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JANUARY 2009 UPDATE

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Title: JANUARY 2009 UPDATE


1
JANUARY 2009 UPDATE
2
INTRODUCTION
  • TSX listing symbol SEO.
  • Spin out company with 900 Boe/d from sale of
    Storm Energy Ltd. to Harvest Energy Trust July 1,
    2004 (this is 3rd version).
  • 44.7 million shares (47.0 million fully diluted).
  • Market cap 540 million (12.00/share), Q3/08
    debt 83 million.
  • Management and Board ownership 28 (32 FD).
  • Production currently 8,700 Boe/day (87 gas).
  • All Amounts in Canadian Dollars.

3
OVERVIEW
  • Disciplined approach to capital investment
  • Cash flow funds exploration and exploitation
    activities (drilling).
  • Debt and equity used to fund acquisitions.
  • Low risk growth over the next three to four years
    primarily from exploiting our large, tight gas
    Montney discovery in NE BC.
  • Inventory of 32 hzs (4 hz/section), 400 boe/d
    1st year average.
  • Exposure to higher impact opportunities with
    significant additional growth potential.
  • Montney resource expansion (GIP, recovery, new
    pool leads).
  • Horn River Basin unconventional Devonian shale
    gas in NE BC.
  • Large scale international projects thru SVI
    ownership.

4
MANAGEMENT Eric Blakely, VP Exploration
(Manager, Exploration with Storm Energy Ltd,
joined Dec/98) Harry Ediger, VP Land (VP
Land with Storm Energy Ltd, joined May/99)
Brian Lavergne, President CEO (VP Operations
COO with Storm Energy Ltd, joined Dec/98)
Don McLean, VP Finance CFO (VP Finance and CFO
with Storm Energy Ltd, joined Sep/01) Rob
Tiberio, VP Operations COO (VP Production
with Storm Energy Ltd, joined Dec/01)
5
GROWTH PROFILE
6
MAJOR OPERATING AREAS
Large undeveloped land base totals 190,000 net
acres. Parkland/Ft St John, NE BC 53,500 net
undev acres, 6,100 boe/d Grande Prairie, AB
20,100 net undev acres, 1,650 boe/d
Cabin/Kotcho/Junior and Horn River Basin, NE BC
56,100 net undev acres, 800 boe/d Other
Areas 60,300 net undev acres, 60 boe/d Red
Earth, AB 42,300 net acres Tommy Lakes, BC 5,400
net acres Surmont , AB 3,840 net acres
7
PRODUCTION HISTORY (to Nov/08)
Total Storm
Parkland Property
8
PARKLAND/FT ST JOHN AREA (NE BC)
  • Montney, Doig, Halfway nat gas.
  • 53,500 net undev acres (76 WI).
  • - 72 net sections Montney PNG
  • developed undeveloped.
  • Currently 6,100 boe/d.
  • - 5,900 boe/d Parkland (35 mmcf/d).
  • - 200 boe/d other.
  • 2008 capex 85 MM (90 of corp)
  • - 12 Montney hzs (11.7 net).
  • - 11 verticals (10.5 net).
  • - 2nd facility Jan/09, 13 MM cost
  • (8 MM 2008, 5 MM Q1/09).
  • 2009 7-9 hzs, 5 verts, 3 complns,
  • expand 2nd facility Q3/09.
  • Opportunity summary
  • - Develop Montney discovery
  • with hzs, expand GIP.
  • - Montney new pool leads (1-2).
  • - Hlfy/Doig infills, step-outs,

9
Montney Discovery (Parkland Area, NE BC)
  • Large scale, high impact.
  • Estimated gross original gas in
  • place 410 BCF (405 BCF net),
  • approx 6 sandstone cut-off.
  • - 13 vert wells, 10.25 sections.
  • - 770 BCF with 3 cut-off.
  • gt5,000 boe/d from Montney
  • verticals hzs 100 WI.
  • Liquids rich, high heat content.
  • Estimated ultimate recovery 50.
  • Delineate with vertical wells.
  • 4 hz per section (7 8 fracs/hz).
  • Inventory of 32 hzs, 8 verts.
  • Significant upside potential
  • - increase GIP (vertical step-outs,
  • lower cut-offs?).
  • - increase recovery (infills?).

