Fastnet Oil & Gas Plc Corporate Presentation/media/Files/F/Fastnet-Oil-and-Gas... · This communication is exempt from the financial promotion restriction in ... Deep Kinsale Offshore

Fastnet Oil & Gas Plc

Corporate Presentation December 2014

www.fastnetoilandgas.com 2

Disclaimer

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Company Overview

Moroccan Assets

Irish Assets

Outlook

Company Overview

Moroccan Assets

Irish Assets

Outlook


Overview and Company Funding

• Portfolio includes onshore and offshore Morocco and offshore Ireland with 16 primary exploration and appraisal

prospects matured for drilling

• Cash balance USD 18 mm at 30 November 2014

• Running costs – general and administration – USD 3.3 mm p.a

• All current licence phase commitments have all been met – fully funded for discretionary spending going forward

• Monetisation through farm down and recovery of past costs

• Recently announced changes to the Tendrara Lakbir option, improving net equity position to 50%, creating a

significant positive effect on project economics. Potential running room in both additional conventional traps and an

unconventional shale gas play on the Licenses. The Company retains an option to farmin to the licence. It is the

intention of the board of Fastnet to have this option extended by 12 months to the end of 2015

• Celtic Sea farm out process stalled due to adverse movements in commodity markets. Internal technical work

continues to enhance value with completion of 3D interpretation. Still working with 3rd parties towards farmouts in

2015

• FA-1 well reached TD May 14, under budget. Numerous oil and gas shows encountered in well. Full prognosed

section not penetrated due to salt occurring shallower than predicted. FA-1 results have significantly de-risked the

Foum Assaka license area

OVERVIEW


Frontier Exploration Asset Overview

Licence Name Region Area Fastnet Interest

Gross Net Partner Operator

Tendrara Lakbir

Option Onshore Morocco 14,548 km2 66.7% 50% ONHYM, OGIF Fastnet

Foum Assaka Offshore Morocco 6,478 km2 12.5% 9.375% Kosmos, BP, SK Kosmos

Mizzen Basin Offshore Ireland 787 km2 100% 100% n/a Fastnet

Mizzen East Offshore Ireland 1,155 km2 100% 100% n/a Fastnet

Deep Kinsale Offshore Ireland 285 km2 60% 60% PETRONAS Fastnet

Shanagarry Offshore Ireland 881 km2 82.35% 82.35% Adriatic Oil, Carob, Petro Celtex Fastnet

Molly Malone Offshore Ireland 648km2 100% 100% n/a Fastnet

Block 49/13 Offshore Ireland 272 km2 85% 85% Carob ltd, Petro Celtex Fastnet

Total Area 25,054 km2

771

283

95

0 100 200 300 400 500 600 700 800

Frontier

Standard

Mature

Strategic focus on high-volume, high- value, frontier petroleum systems

Average Commercial Discovery Size in MMBoe 2010-2012 by Type

of Hydrocarbon Province

Note: Information from September 2012 Bernstein Research Report

OVERVIEW


Business Model Health Check

ACQUIRE

• 25,054 sq. km. under licence and exclusive options

• Continually reviewing and seeking out new niche opportunities

ANALYSE

• 1,910 sq. km. of 3D seismic acquired in Ireland

• 488 sq. km. of 3D seismic reprocessed onshore Morocco

• Up to 5,000 sq. km. of 3D seismic acquired/reprocessed offshore Morocco

FARM DOWN

• Foum Assaka farmed out to SK Innovation – carry in up to 2 wells plus back costs

• Total cost to Fastnet from licence acquisition to completion of the FA-1 well was USD 2.75m

• Celtic Sea and Tendrara farmouts continue

EXPLORE

• FA-1 first well tested the high risk, deepwater, acreage in the portfolio

• De-risked petroleum system – oil shows encountered, sand presence confirmed but thickness/quality remains issue

• Celtic Sea 3D Interpretation has defined and de-risked very large potential oil and gas prospects

MONETISE

• FA-1 significantly derisked petroleum system on the block, well data being fully integrated

towards further exploration on the License.

