corporate presentation december 2012.ppt€¦ · *per rps energy, ltd. reserve evaluation as of...

© Coastal Energy Company 2012 | All Rights Reserved

Corporate PresentationDecember 2012

2Corporate Presentation December 2012

This 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.

Forward Looking Statements


Company Overview

Operational Overview Asset Overview

Financial Overview($US in millions, except shares / share price)

Share Price (at 12/3/2012) C$19.16

Shares Outstanding 113.0

Shares Outstanding, Fully Diluted 117.7

Equity Value / Market Cap. $2,266.6

Debt (at 9/30/2012) $100.0

Cash (at 9/30/2012) $35.7

Enterprise Value $2,330.9

Production

Current Production (boepd) 24,500

Offshore Production (oil) 22,500

3/31/2012 RPS Reserves1

2P (Mmboe) 149.1

% Oil 86%

Increase vs. YE 2011 2P 45%

After‐Tax 2P PV‐10 ($MM) $2,497.7

Prospective Resources (Recoverable ‐ Mmboe)2 453.2

(1) Per RPS Energy, Ltd. Reserve evaluation as of 3/31/2012 (2) Internal estimate ‐ offshore only


Note: 2012 reserve figures per RPS Energy Ltd. report as of March 31, 2012; prospective resource volumes are undiscovered and represent internal estimates

Investment Highlights

Highly Prospective Inventory / Significant Asset Base

Opportunity to de-risk 660 Mmbbls unrisked oil-in-place by year-end 2013

>30 identified prospects comprising 450 Mmbbls offshore prospective resources

1.4 million acres in Gulf of Thailand; Malaysian RSC covering 3 fields

Opportunity to de-risk 660 Mmbbls unrisked oil-in-place by year-end 2013

>30 identified prospects comprising 450 Mmbbls offshore prospective resources

1.4 million acres in Gulf of Thailand; Malaysian RSC covering 3 fields

2011 Material Exploration Success Highly successful drilling program targeting shallow Miocene at Bua Ban North

Added 56 Mmbbls 1P, 68 Mmbbls 2P in 2011 at Bua Ban North; +102% total 2P y/y

Highly successful drilling program targeting shallow Miocene at Bua Ban North

Added 56 Mmbbls 1P, 68 Mmbbls 2P in 2011 at Bua Ban North; +102% total 2P y/y

2012 Exploration Success to Date Added 40 Mmbbls 2P Bua Ban North & 20 Mmbbls 3P Bua Ban South at 3/31/2012 Added 40 Mmbbls 2P Bua Ban North & 20 Mmbbls 3P Bua Ban South at 3/31/2012

Industry Leading F&D Costs 5-year F&D cost of $3.27/boe ($4.35/boe including facilities CapEx) 5-year F&D cost of $3.27/boe ($4.35/boe including facilities CapEx)

Growing Oil Production Profile Current production ~24,500 boepd, >90% offshore oil (+104% vs. 3Q11)

33,000 boepd 2013 guidance (+50% y/y)

Current production ~24,500 boepd, >90% offshore oil (+104% vs. 3Q11)

33,000 boepd 2013 guidance (+50% y/y)

Strong Management and Shareholder Support

Highly incentivized management team and employees

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

Highly incentivized management team and employees

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


Field Overview

Offshore Thailand

Bua Ban North

Current production ~18,000 bopd

Booked 68 Mmbbl 2P in 2011; added 40 Mmbbl 2P at 3/31/2012

Appraisal & exploration of 70 Mmbbl of prospective resources

Early 2013 development and appraisal drilling planned

Songkhla

Current production ~3,500 bopd

Appraisal & exploration of 89 Mmbbls of prospective resources

Development / appraisal and water injection activities currently underway

Bua Ban South

March 2012 discovery; completion, fracking and appraisal activities currently underway

Onshore

Sinphuhorm gas field current production ~2,000 boepd

15-year Gas Sales Agreement with Nam Phong power plant

Dong Mun discovery being evaluated for development

10 Mmboe contingent resources


51.0

102.8 40.4 5.3 0.5 149.1

37.4 8.5

484.8

0

100

200

300

400

500

600

700

800

2P YE 2010 2P YE 2011 2P Bua BanNorth Addition

2P Bua BanSouth Addition

Other 2P3/2012

3P3/2012

Contingent Prospective

(Mmbo

e)

