Corporate Presentation - Coastal Energy: Home · 2011. 10. 3. · Bua North A & B have discovered productive zones in the Miocene and Upper Oligocene formations containing over 300

© Coastal Energy Company 2011 | All Rights Reserved Corporate Presentation September 2011

Corporate PresentationSeptember 2011

2Copyright Coastal Energy Company 2011 | All Rights ReservedCorporate Presentation September 2011

Forward Looking StatementsThis presentation contains ‘forward-looking statements’ as defined by the applicable securities legislation.Statements relating to current and future drilling results, existence and recoverability of potential hydrocarbonreserves, production amounts or revenues, forward capital expenditures, operation costs, oil and gas priceforecasts and similar matters are based on current data and information and should be viewed as forward-lookingstatements. Such statements are NOT guarantees of future results and are subject to risks and uncertaintiesbeyond Coastal Energy’s control. Actual results may differ substantially from the forward-looking statements. Thispresentation does not contain all of the information contained in the preliminary prospectus of Coastal EnergyCompany, which should reviewed for complete information.


Offshore Thailand

Three fields currently producing 13,700 bopd

Bua Ban North

Discovered in 2011; production began in August, currently producing 8,200 bopd

93 mmbbl of recoverable resources added; further appraisal and exploration underway at Bua Ban North A

Full extent of the field to be determined by appraisal drilling in 2H11

Songkhla Field:

Currently producing approximately 4,000 bopd (restricted due to temperature issues)

Additional development wells and water injection wells planned 2H11

Bua Ban Field:

Currently producing approximately 1,500 bopd

Offshore Thailand(Oil)

Onshore Thailand(Gas)

Onshore Thailand

EU1 / E5N contains the Sinphuhorm gas field

Currently producing 2,000 boepd

Gas sold to Nam Phong power plant under a 15-year Gas Sales Agreement

27 mmbl of 2P Reserves13,700 bopd avg. production

24 mmboe of 2P Reserves2,100 boe/d avg. production

Note: Reserve numbers from Competent Person’s Report dated 12/31/2010 prepared by Huddleston & Co. and do not reflect 2011 discoveries

Total Company

51 mmboe of 2P Reserves15,800 boe/d avg. production


2011 Resource Additions (Recoverable)(per Management Estimates)

Note: 2011 reserve additions are Coastal internal estimates; a third party certification is underway

Offshore (mmbbl) Onshore (mmboe) Total (mmboe)

December 31, 2010 27.0 24.0 51.0

Exploration Additions 92.9 0.0 92.9

As of September 10, 2011 119.8 24.0 143.9

YTD Offshore recoverable resources have risen by over 340% and total Company resources have risen by 180%


Recoverable Resources up 180% - Stock Price is up ~60%

Note: 2011 recoverable resource additions are Coastal internal estimates; a third party certification is underway


Drilling Program Average Daily Production

2011 HighlightsBua Ban North: 11 of 12 exploration wells at

Bua North A & B have discovered productive zones in the Miocene and Upper Oligocene formations containing over 300 mmbblunrisked STOIIP and 93 mmbbl recoverable resources

Bua Ban North B is producing 8,200 bopd from seven wells

Bua Ban North A expected to be tied in Q411

Songkhla H exploration well discovered oil in the central Songkhla basin

200 mmbbl of prospective resources are targeted for the 2H11 exploration program, leaving room for further upside

2011 capex program of $150MM: 1/3 development drilling and 2/3 exploration drilling

Growing Production Profile

Note: 2011 reserve additions are Coastal internal estimates; a third party certification is underway

0

5,000

10,000

15,000

20,000

25,000

2008 2009 2010 2011 Est. 2012 Est.

