A Unconventional Energy Company - WebLinkclients.weblink.com.au/news/asx_pdf_loader.asp?articleID=... · MOLOPO ENERGY CANADA LIMITED Summary Molopo Energy is a A$300 million market

MOLOPO ENERGY CANADA LIMITED

MOLOPO ENERGY LIMITED

A Unconventional Energy CompanyNovember 2009


The information in this presentation has been compiled by persons meeting the criteria in ASX Listing Rule 5.11. The identity of the relevant persons is dealt with in the releases to ASX.

References to “possible hydrocarbon reserves”, “probable hydrocarbon reserves” and “proved hydrocarbon reserves” have the same meaning as the ASX Listing Rules. The assessment of reserves involves matters of judgement. All amounts involve varying degrees of probability and uncertainty.

This presentation contains forward looking statements, i.e. statements that are not of historical fact. Such forward looking statements include statements regarding Molopo’s future production, profitability, financial position and cash-flow, Molopo’s business strategy, the plans and objectives of Molopo’s management for future operations, Molopo’s development plans, and Molopo’s reserve and resource positions.

Actual results, performance, achievements, outcomes or occurrences may be materially different from any forecast, prediction, estimate or other forward looking statement in this presentation, including those implied by any such forward looking statements.

Forward looking statements are based on numerous assumptions regarding Molopo’s present and future business strategies and the environment in which Molopo will operate in the future. Among the important factors that could cause Molopo’s actual results, performance or achievements to differ materially from any prediction, estimate, forecast or other forward looking statement in this presentation are – changes in levels of demand and market prices, increases in relevant input costs, drilling and production results, producible reserves being lower than anticipated, technical and other problems in the production and transportation of products, loss of market, delays in implementing projects, the impact of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty, economic conditions in relevant areas of the world, actions of competitors, and the activities of governmental authorities (including changes in taxation, business regulation, environmental laws and fiscal policy).

The uncertainties and risks affecting forward looking statements should be taken into account when considering them and the extent to which it is prudent make decisions based on them.

All forward looking statements are applicable only as of the date of this presentation. Molopo disclaims any obligation or undertaking (except as required by applicable laws) to up-date or revise any forward looking statement to reflect any change in Molopo’s expectations or assessment regarding any such forward looking statement.

Nothing in this presentation is to be regarded as constituting advice or a recommendation regarding the making of any investment in Molopo or any dealing in securities of Molopo.

MOLOPO ENERGY LIMITED


Summary

Molopo Energy is a A$300 million market capitalised company.– Molopo Canada offers an opportunity to invest in an un-risked mid case C$500 valued portfolio– Upside portfolio value potential is in the C$2500-3000 million range

Portfolio is near term oil focused, well positioned to access improving oil prices with economic recovery– Development activity is underway – Pace of activity can be varied with success and price– Projects have scale and significant exploration upside

Long term gas value offered from emerging Quebec shale gas play ideally to accessing key high value NE USA states.

– Development will offer 20-40 year project life– Exploration and appraisal during current low cost conditions– Production ramp-up during post economic recovery gas price period

Management and Board have extensive resource development expertise – Each member of the technical team has approximately 15-30 years experience at companies including BHP

Billiton, Shell and EOG Canada– Expertise in exploring, developing, producing and divesting oil and gas conventional and unconventional resource

plays

3


MOLOPO SUMMARY INFORMATION

Donald Beard – Chairman

Stephen Mitchell – Managing Director

Ian Gorman - Executive Director & Chief Operating Officer

Monty Bowers – President & Chief Executive Officer – Molopo Canada

Geoff Phillips – Non-Executive Director

David Hobday – Non-Executive Director

Anthony Bishop - Chief Financial Officer and Company Secretary

MOLOPO BOARD AND MANAGEMENT

Cash (Sept 30th 2009) $81 million

Debt Free

Share Information

Share Price $1.55

Fully Paid Shares (as at 07/10/2009) 194 million

Market Capitalisation ($1.55) $300 million

No of Shareholders 8,612

Top 20 / Issued Capital 28.44%

Share Price Performance – 1 Year 60%

Share Price Performance – 5 Years 600%

Share Price Performance – 10 Years 1,000%

Broker Date of Report Recommendation 12 Month Price Target

Baillieu Oct 2009 BUY $2.20

Wilson HTM Nov 2009 BUY $2.40

Credit Suisse Sept 2009 BUY $1.60

BROKER SUMMARY

4

PARENT COMPANY– Molopo Energy Limited

MOLOPO SHARE PRICE


Williston Basin

SpearfishBakken

Québec

Molopo Canada’s growth strategy is based on three sizeable resource assets offering short term reserve and production growth from oil and long term exposure to natural gas.