Q1/09
Q1/09
10
Montney Horizontal Wells (Parkland Area, NE BC)
10 producing horizontal wells
Average Storm hz estimated 1st year rate 2.2
mmcf/d (400 boe/d sales)
11
Montney Gas In Place (Parkland Area, NE BC)
Estimated Gross Original Gas in Place (OGIP) is
calculated as follows
  • Based on 3 cores and log analysis from 13
    successful vertical wells 10 producing, 1
    standing awaiting compln/tie-in, 2 completed
    standing.
  • OGIP estimate increases to 770 BCF with 3
    sandstone scale cut-off (87 m net pay, 6.4 avg
    porosity).

12
Montney Netback (Parkland Area, NE BC)
13
GRANDE PRAIRIE AREA (AB)
  • Lower risk exploitation of multiple existing
    pools.
  • Natural gas, light oil in Doe Crk,
  • Gething, Halfway, Montney.
  • 20,100 net undev acres (68 WI).
  • Results (04 to 07 actual)
  • - 100 boe/d 1st year.
  • - 200 MBoe PPA.
  • - 1,500 M drill complete.
  • - 70 drill success (17/24 04 to 07).
  • Production 1,780 Boe/d 08 est.
  • 1,650 Boe/d current.
  • 2008 capex 2 MM facility
  • optimization, 3 recompletions.
  • 2009 Activity 2 wells, 2 recompl.
  • Project inventory includes
  • - 22 locations (12 twins/infills).
  • Activity reduced due to less
  • discretionary cash flow.

14
CABIN/KOTCHO/JUNIOR AREA (NE BC)
  • Higher impact area with unconventional shale gas
    potential.
  • 56,100 net undev acres (56 WI).
  • Winter access only.
  • Slave Pt natural gas historical target.
  • - 1 to 5 mmcf/d 1st year rates.
  • - 450 MBoe PPA, 2,250 M drill, complete.
  • - Higher risk, 55 success (7/13 since 04).
  • Production 890 Boe/d 07 est.
  • 800 Boe/d currently.
  • Conventional inventory includes
  • - 7 Slave Point, 3 Bluesky/Debolt,
  • Jean Marie hzs.
  • Unconventional Horn River Basin (HRB)
  • Devonian shale gas in Cabin area.
  • - partnership with SGR (60 SGR, 40 SEO).
  • - SEO has 23 equity in SGR.
  • - total shale gas exposure 54.

15
Horn River Basin/HRB (NE BC)
  • 11,300 net undev acres (40 WI).
  • - 43 gross sections acquired in 08,
    500/acre.
  • - close to pipelines.
  • Drill 2 vert shale tests (40 WI) this winter
  • - 7 MM gross capex.
  • - 1 well cored longer term flow test.
  • Central project area 25 gross sections (40 WI).
  • - estimated gross original gas in place 1.9
    TCF
  • in Muskwa and Otter Park shales only.
  • - 80 metres avg gross pay in Muskwa and
  • Otter Park (55 to 110 metres).
  • - average porosity 3.8, TOC 2.5,
  • silica content 50 - 55, thermal maturity
  • Ro ?, core required to verify/confirm.
  • - est adsorbed gas 40 scf/ton (core to verify).
  • - 80 BCF/section (67 free/33 adsorbed).
  • Early stages, high level of associated risk.
  • - this winter, prove productivity of lands.

16
RECENT DEVELOPMENTS
  • Q4/08 Activity
  • Parkland drilled 1 vert Montney step-out (1.0
    net) 5 hz Montney (5.0 net) wells, 100
    success. Two hz Montney completed, produced
    1,000 boe/d per well in 1st month.
  • Surmont drilled 3 oil sands evaluation wells
    (3.0 net).
  • Q4/08 estimated prodn 8,100 8,200 boe/d, 35
    MM capex.
  • 2008 capital investment est 95 MM undeveloped
    land 9 MM, property dispositions 8 MM,
    infrastructure/tie-ins 13 MM.
  • 2008 PPA reserves increased 109, reserve
    replacement 840.
  • Q1/09 Plans
  • two vertical shale tests (0.8 net) in HRB.
  • Parkland drill 1 to 2 hz Montney development
    wells (100 WI) 2 vert Montney step-outs (1.6
    net), complete/tie-in 3 standing hzs drilled
    Q4/08.
  • Completed 2nd Parkland facility operational
    mid-January/09.