Average

Daily Produ

ction (boe

/d)

Onshore Offshore


2012 EBITDAX Sensitivity


Key Highlights

Material Exploration Success in 1H11

Growing Oil Focused Production Profile

Coastal has added 93 mmbbl recoverable resources in 1H11 in the shallow Miocene zone which has higher porosity and permeabilty

Established production base of 15,800 boepd which is 85% offshore oil and 15% onshore natural gas (natural gas pricing is based on oil products)8,200 bopd of production has been brought online less than three months after initial discovery

Cost-effective Micoene Play

Significant Asset Base and Drilling Inventory with substantial upside potential

Average well cost of $1.5MM to $2.0MM for Miocene wells

Continued high impact exploration drilling will target over 200 mmbbl of prospective resources in 2H11

1.4 million acres in the Gulf of Thailand and over 30 identified prospects

Strong Management and Shareholder Support

70% of outstanding shares owned by management and top 4 shareholders

Investment Highlights

Note: 2011 recoverable resource additions are Coastal internal estimates; a third party certification is underway


Company Snapshot

Financial Information

Cash (as at 9/2/11) $37MM

Total Debt (as at 9/2/11) $80MM

Share Price (as at 9/2/11) C$10.19

Current Market Cap $1.2B

Shares Outstanding 111,843,893

Shares Outstanding, fully diluted 114,293,504


Offshore Thailand: High Impact Potential


Bua Ban North A & B

Bua Ban North B producing approximately 8,200 bopd

Bua Ban North A to be tied in early Q411 from 7-8 wells

Over 90 mmbbl recoverable resources added in 2011; testing an additional 180 mmbbl of prospective resources (STOIIP) on the eastern flank in 2H11

Songkhla

Producing approximately 4,000 bopd

Temperature issues have constrained rates; expect coolers to be installed in late September to restore rates

Field 2P reserves of 21.4 mmbbl

Bua Ban

Producing approximately 1,500 bopd

Exploration of southern Miocene prospect scheduled for Q411; over 130 mmbbl prospective resources (STOIIP)

Field 2P reserves of 5.7 mmbbl

Location STOIIP (mmbbl) Recoverable (mmbbl)

Bua Ban North A 146.1 43.8

Bua Ban North B 163.5 49.1

Total 309.6 92.9

Note: Recoverable resource numbers are management’s estimates and have not been audited by a third party


Over 309 mmbbl STOIIP Discovered at Bua Ban North in 2011

Bua

Ban

G 5

/ 4

3So

ngkh

la H

Legend

In Progress

Planned

Song

khla

A

Apply for Production License

2 0 1 1 2 0 1 2 Sep Oct Nov Dec Jan Feb

Drill development wells and water injection wells

Install MOPU at BBNA and begin

production testing

Drill Bua Ban South Miocene exploration wells

(202 mmbbl unrisked STOOIP)

Drill 4-5 Bua Ban North A East exploration/appraisal

wells (180 mmbbl incremental unrisked STOOIP)

G 5

/ 5

0

Drill 1-2 commitment wells


Bua Ban


Bua Ban North DiscoverySuccessful Exploration in 2011

11 of 12 exploration wells have been successful

Producing approximately 8,200 bopd from 7 wells

Production at Bua Ban North A expected to be tied in late October 2011

Discovered Miocene trend in the Songkhla basin

Further drilling required to determine extent of Bua Ban North field

Bua Ban North A-05 well encountered 35 feet of net pay on the eastern side of the field; it was drilled as far north as possible to prove the presence of hydrocarbons between the two fields

5 – 6 more wells planned in 2H11 to further evaluate the field

Bua Ban North B152.6 MMBO OOIPin Lower Miocene

Bua Ban North A141.5 MMBO

OOIPin Lower Miocene


Bua Ban Basin Exploration Program 2011

Well(s) Interval(s) STOIIP (mmbbl) Recoverable (mmbbl)

Bua Ban North A-01 Lower Miocene 8.0 2.4



Bua Ban North A-05 (Eastern) Lower Miocene 108.1 32.4

Bua Ban North A-01, A-04 Upper Oligocene 4.6 1.4

Bua Ban North B,01, B-02, B-03, B-04, B-05, B-06, B-08 Lower Miocene 157.2 47.2

Bua Ban North B-01 Lower Oligocene 10.9 3.3

Total 309.6 92.9

Discoveries to Date

Note: Recoverable reserve numbers are management’s estimates and have not been audited by a third party

Prospect Area Interval Unrisked STOOIP (MMBBL)

Unrisked Recoverable

(MMBO)

