Red Leaf Resources, Inc. Economics and Commercial Application - - PowerPoint PPT Presentation
Red Leaf Resources, Inc. Economics and Commercial Application Matthew Greene Chief Financial Officer EcoShale TM In-Capsule Process - Dr. James W. Patten - Dr. Laura Nelson - Anton Dammer -
Chief Financial Officer
October 18-20, 2010
EcoShaleTM In-Capsule Process
In preparing this presentation, Red Leaf has relied upon and has assumed the completeness, accuracy and fair presentation of all financial and other information, data, advice, opinions and representations obtained by us from public sources. Red Leaf has not attempted to verify independently the accuracy, completeness or fairness of presentation of any such information, data, advice, opinions and representations. The presentation is rendered
prospects, financial and otherwise, of Red Leaf. In Red Leaf's analyses and in connection with the preparation of the presentation, we made numerous assumptions with respect to industry performance, general business, capital markets and economic conditions and other matters, many of which are beyond the control of any party. Certain estimates and financial information contained in this presentation constitute forward-looking information. Such forward-looking information involves known and unknown risks and uncertainties that could cause actual events or results to differ materially from the estimates or results implied
to be incorrect including, with respect to general economic, market and business conditions; commodity prices and differentials; resource estimates; the accuracy of cost estimates, the relationships with key project contractors, suppliers and customers; production rates and economic returns; the availability of sufficient capital on satisfactory terms; the successful and timely approval and implementation of capital projects; currency exchange rates; government enacted environmental initiatives; the impact of changes in applicable laws and regulations; the timely issuance of required permits; and the successful commercialization of the EcoShale™ In-Capsule Process. Specifically, this presentation contains forward-looking information concerning the use, performance and effect of the EcoShale™ In-Capsule Process; other related technologies; the cost, development, and forecasted
strategies, financial and operating results and business opportunities. The actual results, performance or achievements of Red Leaf, and the EcoShale™ In-Capsule Process, could differ materially from those expressed in or implied by the results contained in this presentation. There can be no assurance that the forward-looking information in the presentation will be realized and that actual results of operations or future events will not be materially different from the forward-looking information contained the presentation. The information incorporated into the presentation is made as of the date of the presentation and, although Red Leaf reserves the right to change or withdraw the presentation if it learns that any of the information that it relied upon in preparing the presentation was inaccurate, incomplete or misleading in any material respect, Red Leaf disclaims any obligation to change or withdraw the presentation, to advise any person of any change that may come to our attention or to update the presentation after the date of the presentation.
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3 Proven, Revolutionary Oil Shale Extraction Process World-Class Management Team Substantial Growth Opportunities Superior Economics Advanced Green Technology Significant Owned Oil Shale Resource
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2006
2007
§ Initial patents filed § Simulation and modeling, laboratory reactor tests 2008
§ Raised capital § Filed additional patents 2009
§ Field pilot completed – confirmed validity of the EcoShaleTM Process § Filed additional patents 2010
§ Raised approximately $50MM additional capital § Commissioned FEED and mine engineering for 9,500 bbl/d project (May) § Completed Norwest Resource Assessment for Seep Ridge project (October) 2011
2012
2013
5 400MM bbls surface recoverable(5)
Red Leaf acreage
1.1 – 1.5 billion barrels in place(4)
Red Leaf acreage
50.6 billion barrels surface recoverable(3)
Utah
1.5 trillion barrels in place(2)
Green River Formation, Western U.S.
2.1 trillion barrels in place(1)
U.S.
