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TRANSCRIPT
Corporate Presentation
2
DISCLAIMER
This presentation is for information only and does not constitute an offer or invitation for the sale or purchase of securities. Any
information or documentation provided as part of the presentation may not be reproduced or circulated or used for any other purpose.
Certain forward-looking statements may be contained in the presentation materials. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will
prove to be accurate. Accordingly, results could differ from those projected as a result of, among other factors, changes in economic
and market conditions, changes in the regulatory environment and other business and operational risks. The information provided in
the presentation has not been independently verified. No representation or warranty, express or implied, is given as to the accuracy,
fairness or completeness of the information or opinions contained in the presentation and no liability is accepted for any such
information or opinions (which should not be relied upon) or for any loss howsoever arising, directly or indirectly, from any use of the
information provided.
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ZOLTAV AT A GLANCE
Zoltav is a Russia-focused, AIM-listed, full-cycle E&P company
Current assets (100% held):
- Bortovoy Licence (Saratov region)
- Existing material gas production (Western Gas Plant)
- Substantial upside from further appraisal, development and
exploration
- Koltogor Licences (Western Siberia)
- Two oil field discoveries
- Significant conventional potential
Organic growth strategy
– Driving profitable growth from Bortovoy Western Gas Plant
– Reviewing feasibility and economic viability of development options for
East Bortovoy
– Intention to bring in partner at appropriate time to assist with further
appraisal and development of significant resource at Koltogor Licences
– Operating a profitable and cost efficient business
Group 2P reserves: 210 mmboe (c.62% gas)
2015 production: ~3.1mmboe (440mToe)
Achieved maiden profit before tax in H1 2016 of USD 1.6 million for
the half year
Principal shareholders
– Arkadiy Abramovich / Valentin Bukhtoyarov
Bortovoy
RUSSIA
FINLAND
UKRAINE
KAZAKHSTAN
Koltogor
BELARUS
Saratov
Moscow
Khanty-Mansiysk
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H1 2016 FINANCIAL HIGHLIGHTS
RUB denominated revenue rose 21% to RUB 1,003 million (H1 2015: RUB 828 million); USD denominated
revenue flat at USD 14.3 million (H1 2015: USD 14.4 million) as a result of RUB devaluation
EBITDA increased by 130% to USD 6.2 million (H1 2015: USD 2.7 million)
Maiden profit before tax of USD 1.6 million (H1 2015: loss USD 2.5 million) - achieved as a result of excellent
operational performance and ongoing cost optimisation programme
USD 0.8 million of net profit (H1 2015: loss USD 2.8 million)
Strong operating cash flow of USD 4.8 million (H1 2015: USD 2.9 million)
Reduced borrowings by 8% (RUB denominated) through repayment of RUB 180 million of PJSC Sberbank
debt - in line with all covenants
Total cash at period end of USD 5.5 million (at 31 December 2015: USD 5.9 million)
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INVESTMENT PROPOSITION
Attractive asset base with substantial organic appraisal and development upside across all licences
Maximising profit potential of Western Gas Plant through operational excellence
Operating a lean and cost efficient business
Experienced board and management team with high principles of corporate governance
- Experienced in-country operating team utilising modern technology and operating practices
Supportive principal shareholders
- Arkadiy Abramovich / Valentin Bukhtoyarov
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COMPANY BUILT ON ACQUISITIONS & OPERATIONAL EXCELLENCE
April 2011:ARA Capitalinvestment
June 2014:Completion of acquisition
of Bortovoy Licence$180 million
March 2013:Announced acquisition of Koltogor Licences2P reserves: 79 mmboe
December 2013: Announced acquisition of
Bortovoy Licence2P reserves: 131 mmboe
July 2013:Completion of acquisition
of Koltogor Licences$26 million
October 2014: Achieved plant capacity ahead
of schedule at Bortovoy48.4 mmcf/d
March 2015:Increased Koltogor Russian Standard C1+C2 reserves
>1 billion barrels
December 2015: Bortovoy Western Gas Plant
turns profitablePlant operating profitably since 2015
Bortovoy Licence
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Bortovoy
UKRAINE
BELARUS
Saratov
Moscow
BORTOVOY LICENCE - OVERVIEW
