Doxa Energy Presentation Update – May 2012 Accelerating Production, Proven Execution
Safe Harbor All statements other than statements of historical fact may be forward ‐ looking statements. These statements relate to future events or the • Corporation's future performance. Forward ‐ looking statements are often, but not always identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward ‐ looking statements. The Corporation believes that the expectations reflected in those forward ‐ looking statements are reasonable but no assurance can be given that • these expectations will prove to be correct and such forward ‐ looking statements included in this presentation should not be unduly relied upon by investors. These statements speak only as of the date of this presentation and are expressly qualified, in their entirety, by this cautionary statement. In particular, this presentation contains forward ‐ looking statements. The Corporation's actual results could differ materially from those anticipated in • these forward ‐ looking statements as a result of the risk factors set forth below and elsewhere in this presentation. The forward ‐ looking statements or information contained in this presentation are made as of the date hereof and the Corporation undertakes no obligation to update or revise any forward ‐ looking statements, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. Certain of the forward ‐ looking statements regarding the Corporation’s financial outlook, anticipated revenue, future expenditures and cash flow • forecasts may constitute future ‐ orientated financial information (“FOFI”). The FOFI included in this presentation has been provided only for the periods listed and for the sole purpose of providing an estimated guideline for the Corporation’s possible future financial position and the FOFI may not be appropriate for other purposes. References to "contingent resources" or "resources" in this presentation do not constitute, and should be distinguished from, references to • "reserves". "Reserves" are those remaining quantities of oil and gas anticipated to be economically recoverable from these known accumulations from a given date forward. "Resources" are oil and gas volumes that are estimated to have originally existed in the earth's crust as natural accumulations but are not capable of being classified as "reserves", and "contingent resources" are a sub ‐ category of resources that means those quantities of oil and gas estimated to be potentially recoverable from known accumulations but which cannot be classified as "reserves" for a variety of reasons, including that they may not be currently economic. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. Barrel of Oil Equivalent: Where amounts are expressed on a barrel of oil equivalent (“BOE”) basis, natural gas volumes have been converted to BOE • at a ratio of 6,000 cubic feet of natural gas to one barrel of oil equivalent. This conversion ratio is based upon an energy equivalent conversion method primarily applicable at the burner tip and does not represent value equivalence at the wellhead. BOE figures may be misleading, particularly if used in isolation. Page 2
Executive Summary Doxa Energy Ltd. (TSXV:DXA) • Key Figures www.doxaenergy.com Net Proved Reserves (12/31/11) 234.2 MBOE – Founded mid ‐ 2010 Net Proved PV(10) (12/31/11) US $7.107 MM – Independent oil and gas E&P Basic shares (as of 12/31/11) 33,980,141 – Shares senior management with Fully diluted shares 52,978,288 Dynamic Production, Inc. Recent Share Price CDN $0.17 Dynamic Production, Inc. Market Capitalization CDN $5.8MM • www.dynamicproduction.net Producing Wells (as of 5/1/12) 10 – Privately held Ft. Worth E&P founded Wells Drilling or in Progress 3 1968 Est. Net Daily Production BOPD 45 – Proven, 40 ‐ year track record, veteran MCFD 740 staff BOEPD ( 6:1 Conversion ) 170 Est. Monthly O/G Production $213,000 Strategy Revenues (5/12 net of taxes only) • – Apply specialized E&P expertise to identify, acquire and develop diverse Capitalization and strategic portfolio of oil & gas Shares % assets Insiders 12,124,929 35.68 Public 21,855,212 64.32 Total: 33,980,141 100.00 Page 3