Substantial Organic Reserve Growth

149 Mmboe 2P reserves at 3/31/2012 (86% oil/offshore, 59% 1P)*

45% increase over YE11

Near-term drilling program could result in significant additional uplift

Opportunity to de-risk ~660 Mmbbls of unrisked oil-in-place through year-end 2013

*Per RPS Energy, Ltd. Reserve evaluation as of March 31, 2012Note: Offshore prospective resources reflect internal estimatesOffshore/Onshore (Mmboe): 3/31/12 2P – 127.7 / 21.4; 3P – 34.2 / 3.2; Contingent – 8.5 / 12.8; Prospective – 453 / 31.6


Track Record of Consistent Growth

Production Growth EBITDA Growth

2013 production expected to average 33,000 27,000 boepd offshore Thailand, 2,300 onshore Thailand, 3,700 boepd Malaysia (3Q commencement)

Note: See EBITDA sensitivity slide for 2013 potential outcomes

$80/bbl

$120/bbl


2013 EBITDAX Sensitivity

Note: Assumes 2013 guidance of 33,000 boepd, $19/boe OpEx and $315 MM capital program


Robust 2013 Drilling Program

2013 FCF of $200 MM post CapEx and taxes at $100 realized oil price

2013 CapEx budget of $315 MM ~13% below 2012 due to substantially lower facilities expenditures while including a 2 rig program

Two rig program will permit mix of production enhancing development drilling and high-impact exploration activities offshore Thailand

Expect first oil in Malaysia in July

Onshore CapEx focused on development activities at Dong Mun field

($US MM) 2012 2013 %

Drilling & Completions

Offshore Thailand 130 153 18%

Onshore Thailand 5 21 nm

Malaysia1 5 42 nm

Facilities 162 81 (50%)

Seismic 42 7 (82%)

Other2 19 10 (46%)

Total 362 315 (13%)

(1) Reflects capi ta l i zed s tartup costs

(2) Reflects acquis i tion of addi tiona l interest in APICO and ARO


Rig Nov‐12 Dec‐12 Jan‐13 Feb‐13 Mar‐13 Apr‐13 May‐13 Jun‐13 Jul‐13 Aug‐13 Sep‐13 Oct‐13 Nov‐13 Dec‐13

Vicksburg

Manta

HWU

Coastal Drilling Sequence

Songkhla A14

Songkhla A15

Songkhla A17

Bua Ban North

Development & Appraisal

8 Wells

Malaysia Appraisal Drilling

Bua Ban

South

Appraisal

Wells (4)

Bua Ban

South

Completion

/ Fracking

Bua Ban North

Development 8 Wells

Bua Ban South

Appraisal 3

Wells

G5/50 EXPL W

ell

Bua Ban Main

Workover ST 3

Wells

G5/43 EXPL

Songkhla M

G5/43 EXPL B

ua B

an North Terrace

G5/43 EXPL B

ua B

an Terrace

G5/43 EXPL

Benjarong F

G5/43 EXPL

Benjarong N

Songkhla H

Development 4

Wells

Exploration AppraisalDevelopment Water Disposal/InjectionWorkover / Completion

Note: HWU = hydraulic workover unit

MOPU required

MOPU required


Industry Leading F&D Costs

F&D Cost ($/boe) (Including Facilities CapEx) F&D Cost ($/boe) (Excluding Facilities CapEx)

<$400 MM total CapEx (excluding facilities) between Jan’08 - Mar’12

~122 Mmboe added between Jan’08 - Mar’12, net of production

Note: F&D cost calculated as cumulative period CapEx divided by period ending 2P reserves less period beginning 2P reserves plus cumulative period productionEnding period for all calculations reflects 3/31/2012

Thailand Exploration & Appraisal


Prospects

Lower Miocene/Up Oligocene

Eocene

Pre‐Tertiary Buried Hill

Lower Oligocene

Highly Prospective Songkhla Basin

Bua Ban North

Songkhla A Extensions

Bua Ban South

Bua Ban Terrace

Songkhla H

Benjarong South (Songkhla N)

