A Coal Bed Methane Exploration Leader February 2019
Disclaime aimer This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any shares of G3 Exploration Ltd. (the “Company”) in any jurisdiction. The Company’s shares have not been and will not be registered under the US Securities Act of 1933 (the “Securities Act”) and may not be offered or sold within the United States absent registration under the Securities Act or an exemption from registration. The information contained in this presentation is given in good faith but no representation or warranty is made in relation to the accuracy or completeness of the information, or any oral information provided in connection therewith, or the data it generates and no responsibility, obligation or liability is or will be accepted by the Company or its affiliates or advisors or by any of their respective officers, employees or agents in relation to it. This presentation contains certain forward looking statements with respect to the financial condition, results, operations and businesses of the Company. The statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. Past performance is no guide to future performance and persons needing advice should consult an independent financial advisor. This presentation and the information contained in it are confidential and should not be distributed, published or reproduced, in whole or in part, or disclosed by recipients directly or indirectly to any other person.
Table of contents Overview Operational highlights 2019 outlook Appendix STRICTLY CONFIDENTIAL & PROPRIETARY -3- -3- SUBJECT TO CONFIDENTIALITY AGREEMENTS
Summary • Two producing assets selling gas at high margins, including government subsidies which highlights their support for increased production High margin gas • Large acreage, with substantial gas reserves, located inland and well positioned to serve the main production in manufacturing and population centres of the world’s largest energy consumer China • Attractive PSCs, protected by Holland-PRC bilateral treaty, providing gas, mainly to large SOEs on long-term GSAs, at prices insulated from international markets • Drilling and completion techniques tailored to deal with the brittle coal and faulted geology of China - LiFaBriC Well established operations • Gas production to increase significantly with further development drilling and by implementing well- positioned for completion upgrades and production optimisation of existing well stock growth • Sales ramp up supported by enhanced well-to-market infrastructure and increased processing capacity • Highly experienced operational team with strong industry track record Strengthened • Strong corporate management team with solid energy sector expertise corporate and operational • High quality shareholder base including Aberdeen, Clermont, Fidelity, GDGH, GIC and Platinum management Asset Management STRICTLY CONFIDENTIAL & PROPRIETARY -4- -4- SUBJECT TO CONFIDENTIALITY AGREEMENTS
Overview – 2018 Operational Achievements Exploration – G3E Guizhou block exploration program ongoing; 6 wells online, Chinese reserve report successfully submitted Jiangxi and Anhui exploration blocks development potential re-assessed with high prospective acreage identified Exploration activities continued on non-operated areas; 12 wells producing in Shizhuang North, 400sqkm of seismic and an additional 14 wells drilled in Qinyuan block Production – GDG Total exit gas sales of 6.38 Bcf from producing assets GSS & GCZ drilled wells 1442, online wells 1117, infrastructure connected wells 1039 GSS infrastructure build on schedule; 243 new wells online, 459 new wells connected to infrastructure 80% CNOOC drilled wells online, 93% CNOOC online wells connected to infrastructure 4 IPF 1 operational ; 1 in test run, 3 under construction 61 wellhead compressors; GSS 51 units, GCZ 10 units 35 upstream production workovers performed on operated wells GCZ ODP approved; implementation Q1 2019 Source: Company STRICTLY CONFIDENTIAL & PROPRIETARY 1. IPF: Integrated Production Facility (Gas Mother Stations in GSS and GCZ block) -5- -5- SUBJECT TO CONFIDENTIALITY AGREEMENTS