PORTFOLIO OF MAJOR HYDROCARBON RESOURCE ASSETS


Investment Rationale

6

Molopo has spent 1½ years building a portfolio of high impact resource projects in Canada and is offering an opportunity to invest in a C$500 valued portfolio with upside value potential in the C$2500-3000 million range.

Bakken Light Oil – 70 net sections of well positioned land targeting over 200 MMbbls of oil in place

Spearfish Light Oil – 86 net sections of land with 2P resource of 0.475 Mbbls targeting over 150 MMbls in place. Currrent production of 75 b/d

Quebec Shale Gas – 2.2 million acres, 4 identified prospect areas targeting over 6 Tcf of recoverable gas

Portfolio is near term oil focused positioned to access improving oil prices with economic recoveryDevelopment can be commenced immediatelyPace of activity can be variedProjects have scale and significant upside

Long term gas value offered from emerging Quebec shale gas play ideally located to accessing key high value NE USA states.Development will offer 20-40 year project lifeProduction ramp-up during recovering gas price periodExploration and appraisal during current low cost conditions

Aggressive work programme over the next 3 months will yield results prior to TSX listing in Spring 2010

MOLOPO ENERGY CANADA LIMITED 7

CANADIAN TEAM

Board of Directors

Stephen Mitchell Chairman Non Executive. CEO of Molopo Australia an ASX 200 listed company with 5 year share price appreciation of 600% and 10 year performance of 1000%.

Monty Bowers President and CEO. Former CEO of Capitol Energy Resources delivering average ROE of 68% growing production from nil to 4,400boe/d. Ex Shell and Amerada Hess.

Lanny Fenwick Non Executive Director. Former General Manager of EOG Canada (18 years), overseeing growth from 30 MMcf/d to 250 MMcf/d. Director of Galleon.

Ian Gorman Non Executive Director. COO and Executive Director of Molopo Australia during a period of rapid growth and share price appreciation . Former technical head of BHP Billiton’s Global CBM team and also Ex Shell.

Management Team

Monty Bowers - President and CEOBrian Tompkins - VP Exploration, ex EOG Canada – 10 year Spearfish ExperienceCurtis Schoenfeld - VP Engineering, ex EOG Canada – Unconventional Oil and Gas ExperienceAnthony Bishop - CFO (temporary). CFO of Molopo Australia, ex Shell and Goldman Sachs

Note: Molopo Canada will seek to appoint 2-3 further Non-Executive Directors in the period ahead


BUSINESS STRATEGY

Identify and Acquire– Capture assets that support the creation of a multi-billion dollar production and operating

company in North America– Short term oil focus, long term gas focus

Resource and Fund– Build execution capability with local expertise and knowledge supported in short term by parent

company skills– Front end support exploration and development programmes to provide a self funding entity with

the exception of additional acquisition opportunities

Exploit– Aggressively pursue increased oil production levels and building revenue stream, position the

gas assets for long term staged exploitation

Manage Risk– Limit cash sink, tailor development to revenue stream and long term exploration success.

Optimise funds sourcing and use of credit lines.

8


BUILDING A HIGH IMPACT CANADIAN PORTFOLLIO

9

20102008 2009

Quebec: Richelieu area 2D seismic

Quebec: Lyster & Pintendre area 2D seismic

Quebec: Richelieu area Drilling

Quebec: 1.8m acres acquired

Quebec: 270,000 acres acquired

Quebec: 36,000 acres acquired

Bakken: 42,000 acres acquired

Spearfish: 55,000 net acres acquired

Bakken: 4-6 well exploration and development programme

Spearfish: 3 well recompletions and 3 new development wells

Assess Acquire Exploit


Proposed Use of Funds through March 2010 - estimated

10

ExplorationC$ million

Appraisal C$ million

Development C$ million

Land C$ million

TotalC$

millionManitoba (75%) 0.5 0.5

Pierson 0.0 0.0 5.4 5.4Lyleton 0.0 2.2 0.0 2.2

Saskatchewan 0.6 0.6Estevan 1.0 7.5 0.0 8.5

Weyburn 1.0 2.0 0.0 3.0Quebec 2.0 0.0 0.0 0.0 2.0Total 4.0 11.7 5.4 1.1 22.2

• Funds use is 80% weighted to production/revenue generation and land management• 90% of funds directed to oil projects• Subsidiary unlikely to be taxed for foreseeable future (at least next 2-3 years) due to existing tax pools and envisaged future capital spend