Bua Ban North A & BMiocene 294.1 88.2

Bua Ban North A & BUpper Oligocene 15.5 4.7

Bua Ban Terrace Miocene/Oligocene/Eocene 202.4 42.6

Bua Ban South Miocene/Oligocene/Eocene 202.4 53.9

Total 714.4 189.4


G5/43 Miocene Trend is very prolificThree Grabens Drilled

Bua BanBua Ban North ABua Ban North B

All discovered oil11 Wells Drilled

Seven wells currently producing 8,200 bopdRemaining wells to be tied in Q411No Dry Holes

7 Fault Blocks PenetratedAll Contain Oil

Songkhla A

Songkhla B

Bua Ban

Bua Ban North B 33mmbbls*

Bua Ban North B 157-323mmbbls

Northweast Terrace

Benjarong

Miocene Basin Margin 3-Way Fault Closure Trend

Songkhla G 97mmbbls(includes Bua Ban)

Time Structure MapTop Lower Oligocene Limestone

A

A’

Legend

Miocene Grabens

*Miocene Oil-in-place estimates in millions of barrels- Blue discovered (190mmbbls)- Black prospective (230mmbbls)

Areas without estimates require detailed mapping


Songkhla A

Songkhla B

Songkhla C

Songkhla D

Songkhla E

Northwest Terrace

Benjarong

Songkhla G

Songkhla B TrendBua Ban North, Bua Ban

and Benjarong Trend

Songkhla A Trend

3-Way Fault Closure TrendLower Miocene

Upper Oligocene

L Oligocene/Eocene

Upper Miocene

Miocene Grabens

A A’

Arbitrary Seismic Line from Merged 3d


Prospect Area Prospects IntervalUnrisked (P50)

STOOIP (MMBO)RecoveryFactor

Unrisked (P50)Recoverable (MMBO)

Bua Ban North A & B Miocene Miocene 309.6 .30 92.9

Total 309.6 92.9

Bua Ban North A & B Upper Oligocene 1,2, 3 Upper Oligocene 27.2 .30 8.2

Total 27.2 8.2

Songkhla H Miocene M100, M500 Miocene 59.0 0.30 17.7

Lower Oligocene & EoceneLower Oligocene & Eocene 31.7 0.15 4.8

Total 90.7 22.5

Buried Hill Karstified Limestone Permian 42.0 .30 12.6

Buried Hill 2 Karstified Limestone Permian 42.0 .30 12.6

Total 84.0 25.2

Bua Ban Terrace Bua Ban Terrace C & K Miocene 20.2 .30 6.1

Bua Ban Terrace C Lower Oligocene 40.7 .20 8.2

Bua Ban Terrace C & E Eocene 141.5 .20 28.3

Total 202.4 42.6

Bua Ban South Songkhla G B & C and Terrace J Miocene 133.9 .30 40.2

Bua Ban Terrace G & H Eocene 68.5 .20 13.7

Total 202.4 53.9

Total All Prospects 916.3 245.3

Prospective Resources Base Case

Note: Recoverable resource numbers are management’s estimates and have not been audited by a third party


Further Exploration PotentialThe richest source facies in the Songkhla basin are found within the

lower Oligocene balanced-fill lake phase, an extensive carbonate‐rich

interval with analogies to the Qingshankou and Nenjiang source

strata in the Songliao Basin of China

Reservoirs associated with this lake type include lake marginal

carbonate strata, lake marginal beach deposits, and deltaic facies

that would tend to be restricted to the lake margin

Source rock is currently sitting in oil window. Start of oil window is

estimated to be between 6,250 - 10,000 feet

Thickness of source rock ranges from 77 feet to 300 feet in the

center of the basin.

Total petroleum system evaluation:

Contour (ft)

AcresBarrels of Oil (possible)

Barrels Recoverable (assuming 10% recovery factor)

10,000.00 17,078.73 19,877,199,359.56 1,987,719,935.968,000.00 96,577.08 14,499,833,844.09 1,449,983,384.416,250.00 88,006.43 13,213,058,545.69 1,321,305,854.57

10,000 & 8,000Total 3,437,703,320.37Total 4,759,009,174.94


Songkhla


Songkhla A: Oligocene

Songkhla drilling results (A-09 and A-12 wells) confirmed migration east of the Songkhla Wedge

Water injection wells are required for the eastern fault blocks due to lack of aquifer support

Awaiting EIA approval to drill 4-5 development wells and 2 water injection wells, likely in Q411