Zoltav acquired the 3,215 km2 Bortovoy Licence in the Saratov Region for US$180 million (including assumed debt) in June
2014
– Near-insolvency of prior owners resulted in lack of investment in the assets
– Fair value of assets at 31 December 2014 resulted in US$ 35 million gain on acquisition
2015 total production: 3.1mmboe (440mT) – substantial uplift since Zoltav became owner
– Avg. daily production in 2015 was 8,853 boe/d (1,256 Toe/d) compared to 7,656 boe/d in 2014
– 46.6 mmcf/d (1.32mmcm/d) of gas and 587 bbls/d (75 T/d) of oil and condensate
– Avg. daily production has risen to 9,019 boe/d (1,280 Toe/d) in H1 2016
2P Reserves on licence: 131.2 mmboe (20.7 mmToe):
– Gas: 750 Bcf (21.2 bcm); Liquids: 3.9 mmbbls (488 mT)
Mean Prospective Resources: 163 mmboe (97% gas)
Working to better understand the feasibility and economic viability of the development options for East Bortovoy
CPR valuation of Bortovoy Licence (PV10): US$603 million
Existing Gazprom pipelines
Pipelines to be constructed
Oil and Gas Field
Gas processing plant
Existing sales pipelines
Railroads
Gas field
Other field
0 100km
Krasnokutskoye
Zhdanovskoye
Karpenskoye
Mokrousovskoye
Gazprom pipeline
Pavlovskoye
Kochkurovskoye
West LipovskoyeLipovskoye
Nepryakhinskoye
Gazprom trunkline
from Kazakhstan/
Turkmenistan to
Central Russia
KAZAKHSTAN
RUSSIA
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Koltogor Licences
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KOLTOGOR LICENCES – OVERVIEW
Zoltav acquired the 695 km2 Koltogor Licences in the Khanty-Mansiysk Autonomous Okrug (Western Siberia)
in July 2013 for US$26 million
Excellent existing infrastructure, including proximity to roads and pipeline
CPR valuation (PV10): US$282 million
Intention to bring in partner at appropriate time to assist with further appraisal and
development
Koltogor E&P Licence
Licence valid through to February 2033
Contains Koltogor oil field with 2P Reserves:
79.2 mmboe (10.3 mmToe) (95% Liquids)
Possible reserves: 183 mmboe (23.9 mmToe)
Year-round access road to well 141
Koltogor E&P Licence 10
Licence valid through to March 2036
West Koltogor oil field discovered 2014
RUSSIA
Koltogor
Moscow
Khantiy-Mansisk
Conclusion
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CONCLUSION
Creating value through operational excellence, organic growth of existing assets and cost efficiencies
Bortovoy delivered immediate production (cash flow) and highly prospective low-risk appraisal upside from
undeveloped Eastern Fields
Company trading profitably in 2016 as a result of Bortovoy Western Gas Plant operational performance
Koltogor delivered two oil fields with current 2P reserves of 79.2 mmboe, with good infrastructure and
compelling development prospects (updated CPR to be commissioned when appropriate)
Experienced board and management
Appendices
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BOARD
Marcus Rhodes – Non-executive Chairman/Senior Independent Director
Marcus Rhodes was appointed as a non-executive director in May 2014 and subsequently as non-executive chairman in
September 2016. He is an experienced director of major publicly-listed companies operating in Russia and the CIS. He is a
qualified chartered accountant and a member of the Institute of Accountants in England & Wales. Marcus Rhodes is
currently a non-executive director and the chairman of the audit committee of NASDAQ-listed QIWI plc, a major provider of
payment solutions in Russia and the CIS. He is also a non-executive director and chairman of the audit committee for the
Russian company PhosAgro OJSC, one of the world’s leading producers of phosphate-based fertilisers and listed on the
London Stock Exchange, Tethys Petroleum Limited, the London Stock Exchange-listed company with assets in Central
Asia and the Caspian region, London Stock Exchange-listed Cherkizovo Group OJSC, Russia’s largest meat producer and
the MICEX and RTS-listed Rosinter Restaurants Holding OJSC, the leading casual dining chain operator in Russia and the
CIS. From 2008-2012, Marcus Rhodes was a non-executive director and the chairman of the audit committee for NYSE-
listed Wimm-Bill-Dann Foods OJSC, one of Europe's largest dairy products companies, headquartered in Moscow. From
2010-2012 he was a non-executive director and the chairman of the audit committee for London Stock Exchange-listed Ros
Agro plc, one of the largest agriculture industry holding companies in Russia. Marcus Rhodes was an audit partner for Ernst
& Young from 2002-2008. Prior to that, he was an audit partner for Arthur Andersen from 1998-2002.