PORTFOLIO VALUE

11

0200400600800

100012001400160018002000

Manitoba Saskatchewan Quebec

Valu

e C

$ m

illio

nProject NPV after Tax @10%

LowsideMid CaseUpside

Total Mid case portfolio value is C$500 million with upside potential to exceed C$2500 million


VALUE REALISATION OPTIONS

Parent and Subsidiary share price growth on the back of ongoing development and exploration success (repeat EOG and Chesapeake stories)

– Publically traded– Strong trade volumes (10-15% of stock per month)

Portfolio rationalisation– Molopo already demonstrated willingness to exit major projects at any point when fair

value is offered to shareholders– A$111 million Gloucester divestment Natural consolidators of assets in all Canadian Portfolio elements

– Spearfish: EOG & PennWest both planning major development programmes– Bakken: PetroBank, Crescent Point, Legacy ($230-260 million acquisitions by latter

two) – Quebec: When proven Super Majors have demonstrated willingness to make major

acquisitions in shale gas (Shell:Duvernay C$5.9 billion, BP two ~$1billion, Statoil:Chesapeake $1.4billion). Talisman already a major player in basin

12


Manitoba Asset

13


SPEARFISH ASSETS - Location

14

Spearfish formation, tight sand/siltstone stratigraphic traps on basin margin

Adjacent fields now being developed with multi-stage frac’dhorizontal wells

Existing Reserves (Chapman Petroleum Engineering LTD – by Brink)

– 1P 0.244 MMstb (C$53 per bbl)

– 2P 0.475 MMstb (C$27 per bbl)

Land 86 Sections (55,040 acres gross, 41,280 acres net)

Production 90b/d gross, 75b/d net


SPEARFISH ASSETS – Scope and Scale

15

Acreage Property Range Average Risk IssuesOIIP per Section - MMstb 9-15 10 Lowside average

Estimated RF - % 5-15 10 10-20% with infill and pressure support

Recovery per Section - MMstb 0.45-2.25 1.0 1.5 MMstb with infill

Cost per Well – C$million 1.6-2.3 2.0 C$1.65m being achieved in area

IP per well – b/d 100-250 150 EOG achieving 250+ b/d

Reserves per Well - MMstb 0.15-0.35 0.2 Assumes 4 wells per section, 80% SF

Land - Sections 86Core Focus Acreage - Sections 11-16Drilling LocationsDevelopment (within 2km of existingproduction)

29

Exploration (>2km) 46

Total 75

Recovery Potential 15 MMstb

Unrisked upside with increased well density and completion improvements is 20-25 MMstb


SPEARFISH ASSETS – Single Well Metrics

16

0

50

100

150

200

250

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Oil

Rat

e b/

d -m

id y

ear a

vera

ge

Year

Single Well Profile

100

150

200

300

Well IPb/d

CAPEXC$m

Well Recovery

MMstb

NPVat @10% - Oil Price C$/bbl Flat

60 80 100

100 2.0 0.13 0.60 1.45 2.31

150 2.0 0.20 1.56 2.84 4.12

200 2.0 0.27 2.52 4.23 5.94

300 3.5 0.40 3.04 5.50 8.06

0

50

100

150

200

250

300

350

2006 2007 2008 2009

Oil

Rate

b/d

(1st

mon

th a

vera

ge)

Spearfish Area Initial Rate Improvements

Vertical Wells

1st GenHorz.

2nd GenHorz.

3rd GenHorz.

Taxes Manitoba

Royalty 15-18%

Provincial Tax 12%

Federal Tax 18%-15%

Existing tax pool of C$15m3.5 Core sections crown –royalty holiday

Source: Published data and Industry Intelligence


SPEARFISH ASSETS – Project Impact

17

0

50

100

150

200

250

300

60 80 100

NPV

at

10%

C$m

illio

n

Flat Oil Price $/bbl

NPVat @ 10% MPO share of 15 MMstb

At current oil prices and 150 b/d IP the project NPV is approximately C$160 million un-risked. Price growth to $100 per bbl and beyond, rate (technology) improvements, cost reductions, increased prospective area and infill activity has the potential to increase this by factor of 3-4

Range

Peak Oil Rate – b/d 3,000-6,000

Peak Production Year 2012-2016


Saskatchewan Asset

18


BAKKEN ASSETS - Location

19

Recent Activity

At current oil prices two recent (last 4 weeks) acquisitions have paid approximately C$230-260m each for equivalent sized land packages with roughly 1500 boed existing production

Recent land sales in Saskatchewan are now encountering acreage bids up to C$2600 per acre.