Notes: (1) 2007 Survey of Energy Resources, World Energy Council (2) John R. Dyni, U.S. Geological Survey (USGS) Scientific Investigations Report (3) Utah Geological Survey (UGS), based on 15 gpt richness, at least 50 ft. thick, under no more than 200 feet of overburden (4) Company estimates using various USGS and State data (5) Company estimates using various USGS and State data, based on 18 gpt richness, under no more than 100 feet of overburden with a strip ratio no more than 1:1
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state oil shale leases
– State Institutional Trust Land Administration (SITLA)
Seep Ridge Resource Report
– Report completed in October 2010 – Covers approximately 1,500 acres – Represents less than 10% of Red Leaf’s total acreage – Site of 9,500 bbl/d project – Similar geology to second Red Leaf site, targeted for 30,000 bbl/d project
– Average cumulative resource thickness of 63 feet (selective mining) – Average overburden of less than 50 feet – Strip ratio of 0.6 BCY per ton – Richness of 21.4 gallons per ton
Norwest Resource Assessment Validates Prior Resource Estimate
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– 25 year project life – 6 Capsules started/completed per year – 90 million bbl of oil produced
– FEED, mine plan and resource assessment – 18 – 24 months to design, construct and operate
– Existing acreage supports this project
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All ¡values ¡in ¡US$ ¡unless ¡noted ¡otherwise
Commodity ¡Pricing WTI (US$/bbl) $80.00 Commodity ¡price ¡inflation (annual) 2% Kerogen ¡differential (US$/bbl) 0% Capsule ¡Metrics Number ¡of ¡simultaneous ¡capsules 2 Capsules ¡per ¡year 4 Opex ¡contingency 15% Capex ¡contingency 20% Total ¡number ¡of ¡capsules 116 Total ¡production ¡per ¡capsule (bbls) 866,855 Daily ¡production (bbls/d) 9,500 Taxes ¡& ¡Royalties Corporate ¡tax ¡rate 38% Property ¡tax ¡rate 1.2% Starting ¡royalties(1) 5% Financials Interest ¡on ¡cash ¡balance (annual) 2% Inflation ¡rate (annual) 2% Capital ¡costs ¡per ¡capsule(2) $2,301,551
(1) ¡Increases ¡in ¡1% ¡increments ¡to ¡12.5% ¡beginning ¡5 ¡years ¡post ¡first ¡production (2) ¡Based ¡on ¡116 ¡capsules
Base ¡Case ¡Assumptions
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9.2
Notes: Source: Wood Mackenzie (figures nominal to 2009 and real (in 2009 terms) thereafter), company reports
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EcoShale initial capex of US$124 million initiates production of 9,500 bbl/d in 2011; additional capex of US$143MM required in 2023 Average produced product API gravity: non-integrated oil sands projects = 9.2 degrees; integrated oil sands projects = 34.9 degrees
Comparative Process Capital Costs
Oil Shale
$80,000 $120,000 $160,000 $200,000 $240,000 Capital Efficiency (US$/bbl/d)
Initial Capex Total Capex
CSS SAGD Integrated
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All ¡values ¡in ¡US$ ¡unless ¡noted ¡otherwise
¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡Aggregate ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡Per ¡Capsule ¡ ¡ ¡ ¡ ¡Per ¡Barrel ¡Produced ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡Per ¡Flowing ¡Barrel Total ¡Capital ¡Costs(2) $266,979,934 $2,301,551 $2.66 $28,104 Project ¡Components: ¡ ¡Pre-‑development ¡ ¡In-‑capsule ¡ ¡Roasting ¡System ¡ ¡Vapor ¡Recovery ¡System ¡ ¡Prompt ¡Oil ¡System ¡ ¡Tank ¡Farm ¡ ¡Control ¡System
(1) ¡Based ¡on ¡116 ¡capsules ¡over ¡30 ¡years, ¡includes ¡inflation ¡and ¡20% ¡capex ¡contingency (2) ¡Includes ¡$124 ¡million ¡for ¡initial ¡capex ¡from ¡2010 ¡-‑ ¡2012 ¡and ¡$143 ¡million ¡of ¡discretionary ¡capex ¡in ¡2023
Capital ¡Costs(1)
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Opex ¡includes ¡on-‑going ¡engineering, ¡production ¡opex ¡and ¡in-‑capsule ¡opex Taxes ¡are ¡based ¡on ¡a ¡corporate ¡tax ¡rate ¡of ¡38% Based ¡on ¡base ¡case ¡assumptions
EcoShaleTM ¡Netback ¡Analysis ¡for ¡Years ¡2015 ¡& ¡2030
$25.35 $38.90 $31.58 $49.71 $16.58 $16.58 $21.03 $21.03 $11.48 $11.48 $14.56 $14.56 $3.35 $4.47 $11.27 $15.03 $17.97 $11.73 $19.90 $10.29
