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Investors Presentation June 2010
1. Victoria Oil & Gas Plc
Tapping Gas Value in Cameroon 2010
2. Disclaimer
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securities laws.
3. Key Points
o Victoria Oil & Gas Plc (VOG) is emerging as a
significant player in natural gas production
o Logbaba gas and condensate field in Douala, Cameroon,
is the only onshore gas discovery in the country
o The West Medvezhye (West Med) project in Siberia has
independently estimated recoverable prospective
resources of over 5 Tcf of gas
o Logbaba is poised to deliver first cash flows and
profits for VOG
o Over 600 feet of gross sandstone pay in two wells
o In-principal agreements signed with industrial customers
o First revenues from Logbaba targeted in Q4 2010
3
4. Logbaba: First Mover Advantage
o Government plans announced to triple Cameroon
power generation capacity in the next 10 years,
much of which could be generated by gas
o The Logbaba field represents a unique opportunity
to dominate the nascent natural gas market in
Cameroon
o Competitive advantages:
The field lies beneath the major industrial city in the
Central African Region
Agreements for gas off-take already signed with industrial
customers in Douala
The only onshore gas discovery in the country
All facilities (drilling, processing and pipeline) will be
operated by VOG
First gas Q4 2010
o Plans announced to triple Cameroon power
generation in the next 10 years
4
5. Cameroon: Heart of Central Africa
o Cameroon is a member of the ECCAS
Economic Community of Central
African States (ECCAS)
o Members share trade markets
and currency
o Douala is the deep-water port and
industrial heart of the region
o Major companies such as
Guinness and Nestle have
facilities there
o Rio Tinto Alcan have a major aluminium
smelter at Edea
close to Douala
o Douala handles around 95%
of import/exports for Cameroon,
Chad and CAR
o Logbaba is located in the
eastern suburbs of Douala
5
6. Cameroon Gas: No Competition
o Logbaba remains the only onshore natural gas discovery in
the country
o Due to Logbaba’s position and development, VOG also has
the opportunity to beat larger operators in feeding new
power projects
o Perenco’s offshore Sanaga Sud field yet to come into
development despite location next to Kribi power station
o Limbe power station, north of Douala, relies solely on liquid
fuels despite Total’s offshore discoveries nearby
6
7. Logbaba: Summary Economics
Management Forecasts
Prices: Post-Tax NPV net to VOG
Gas price Industrial Gas $16/mmbtu ($MM) 10% 15% IRR
Industrial Power $16/mmbtu Industrial to gas & power(1) 405 271 64%
Grid Power(5) $6.5/mmbtu Plus mini Power (2) 409 274 64%
Plus LNG(3) 681 448 73%
LNG $12/mmbtu
Plus large power(4) 819 538 75%
Condensate Limbe Refinery $75/bbl
Fiscal Terms: Scenario 4 Reserves & Ratios Net to VOG
Corporate tax 38.5% $MM $/boe
Capex 1055 $9.6
Government Royalty 8.0%
Opex 393 $3.6
Royalty to Rodeo Resources 1.2%
Royalty to Cameroon 6.7% Reserves 578 Bcf
Holdings R/P ratio 19 Years
Scenarios
(1) 8.5 mmcfd supplied for industrial customers for gas & power rising to 40mmcfd by 2013
(2) Case 1, plus VOG 10MW IPP - (incremental 2mmcfd) to be connected to the power grid
(3) As in case 2 but VOG new LNG facility with incremental demand of 40mmcfd on stream by 2013
(4) As in case 3 but VOG supplying power to new IPP 200MW facility (incremental 40mmcfd) by 2013
(5) Gas for power generation to be connected to the grid has been priced at the approximate cost of generation until further negotiation with ARSEL – the state regulator
7
8. Early Cash Flow – Captive Market
• Gas price is fixed at $16/MMBtu for first 5 years
• 20 year exclusive gas supply agreements
• Base Case Payback in 2011
• Low cost, first mover advantage for a captive
market with severe power disruption and energy
constraints
• Possible expansion in the future (2013 onwards)
with mini-LNG & IPP options to markets further
afield
8
10. Logbaba: Well La-105 Drilling
o La-105 was drilled to a total
depth of 8,920 feet
o Multiple gas-bearing sands
with over 300 feet of gross pay
between 1,836 and 2,540 m
correlating to La-103
o La-105 was completed as a
production well
o Logbaba wells are more
complex and difficult to
control than predicted
o Chronic lack of oil and gas
infrastructure
o Drilling progress being far
slower than expected due to
the need for heavier mud
10 weights.