Other Potential

20% of Viewfield Field area production is non-Bakken pointing to significant other potential in the Mississippian,

Sanish/Three Forks represents additional potential based on recent North Dakota activity


BAKKEN ASSETS – Scope and Scale

20

Acreage Property Range Average Risk IssuesOIIP per Section - MMstb 3-6 4 Minimum thickness assumed

Estimated RF - % 5-15 10 Potential upside from spacing

Recovery per Section - MMstb 0.15-0.75 0.5

Cost per Well – C$m 2.0-2.5 2.3

IP per well – b/d 70-200 110 New wells indicating 200+ b/d

Reserves per Well - MMstb 0.08-0.25 0.125

Land - Sections 70Core Focus Acreage - Sections 42 (60%)Drilling LocationsDevelopment (within 2km of existingproduction)

~7

Exploration (>2km) 161

Total 168

Recovery Potential 21 MMstb assuming 60% success factor

Unrisked upside with increased well density, acreage success and completion improvements is 40-50 MMstb


BAKKEN ASSETS – Single Well Metrics

21

Well IPb/d

CAPEXC$m

Well Recovery

MMstb

NPVat @10% - Oil Price C$/bbl Flat

60 80 100

90 2.3 0.10 0.13 0.86 1.59

110 2.3 0.12 0.50 1.38 2.27

150 2.3 0.17 1.22 2.43 3.65

200 2.3 0.23 2.13 3.75 5.36

Recent Connaught Wells - Estevan Acreage

Well Date on Production IP Recent Accumap Rate (April)

8-29-1-29W2 Dec, 2008 95 bopd 14 bopd / 20% Oct1-29-1-6W2 Dec, 2008 170 bopd 59 bopd / 82% Oct8-28-1-6W2 July, 2008 200 bopd 120 bopd / 92% Oct1-28-1-6W2 Sept, 2008 250 bopd 250 bopd / 92% Oct16-20-1-6W2 Jan, 2009 100 bopd 40 bopd / 40% Oct13-26-1-6W2 Dec, 2008 15 bopd 1.5 bopd / 100% Oct (?)16-8-2-6W2 July, 2008 85 bopd 40 bopd / 45% Oct2-9-2-6W2 Nov, 2008 110 bopd 40 bopd / 80% Oct14-16-2-6W2 Nov, 2008 135 bopd 100 bopd / 90% Oct5-12-3-6W2 (Tristar) Mar, 2009 180 bopd 180 bopd / 65% Oct

Avg= 135 bopd Current Avg= 75 bopd(5-6 mos prod time typically)

Note: In addition, there are 13 horizontal wells that have either been recently licensedor drilled, and production data is not available for within these two sections of interest.

Important Development: Recent Glamis press release (Connaught Acqusition), indicatedrecent Bakken completions produced from 600 - 1000 bopd.

Taxes Saskatchewan

Royalty 17.5-27.5%

Provincial Tax 12%

Federal Tax 18%-15%

0

20

40

60

80

100

120

140

160

1 2 3 4 5 6 7 8 9 1011121314

Oil

Rat

e b/

d

Profile assumptions

90 b/d IP

110 b/d IP

150 b/d IP

200 b/d IP

No existing tax pool Acreage is crown – royalty holiday on first 35-100 Mbl


BAKKEN ASSETS – Project Impact

22

At current oil prices and 110 b/d IP the project NPV is approximately C$160m unrisked. Price growth to $100 per bbl, rate improvements, increased prospective area and infill activity has the potential to increase this by factor of 4-6

0

50

100

150

200

250

300

350

60 80 100

NPV

at

10%

C$m

Oil Price $/bbl

NPV at 10% of MPO share 20 MMstb

Range

Peak Oil Rate – b/d 5,000-10,000

Peak Production Year 2013-2017


Quebec Asset

23


QUEBEC ASSETS - Location

24

CANADA – SHALE GAS PROJECT

Molopo controls 100% of 2.13 million acres with NRIs of 80% and above

Shale gas and conventional targets

Primary objective Ordovician Lorraine/Utica shales

Potential GIIP 40 TCF, recoverable potential 6TCF on indicative metrics from high graded Richelieu, Bedford, Lyster and Quebec areas (375,000 acres)