• Tendrara – Lakbir drilling programme offers potential for next near-term opportunity for

monetisation subject to extending option deadline

• Celtic Sea prospects offer medium term potential for monetisation following farm-down/drilling

OVERVIEW

ACQUIRE

ANALYSE

FARM DOWN

EXPLORE

MONETISE

Experienced Board & Senior Management

Cathal Friel, Non-Executive Chairman Managing Director and one of the founders of Raglan Capital in

2007

Former founding partner and Director of Merrion Capital

MBA from University of Ulster

Carol Law, Chief Executive Officer Former Exploration Manager, Anadarko East Africa

Responsible for the play finding Prosperidade gas complex in

Rovuma Area 1, offshore Mozambique

Also member of teams responsible for discoveries in Ghana

(Jubilee), Brazil (multiple Campos Basin discoveries)

Will Holland, Chief Financial Officer Former Associate Director at Macquarie bank where he originated,

structured and managed equity and debt investments in small-cap

E&P companies.

Previously worked at Halliburton Energy Services in various

technical & business development roles based in Africa & Europe

MBA from Heriot-Watt University

Michael Edelson, Non-Executive Director Non-executive Chairman of Sterling Green Group plc since he

founded the Company.

He has been a member of the board of Manchester United

Football Club since 1982

Angel investor, venture capitalist and philanthropist

Michael Nolan, Non-Executive Director Former Founder and Group Finance Director of Cove Energy PLC

Currently CFO of Discover Exploration and Non-executive director

of Rathdowney Resources plc and Orogen Gold plc

Fellow of the Chartered Accountants Ireland

€100 million

One of the founding directors

of Merrion Capital, where he

was part of the small team

that built the business and

sold it for c. €100m in 2006

100 TCF +

Carol led the Anadarko team

that discovered over 100 TCF

of natural gas in the Area 1

Block, Offshore Mozambique

$2.5 billion

Value of successful

corporate transactions

on which Cathal has

advised

$2.64 billion

Sale price of a 10%

stake in Anadarko’s

Area 1 Block, Offshore

Mozambique

25+ years

Managerial

Corporate Finance

experience

30 years

Experience in oil

and gas industry

20+ years

Experience in oil

and gas industry

40+ years

Experience as a

Director of several

AIM listed PLCs

+$110 million

Managed Macquarie interest

in over $110 million of debt

and equity investments

Internal Control

Lead teams of internal

auditors at Halliburton

assessing accounting &

operation risks

5p to £22

Founder of Asos, the global

online fashion and beauty

retailer

Value Creation

Originated 20-plus AIM

and PLUS listed

vehicles, delivering

significant returns to

shareholders

THE TEAM

18+ years

Experience in

resource

exploration sector

+1900%

Share price increase between

the Cove Energy IPO in June

2009 and its sale in Aug 2012

$1.9 billion

Cove Energy was sold

to PTTEP in Aug 2012

after a competitive

auction process

Company Overview

Moroccan Assets

Irish Assets

Outlook

Company Overview

Moroccan Assets

Irish Assets

Outlook


Energy Prices and Fiscal Regime

MOROCCO

• The gas and oil prices in Morocco are indexed to international prices.

• The gas price at the Morocco - Algerian border is 10 to 11 USD per mscft.

• Locally produced gas sells in the domestic market at 7 to 12 USD per mscft.

Fiscal Incentives

• 25% State participation

• Royalty: Oil 10%; Gas 5%

• 10 year corporate tax holiday on discovery

Profit Value of 1bbl of Oil in Morocco

• Producing 1bbl of oil in Morocco is equivalent to

• 13bbl in Algeria

• 7bbl in Nigeria

Morocco Canada

Argentina UK

Libya Egypt

Norway Indonesia

0% 20% 40% 60% 80% 100%

Gov’t Take (%)

Morocco Algeria Nigeria Egypt

Source: EY Global oil and gas tax guide, 2013


Gas-to-Power Opportunity

MOROCCO

• 470 MW of Existing Gas Power

Capacity in Morocco (Population

33 million)

• 4,000 MW Planned Increase in

Gas Power Capacity (requiring

600 mm cfgpd)