Further appraisal and exploration drilling will be required to determine areal extent to the east

80 mmbbl of oil in place discovered in Oligocene and Eocene by 2010 drilling proving up the eastern fault blocks

Production is constrained due to temperature issues; expected to be resolved by late September and production restored

Songkhla


Financial Information


Improving Offshore Cash Operating Netbacks


Increasing EBITDAX

Note: Includes consolidation of onshore gas


2012 Projected TaxAssumes average production of 20,000 bbl/d offshore

Assumes $250MM of capex

Tax calculation includes Petroleum Income Tax and Special Remuneratory Benefit

Note: Tax rate expressed as a percentage of EBITDAX


Appendix


Bua Ban North A Lower Miocene M100 through M500

BBNA Lower Miocene M100 - M500:BBNA 01 Block 6.1 MMBO OOIPBBNA 04 Block 5.8BBNA 03 Block 21.5BBNA 05 Eastern Block 108.1

Total BBNA 141.5 MMBO OOIP

Lower Miocene M100 Depth Structure (FT TVDSS, 50 FT Contour Interval)

oil

prospect or development location M100 penetration point

interval wet

interval tight or absent

total pay all zones M100 through M50033’ net pay

Lower Miocene 04 BlockM100 & M500 pay

368 acres5.8 MMBO OOIP

Lower Miocene 01 Block M100 & M500 Pay160 acres

6.1 MMBO OOIP

Lower Miocene 03 BlockM200, M400 & M500 pay

163 acres21.5 MMBO OOIP

M100 absent F/O

04: 16’ net pay

03: 125’ net pay

01: 33’ net pay

Lower Miocene Eastern BlockM100 Pay1207 Acres

108.1 MMBO OOIP

OWC 3770 TVDSS

OWC 3680TVDSS

OWC 3700 TVDSS

05 ST01: 34’ net pay



oil


interval wet


total pay all zones M100 through M50069’ net pay

Bua Ban North B Lower Miocene M100 through M500

BBNB Lower Miocene M100 - M500:Western Block 45.6 MMBO OOIPCentral Block 64.2Eastern Block 42.8

Total BBNB 152.6 MMBO OOIP

01: 4’ net pay

05: 149’ net pay03: 47’ net pay

02: 62’ net pay

04: 65’ net pay

06: 69’ net pay

07: 4’ net pay

Lower Miocene Western BlockM075‐M300, M500 Pay

641 acres45.6 MMBO OOIP(3825 TVDSS OWC)

Lower Miocene Central Block880 acres

64.2 MMBO OOIP(3825 TVDSS OWC)

OWC 3790 TVDSS

OWC 3825 TVDSS

Lower Miocene Eastern BlockM100 & M200 Pay

495 acres42.8 MMBO OOIP(3790 TVDSS OWC)

OWC 3825 TVDSS

08: 92’ net pay


Bua Ban North A & B Lower Miocene

Total Bua Ban North A & BLower Miocene M075 through M500:294 MMBO OOIP


oil


interval wet



Bua Ban North A141.5 MMBO OOIPin Lower Miocene


Bua Ban Lower Miocene Trend

Bua Ban Lower Miocene Trend: Bua Ban North A & B Lower Miocene : 294 MMBO OOIPBua Ban South Lower Miocene: 97 MMBO OOIP Unrisked

Total Lower Miocene Trend: 391 MMBO OOIP

Bua Ban South Lower Miocene Prospects97 MMBO OOIP Unrisked

Lower Miocene M100 Depth Structure

oil


interval wet



Bua Ban North A141.5 MMBO OOIPin Lower Miocene






Porosity vs. Depth in Eocene Reservoir

Drilled to date

Depth of Burial is Key for Eocene Productivity


“Thai III” regime

Royalty payable on a sliding scale determined by monthly production volume (5 – 15%)

Current monthly production volume results in 7% effective royalty rate; monthlyproduction of 20,000 bopd results in 10% effective royalty rate

Petroleum Income Tax (“PIT”) payable on net income after deductions

Allowable deductions: Royalty, Operating Expenses, Depreciation Allowance, SpecialRemuneratory Benefit, Loss Carryforward