Assets in Commercial Chinese CBM Basins Blocks’ s’ su summary Geographi hic l locat ation GCZ GCZ Gas GSS Dragon Ga • Grek • Grek eka I Inter erest est: 47% eka I Inter erest est: 60% 1 • Part EA • Part rtner: : PetroChina rtner: : CNOOC Qinyuan Block Green Dr • Opera • Opera rator: r: PetroChina rator: r: Greka Heilongjiang (GQY A&B) 3,665km 2 • Total W • Total: l Wells lls: 114 wells 2 l: W Wells lls 1,328 wells 2 Jilin Gr Inner Mongolia D Shizhuang GSN GQY ( Y (A) Liaoning North Block (GSN) 375km 2 Beijing • Grek • Grek eka I Inter erest est: 50% eka I Inter erest est: 10% Xinjiang Tianjin • Part • Part rtner: : CNOOC rtner: : CNOOC P Shizhuang Ningxia Shandong • Opera • Opera South Block rator: r: CNOOC rator: r: CNOOC (GSS) Shanxi Qinghai • Total W • Total W l Wells lls: 192 wells 2 l Wells lls: 32 wells 2 388km 2 Gansu Jiangsu loration Henan P Shaanxi Tibet Chengzhuang Shanghai Hubei Anhui Explo GQY (B) GF GFC Block (GCZ) 67km 2 Zhejiang Chongqing • Greka Interest: 60% • Grek eka I Inter erest est: 49% Sichuan G3 E • Partner: CNOOC • Part rtner: : CNOOC Jiangxi Hunan EA Panxie East D Fujian • Operator: Greka • Opera rator: r: Greka Block (GPX) Baotian- Guizhou 584km 2 Qingshan Block Guangdong Guangxi • Total Wells: 37 wells 2 • Total W l Wells lls: 31 wells 2 (GGZ) 947km 2 Yunnan EA Hong Kong Fengcheng Block (GFC) GPX PX GGZ GZ 1,541km 2 Hainan • Grek • Grek eka I Inter erest est: 60% eka I Inter erest est: 60% Capital of Province P Production • Part • Part rtner: : CNOOC rtner: : PetroChina Group Coalbed Methane Blocks • Opera • Opera rator: r: Greka rator: r: Greka D Development/Pilot Stage • Total W • Total W l Wells lls: 12 wells 2 l Wells lls: 45wells 2 EA Exploration and Appraisal Notes: 1. Can be increased to 70% on option exercise STRICTLY CONFIDENTIAL & PROPRIETARY -6- -6- SUBJECT TO CONFIDENTIALITY AGREEMENTS 2. Includes non-operated wells
G3E – Six Exploration blocks - 2P US$816 million 1P Net: 5Bcf PV10: US$29m GGZ GSN Capex: USD3m Net: 1 Net: 4.6 PV10: PV10: US$6m US$23m 2P GGZ GSN GFC Net: 71 Bcf Net: 29 Net: 17 Net: 25 PV10: US$816m PV10: PV10: PV10: Capex: USD86m US$4204m US$85m US$326m 3P GGZ GSN GFC Net: 1,002 Bcf Net: 101 Net: 672 Net: 229 PV10: US$7,648m PV10: PV10: PV10: US$1,412m US$3,221m US$3,015m Capex: USD498m Contingent GGZ GQY Net 2C: 668 Bcf Net 2C: 636 Net 2C: 32 Prospective GGZ GPX GQY GFC Best: 1,328 Bcf Best Est: 368 Best Est: 15 Best Est: 736 Best Est: 209 G3E net 2P reserves of 71 bcf with PV10 value of US$816 million Source: Company estimates as of yearend 2018. Note: Net gas reserves and NPV estimates are based on company's participating interest in the blocks. -7- -7- Note: 5% escalation applied per year to future operating costs, capital costs and sales prices.
GDG – Two Production blocks - 2P US$1.6 billion 1P Net: 129 Bcf PV10: US$653m Capex: USD49m GSS GCZ Net: 114 Net: 15 Bcf PV10: PV10: US$581m US$72m 2P GSS GCZ Net: 338 Bcf Net: 303 Net: 35 Bcf PV10: PV10: PV10: US$1,653m US$1,495m US$157m Capex: USD141m GSS 3P GCZ Net: 1,023 Net: 60 Bcf Net: 1,083 Bcf PV10: PV10: US$4,942m PV10: Capex: USD630m US$4,686m US$255m GDG n net 2 2P re reserves of of 338 38 bcf w f with P h PV10 v valu lue of of US$1 $1.6 6 billio ion Source: Company estimates as of yearend 2018. Average gas price US$8.98/Mcf for producing blocks. USD/RMB FX Ratio of 6.8. Note: Net gas reserves and NPV estimates are based on company's participating interest in the blocks. -8- -8- Note: 5% escalation applied per year to future operating costs, capital costs and sales prices.
Table of contents Overview Operational highlights 2019 outlook Appendix STRICTLY CONFIDENTIAL & PROPRIETARY -9- -9- SUBJECT TO CONFIDENTIALITY AGREEMENTS
Guizhou Block Moving Towards First Gas De-risked 7 major 8 wells realized 3P reserves First Sales in coal seams commercial gas rates $ 1,412 million 2019 3,500 900 840 Location Guizhou Province 800 PSC Area 947 km 2 3,000 G3E Working Interest 60% (operator) 700 2,500 Chinese Partner PetroChina 600 552 PSC Expiry 2035 2,000 500 GIIP 6,041 Bcf 400 380 380 3,264 Wells Drilled 45 + 585 (slim holes) 360 400 1,500 Major Coal Seams Seven major coal seams 300 290 300 Wells Produced 15 wells 1,000 1P (net volume/PV10) 1 bcf / $6 million 200 1,179 1,130 1,141 1,066 2P (net volume/PV10) 29 bcf / $404 million 500 884 100 762 775 3P (net volume/PV10) 101 bcf / $1,412 million - 0 Chinese Reserves Report Submitted to PCCBM BQ 19 BQ18E BQ16 D1 BQ1D1 BQ2 BQ17 BQ16E BQ16 D1 Peak production ( m3/day) Casing pressure (Kpa) Source: STRICTLY CONFIDENTIAL & PROPRIETARY Company estimates as of 31 st December 2018 -10- -10- SUBJECT TO CONFIDENTIALITY AGREEMENTS
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