• 367% Increase in Gas-Fired

Electricity Generation Forecast by

2023

• Opportunity to supply new-build

400 MW Al Wahda Power Station


Access to European Gas Network

MOROCCO

• Capacity: 12.5 BCM/year (441.37

BCF/year)

• Installed Capacity: 18 BCM

• 14% of transport capacity entitled to

Morocco

• 100% capacity rights to Morocco in 2021

• Transit fees for Morocco of 600 to 800

million m3/year

LNG Terminal Initial Capacity 5 Billions M3 ( 176.55 BCF) > 5 years before operational (at very early planning stage)

Source: CPR, November 2013


Tendrara Lakbir Option

Scale

• 14,548 sq. km. Over entire prospective Missour-Tendrara Basin

• Largest licence in Morocco over the proven Triassic TAGI gas play

• Material, near-development gas project – clear pathway to early monetisation

• Favourable fiscal regime – 5% Government Royalty and 10 year holiday on corporation

tax

• “Running-room” provided by existing TAGI gas discoveries, prospects and leads; under-

explored Palaeozoic prospectivity (extension of proven Algeria/Libya petroleum

systems; unconventional Carboniferous & Silurian/Tannezuft shale gas: economics

enhanced by TE-5 gas development)

Equity & Partners

• Pathfinder Hydrocarbon Ventures Ltd 50% net equity after exercise of Exclusive Farmin

Option

• Partners: Oil and Gas Investments Funds (“OGIF”) 25%; ONHYM 25%

• Pathfinder is the Technical Operator during Option Period

MOROCCO

• OGIF is owned by the largest Moroccan financial institutions (banking, insurance and pensions)

Deal Terms & Legacy Database

• Legacy Database (available to licence holders only): 7 wells by previous operators; 488 sq. kms. of 3D seismic; 4,118 kms. of 2D seismic; PSDM processed

3D seismic and Reservoir Engineering (Pathfinder Option Period work programme)

• Pay disproportionate share of two wells to be drilled on the TE-5 gas structure in the Initial Exploration and First Extension Periods of the Licence – Offers to

reflect the materiality and “running room” and comprehensive legacy database

- Well planning underway with drilling to commence within the next 9 months

- Scoping budgetary estimate for individual wells, fully tested, is USD 13.5 - 17 MM

• Assignment of equity interests are subject to the usual Moroccan government approvals


Tendrara Lakbir Exploration History: 6 out of 7 wells drilled discovered gas MOROCCO

• TE-5 Gas Structure (red) 488 sq. km. 3D & 4,110 kms. 2D seismic

3 month EWT – no pressure depletion in TAGI I Formation damage – stabilised rate 1.5 mm cfgpd

Legacy Prospectivity (2000-2008)

• TE-3 & TE-4 Structure (red hatched) TAGI tight gas reservoir

Gas shows in Lias limestone and Carboniferous

• TE-2 Structure (red outline) TAGI tight gas reservoir

• SBK-1 Gas Discovery (red) TAGI II tested at 5 mm cfgpd

Declined to 2.5 mm cfgpd (fault barrier/no 3D) Condensate shows in Lias dolomites & Trias basalts 300 bcf GIIP Best Estimate

• TAGI Prospects (yellow) Structural & Stratigraphic Pinchout

• TE-1 (1966) logged gas Possible downdip extension TE-5 Structure

Additional Untested Upside

• Cambro-Ordovician NE area of the Block

• Carboniferous Basinwide

• Unconventional Shale Gas Carboniferous – basin centre play

62 TCF (Source ONHYM) Silurian/Tannezuft – NE area

NW-SE LINE OF SECTION Legacy 2D Seismic


Fastnet TAGI I Depth Map (At Seismic Reference Datum)

MOROCCO

P90 CLOSURE GDT TE-5 2451 m SRD Area within Cyan Dots

= 25 sq km

P10 CLOSURE GDT TE-1 2835 m SRD

Area within White Dots = 386 sq km

MODEL 4 Uses pseudo-interval velocities based upon revised TWTs at well locations

Current Well Mis-ties (well-map)

