The role of Independent explorers in unlocking new plays and basins - - PowerPoint PPT Presentation

the role of independent explorers in unlocking new plays
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The role of Independent explorers in unlocking new plays and basins - - PowerPoint PPT Presentation

The role of Independent explorers in unlocking new plays and basins offshore Southern Africa Legal Disclaimer The information contained in this presentation (hereinafter, this Presentation ) has been prepared by Azimuth Limited and its


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The role of Independent explorers in unlocking new plays and basins offshore Southern Africa

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Legal Disclaimer

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The information contained in this presentation (hereinafter, this “Presentation”) has been prepared by Azimuth Limited and its affiliated group companies (hereinafter, together, the “Company”). This Presentation does not constitute or form part of, and should not be construed as, an offer or invitation to sell or issue

  • r any solicitation of an offer to purchase or subscribe for any securities in the Company in any jurisdiction. The Presentation, its contents, references and its

distribution, should in no way form the basis of, or be relied upon in any connection with, or act as an inducement in relation to, a decision to purchase, subscribe for or enter into any contract or make any other commitment whatsoever in relation to any such securities. In particular, details included in this Presentation are subject to updating, revision, further verification and amendment and refer to events as having occurred which may not have occurred at the date of this Presentation, but which are expected to happen in the future. Reliance on this Presentation for the purposes of engaging in any investment activity may expose an individual to a significant risk of losing all the property or assets invested. The contents of this Presentation are confidential and may not be copied, published or reproduced in whole or in part, or disclosed or distributed by recipients to any other person. No reliance may be placed for any purpose whatsoever on the information or opinions contained in the Presentation or on its completeness, accuracy or fairness. No representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its directors,

  • fficers, employees, agents or advisers as to the accuracy, completeness or fairness of the information or opinions contained in the Presentation and no

responsibility or liability is accepted by any of them for any such information or opinions. In particular, no representation or warranty is given as to the achievement

  • r reasonableness of, and no reliance should be placed on, any projections, targets, estimates or forecasts and nothing in this Presentation is or should be relied

upon as a promise or representation as to the future. The information contained in this Presentation is not for publication, distribution or redistribution. This Presentation includes forward-looking statements. The words “believe”, “anticipate”, “expect”, “intend”, “aim”, “plan”, “predict”, “continue”, “assume”, “positioned”, “may”, “will”, “should”, “shall”, “risk” and any other similar expressions that are predictions of, or indicate, future events and future trends identify forward-looking statements. These forward-looking statements include all matters that are not historical facts. Attendees of this Presentation should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are in many cases beyond the Company’s control. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance and the Company’s actual results of operations, financial condition and liquidity, and the development of the industry in which it operates may differ materially from that made in or suggested by the forward-looking statements contained in this Presentation. The cautionary statements set forth in this disclaimer should be considered in connection with any subsequent written or

  • ral forward-looking statements that the Company, or persons acting on its behalf, may issue. These forward-looking statements are made as of the date of this

Presentation and are not intended to give any assurances as to future results. The Company undertakes no obligation to update the forward-looking statements contained in this Presentation.

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Introduction to Azinam, a PE backed E&P company

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Uniquely positioned in Namibia & South Africa – the new industry hot spot

Focused niche explorer Large offshore acreage position across Namibia and South Africa Portfolio with Basin and Petroleum system diversity Additional value creation for Azinam yielded from third party activity and success, and opening of new multi- billion barrel basins Azinam’s strategy is to participate in a drilling programme over the next three years, benefitting from cyclical lows in drilling cost

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Launched by Seacrest in 2012 with seismic data advantage

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2012 2013 2014-18 2019-2021

  • 1. Anchor position – “seismic for equity”
  • Global

screening programme identified potential and

  • pportunity
  • ffshore

Namibia

  • Azinam takes

advantage of downturn to consolidate acreage position and invest in seismic

  • The Future: Take

advantage of low drilling costs to test portfolio

  • Exposed to third

party value creation

Playing the cycle to our advantage

  • 2. Successful proof of source drilling
  • 4. South Africa entry and Azinam drilling
  • 2013 HRT wells

recovered oil and proved working source rock in the area

HRT Drills Wingat and Murombewells

Sample of light (41° API) oil from the Wingat-1 exploration well

1 3 2 4

Cormorant Prospect S

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Under explored Southern Africa…

Southern Africa in comparison to other prolific basins

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Source: Wood Mackenzie Upstream Data Tool, February 2019; Norwegian Petroleum Directorate; UK Oil & Gas Authority’s Well insight report 2018; Rystad Well Cube

Offshore US and Gulf of Mexico Since 2000, there have been 2,219 wells Norwegian Continental Shelf as of 2018, 6,477 E&A wells drilled UK Continental Shelf as of 2018 over 7,800 E&A wells drilled Offshore Indonesia Since 2000, there have been 715 wells

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Why is the Southern African Atlantic Margin underexplored?