Songkhla J (Buried Hill II)

Eocene

Lower Oligocene

Lower Miocene

Fields

Note: Prospective resource volumes are undiscovered resources and represent internal estimates

Songkhla L

Songkhla M


2012 Drilling Campaign

SA-10

Encountered 550’ Lower Oligocene sand oil column

212’ net pay

A record for the Songkhla Basin

SA-13

67 feet of Lower Oligocene net pay with 18% porosity

Evaluating updip location for confirmation well

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

89 Mmbbls prospective resources (recoverable)

A-19 water injector found 100 feet Miocene M100 with 20-35% oil saturation, providing evidence of oil migration throughout Miocene in Songkhla area; evaluation of new 3-D to detect structural closures

Songkhla Field

Planned Development Well

2012 Drilling Campaign

SA10 550’ Oil Column 212’ Net Pay

Planned Water Injection Well


Songkhla Basin Miocene Trend

A A’


Miocene Oil-in-place estimates in millions of barrels- Blue discovered (393mmbbls)- Black prospective (666mmbbls)

Areas without estimates require detailed mapping

Songkhla Basin Miocene Trend

2012 Development & Appraisal

Continue delineation of Bua Ban North A & B Reserve additions Production

Additional drilling in Songkhla area Reserve additions Production & pressure maintenance

G5/43 Miocene Trend is very prolific

Only two Miocene grabens drilled Bua Ban North and Bua Ban South Both discovered oil

17Corporate Presentation July 2012

Highly Successful Exploration in 2011

Discovered successful Miocene trend in Songkhla basin

299 Mbbls STOIIP

3/31/2012 increases based on additional drilling and core analysis performed subsequent to year-end 2011

Producing approximately 18,000 bopd

Two recent successful horizontal development wells

Further drilling required to determine extent of field

Bua Ban North Field

(Mmbbls) YE 2010 YE 2011 3/31/2012 Change %2P 0.0 67.9 108.3 40.4 60%

Prospective1 0.0 64.0 70.1 6.1 10%(1) Reflects internal estimates


Stratigraphic limit of M100 net sand



Bua Ban South Field

A-04 and A-05 wells encountered Miocene pay in same reservoir as Bua Ban Main A-11

No Miocene oil water contact encountered yet

Could be materially lower than current depths

A-06 well will test eastern boundary

47 Mmbbls prospective resources (recoverable)

21 Mmbbls associated with potential fracking success

Fracking of BBS 1 & 3 underway

Booked 5.3 Mmbbls 2P, 20.0 Mmbbls 3P reserves at 3/31/2012

All associated with Miocene

Successful flow tests could result in significant reserve additions / reclassifications

Potential to reclassify incremental 14.7 Mmbbls 3P Miocene reserves to 2P


Likely Commercial Development Potential CNG for Natural Gas Vehicles 53 km pipeline to Nam Phong 24 Mmscfd gross from 4 wells (20 yrs)

60 Bcf contingent (recoverable) net to Coastal’s 40% interest

107.4 Bcf net incremental prospective resources (recoverable)

Dong Mun-3st (1Q12)

Confirmed G/W contact Improved reservoir

Milestones Commerciality approval (DMF) by 1Q13 Gas Sales Agreement by 2Q13 EIA/ONEP Approval by 3Q13 First Gas 4Q14

Dong Mun Field – Onshore Gas

Malaysian Risk Service Contract


Background

Coastal entered into a Risk Service Contract with PETRONAS for the development of the Kapal, Banang and Meranti fields (KBM) offshore Peninsular Malaysia

Coastal will be a 70% partner and a local Malaysian contractor (to be named later) will be a 30% partner

The contract requires the drilling of 17 wells: 10 wells at Kapal, 4 wells at Banang and 3 wells at Meranti

Once the wells are drilled, Coastal will operate the production facilities and coordinate oil liftings, operating cost disbursements, etc.

