October 22nd 2015
Capital structure Market Cap £1.63million* Capital Structure Current Shares 203mm Warrants 52.7mm** Options 5.5mm*** Major Shareholders Management 16.9% Legal and General 4.6% AXA Investment 4.1% Managers Key Data Market AIM Notes: Ticker IRG * Market Cap as at 20/10/2015 ** Warrants have an average volume weighted exercise price of 1.47p/share *** Options have an average volume weighted exercise price of 2.93p/share 2
Management team: Biographies Greg Coleman has over 35 years of experience in the oil and gas industry, 20 of which were gained Greg Coleman at BP where he was Group Vice President. He worked as Managing Director for BP Norway CEO following the merger of BP and Amoco. He then led BP's Investor Relations team and was Group Vice President for Health, Safety, Security and Environment. He then founded Canamens Ltd (a private equity backed company). In 2007 which successfully appraised the Kraken field in the North Sea as well as building a portfolio of interests in North Africa and Central Asia. Owain Franks is a former PricewaterhouseCoopers partner and was on the PwC UK Management Owain Franks Board for 7 years. He is by background a legal and tax advisor with 25 years of M&A and Commercial Director performance improvement experience and has over 15 years of specialisation in the Oil and Gas Industry and over 30 years experience in the commercial financial sector. Brian Hepp has over 31 years of upstream oil and gas operations in North America, Russian Brian Hepp Federation, Europe, North Africa and South America. His record and experience encompasses all COO aspects of field operations and asset management and optimisation, and he was instrumental in increasing production on a development in the West Esh El Mallaha ("WEEM") field in the Gulf of Suez in Egypt from 450 to 6,000 bopd, in less than 18 months from initial involvement. Kevin Dean Kevin Dean has over 35 years of upstream experience around the globe including East and Northern Africa, Russia and the North Sea. He led the effort to evaluate and drill the Rabeh East Technical Director Field in the Egyptian Eastern Desert which proved c.40mmb of reserves, led assessment of a corporate acquisition in Colombia and the redevelopment of several multi million barrel fields in Azerbaijan. Feilim McCole is a Chartered Accountant with significant quoted company and corporate finance Feilim McCole experience. He spent six years in the corporate finance teams at Andersen and Deloitte, leading Financial Director AIM IPOs and acting as Nomad and financial adviser to AIM and Main Market companies, before spending three years focused on private equity advisory. Before joining IRG he was the interim Finance Director of a £35m turnover support services company and prior to this, Finance Director of a quoted property company with a £125m portfolio. He qualified with EY. 3
Strategy Acquire initial cornerstone production assets with scope for application of modern technology, operational excellence and development upside Investments • Innovative investment approach and structures • Seek synergies between assets • Production enhancement through operational improvement and appraisal / development of identified structures • Execute two to three complementary transactions (number of MoUs Growth of Production being negotiated) to give additional production / cash flow Portfolio • Identify further acquisitions with opportunities for production enhancement • Cash flow and debt financing to fund acquisitions and Capex Organic & Inorganic • Mix of acquisitions and organic growth to drive production up to Growth 25Mboepd 4
Egypt: Current Situation • Political situation is stabilising • The government is determined to attract new foreign investment- New investors/operators will be welcomed with open arms. • Fuel subsidies have been reduced and further moves in that direction are on the table to reduce the fiscal deficit • The country is now a net importer of oil and oil products. Hence the need to move to competitive international pricing. Due to local shortages, premium prices for imports are being realised. • EGPC reduced outstanding receivables to oil companies by $2.1bn at year end 2014 and continuing… • 2 licence rounds have been completed in the last year with EGPC expected to announce a further western desert acreage round. • Service costs are coming down 5