Investment Highlights Skilled and expeditious ramp ‐ up of production since May 2010 launch • 10 producing wells (1 producing well sold in Q4 2011) – 170 barrels of oil equivalent per day (BOEPD) brought on production – Expecting ramp up of drilling and associated production in Sarco Creek 3D and Mississippian Oil Play – throughout 2012 (Anticipate participation in 18 gross wells in 2012) Strategic portfolio of conventional and non ‐ conventional projects within 2 years • 3,600 net acres leased in Mississippian Oil Play, North Oklahoma – 5,376 net acres of coverage in Sarco Creek 3D Seismic, South Texas – 861 net acres leased in Eagle Ford shale play, South Texas – 152 net acres HPB and other conventional vertical well prospects, Texas Gulf Coast – Private equity management style • Stricter, return ‐ focused project selection criteria – Bottom line focus – 40 years of Dynamic Production, Inc. E&P experience • Low overhead by leveraging Dynamic Production staff – Allows immediate deployment of financing proceeds – Gulf Coast E&P veterans with notable partners and full staff – 36% management ownership stake • Page 4
Dynamic Production, Inc. Doxa Shares Management and Opportunities with Dynamic Family owned, Ft. Worth E&P company – • founded in 1968 Longstanding industry reputation – Fully staffed with E&P veterans – 30 ‐ year tenures with Dynamic • Geology – Engineering – Land management – Accounting & project administration – Operator of 500+ Gulf Coast wells – 75 wells currently operated • Notable Dynamic discoveries • Dynamic Gas Field ‐ Wharton County, TX – 120 BCF Expected Ultimate Recovery (EUR) • Sligo Oil and Gas Field – Live Oak County, TX – 30BCF Projected EUR • Producing 20 MMCFD • Koehn Unit No. 1 Historical Transaction Partners • Newfield, Cimarex , Penter VII, Chesapeake, XTO, – Petrohawk, Rosetta, Pioneer Page 5
Doxa’s Focus Areas Page 6
Mississippian Resource Play, Oklahoma Emerging horizontal oil play led by Chesapeake, SandRidge and Eagle Energy • Potential to become premier US onshore resource type play – Potential of 300 ‐ 500 MBOE reserves at $3 ‐ 4mil cost per well – Extensive historical vertical well control • High perm, thick fractured carbonate • Shallow depths, above 6,000’ • Ample rig availability ‐ low horsepower & low pressure pumping • Acquired 20% working interest in ~18,000 gross acres • Woods, Alfalfa, Grant, Garfield and Kay Counties – Oklahoma forced pooling – Land acquisition complete – SandRidge data points* • 232 wells drilled – Avg. peak 30 day production: 275 BOEPD • Other players include: Eagle Energy, Range Resources, Chesapeake – Over 255 wells drilled (excluding SandRidge) • Focused Acquisition Strategy • Based on evaluation and identification of “core” play area – Veteran local brokers engaged – Early mover – low acreage cost – *SandRidge Presentation,– February 28, 2012, Page 7
Doxa’s Activity in the Mississippian 2012 Ramp Up of Drilling and Completion Activity • 4 wells drilled and completed, 3 currently producing (4 gross/.12 net). – 2 wells drilled and waiting on completion (2 gross/.06 net). – 2 additional wells currently drilling (2 gross/.06 net). – 7 proposed wells (7 gross/.11 net). – Anticipate average 1 ‐ 2 well starts each month in 2012. – Initial Average Well Performance Meeting Expectations • 3 producing wells, average initial peak production rates as follows: – 170 BOPD, 650 MCFD, or 278 BOEPD (SandRidge average is 275 BOEPD). • Doxa’s net interest and production in the 3 gross producing wells are as follows: – 0.09 net wells, 18 BOPD, 66 MCFD, or 29 BOEPD (total for 3 wells NAR). • Est. Monthly O/G Revenue net of royalties and taxes (3 producing wells), $56,000. • Total estimated drill and complete cost net to Doxa (3 producing wells), $336,000. • Average drill and complete well cost net to Doxa, $112,000 per well. • Estimated LOE per month net to Doxa, $10,000 (3 producing wells). • Long Term Expectations • Expect participation in 300 ‐ 400 gross wells, up to 17 net wells with average WI of 3 ‐ 4% – Estimate each net well (based on SandRidge type curve) will add $5.6mil in net PDP value to – Doxa (NPV10), plus 5.6mil in PUD value assuming 1 development location. Total Potential Resource Value, $93.2mil. Page 8
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