Tangibles depreciated straight-line over 5 years

Pre-production intangibles depreciated straight-line over 10 years

Post-production intangibles expensed as incurred

Resulting net income taxed at 50% rate

Thailand Fiscal Terms – G5/43


Designed as a “Windfall Profits Tax” for high oil price environmentsAssessed on a sliding scale basis determined by “Revenue per Meter Drilled”

Petroleum Revenue applied to sliding scale is adjusted for inflation and exchange ratefluctuations (0 – 75%)

Coastal’s offshore concessions provide a 600,000 meter “allowance” to be added to actualdrilling footageTax assessed on “Petroleum Profit”

Allowable deductions: Royalty, Capital Expenditures, Operating Expenses, LossCarryforwardAll Capex is expensed as incurred, with a special 35% “uplift” on facilities capexAllows for full capital recovery plus uplift

SRB is deductible for PIT purposes

Special Remuneratory Benefit


Special Remuneratory Benefit ExampleRevenue: $250MM

Adjusted Revenue: $200MMDeductible Expenses - $345MM

Royalty (10%): $25MMOperating Expenses: $50MMCapital Expenditures: $120MM ($80MM intangible, $30MM facilities +35% facilities uplift)Loss Carryforward: $150MM

Petroleum Profit: -$95MM ($250MM - $345MM), $95MM loss carried to next yearAdjusted Revenue per Meter Drilled

$200MM / (600,000 + 15 wells X 3,000 meters) = $310 per meterResulting SRB rate is approximately 25% per sliding scale (USD/THB rate of 35 was used);applied to negative Petroleum Profit results in no SRB payable

Adj. Revenue per Meter SRB Rate

<137 0

137 – 411 1% for each $7

411 – 960 1% for each $27

>960 1% for each $110


Legal DisclaimerThe information contained in this presentation (“Presentation”) has been prepared by Coastal Energy Company (“Company”) and is being delivered for informational purposes only to a limitednumber of persons to assist them in deciding whether or not they have an interest in investing in the Company. The Presentation has not been independently verified and the information contained init is subject to updating, completion, revision, verification and further amendment. The Presentation does not purport to contain all information that a prospective investor may require. While theinformation contained in it has been prepared in good faith, neither the Company nor its shareholders, directors, officers, agents, employees, or advisors give, has given or has authority to give, anyrepresentations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision thereof, or of any other writtenor oral information made or to be made available to any interested party or its advisers (all such information being referred to as “information”) and liability therefore is expressly disclaimed.Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct, express or implied,contractual, torturous, statutory or otherwise, in respect of the accuracy or completeness of the information or for any of the opinions contained in, or for any errors, omissions or misstatements or forany loss, howsoever arising from the use of this Presentation. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to anyadditional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent.Information contained in this Presentation is confidential information and the property of the Company. It is made available strictly for the purposes referred to above.The Presentation and any further confidential information made available to any recipient must be held in complete confidence and documents containing such information may not be reproduced,used or disclosed without the prior written consent of the Company. This Presentation must not be copied, published, reproduced or distributed in whole or in part at any time without the prior writtenconsent of the Company and by accepting the delivery or making to it of this Presentation, the recipient agrees not to do so and to return any written copy of this Presentation to the Company at therequest of the Company.This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisors. Each party to whom thisPresentation is delivered or made must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular,any estimates or projections or opinions contained in this Presentation necessarily involve significant elements of subjective judgement, analysis and assumption and each recipient should satisfyitself in relation to such matters. Neither the delivery or making of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed withany transaction and the right is reserved to terminate any discussions or negotiations with any prospective investors. In no circumstances will the Company be responsible for any costs, losses orexpenses incurred in connection with any appraisal or investigation of the Company.This Presentation does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to subscribe for or purchase any securities in the Company, nor shall it, orthe fact of its delivery, making or distribution, form the basis of, or be relied upon in connection with, or act as any inducement to enter into, an contract or commitment whatsoever with respect tosuch securities. Any such solicitation or offer will be made by means of a prospectus to be issued by the Company in due course and any decision to subscribe for securities in the Company shouldbe made solely on the basis of the information contained in such prospectus.

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Corporate Presentation - Coastal Energy: Home · 2011. 10. 3. · Bua North A & B have discovered productive zones in the Miocene and Upper Oligocene formations containing over 300