There are existing discoveries at each field. Coastal estimates recoverable oil could be anywhere from 15 to 35 Mmbbl

Additional upside from exploration prospects


Overview of Terms

The contract duration is 8 years ; the KBM SFRSC model strikes a balance in sharing of risks with fair returns for development and production of already discovered fields

PETRONAS remains the project owner while Contractors (Coastal and partners) are the service provider

Contractor will incur upfront costs for Petroleum Development and Operations and will be reimbursed upon first commercial production; the contractor will also be entitled to a Remuneration Fee per barrel from a pre-determined percentage of the field revenue

The reimbursement and remuneration are tied to cost and production performances; priority of payment shall be cost reimbursement of CAPEC and OPEX, followed by Remuneration Fee

Contractors are subjected to the Corporate Income Tax Act (CITA) and not the Petroleum Income Tax Act (PITA). Corporate tax payable by the Contractor Group under CITA is at the prevailing rate of 25%


Comparison Between PSC and SFRSC

***

* Petroleum Income Tax Act**Corporate Income Tax Act


Anticipated Costs / Timeline

First oil from Kapal field is expected beginning of 3Q13

The Capital Expenditure (CAPEX) of KBM Cluster is estimated to be USD320 million over 3 years

Coastal expects to fast track development of the fields using MOPUs and FSOs similar to how it has fast tracked development of its Gulf of Thailand assets


Conclusions

Songkhla Basin has significant upside Established Plays

Miocene Grabens Lower Oligocene Eocene Pre-Tertiary

New Play Development

Onshore Exploration Huge undrilled structures Lack of 3D Seismic Lack of Completion Technology

Horizontal Wells Fracture Technology

Business Development Significant Discoveries Undeveloped throughout Asia

Appendix


Further Exploration Potential

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) Acres Barrels of Oil (possible) Barrels Recoverable (assuming 10% recovery factor)

10,000.00 17,078.73 19,877,199,359.56 1,987,719,935.96

8,000.00 96,577.08 14,499,833,844.09 1,449,983,384.41

6,250.00 88,006.43 13,213,058,545.69 1,321,305,854.57

10,000 & 8,000 Total 3,437,703,320.37

Total 4,759,009,174.94


3-D seismic shoot covering entire Songkhla basin and G5/50 is complete

Processing and interpretation in 1Q13

Songkhla Basin 3-D Seismic


Lower Oligocene Sand depth closure from 8270 TVDSS LKO in C03

Top Lower Lacustrine Shale Depth Structure Map

Contour Interval: 100 feet TVDSS

DNP

DNP

DNP

DNP

Additional Miocene targets similar to Bua Ban Main A-11

Plan on testing horizontal wells in Lower Oligocene to

increase productivity and recovery

Plan to test concept of horizontal wells and multi-stage

fracturing in the Eocene

Drill additional water injectors to enhance recovery

Bua Ban Main Field


Assumes production, expenses and capital program outlined in 2013 guidance

Tax calculation includes Petroleum Income Tax and Special Remuneratory Benefit

Note: Tax rate expressed as a percentage of EBITDAXCash tax rate reflects actual amounts due in 2013 and is inversely related to commodity prices given large proportion of fixed amounts related to 2012 taxesEffective tax rate reflects taxes incurred in 2013 and includes amounts payable in 2014

2013 Projected Tax

Realized Crude Price

Offshore EBITDAX ($MM)

Cash Tax Rate (Due in 2013)

Effective Tax Rate

$85.00 543.5 26.7% 45.5%$90.00 587.1 25.5% 48.1%$95.00 630.6 24.2% 50.6%$100.00 675.8 23.0% 53.0%$105.00 723.7 22.0% 54.6%$110.00 771.7 20.9% 56.5%$115.00 819.7 20.2% 57.6%$120.00 867.7 19.6% 58.6%


Share Price Performance / Coastal Milestones

Share repurchase announced

Bua Ban South adds 23.5 Mmbbls 2P reserves with additional 31.0 Mmbbls of

prospective resources for total of 54.5 Mmbbls recoverable (81% of pre-drill estimate)

Announced commencement of Bua Ban South exploration. Pre-drill estimate was

67 Mmbbls of prospective resources

Announced YE11 2P reserves of 103.0 Mmbbls

A-10 Results

Announced

Overview of Thailand Fiscal Terms


12.5% royalty rate

Petroleum Income Tax (PIT) assessed at 50% of taxable income (revenues – allowabledeductions)