Alexander Gorodetsky – Independent Non-executive Director
Alexander Gorodetsky was appointed as a non-executive director in September 2015. He has a wealth of commercialexperience in Russia and the CIS, including over two decades in the international oil and gas industry. He began his careerin 1995 within Alfa-Eco, a leading gas and oil trading business in Russia, before joining TNK and, later, TNK-BP. He iscurrently the general partner of Strategy Capital Advisor Limited, a private equity fund established in 2009 withapproximately $0.5 billion under management and a mandate to invest in projects, including within the oil and gas sector,across the former Soviet Union. Alexander Gorodetsky led the successful sale in 2015 of SANORS, a leading Russianpetrochemical company under the management of Strategy Capital Advisor Limited, to Rosneft. Prior to Strategy CapitalAdvisor Limited, Alexander Gorodetsky was first deputy to the chairman of the board of East One Group, an internationalinvestment advisory group providing strategic and investment management services to a diversified portfolio of companies.During his time at East One Group, he assisted in the strategic development of over 25 portfolio companies including GEOALLIANCE Group, one of the leading independent oil and gas exploration and production groups in Ukraine. From 2000-2006, Alexander Gorodetsky was president/business unit leader for TNK-BP Ukraine. He contributed significantly to theincreased brand awareness of TNK-BP in the Ukrainian market, where it is among the leading oil and gas companies.
Andrey Immel – Non-executive Director
Andrey Immel was appointed as a non-executive director in September 2015. He is an experienced Russian corporate lawyer.
He has, since 2012, been the head of the legal department of Moscow-based Contact-Service LLC, a real estate company,
where his responsibilities include corporate governance and the provision of legal support for transactions. From 2008-2012,
Andrey Immel worked for Himuglemet, a manufacturer of conveyer band and other components for coal mines, both as legal
counsel and as a corporate and tax lawyer. His responsibilities included legal due diligence and support for corporate
transactions.
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SENIOR MANAGEMENT
Denis Golubovskiy, Director of Finance
Denis Golubovskiy has an extensive background in economics and finance and holds an MBA from the Moscow School of
Management (Skolkovo). After a number of roles as Chief Accountant, Denis Golubovskiy joined Novatek where he worked for
seven years including as CFO of Novatek’s largest E&P business, Novatek-Yurkharovneftegaz. From 2010, Denis Golubovskiy
worked for SeverEnergia where he was Director of the Planning and Economic Department, gaining experience working in one
of Russia’s largest hydrocarbon JV’s with foreign involvement.