Recent Egypt Oil & Gas Transactions Buyer Seller Deal Type Date Country Transaction Value ($MM) $/1P bbl $/2P bbl Sea Dragon Energy Madison Petrogas Corporate Aug-15 Egypt 20.9 - 4.5-6.8* Rockhopper Beach Energy Asset Aug-15 Egypt 22.0 - 4.5 Sacoil MENA Hydrocarbons Asset Sep-14 Egypt 14.1 - 2.3 Undisclosed Sea Dragon Asset Sep-13 Egypt 6.0 - 9.2 SINOPEC Apache Asset Aug-13 Egypt 3100.0 34.1 7.3 National Petroleum Sea Dragon Energy Company Corporate Dec-12 Egypt 3.3 1.4 1.2 Petroceltic Melrose Resources Corporate Aug-12 Egypt 492.3 8.6 6.0 Transglobe Cepsa Egypt Asset Jul-12 Egypt 4.7 - - Transglobe EP Energy Asset Jun-12 Egypt 21.7 - - National Petroleum Sea Dragon Energy Company S.A. Corporate Jan-12 Egypt 80.9 14.7 8.6 MENA Hydrocarbons Hess Asset May-11 Egypt 7.5 - - Egyptian Petroleum Transglobe Development Asset Mar-11 Egypt 60.0 8.1 6.8 Average 307.95 13.23 5.63 Independent Resources Transglobe Inc. Corporate Sep-15 Egypt 1.75 11.40 3.47 * Based on IRG estimated value of net cash of Madison Company Market Cap (US$MM) EV/2P bbl (US$/bbl) ** Based on EV as of 19 Oct 2015, debt, cash & reserves from 2014 Transglobe 204.5 3.94** Annual Report *** Based on EV as of 19 Oct 2015, debt & cash from 2014 Annual SDX Energy 27.6 5.62*** Report. Reserves from Operations page on web site (19/10/2015) 6
Nostra Terra partnership Strategic agreement to explore Egyptian investments - 50:50 investments - Cost sharing approach NTOG: Producing company – Texas, Oklahoma, Kansas, Colorado and Wyoming - - AIM quoted Experienced in field development techniques relevant for Egypt Key personnel Ewen Ainsworth – Chairman - Matt Lofgran – CEO - - Alden McCall - COO 7
East Ghazalat Acquisition 8
East Ghazalat Acquisition Transaction Acquire 25% working interest in producing East Ghazalat licence in the Egyptian Western Desert US$0.5M cash payment upon purchase, US$1.25M loan note repayable in 2 years with 10% pa coupon Rationale For Transaction Immediate net production to IRG of circa 220bopd Generate c.US$2.0m pa of operating cash flow (pre-investment capex) from 2017 even at current low oil prices Significant upside can be recognised immediately on any further oil price recovery Significant cost recovery potential based on historic investments made by the Vendor in the JV to the Operator Further Upside IRG share of 2P Reserves of approximately 0.5mm bbls Management expects to more than double net production through low risk workovers and development drilling Significant undeveloped gas resource of 140,000 Boe (2C resources) 9
East Ghazalat Asset Degolyer& McNaughton CPR (Prepared as of 30 June 2015) 25% WI 1P 153,000 bbls 1P+ 2P 500,000 bbls 1P+2P+3P 632,000 bbls 2C contingent: 140,000 BOE 1,900,000 bbls (plus upside in gas development Mgmt Case 10
East Ghazalat Wells & Facilities Sabbar NW-1 well Sabbar 1X well Production Storage Tanks Manifold 11
East Ghazalat Structure 12
East Ghazalat - Revenue per bbl Analysis at US$50/bbl Production Sharing Contract – Approved by Egyptian Parliament 25% cost recovery 20% profit share of remaining revenue Opex recovered in current year Capex recoverable over 5 years No further corporation tax or Government royalties due Western Desert Discount $4.02 Fixed $2.15 per bbl + 3.75% Remainder $27.59 EGPC Profit Oil Includes At US$50 per bbl the Egyptian Contractor receives $18.39 per $50.00 $45.98 Tax & bbl to meet all costs and G&A Gross Net Royalty per bbl per bbl $6.90 Profit Oil At 880 bbl per day revenue $11.49 available to the Contractor is Cost Oil $5,906,868 per year 25% Net 20% Profit 80% Profit (15% Net) (60% Net) 13
East Ghazalat - Single Well Economics Production: 636,000 bbls Even at $50 per BBL the returns from new well investment are excellent. Payback is less than 2 years 14
Tunisian Assets 15
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