TE-1 -15 m TE-5 +28 m TE-4 +24 m TE-3 -15 m

P50 CLOSURE 2575 m SRD

Area within Blue Dots = 62 sq km

Outline of 3D data


Fastnet Independent Reservoir Engineering Study

(Case “A” 9.1 mm cfgpd with all zones in 22.5m perforated; S = 0) A

( Original Well Test k – Only top 11.5m contributing; S = 30)

(EWT Well Test k – Only top

11.5m contributing; S = 0)

MOROCCO

TE-5 Well – inflow Performance Rates

TE-6 Well to test well deliverability case “A” – 9mm cfgpd


Meskala Gas Field: On-Trend Producing TAGI I Gas Reservoir Analogue

Supports TE-5 Gas Potential

MOROCCO

Exploration History

• MKL-101 Gas Discovery drilled in December 1981 – field on-stream in 1987

• TAGI Triassic reservoir (also tested gas in TE-5 gas structure – up to 14% porosity)

• Gross reservoir section 150m with c. 30m net pay (less than TE-5)

• Avg. porosity in best pay section 12% (k2-4 mD compared to up to 55 mD at TE-5

• Depth 3374 m (c. 750m shallower than TE-5)

MKL-101 Reservoir Characteristics and Test Results

• Over-pressured – 3700 psi above hydrostatic pressure (also over-pressured at TE-5)

• 18m perforated (only 11.5m contributing to flow at TE-5) from 3374m – 3392m

• No acidizing/no fracking

• 20mm cfgpd absolute open-hole potential – stabilised at 6mm cfgpd and 510 BCPD

on ¼” choke with WHFP 4800 psi (flow rate restricted by liquid condensation near

well bore. Liquid content 85 barrels per mm cfgpd (3 barrels at Tendrara)

• MKL-101 producing 3.24mm cfgpd and 200 BCPD after 27 years production life.

Reservoir Geometry

• Good lateral continuity but fault compartmentalisation (less significant at TE-5)

• Development wells drilled pre-3D – very poorly located

GIIP Per Well

• MKL-101 fault compartment 33BCF and 2.8mm BC in-place per sq. km.

• TE-5 independent estimates indicate a range of 8 to 20+ BCF recoverable per well

for a variable net pay thickness of 135 to 200 feet and a drainage area of between

200 and 300 acres per well

Source: World Bank Report No. 4283-MOR

4 Apr 1983

TE-5 Gas

Structure

Meskala

Gas Feld


Untested Unconventional Palaeozoic Hydrocarbon Plays

MOROCCO

62 TCF Missour Basin

TENDRARA LICENCE

Area : 11000 Km²

Age : Carboniferous

Maximum depth :

4363 m

TOC : 1 – 11.44 %

OSD-1

TAJ-1

Distribution of Silurian

Hot Shales: NW Africa

OSD-1 (Carboniferous)

• TOC up to 11.44% at 2401m

• Tmax 439°

• S2 187 mg/g

• HI 163

• 800m+ thick

TAJ-1 (Silurian)

• TOC up to 3.32% at 2729m

• Tmax 348°

• S2 1.31 mg/g

• HI 39

• Avg. thickness 150m

• Gas in Fractured Lower Devonian Lstn. at Meskala

Field

• Carboniferous gas in some Tendrara wells

• Potential for tectonic fracturing locally

• Silica and clay content not investigated

• Shale porosity not investigated

• “Sweet spots” not yet identified

Based on Legacy 2D Seismic Data


Offshore Morocco Play Fairway Analysis

MOROCCO

• FA-1 well trade value is being used to

give valuable insight into an ongoing

analysis of the potential of the under-

explored offshore

• Deep Secondary Target favoured by

Fastnet and a target for Chevron and

BP offshore Nova Scotia remains a key

target in Foum Assaka following the FA-

1 well

• Exploration drilling offshore Morocco

has historically focused on the

Carbonate Shelf with no commercial

discoveries as yet

FA-1 Well


Flat Spot??