17
CURRENT BUSINESS ENVIRONMENT
  • We will adapt our business strategy to the
    current, lower natural gas price environment.
  • Objectives are to increase inventory accretive
    growth in net asset value.
  • undeveloped land acquisitions and farm-ins,
  • asset acquisitions,
  • growth of existing assets (verticals in the
    Montney and HRB).
  • Production growth is secondary.
  • Restrict (choke back) wells capable of high
    initial rates to flatten the production profile
    and level out pricing/netbacks over a wells
    life.
  • Maximize netbacks by shutting in higher cost
    wells/properties.
  • Lower natural gas prices will result in reduced
    production growth.
  • Capital will be conserved for re-investment in
    growing net asset value.
  • Focus will be on Montney development at Parkland,
    provides highest economic returns.

18
RESERVE ADDITIONS COST
19
CONTROLLABLE COSTS
Total cash costs include operating, interest and
cash GA expenses.
20
OUTLOOK
21
OTHER ASSETS
  • Storm Ventures International (SVI)
  • Storm holds 4.5 MM shares (6 ownership), total
    investment 4.3 MM.
  • 28 MM value using Aug/08 rights offering at
    6.25/share (raised 31 MM).
  • Focused in the UK sector of the North Sea and in
    Tunisia.
  • Storm Gas Resource Corp (SGR)
  • Storm holds 2.05 MM shares (23 ownership),
    total investment 5.7 MM.
  • 13 MM value using July/08 equity issue at
    6.50/share (raised 40 MM).
  • Priorities 1) expand Horn River Basin land
    position (SGR 60, SEO 40) and test
    productivity, 2) identify new unconventional gas
    areas.
  • Surmont Oil Sands
  • 3,840 acres (6 sections) at 100 WI.
  • Using a SAGD process, exploitable bitumen in
    place is 312 MMbbls with bitumen resources
    recoverable of 113 MMbbls.
  • Three test holes Dec/08 avg net bitumen pay 22
    metres (13 - 30 metres).

22
SUMMARY
  • Proven business plan.
  • Prodn per share growth of 20 in 2008 and 25 in
    2009 using cash flow plus limited amount of debt
    (this is not a new approach for us).
  • Low risk growth provided by exploitation of
    Montney discovery.
  • Strong and improving financial results.
  • Low cost structure 3 year all-in PPA FDA
    12.43/boe
  • total cash costs below 9.50/boe
    (operatingGAinterest).
  • Pricing/netbacks increasing (liquids rich natural
    gas from Montney).
  • Significant future upside potential
  • Expand Montney resource GIP, RF, new pool leads
    on large land base.
  • Horn River Basin unconventional Devonian shale
    gas.
  • Exposure to large scale international
    opportunities thru SVI ownership.
  • We will be patient pursuing new opportunities
    acquisitions, must be accretive to net asset
    value.

23
APPENDIX
24
Montney Vertical Wells (Parkland Area, NE BC)
10 producing vertical wells
25
Halfway/Doig (Parkland Area, NE BC)
26
Halfway/Doig Wells 2004 - 2007 (Parkland Area, NE
BC)
26 producing vertical wells
27
NETBACKS
28
FINANCIAL RESULTS
29
SVI UPDATE
  • SVI and Silverstone (33 owned UK North Sea
    subsidiary) merger completed.
  • 1.67 shares of SVI for each share of Silverstone.
  • 76.2 MM shares outstanding, 36 MMboe PPA
    reserves, est 2009 prodn of 2,200 boe/d.
  • Three development projects Vulcan East (North
    Sea), Remada Sud (Tunisia), Cosmos (Tunisia).
  • UK North Sea.
  • Viking Fields area 200,000 acres, 5 TCF
    recovered to date in area, 9 prospects gt 50 BCF.
  • - production from recently tied in Victoria
    discovery 15 mmcf/d (100 WI).
  • Central North Sea (CNS) 140,000 acres, 12-22 o
    API, wells gt 10,000 bopd.
  • Activity planned by end of 2009 (cash on hand and
    cash flow to fund)
  • - 1 exploratory well.
  • - Advance completion tie-in of Vulcan East
    discovery (first gas early 2010).
  • Tunisia five on off shore blocks, 2.4 million
    acres (50-100 WI).
  • Remada Sud (71 WI) onshore well Q1/08, tested
    200 bopd, STOOIP independently estimated at 220
    MMbbls. Extended test planned in Q2/09 plus
    drill one step-out and 3-D sesimic survey.
  • Jenein Centre onshore well first half 2009 (pay
    30 for 65 WI), Acacus discoveries in area.
  • Gulf of Hammamet offshore well late 2009 (pay 9
    for 50 WI), 73 MMbbl STOOIP prospect.
  • Cosmos Main (100 WI) first oil mid-2010 with
    vessel converted to FPSO. Contingent on sourcing
    partner for up to 40. Estimated STOOIP 25
    MMbbls, IP possibly 20,000 bopd.