Andrey Komarov – Chief Executive
Andrey Komarov joined Zoltav in November 2014; and subsequently became an executive director in December 2014. He is a
very experienced Russian oil and gas professional having held senior managerial positions with a number of major Russian
energy businesses. Between 2006 and 2013 Andrey Komarov served as Vice President, Gas Business Development & Sales,
and latterly as Vice President, Gas & Power, at TNK-BP, where he worked with Alastair Ferguson (also a director of Zoltav). In
2002 Andrey Komarov joined Sibneft OJSC (now Gazprom Neft), one of Russia’s leading oil producers, as Director, Regional
Sales and was subsequently appointed as the group’s Vice President, Downstream in 2004. Prior to Sibneft OJSC, Andrey
Komarov held the positions of Deputy General Director and Commercial Director of the Moscow Oil Refinery and served as an
advisor to the Minister of Fuel and Energy of the Russian Federation.
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BORTOVOY LICENCE – RESERVES AND RESOURCES
1P 2P 3P
Reserves English Metric English Metric English Metric
Sales Gas 352.9 bcf 10.0 bcm 749.7 bcf 21.2 bcm 1,389.7 bcf 39.4 bcm
Liquids 2.0 mmbbls 0.3 mmT 3.9 mmbbls 0.5 mmT 6.3 mmbbls 0.8 mmT
Total 62.0 mmboe 8.3 mmToe 131.2 mmboe 17.5 mmToe 242.4 mmboe 32.3 Toe
NPV 1P 2P
PV @10% US$377.6 mm US$602.5 mm
PV @15% US$267.2 mm US$375.3 mm
Source: DeGolyer and & MacNaughton
1C 2C 3C
Contingent Resources English Metric English Metric English Metric
Sales Gas 4.9 bcf 0.1 bcm 26.1 bcf 0.7 bcm 41.0 bcf 1.2 bcm
Liquids 0.1 mmbbls 0.0 mmT 0.3 mmbbls 0.0 mmT 0.5 mmbbls 0.1 mmT
Total 1.0 mmboe 0.0 mmToe 4.8 mmboe 0.0 mmToe 7.5 mmboe 0.1 mmToe
Low Estimate Mean Estimate High Estimate
Prospective Resources English Metric English Metric English Metric
Sales Gas 481.3 bcf 13.6 bcm 925.2 bcf 26.2 bcm 1,486.1 bcf 42.1 bcm
Liquids 3.5 mmbbls 0.5 mmT 5.5 mmbbls 0.8 mmT 7.9 mmbbls 1.1 mmT
Total 85.1 mmboe 11.4 mmToe 162.7 mmboe 21.0 mmToe 259.8 mmboe 34.8 mmToe
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KOLTOGOR LICENCES – RESERVES
Western Reserves (PRMS)
NPV 2P (US$mm)
PV @10% 282.0
PV @15% 180.6
Starting Reserves (at time of Zoltav
acquisition)
Registered Reserves
as at 24 July 2015
English (mmbbls) Metric (mmT) English (mmbbls) Metric (mmT)
Koltogor E&P Licence
Bazhenov (Ju0) - - 53.4 7.7
Ju1 266.1 35.0 727.1 94.8
Ju2 - - 48.9 6.4
Ju3 - - 119.9 15.8
Total 266.1 35.0 949.4 124.7
Koltogor 10 English (mmbbls) Metric (mmT) English (mmbbls) Metric (mmT)
Bazhenov (Ju0) - - 33.9 4.8
Ju1 - - 50.1 7.1
Total - - 84.0 11.9
Combined Total 266.1 35.0 1,033.4 136.6
Russian Reserves
Source: Company data
Source: DeGolyer and & MacNaughton
1P 2P 3P
English Metric English Metric English Metric
Oil 1.6 mmbbls 0.2 mmT 75.2 mmbbls 9.8 mmT 249.2 mmbbls 32.5 mmT
Sales Gas 0.5 bcf 0.0 bcm 25.3 bcf 0.7 bcm 80.9 bcf 2.3 bcm
Total 1.7 mmboe 0.2 mmToe 79.2 mmboe 10.3 mmToe 262.9 mmboe 34.3 mmToe