Pre-Drill Fastnet

Primary “Wedge” Target

Post-Drill Fastnet Primary “Wedge”

Target Tagged but not Penetrated

FA-1

Live Oil Shows

High Amplitude Package

Recalibrate with Well Results

SALT

MOROCCO

FA-1 Preliminary Well Post Mortem Shows Untested Potential


MOROCCO

FA-1 Sidewall Cores – Live Oil Under UV Light

Source: CoreLab

Company Overview

Moroccan Assets

Irish Assets

Outlook

Company Overview

Moroccan Assets

Irish Assets

Outlook


Celtic Sea Offshore

Highly prospective basin

capable of delivering significant

near-term production

• Attractive petroleum geology with

major reserves potential: largest

producing gas field at Kinsale

Head, large prospects with well-

understood large-field analogues

and existing infrastructure

• Underexplored, applying new

technologies to de-risk by analogy

with surrounding oil and gas

discoveries

• Shallow water prospects: easier to

monetise than deepwater Irish

Atlantic Margin

• Largest ever 3D seismic survey

undertaken in Summer 2013

(1,910km2)

- Mizzen 1,400km2

- Kinsale 510km2

• Statoil Discovery potentially 600

MBO Recoverable made in

analogous basin summer 2013

(Flemish Pass Basin)

DEEP

KINSALE

MOLLY

MALONE

MIZZEN &

Mizzen East

SHANAGARRY BLOCK 49/13

AREA 285 km2 648 km2 1942 km2 881 km2 272 km2

WATER DEPTH c. 100 m c. 100 m c. 100 m c. 100 m c. 100 m

FASTNET INTEREST 60% 100% 100% 82.35% 85%

IRELAND


Deep Kinsale - Large Untested Closure Below Shallow Producing Gas Field IRELAND

Prospect E

Deep Kinsale Primary

Prospect “A”

49/9-2 “Helvick” Oil & Gas Play

Base Chalk

Upper Purbeck Sands

Middle Wealden

Upper Jurassic

Upper-Middle Jurassic

Mounding in Upper Purbeck

Northern Bounding Fault Kinsale Field 1.7 TCF Gas

MFS

48/25-1 Discovery

Southern Bounding Fault

Source

Reservoir Prone

Deep Liassic Source?

Approx. Licence Limit (4000ft)

North

SE

North South East

Potential reservoir bearing packages thicken into active Late Jurassic to Early Cretaceous Faults


P50 Closure for Upper Purbeck Sands Primary Prospect “A”

Primary Prospect “A” Basal Wealden

46 sq. km.

48/25-1 Oil Discovery Lower Wealden

46.7 sq. km.

Logged Live Oil 48/25-1

270 feet net oil pay

IRELAND

3D Seismic De-risk Legacy Reservoir

Compartmentalisation Issues


Multiple Options to Develop Celtic Sea Gas

• Existing infrastructure

• New pipeline build

• Floating facility

IRELAND

155 kms to

Bantry Bay Oil

Terminal

Infrastructure

34 kms to connect to

onshore gas infrastructure

185 kms to connect to Kinsale

Platform and Shore Terminal


New 3D Seismic Defines Large Potential Gas Anomaly Over Primary Prospect

“A” – 91.9 sq. km. giving 1.45 (P50) to 2 (P10) TCF of Recoverable Gas

RMS Amplitude Extraction, TDW 40 mins 100ms

IRELAND

Basis for Maximum closure

at Primary Prospect A

High amplitudes over crest

Inline 728

Inline 728


Company Overview

Moroccan Assets

Irish Assets

Outlook


Near Term Share Price Catalysts

• Strong uncommitted cash balance with low corporate overhead

• Seeking a one year extension to the Tendrara Lakbir Option

• Progressing ongoing discussions with potential partners for Tendrara. This includes gas to power

opportunities as well as developing an appraisal programme for the TE-5 discovery

• Continue with Celtic Sea farm out process. Confirmation that a rig will be drilling in the region

increases attraction of the area

• Identification of the second prospect/well location for Foum Assaka

• Business development opportunities

OUTLOOK


Appendices

Fastnet Oil & Gas

Appendices


Fastnet New TE-5 Unconventional NuTech Petrophysics

TAGI-I Perforated Zone 2,588.5m-2,620m

MOROCCO

• Identification from logs of higher permeability layers – calibrated to available core data

• Perforated zone tested only some of these: moderate gas flow rates (formation damage and liquid loading)

Gamma

Res. Qual.