30
Definitions
  • Original Gas in Place (OGIP) is the same as
    discovered Petroleum Initially in Place which is
    defined in the COGEH handbook as the quantity of
    hydrocarbons that is estimated to be in place
    within a known accumulation. OGIP is used here
    as it is a more commonly referenced industry term
    when referring to gas accumulations. Discovered
    Petroleum Initially in Place is divided into
    recoverable and unrecoverable, with the estimated
    future recoverable amount classified as reserves
    and contingent resources. No certainty can be
    offered that it will be economically viable or
    technically feasible to produce any portion of
    this Discovered Petroleum Initially in Place
    except for those amounts identified as proved or
    probable reserves.
  • Boe Presentation For the purpose of calculating
    unit revenues and costs, natural gas is converted
    to a barrel of oil equivalent (Boe) using six
    thousand cubic feet (Mcf) of natural gas equal
    to one barrel of oil unless otherwise stated.
    Barrels of oil equivalent (Boe) may be
    misleading, particularly if used in isolation. A
    Boe conversion ratio of six Mcf to one barrel
    (bbl) is based on an energy equivalency
    conversion method primarily applicable at the
    burner tip and does not represent a value
    equivalency at the wellhead. All Boe
    measurements and conversions in this report are
    derived by converting natural gas to oil in the
    ratio of six thousand cubic feet of gas to one
    barrel of oil.

31
Disclaimer
  • Certain information set forth in this
    presentation, including managements assessment
    of Storms future plans and operations, contains
    forward-looking statements. These statements are
    based on current beliefs and expectations based
    on the information available at the time the
    applicable assumptions were made. By their
    nature, forward-looking statements are subject to
    numerous risks, uncertainties and assumptions,
    some of which are beyond the Companys control,
    including the material risks described in Storms
    Annual Information Form and Managements
    Discussion and Analysis dated November 13, 2008
    under Risk Assessment, the effect of general
    economic conditions, industry conditions,
    volatility of commodity prices, currency
    fluctuations, imprecision of reserve estimates,
    environmental risks, competition from other
    industry participants, the lack of availability
    of qualified personnel or management, stock
    market volatility and ability to access
    sufficient capital from internal and external
    sources. Readers are advised that the assumptions
    used in the preparation of such information,
    although considered reasonable at the time of
    preparation, may prove to be imprecise and, as
    such, undue reliance should not be placed on
    forward-looking statements. Storms actual
    results, performance or achievement, could differ
    materially from those expressed in, or implied
    by, these forward-looking statements. Storm
    disclaims any intention or obligation to publicly
    update or revise any forward-looking statements,
    whether as a result of new information, future
    events or otherwise, except as required under
    securities law. 

32
STORM EXPLORATION INC
  • For further information please contact
  • Brian Lavergne, President and Chief Executive
    Officer
  • Donald McLean, Vice President and Chief
    Financial Officer
  • Address
  • 800, 205 5th Avenue SW, Phone (403) 264
    3520
  • Calgary, Alberta, T2P 2V7 Fax (403)
    264 3552
  • E-mail info_at_stormexploration.com
  • Website www.stormexploration.com
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