Q4 Q4 20 2012 Presentation 27 February 2013 This presentation is - - PowerPoint PPT Presentation

Q4 Q4 20 2012

Presentation 27 February 2013

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

Q4 Highlights

Production drilling program completed Continuous steam flood commenced 8 October Etchegoin delineation well completed Oil sale of 13,015 bbls in Q4 (6,043 in Q3) Average oil price USD 96.28/ bbl in Q4 (USD 98.14 in Q3)

Sales Construction Post 31.12

Projected investment costs increased by USD 3.4 mill to USD 64.7 mill, where main cost drivers have been re-orientation of some drill patterns and more expensive completion solutions

3

Financial Highlights

Q4 2012 Q4 2011 % change Oil sale (bbls) 13 015 3 209 306 % Achieved Oil Price ($/bbl) 96,28 105,85

• 9 %

Revenues, MUSD 0,948 0,259 266 % COGS, MUSD

• 0,639
• 0,201

218 % OPEX (other opex and salary), MUSD

• 0,916
• 0,792

16 % Other expenses*, MUSD

• 0,735

EBITDA, MUSD

• 1,342
• 0,734

83 % Depreciation, MUSD

• 0,260
• 0,365
• 29 %

Capital expenditure, MUSD 16,329 5,354 205 % Cash position (as per 31.12), MUSD 10,876 14,757

• 26 %

Book equity (as per 31.12), MUSD 32,231 36,244

• 11 %

Unaudited * Provision of calculated loss compared to MTM value (market to market) on Credit Suisse facility

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Profit & Loss

(MUSD) Q4 2012 Q4 2011 Comment Revenues 0,948 0,259 Increase in revenues due to production from additional wells. Production cost

• 0,639
• 0,201 Increased activity including a new steam generator and new wells completed for production

Salaries

• 0,496
• 0,509 Change in principles, actual salary for Q4 12 is KUSD 650

Depreciation

• 0,260
• 0,365 In Q4 12 implemented a unit of production (UOP) depreciation profile

Other operating expenses

• 0,420
• 0,283 Correction of previously crediting of fees related to Credit Suisse of KUSD 100 in Q4 12

Other expenses

• 0,735

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

• 1,602
• 1,099

Net financial items

• 0,991

0,839 Material variations due to change in USD/NOK exchange rate Taxes 2,743 0 Recorded deferred tax assets in the Balance Sheet from Q4 12 Net profit/(loss) 0,150

• 0,260

Unaudited

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Balance Sheet

Assets (MUSD) 31.12.2012 31.12.2011 Comment Deferred tax assets 2,7 Deferred tax assets recorded in the Balance Sheet from Q4 12 Fixed Assets 48,5 15,6 Increase due to investments for oil production Production Rights in oil field 8,2 7,5 Increase due to IFRS adjustments. Other non-current assets 4,3 0,3 Third parties' share of investments (10 % owners) Note 6 in interim report Total non-current assets 63,8 23,3 Total Current Assets 13,0 15,4 Decrease in cash due to increased investments for oil production Total assets 76,8 38,7 Equity and Liabilities (MUSD) 31.12.2012 31.12.2011 Comment Equity 32,2 36,2 Long Term Debt 38,8 1,7 Credit Suisse, bond issue, derivatives and liability to previous owner Short Term Debt 5,8 0,8 As per 31.12.12: USD 5 million consists of accounts payable Total equity and liabilities 76,8 38,7 Unaudited

6

Cash Flow

Cash flow from operating activities 2012 2011 Cash flow from operations

• 1,411
• 0,961

Interest paid

• 0,16

Taxes paid

• 0,01

Net cash from operating activites

• 1,584
• 0,961

Cash flow from investing activities Purchase of tangible fixed assets

• 33,058
• 14,834

Loans to third parties

• 4,035

Net cash flow from investing activities

• 37,093
• 14,834

Cash flow from financing activities Issue of ordinary shares 2,698 28,456 Bond Issue 3,772 Credit Suisse facility 30,000 Net cash from financing activities 36,470 28,456 Net change in cash, cash equivalents and bank ove

• 2,207

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

• 1,675
• 1,415

Cash, cash equivalents and bank overdrafts at end 10,876 14,757 Unaudited

• Crudecorp is now developing the Etchegoin sands in

the Chico Martinez property at depth of 400 – 1000 feet

• STOIIP estimated to 50 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

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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 potential for new discoveries in existing

property

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

8

Cyclic Steam Circulation and Steam Flood

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

Q4 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 horiz. prod. wells
• 48 vert prod. wells
• 29 steam injt. wells

Operational Q1/Q2-2013

• Initiated continous steaming operations on 8 October.
• Completed drilling program for Phase 4 in December
• Drilled a delineation well in December
• The project activities remaining after Q4, include hook-up of 13 production wells and 15 steam injection wells
• 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

Q4 activity

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Simplified well lay-out in Chico Martinez