Total unrisked potential of some 100 Tscf GIIP and 15 Tscf recoverable


Shale Acreage Prospectivity

2006-2007 Farm-in activity priced land in C$50-150 per acre range (Forest Oil and Questerre)

2008-2009 Farm-in post initial shales gas success priced land in C$250-1000 per acre range (Canbriamand Gastem)

25

Play Type Total Land acres

Chance Factor * Risked Acreage acres

Shallow Fairway 90000 0.5 45000

Deep Fairway 44000 0.7 30800

Sub Basin 190000 0.3 57000

Northern Extension - controlled 92500 0.2 18500

Northern Extension – un-controlled 814000 0.05 40700

Deep Thrusted - good 448400 0.1 44840

Deep Thrusted – poor 472000 0.01 4720

Total 2.16 million 241560

Land deal values assume all of target farm-in area is equally prospective

Implied value of Molopo risked acreage is in the range C$60-240 million

Conventional potential represents value upside

* Chance Factor defined by production tests, recent shale gas well control, seismic, 1970-1980 exploration, gravity and magnetic data


QUEBEC ASSETS – Scope and Scale

26

Acreage Property Range Average Risk IssuesGIIP per Section - Bscf 4-150 40 Zero in some areas

Excludes conventional and ultra deep

Estimated RF - % 5-30 15 Increase with infill

Recovery per Section - Bscf 0-45 6

Cost per Well – C$m 1.0-2.5 (V)2.0-4.0 (H)

2.03.5

Highside weighted

IP per well – Mscf/d 300-1000 500 Utica only results in 300-800 Mscf/dLorraine incremental

Reserves per Well - Bscf 0-4 2

Land - Sections 3382Core Focus Acreage - Sections 582Drilling Locations ~3000-4000

Recovery Potential ~6 Tscf in core area

Unrisked upside with increased well density, acreage success, completion improvements and RF increase is 10-15 Tscf


QUEBEC ASSETS – Single Well Metrics

27

Well IPMscf/d

CAPEXC$m

Well Recovery

Bscf

NPVat @10% - Gas Price US$/mscfFlat

5.5 7.5 9.5

350 2.4 1.7 0.84 1.61 2.37

500 2.4 2.0 1.46 2.40 3.33

1000 2.4 2.0 2.99 4.18 5.38

2000 2.4 2.3 4.33 5.89 7.44

Taxes QuebecRoyalty 12.5-20%

Provincial Tax 12%

Federal Tax 18%-15%

QEC/GMR/FST St Francois du Lac-1Vertical 2007, frac test 2008, “up to

1MMscf/d” ?Utica, Apr08 press release

QEC/GMR/FST St Louis de Richelieu-1

Vertical 2007, not tested?

QEC/TLM Gentilly-1Vertical Well

Utica frac test >800Mscf/d sustained over 18 days,

Sep08 press;Lorraine frac test “sustained gas

flows encouraging further work”, Apr09

pressQEC/TLM La Visitation-1

Vertical, Utica frac test 300Mscf/d, sustained over 5 days, Apr09 press

QEC/TLM St David-1Vertical, Utica frac test

450Mscf/d, sustained over 17 days, Apr09 press

Canbriam/GMR/Mundiregina

3 vertical wells 3Q09

QEC/GMR/FST Yamaska Wells

Original verticals taken horizontal 4 stage slick water frac test Utica, initial 4MMscf/d,

sustained 100-800Mscf/d, Feb09 press

QEC/TLM 3 Wells, verticals only

Frac test flow sustained rates 300-800Mscf/d same Utica zone in all 3 wells, Apr09 press

“Biogenic” Top Utica 700-2500ft“Thermogenic” Top Utica

2500ft to Logan’s Line

0.00

0.50

1.00

1.50

2.00

2.50

1 3 5 7 9 11 13 15 17 19 21 23 25

Gas

Rat

e -M

Msc

f/d

Year

Vertical well rate profiles ~2 Bscf Recovery

Low Rate

Mid Rate

High Rate

Max Ver Rate

Well cost includes 20% facilities allowance

Existing tax pool ~$7 millionRoyalty is 12.5% provincial and some land has 7.5% ORRI

Documents

A Unconventional Energy Company - WebLinkclients.weblink.com.au/news/asx_pdf_loader.asp?articleID=... · MOLOPO ENERGY CANADA LIMITED Summary Molopo Energy is a A$300 million market