11. Logbaba: Encouraging Early Results
Due to encouraging LWD GR/Res Log from La-105
initial results,
significant
additional rig-time
and expenditure
was devoted to
subsurface data
acquisition to better
evaluate the
reservoir rock and
fluid properties. Top Logbaba Fm at 1,735m
TVDRKB
This and the Sandstone
application of latest
technology are
enabling VOG to Sandstone
realise the true
reservoir and well Sandstone
potential at
Logbaba. Sandstone
11
12. Logbaba: Well La-105 Testing
o Multiple pay zones tested at
La-105 Testing
depths between 7,005 - 8,500
feet.
o Rates between 11 - 56 million
standard cubic feet per day
(MMscf/d) of natural gas and 210
- 1,000 barrels per day of
condensate. Flowing wellhead
pressures varied between 2,750
- 4,552 psi.
o The Upper Logbaba A through C
sands, although indicated as the
best quality hydrocarbon-bearing
sands encountered in the well
logs, were not tested as the well
indicated more than sufficient
production capacity to meet
12 initial gas demand of 8 MMscf/d.
13. Logbaba: Well La-106 – Initial Data
Drilled deeper than planned to 10509 ft due to the better than
expected observed sand quality in the Lower Logbaba
sections.
Multiple gas-bearing sands encountered between 5482 feet
and 10400 feet (measured depth) - Over 300 feet of gross pay
Top most sand starts at 5482 ft (1671m)
Example of deeper sand 9100 ft (2773m)
13
14. Logbaba: Further Exploration
o 90% of the block remains Passive Seismic Survey
unexplored
o In late 2009, a passive
seismic survey was
commissioned
o Passive seismic is a
direct hydrocarbon
indicator
o Significant new structure 4
km north of the current well
sites
o Best location on the current
structure is as yet undrilled
o The new accumulations lie
outside the area evaluated
by RPS
14
15. Vertically Integrated Strategy
Pipeline Route
VOG plans to install and commission a gas processing facility
and its own gas pipeline to the industrial customers
Approx 85% of
industrial market
within 10km
Wells 105+106
and processing
facility
15
16. Concept Block Diagram
Flare
~
LP LP
Wells Well Manifold Separator ~
Pipeline
Chokes Skid System
(Condensate)
Pressure
Let Down
~
~
Station
Condensate
Storage Power
Generator
Condensate To Industrial
Tanker Consumers
Switchgear
Loading
Condensate Transformer
Diesel
Tankers
Generator
(own use)
Resurfaced Transmission
Road Line
16
To Limbe Refinery To Substation
17. Front End Engineering Design (FEED)
Data collection studies
We have commenced and nearly completed FEED
studies
o Graphical Information System Project to merge satellite data with
site and pipeline route survey
o Pipeline Route Selection and Network Design
o Definition of Customer Conversions
o Logbaba Site and Pipeline Route Survey
o Civil works
Soil sampling and analysis
Logbaba Site-
• Essential requirements: Process and Power Plant
• Accommodation, offices and warehousing
Pipeline construction and installation
Pre-qualification of Cameroon Civils Contractors
17
HV Transmission Line to Logbaba Substation
19. VOG: High Impact Events
o VOG is targeting first revenues in Q4-2010
o Test data and superior modern logs will be incorporated in an
independent reserve re-estimation due in July 2010
o Installation of the facility and construction of the pipeline is
expected to be completed relatively quickly now that concept is
confirmed
19
20. Douala: Cicam Case Study
o Cotonniére Industrielle du Cameroun (Cicam) is the largest textile
producer in ECCAS, with approximately 60% market share
o Current fuel cost for Douala facilities is around CFA 1Bn ($2.2 MM)
o Machinery purchased over a year ago still idle due to
prohibitive energy cost
o Cicam estimate that converting to Logbaba gas would lower their
energy cost by 30% and increase productivity by 400%