Flags Lith/Fluid

Analysis Resistivity

Porosity

Curves

Visual

Matrix Tot. Gas Pore Size

Vol. Analysis

Por/Fluid

Perm

Textural

Params Comment

Zone

Ratings Fracturing Test Interval

“Sweet Spot” Better sorted

NuTech Shows good k Not contributing to flow

Core k up to 55 mD Thin layers sub NuTech log resolution


Deep Kinsale – New 3D Seismic De-risk Potential Untested Thicker Sand

Intervals

IRELAND

Southern Bounding Fault

Prospect E

Deep Kinsale Prospect A

49/9-2 “Helvick” Oil & Gas Play

Base Chalk

Upper Purbeck Sands

Middle Wealden

Upper Jurassic

Upper-Middle Jurassic

Mounding in Upper Purbeck Prospect K

Northern Bounding Fault

North South East

North

SE

Purbeck Shale


NuTech Data Unconventional Petrophysics for 48/25-1

48/25-1 Logged 532 feet of net oil pay

The Lower Wealden interval from 6600-7060ft is sst with

270 feet of net pay. The characteristics of this interval

are: average porosity of 15.3%, average SW of 43.3%,

average permeability of 114 millidarcies, There are

several zones with permeability above several hundred

millidarcies. This interval is expected to produce

hydrocarbon at a good rate.

The Upper Purbeck interval from 7060-7600 feet is sst.

with 262ft of net pay. With average porosity of 12.5%,

average SW of 36.9%, average permeability of 45.6

millidarcies, There are several zones with permeability

over several hundred millidarcies. This interval is

expected to produce hydrocarbon at a fair to good

rate.

Seal Interval

Upper Purbeck –

Lower Wealden

Reservoir

Interval

Mid Purbeck

Lacustrine

Source Rock

Oil-Bearing

IRELAND


NuTech Data Unconventional Petrophysics for 48/25-1 IRELAND

48/23-1 48/24-3 48/25-1

Good Continuity of

Barryroe Tested Sands

Over 10’s of Kilometres

Seal Interval

Upper Purbeck

Lacustrine Shale

Reservoirs in

Deep Kinsale

Lower Wealden

Reservoir

Interval


Fastnet farm-out agreement with SK Innovation

About SK

• SK Innovation is part of SK Group, the third largest

conglomerate in South Korea behind Samsung and

Hyundai with 56,000 employees

• USD $130 billion in Annual Revenue

(Energy/Chemicals Division comprises 56%)

• SK is Korea’s number one and Asia’s fourth largest

oil refining company with 1.1 million boepd capacity

• As of Q1 14, SK’s E&P portfolio consists of 19 blocks

in 13 countries

– 5 production blocks, 14 exploration blocks, 4 LNG

projects across countries such as Peru, Columbia,

Kazakhstan, Libya, Australia, Oman Yemen,

Vietnam, Cote d’Ivoire, Madagascar

– Daily production of 70,000 boepd

– 619mm BOE Proven Reserves

MOROCCO: FOUM ASSAKA

Deal Terms

• SK acquired a 12.5% Gross interest (9.375% Net) in Foum

Assaka licence in December 2013

• Up to two well carry comprised of a carry in the first

exploration well on the Eagle-1 Prospect and first appraisal

well (capped at USD $100 million per well) or at SK

Innovations’ discretion a carry in a second exploration well

(capped at gross USD $100 million)

• Reimbursement of past costs of USD $3.2 million and a

further payment of 25% of Fastnet’s back costs relating to

the period from 1 October to 1 January 2014

• Fastnet now retains a 12.5% gross interest (9.375% - net)


Analyst Coverage

APPENDIX

Name Company

Harry Stevenson Beaufort Securities

Sam Wahab Cantor Fitzgerald

Job Langbroek Davy

Ian McLelland Edison Research

Tao Ly GMP Securities

Gerry Hennigan Goodbody

Richard Savage Mirabaud

Stuart Amor RFC Ambrian

Craig Howie Shore Capital

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Fastnet Oil & Gas Plc Corporate Presentation/media/Files/F/Fastnet-Oil-and-Gas... · This communication is exempt from the financial promotion restriction in ... Deep Kinsale Offshore