$40.00 $60.00 $80.00 $100.00 $120.00 $140.00 $60 WTI $80 WTI $60 WTI $80 WTI US$/bbl Netback Opex Transportation Royalties Taxes
2015 ¡Netback ¡Analysis 2030 ¡Netback ¡Analysis
Base ¡case ¡assumptions
EcoShaleTM ¡Netback ¡Analysis
$0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 US$/bbl $60 WTI $80 WTI $49.71 ¡ $31.58 ¡ $25.35 ¡ $38.90 ¡
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(1) ¡Undiscounted ¡cash ¡flows
Base ¡Case ¡Project ¡Free ¡Cash ¡Flow ¡-‑ ¡Annual ¡& ¡Cumulative(1)
($200)
$400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $2,200 $2,400 $2,600 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Free Cash Flow (US$MM) Cumulative Free Cash Flow Annual Free Cash Flow
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Opex ¡and ¡transportation ¡sensitivities ¡based ¡on ¡average ¡cost ¡per ¡barrel ¡over ¡the ¡life ¡of ¡the ¡project
After ¡Tax ¡IRR ¡Sensitivity ¡Analysis
40% 60% 80% 100% 120% 140% 160% Transportation Expenses $13.83/bbl +/- 15% Opex Expenses $20.16/bbl +/- 15% Kerogen Discount 0% +/- 5% Capital Costs $2.66/bbl +/- 15% WTI $80/bbl +/- 15% After Tax IRR (%)
Green Initiative Surface Retorts Proposed In-situ EcoShaleTM Emissions û Significant air pollution from burning oil shale coke û Particulates produced during processing û Electrically heated – requires burning fossil fuels, likely coal, less than 35% thermally efficient ü Clean natural gas burners ü Produces 2/3 less CO2 than traditional retorts and less than expected in-situ technologies ü Amenable for CO2 sequestration Reclamation û Handling and reclamation
substantial environmental liability – Variable surface facilities needed ü Rapid reclamation ü Occurs while oil is being produced Water Usage û Used for spent shale cooling and oil shale ash disposal û Can use between 1 – 5 barrels of water per barrel of oil produced û ICP process proposes to use water for its freeze wall û CCR process proposes to use steam injection ü No water required for processing
ü Process likely a net producer of water Ground Water Contamination û Substantial amounts of discharge water and potential environmental liability û Process containment a significant concern ü Reduced risk with clay liner ü Independent testing confirms spent shale is not leachable ü Impounds spent shale to EPA standards
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Risk Mitigation
Process Technology
Project Economics
Patent Protection
Environmental & Other Permitting
Marketability of Product
Resource Confirmation
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Current acreage supports a further 30,000 bbl/d project for 30 years
Expansion to additional private and SITLA acreage 50.6 billion barrels of surface mineable oil shale in Utah World-wide licensing / JV potential to 2.8 trillion recoverable barrels Process applicable to coal, lignite and oil sands
Planned 9,500 bbl/d project for 30 years
Present Future
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– Coal, lignite, oil sands
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Jordan and Morocco
– Royalty paid on gross revenue
EcoShaleTM Process
– Extensive due diligence conducted on the EcoShaleTM Process – Licensees commissioned independent third party assessment for technology and economic due diligence
additional license / joint venture opportunities
Source: Dyni, World Energy Council, 2007
Country MMbbls USA 2,085,228 Russian Federation 247,883 Congo (DRC) 100,000 Brazil 82,000 Italy 73,000 Morocco 53,381 Jordan 34,172 Australia 31,729 Estonia 16,286 China 16,000 Canada 15,241 Other Combined 71,183 Total World 2,826,103 In-place Shale Oil Resources
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Proprietary Process
World Class Management Team
Sizeable, Company-owned Resources
Near-term 9,500 bbl/d Project
– US$28,104 bbl/d capital costs – US$38.89/bbl netbacks at US$80/bbl WTI in 2015 – 101% IRR at US$80/bbl WTI
Licenses
Advanced Green Technology
Significant Global Resource Potential
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