a

Dummy picture

Phase 2b-4

Steam flooding

Cyclic steam injection Steam is injected into a production well. Heats up adjacent oil to well bore and produce water and oil back. Continous steam injection Steam is injected into a dedicated injection

• well. Heats up the entire reservoir and
• il flows to production well.

9

Q3 activity

Phase 1 Phase 2 A-B Phase 3 – 4 Phase 5-7

• Cold production
• 18 (18) prod. wells

Operational

• From Cyclic Steam

to Steam flood

• 8 (8) injection wells

Operational

• Steam flood

expansion

• 4 (30) prod. wells
• 8 (18) injection wells

Operational Q1/Q2-2013

• Drilled 16 injection wells and 4 production wells
• Performed 1st cyclic steam stimulation of wells.
• Steaming operations limited by drilling operations and issues related to steaming permit
• All steaming permits received, and all conditions to steaming met
• Steam flood

expansion

• 60 – 72 prod. wells
• 48 injection wells

2014-2016

A 7-phased development plan is currently in place Growth through investments in extra production wells

Q3 activity

10

Project fully funded

Phase 1 - 4

As of Sept Q4 Q1 Q2 Q3 Q4 Q1 Q2 2012 2012 2013 2013 2013 2013 2014 2014 Wells $ 11 216 238 7 876 283 3 000 000 Surface Equipment 23 715 689 4 553 443 100 000 500 000 215 000 Pipeline $ 750 000 750 000 Water Treatment and 3rd Steam Gen. $ 3 500 529 3 000 000 1 000 000 SUM $ 34 931 928 12 429 726 3 100 000 500 000 750 000 4 250 529 3 215 000 1 000 000 Project Total $ 60 177 183

• Remaining investments as per 30.09.12 is 25 MUSD
• The planned investments in water treatment and 3rd steam generator will

be revaluated in Q1 2012 (may not be required if production respons is better than planned).

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Simplified well lay-out in Chico Martinez

Fault line North Producing wells (on corners) Injection wells (in middle of grid) Crudecorp has drilled and is now producing from two patterns (in red) The new production grids w/ injectors (in green) is being drilled Q3 and Q4 ‘Northern (red) pattern’ was cyclic steamed in July and produced in August and September In October, ‘hot shot’ (short cyclic injection) in Southern Pattern and steam flood in 8 injectors. Northern Pattern was put back on cyclic steam (no production contribution in North). In Q4, more wells will be added for both cyclic and continous steam injection

1. Steam injection rates will increase 2. Production response from reservoir

Engineering predictions are from a few months to one year, before the steam-flood takes full effect.

3. Steam to oil ratio (SOR)

During production testing, SOR at Chico Martinez has been 7-8. Various studies predicts a long term SOR between 5-8.

Production rates going forward

Future production rates will depend on;

• 1. Amount of steam injected
• 2. How rapid production response from reservoir to continous steam injection
• 3. Steam to oil ratio (amount of steam injected to amount of oil produced)

Example 1: Douglass Pet Mngt Co (1989)

• There are several old studies which predict

resources and production rates from Chico Martinez.

• Of these old studies, the Douglas study is closest

to the current development plan

• The Douglas study assumes 11,000 bbls of steam
• The Douglas study predicts that with a steam drive,

production should ‘increase rapidly’ to 900 bbls and reach maximum of 1,800 BOPD.

• Does not take into account the upper sand (E1),

where approximately 40% of the oil is located

• Short term SOR = 10-20, long term SOR = 5

2000 BOPD 1000 BOPD 100 BOPD

1987 2011

Example 2: GCA report

Chico Martinez development plan

• Based on current Chico Martinez development

plan

• 6 months build-up of production, from initial steam
• Production of appoximately 7-800 bbls after 6

months with 5,000 bbls steam/ day injection

• Long term SOR = 8

15

Post Q3 production, per 23 Oct - 12

‘Hot shot + Limited steam flood’ start ‘North pattern’ wells shut down for new cyclic steam (ca 40 BOPD) Generator capacity = 5,000 BSPD Currently, 1/3rd used for continous injection, 1/3rd used for cyclic steam in ‘Northern pattern’ Production increase is probably most from ‘hot shot’ and less from ‘continous steam’ at this point in time. Current steam injection rates are limited by permitted steam injection pressure limitations. Crudecorp has permit for 0.6 psi/ft whilst historical permits have typically been for 0.8-1.1.

Note: Daily production varies , as production is held up in wash tank before flowing to production tank where production volumes are measured

Production outlook

Time for full effect and fine tuning of operations

• Production is believed to increase in Q4-12 and Q1-13.
• Production build up is believed to be fairly rapid, and have 100% effectiveness

after 6 months of injection start-up.

• The current steaming permit has a pressure limit of 0.6 psi/ft. The historical

pressure limit has been 0.8 - 1.1 psi/ft.

• The current pressure limit inhibits efficiency of the steam injection. Crudecorp

will resolve this by applying for a higher pressure limitation permit or by increasing perforations in injection well.

• Safety precautions related to drilling have inhibited steam injection operations in

Q3, and will also impact Q4, but to a lesser degree.

• A second steam generator with capacity 5,000 bbls of steam is expected to be
• perational early Q2-13

Exploration potential – Chico Martinez

Results from 3D seismic interpretation

• The existing Etchegoin formation may have

larger extent

• Significant potential in Monterey/ Ct Quartz

(see Q2 presentation)

• Caraneros formation is more uncertain

Crudecorp is currently focused on meeting production targets for Etchegoin No decisions have currently been made with respect to exploring new potentials

18

Summary

Project on track

1

• Drilling of wells for Phase 1-4 expected to be complete by end of 2012
• Second steam generator to be operational early Q2-13
• Investments on budget

Near term production and long term potential

2

Long tern potential

3

• Reservoir is responding to cyclic steam, and emerging evidence of response to

continous steam

• Near term production limited by drilling activity and steam injection pressure limits
• Current Etchegoin development plan (Phase 1-4) for 28% of most probable STOIIP
• Production target for 2015 on 28% of STOIIP (based on 2P estimate) is 2,390 bopd
• Potential to develop the remaining 72% of most probable STOIIP

Future opportunities

4

• Significant potential for exploration opportunities in existing property, including;
• potential resource increase for Etchegoin reservoir
• potential for a significant discovery in Ct Quartz/ Monterey.
• Potential for structural activities, including M&A opportunities