20
21. Douala: Industrial Market
o Douala is one of Africa’s most
important trade centres
o Energy needs satisfied by
high-cost fuels such as diesel
and fuel oil
NB: Prevailing WTI price = $37/bbl
o Almost all fuels imported
o Petrol and diesel costs are Principal Businesses
equivalent to UK
o Douala industrial market
consumption estimated at
15MMcf/d equivalent
o Market expansion is stifled
by the high cost of energy
VOG has signed gas off-take agreements for 8MMcf/d fixed for 5 years
at $16/mcf
21
22. RPS Independent Valuation
RSP Energy Competent Person’s Report
Net Attributable Reserves and Resources
1P 2P 3P
Total Liquids MMbbl 0.28 2.35 4.51
Natural Gas Bcf 7.92 64.53 123.91
Total MMboe 1.71 13.97 26.81
NPV valuation at 10% $MM 18.17 168.65 412.16
Source: RPS Energy
o RPS Energy undertook an
evaluation of the Logbaba
field in July 2008
o 65Bcf of 2P reserves with an
NPV10 valuation of $169MM
o The evaluation only RPS review
encompassed a small area (~6km2)
section of the total 64km2
licence area
22
23. West Med, Russia: Land of
Supergiants
o West Med lies next to the
super-giant Medvezhye
field and the world’s largest
field, Urengoy
o Medvezhye has
produced about 75 Tcf
of gas since 1972
o Independent reserve
auditors DeGolyer &
MacNaughton estimated
recoverable gross
prospective resources of
1.1 Bnboe:
o 5.1 Tcf gas
o 247 MMbbl condensate
o 25 MMbbl oil
23 Source: Gazprom
24. West Med: New Exploration
West Med Exploration Targets
o Second IPDS passive
seismic survey completed
Spring 2010
o Geochemical survey over
the same area also
completed Exploration
target area
o Stratigraphic traps could
exist where West Med
meets Medvezhye field
o Targets for further 2D and
new drilling to be determined
during summer 2010
Well 103
discovery
24
25. Key Management Team
Radwan Hadi Sam Metcalfe Geoff Gill Kamal Jardaneh
Assistant Project Senior Petroleum Drilling
COO VOG
Manager Engineer Supervisor
TECHNICAL
Senior petroleum Over 25 yrs oil 15 yr career in oil 30 yrs of oil and
engineer with over industry experience, and gas, gas experience, 23
30 yrs experience in worldwide. predominantly with yrs as drilling
oil and gas including Has brought several Schlumberger superintendent /
in Nigeria, Ghana North Sea gas Testing and then senior drilling
and Equatorial projects into senior petroleum engineer for BP
Guinea. production for major engineer with and currently a
Former Head of corporations Blackwatch drilling consultant
Planning in ADCO
Kevin Foo Jonathan Scott Barratt Austen Titford Francois Nguene
COMMERCIAL
Commercial Gov’t Relations
Chairman Financial Director
Director Manager
39 yr career in the Former CEO of Chartered Accountant Former
resources sector Eureka Mining Plc & with more than 17 years Exploration and
including 19 years in executive director of experience, covering Production
the FSU; former MD Celtic Resources Plc both the project Manager for SNH
of Celtic Resources development and in charge of Chad-
Holdings operational phases in Cameroon
quoted natural resource Pipeline
companies.
25
26. Abbreviations
Bnboe Billion barrels of oil equivalent
MMboe Million barrels of oil equivalent
MMbbl Million barrels of oil
bbl/d Barrels per day
mcf Thousand cubic feet of natural gas
mcf/d Thousand cubic feet per day
MMcf/d Million standard cubic feet of gas per day
Bcf Billion cubic feet of natural gas
Tcf Trillion cubic feet of natural gas
$MM Million US$
$Bn Billion US$
km2 Square kilometres
m Metres
MMBtu Million British thermal units
MW Megawatts
tpa Tonnes per annum
CFA Central African Franc
26
27. VICTORIA OIL & GAS PLC
HATFIELD HOUSE
52-54 STAMFORD STREET
LONDON
SE1 9LX
Tel: + 44 (0)207 921 8820
Fax: +44 (0)207 921 8821
www.victoriaoilandgas.com
info@victoriaoilandgas.com