North Producing wells (on corners) Injection wells (in middle of grid) The complete pattern of wells have been drilled per Q4, and production is gradually being expanded (wells being steamed in red) 1st steam generator capacity is 5,000 BSPD On 31.12.12 approximately 3,500 BSPD was injected. Injection is a combination of 50% cyclic steam (stimulation of producers) and 50% continous steam (using steam injection well). 2nd steam generator operational 1 April

1. Steam injection rates will increase as more capacity is utilized

• More wells are being hooked-up
• Second steam generator operational 1 April

2. Production response to continuous steaming

• Engineering predictions are from a few months to 12 months, before the steam-flood

takes effect

• Evidence of early continuous steam production in ‘old well’, closer to point of injection

3. Steam to Oil Ratio (SOR)

• Current evidence points towards an SOR = 5 – 8 for the field
• Business model was based on SOR above 8

Production rates pre-view

Steam injection Q4

1st steam generator (5,000 BSPD capacity)

Cyclic steam 1,250 BSPD Cont. steam 1,220 BSPD Idle 2,530 BSPD

Oil prod. 190 BOPD 5 BOPD

SOR = 6,5

Average daily steam injection in Q4 Generator capacity idle, as drilling and well hook-up were on-going Average daily production in Q4, Continous steam stimulation takes longer time to generate production Cyclic steam injection and cyclic

• il production yields a SOR = 6.5.

Globally, the SOR = 13 for the period

SOR = 13

Steam injection, Q1-2013

1st steam generator is fully utilised per mid-February 2nd steam generator is on site, and hooked-up

• Critical item is power line upgrade, which is
• ngoing. Current estimate is start-up of

generator 1 April (4 months ahead of original schedule)

Wells are being prepared and hooked-up to allow for fast utilisation of generator 2

Production response to continous steaming (1)

• Consensus for most engineering studies points

towards 6 months from steam flood initiation to production

• There has also been given predictions for longer (1 yr)

and shorter response time

• Steam flood commenced 8 October 2012. Injection

rates were about 50% of design rates (due to pressure gradient)

• From mid-February 2013, injection rates have

approached actual design rates

35-425 35-424 35-426 35-427 35-SI-9 35-206

35-206 is an old well, closer to injector There has been a marked increase in production in this well, from 0,5 – 1,0 BOPD to 20 BOPD This well is about half the distance from injector, compared to other producers Steam flood works successfully elsewhere, and 35-206 is just a reminder that this technique yields results. A general temperature increase is being observed in the field All available evidence indicate that the steam flood is working according to design, but we are not able to predict timing of production contribution from continuous steam

Production response to continous steaming (2)

Steam to Oil Ratio (SOR)

• Consensus for most engineering studies points an

SOR of 5-8 long term. There exist also predictions for higher SORs, in the range of 10-12.

• Short term SOR varies between 5 and 20 in most

studies

• Business model was based on SOR = 8 and bank

model was based on SOR = 10

• Current SOR for the field, including all steam used

versus production gives a SOR of 13 for the quarter, but points towards an underlying SOR = 6.5 (cyclic)

• Results from approx 400 well tests, performed on 28

production wells, indicate an initial average SOR =

• approx. 5.5

Production has varied significantly as wells drilled in December have not been hooked-up. Per 27/2 there are still 7 producing wells that have not been hooked-up. The January production suffered as there were few available wells to use for cyclic steaming Production is believed to improve as more wells come on-line, and we expect to see contribution to production rates from continuous steaming.

17

Production post 31.12.2012

Exploration strategy

Several interesting exploration prospects in Chico Martinez

• Firming up extent of the current Etchegoin field (drilled)

The Etchegoin delineation well encountered a 200 ft thick sand with ‘oil shows’ from a younger Etchegoin deposit (as hoped for), whereof two sections of 40 ft each looked particularly good in terms

• f oil shows and reservoir quality.

The ‘oil shows’ on the log corresponds well with an anomalous amplitude on the 3D seismic, which indicate that this area will have good development potential

• Possible deeper Etchegoin structures
• Monterey prospect (described in Q3 presentation)

Prospect firmed up, and conducting environmental survey for drilling permit

• Carneros and deeper horizons

The deeper structures are being investigated with the aim to develop a resource play

Etchegoin delineation well

20

Summary

Project

1

• Initial project phase is nearing conclusion
• Finish hook-up of remaining wells within mid March
• Start-up of 2nd steam generator 1 April
• Investments USD 3.4 mill over budget, driven by more expensive completions

Near term production and long term potential

2

Long term potential

3

• Reservoir is responding both to cyclic steam and continuous steam
• Near term production limited by hook-up of remaining production wells and time for

continuous steam to give production effect

• Long term economics improved
• Current Etchegoin development plan (Phase 1-4) for 28% of most probable STOIIP
• New delineation wells confirm a larger area for development

Future opportunities

4

• Significant potential for exploration opportunities in existing property, including;
• potential for lower Etchegoin discovery
• potential for a significant discovery in Ct Quartz/ Monterey
• new lead for a possible Carneros prospect