Historically a number of factors have impacted exploration appetite and activity

5 OIL PRICE

  • Substantial fall in mid-80s
  • Low price maintained through 90s

CHOICE

  • More Mature Basins
  • Shallower waters
  • Areas with easier access

RISK

  • Financial Risk vs Reward (ROI)
  • Unknown frontier areas

INFRASTRUCTURE

  • Limited refineries
  • Poor transport links
  • Distance & Geography Challenges

COST

  • Deepwater wells
  • Expensive seismic surveys
  • Complex supply chain

DATA

  • Limited Seismic surveys – 2D
  • Surface Area vs data coverage low
  • Technology
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Example: Namibia Exploration History

Largely unexplored region with only 16 exploration wells drilled over 48 years

10 year hiatus for international O&G 1974

First well drilled (Kudu 9A-1) encountered gas

1994/95

4 wells drilled in the Walvis basin

1998

2 wells drilled in the Luderitz basin

1) Source: Macrotrends with data from EIA, NAMCOR; 2) Graph displayed using logarithmic scale and historical prices inflation adjusted

2008

1 well drilled in the Namibe Basin

2012-14

6 wells drilled. Wingat-1 recovered 41 API Oil

2018

2 wells drilled as activity picks up Phase 1: 1968-1976 UN Sanctions Phase 2: 1990-1997 Oil price drop Phase 3: 2011-2014 Phase 4: 2018+

$20 $40 $60 $80 $100 $120 $140 $160 1970 1980 1990 2000 2010

Oil price drop

Prices dropped ~58% from start of 1997 to end of 1998

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Sub-Saharan Africa – 2000 to 2014

Since 2000, exploration activity has confirmed the region’s oil and gas potential

Source: Azinam estimates

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2000 2014

Ghana Mozambique Senegal Angola Nigeria Gabon DRC South Africa Equatorial Guinea Kenya

Emerging petroleum province

KEY

Established petroleum provinces

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Sub-Saharan Africa – 2000 to 2014

Who were the Pioneers and the Play openers?

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Source: Azinam estimates

2014 2000

Emerging petroleum province

KEY

Established petroleum provinces

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2019 Sub-Saharan Africa

Who were the Pioneers and the Play openers?

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Source: Azinam estimates

2019 2014

Emerging petroleum province

KEY

Established petroleum provinces

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OIL PRICE

  • Oil price uptick
  • Growing consumer demand
  • Growing investor confidence

CHOICE

  • Exploration acreage is shrinking
  • Giant discoveries lie in Frontier basins like

Africa

The changing of the Southern Africa Atlantic Margin?

All of these factors are changing

10 RISK

  • Political changes (SA – Apartheid ended,

Angola civil war ended)

  • Improved and defined fiscal terms

INFRASTRUCTURE

  • Investment in refineries & LNG
  • World class ports
  • Growing energy demand in Africa

COST

  • Drilling costs at cyclical lows
  • Enhanced access to capital
  • Revived Farm-in market

DATA

  • Extensive broadband 3D seismic data
  • Drilling Technology
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Improved Fiscal Terms across Sub-Saharan Africa

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Low Government take & stable investment environments

0% 20% 40% 60% 80% 100% South Africa Guinea Bissau Morocco Namibia Mauritania Côte d'Ivoire Senegal Kenya Equatorial Guinea Cameroon Benin Congo Angola DRC Gabon Tanzania Government take1

1) Average tax across range of Namibian oil and gas assets 2) Africa Energy Corporate Presentation January 2018 Available on their website

NAMIBIA2 SOUTH AFRICA2

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89m 97m 91m 110m 28m 17m

$0 $20 $40 $60 $80 $100 $120 2013 2014 2015 2016 2017 2018 USDm

Current drilling costs at lowest levels

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Leveraging the weak rig market to access portfolio of high value opportunities

1) Source: NAMCOR and Azinam; 2) Source: LR Synergy CPR & Azinam estimates

> 70% fall in well costs since 2014

Drilling cost at cyclical lows1 Significant resources & robust CoS2

200 400 600 800 1,000 1,200 1,400 1,600 0% 10% 20% 30% 40% Gross Unrisked Resources (mmboe) COS Channel 2 Fan 7 Osprey Wolf Marula

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RESERVE REPLACEMENT

  • Pressures building
  • Giant liquid plays in demand
  • Growing global & local consumer

demand

SOURCE ROCK

  • Conjugate Story
  • West African Margin - the system

works in adjacent basins offshore Brazil

  • Brulpadda extending this story to

Southern Africa

PERCEPTIONS

  • Russian doll effect
  • Independents unlock the opportunity

and reduce the risk, Majors & Supermajors invest

  • East & West Africa basins unlocked
  • Southern Africa…

DISCOVERIES

  • Kenya – Emekuya
  • Tanzania – Zafarani
  • Uganda – Jobi-Rii
  • Ghana – Jubilee
  • South Africa – Brulpadda
  • Angola – Agogo

What has changed in Southern Africa?

Additional game changing factors

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Source Rock: Brazil & Africa Correlations

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Conjugate basins & deepwater plays of the South Atlantic

Sources: 1) Selma Usiku, MSc, 2016 adapted from Macgregor 2013;Torsvik et al. 2009; Weimer & Pettingill 2007. 2) Mello & Katz, 2000

1) 2)

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Why Independents?

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There is no universal recipe for market entry and building successful businesses in Africa

  • Local Knowledge, Data & Commitment
  • Acreage Positions
  • Excellent Government Relations
  • Regional Focus
  • Nimbleness & Timing
  • Soft and Hard skills
  • Culture & Capabilities
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Who’s next to unlock Southern Africa ?

Who will be the new pioneers?

Source: Azinam estimates

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FUTURE 2019

Emerging petroleum province

KEY

Established petroleum provinces

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