Allowable deductions for PIT are as follows:

Operating Expenditures

Hedging Losses

G&A expenses related to the petroleum operations

Capital expenditures under the following depreciation rules

o Pre-production intangibles are depreciated straight line over 10 years

o Post-production intangibles are fully expensed in the year incurred

o Tangibles are depreciated straight line over 5 years

Royalties are not deductible; however, the operator receives a PIT credit for royalties paid,lowering the effective tax rate

“Thai I” Regime (Onshore)


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

Daily production of 25,000 bopd results in an approximate 11% royalty rate

Petroleum Income Tax (PIT) assessed at 50% of taxable income (revenues – allowabledeductions)

Allowable deductions for PIT are as follows:

Royalties

Operating Expenditures

Hedging Losses

G&A expenses related to the petroleum operations

Special Remuneratory Benefit (“SRB”) payments

Capital expenditures under the following depreciation rules

o Pre-production intangibles are depreciated straight line over 10 years

o Post-production intangibles are fully expensed in the year incurred

o Tangibles are depreciated straight line over 5 years

“Thai III” Regime (Offshore)


Designed as a “Windfall Profits Tax” for high oil price environments

Assessed on a sliding scale basis determined by “Revenue per Meter Drilled”

Petroleum Revenue is adjusted for inflation and exchange rate fluctuations sinceinception of the concession and then divided by total meters drilled on the concession

Coastal’s offshore concessions provide a 600,000 meter “allowance” to be added toactual drilling footage

Resulting metric determines the SRB rate (0 – 75%)

Tax assessed on “Petroleum Profit”

Allowable deductions are: Royalty, Hedging Losses, Capital Expenditures, OperatingExpenses, G&A

All Capex is expensed as incurred, with a special 35% “uplift” on facilities capex

Allows for full capital recovery plus uplift

Coastal had an approximate $165MM loss carryforward for SRB purposes at year end 2011

SRB is deductible for PIT purposes

Special Remuneratory Benefit (“SRB”)


The 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.

The delivery, making or distribution of this Presentation in or to persons in certain jurisdictions may be restricted by law and persons who receive this Presentation should inform themselves about,and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the relevant jurisdiction. In particular, this Presentation has not beenapproved by an authorised person pursuant to Section 21 of the Financial Services and Markets Act 2000 (“FSMA”) and accordingly, it is being communicated in the United Kingdom only to personsto whom this Presentation may be communicated without contravening the financial promotion prohibition in Section 21 of the FSMA. Those persons are described in the Financial Services andMarkets Act 2000 (Financial Promotion) Order 2005 (“Order”) and include persons who fall within the category of person set out in Articles 19 and 49 of the Order. Any investment activity to whichthis Presentation relates in the United Kingdom is available to, and will only be engaged with such persons and this Presentation should not be acted or relied upon in the United Kingdom by personsof any other description. This Presentation has not been approved as a prospectus by the UK Financial Services Authority (“FSA”) under Section 87A of the FSMA and has not been filed with theFSA pursuant to the United Kingdom Prospectus Rules. No offer of securities in the Company is being or will be made in the United Kingdom in circumstances which would require such a prospectusto be prepared.The securities proposed to be issued by the Company (the "Common Shares") have not and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and maynot be offered or sold in the United States except pursuant to an exemption from, or transactions not subject to, the registration requirements of the Securities Act. In addition, other than to a limitednumber of persons reasonably believed to be qualified institutional buyers (as defined in Rule 144A under the Securities Act), neither this Presentation nor any copy of it may be taken or transmittedinto the United States or America or distributed directly or indirectly, in the United States of America or to any resident thereof except in compliance with the applicable U.S. securities laws. Anyfailure to comply with these restrictions may constitute a violation of applicable U.S. securities laws.By accepting this Presentation, the recipient represents and warrants that it is a person to whom this Presentation may be delivered or distributed without a violation of the laws of any relevantjurisdiction. This Presentation is not to be disclosed to any other person or used for any other purpose and any other person who receives this Presentation should not rely or act upon it.

Legal Disclaimer

corporate presentation december 2012.ppt€¦ · *per rps energy, ltd. reserve evaluation as of...

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