Primeline Energy Holdings Inc. August 2015 Primeline Corporate Presentation 1 August 2015
Building a leading Pan Asia/Pacific oil and gas company 1. TSX-V listed E&P China gas play with clean balance sheet and strong management team. Year ended Mar 31 2015 cash flow from LS36-1 of CAD$53 million. 2. Merger with Loyz Energy expected to complete by end-2015 to create a leading Pan-Asia/Pacific E&P company. 3. Enlarged company has production in China and Thailand and exploration upside in both countries, Australia, the Philippines and New Zealand. 4. $700m+ regional production infrastructure hub in East China Sea in partnership with CNOOC has secured access to the high price provincial gas market. 5. 2015+ plan to monetise 1TCF+ of high margin hydrocarbon upside in the field and in our 5,877 km 2 exploration concession. *pro-forma, annualised post PPC acquisition Primeline Corporate Presentation 2 August 2015
Structure and assets Acquiring its affiliate Primeline Petroleum Corporation (“PPC”), 100% controlled • by Victor Hwang, PEH Chairman/~70% shareholder. The transaction is expected to complete imminently. Contractors ’ Rights in 2 Petroleum Contracts in the East China Sea: Block 25/34: LS36-1 gas field (85 km 2 ); Operator: CNOOC (51%), Primeline (49%*). • 2015 McDaniel Proved + Probable (2P) reserves estimates of 13.2 Mmboe (Gas: 61.3 bcf, Liquids: 3.0 MMbbl). Block 33/07: 7 year exploration period of three phases (3, 2, 2 years) from Nov • 2012 (5,877 km 2 ). Operator: Primeline (100%*). 600 km 2 of 3D in 2014 and 2 wells planned imminently. Contractor responsible for 100% of exploration costs. CNOOC has right to • participate up to 51% in any commercial development by paying pro rata development/operation costs. *pro-forma, post PPC acquisition Primeline Corporate Presentation 3 August 2015
East China gas market - High growth, high price China’s dynamic economic growth in the past 25 years has created the • world’s 2 nd largest energy market. China’s current energy needs are met mostly by coal and oil (58% of the • latter is imported) and, insignificantly, by gas at just 5 % of total energy mix. Increased gas utilisation has become a focus of Chinese government energy • policy. Much of the rapid increase in gas demand in East China is now met by • imports via LNG and long distance pipelines and prices remain strong. Primeline Corporate Presentation 4 August 2015
Access to Zhejiang gas grid LS36-1 is a strategic • gas field close to Zhejiang Province - population of 50 Ningbo million LNG 4th largest • economy in China. Current Zhejiang • gas grid usage is at ~6.6 bcmpa (has doubled in just 4 years). But gas is only 2.8% • of total energy mix. Primeline Corporate Presentation 5 August 2015
East China Sea becoming a significant gas production basin Proven petroleum province. • New E&P focus in Xihu Trough • (Basin) in northern East China Sea, anchored on two existing fields: Pinghu Field: onstream in 1998, – 386 km 14” pipeline to Shanghai terminal; and Chunxiao Field: onstream in 2006, – 360 km 28” pipeline to Ningbo and 4 production platforms. Expansion development underway. Primeline Corporate Presentation 6 August 2015
LS36-1: Infrastructure hub is completed • Platform facility • 4 development wells • Subsea pipeline: 126.9km to onshore terminal • Sale gas pipeline: 32 km - to grid Primeline Corporate Presentation 7 August 2015
Valuation has not yet reflected impressive operational progress Production started ODP Jacket approved installed Dev. Drilling Fabrication completed Dev. Agreement Primeline Corporate Presentation 8 August 2015
Strategy leverages infrastructure hub to monetize upside Development • completed for LS36-1 gas field, secured market access and Newly acquired built regional 600 km 2 of 3D production seismic infrastructure hub. High impact • exploration in the immediate vicinity and the rest of the 737 km 2 of existing 3D Block anchored seismic data around the producing LS36-1 facility. Primeline Corporate Presentation 9 August 2015
High margin resource additions from both our blocks 2015+ plan to monetise 1TCF plus of high margin hydrocarbon upside in the • field and in our 5,877 km 2 exploration concession. Substantial possible reserves and prospective resources in the field itself, • through “phase 2 development drilling” . Significant potential in nearby prospects that have been defined by 1300 sq. • km plus of 3D seismic data. Additional hydrocarbon potential supported by existing 2D seismic evaluation • along the trend to north adds 2-4 times more gas potential in same play type. Seven regional wells in and around the basin have hydrocarbon shows or • flows. 2 additional wells to be drilled imminently. LOI for first well – spud date this • month. Primeline Corporate Presentation 10 August 2015
Prospective resources of 1.5TCF (McDaniel) Prospective Resources - Natural Gas Risked (2) Prospective Resources - Unrisked (1) Chance of Resources Success (3) Prospect Low Medium Mean High Mean MMcf MMcf MMcf MMcf MMcf % LS36-1 Paleocene-M1-0 2,745 5,568 6,370 11,101 4,644 73 LS36-1 Paleocene-M1-1 South 1,738 3,963 4,779 8,923 3,484 73 LS36-1 Paleocene-M2 4,858 14,463 19,028 38,761 11,417 60 LS36-1 Paleocene-M3 14,647 31,255 37,104 67,329 25,973 70 LS36-1 Paleocene-L1 8,340 24,177 32,739 67,556 16369 50 LS36-1 Paleocene-L2 2,354 5,321 6,452 11,928 2,581 40 LS30-8 Paleocene-M2 9,375 27,118 35,859 73,134 7,530 21 LS36-1 Development Area (Sub total) 44,055 111,865 142,330 278,733 71,997 LS23-1 Total 29,524 87,135 125,356 264,346 36,475 71 LS23-2 (N) Total 7.315 22,949 33,304 70,501 7,410 27 LS23-2 (S) Total 8,242 27,567 41,496 90,041 8,742 27 LS30-3 Total 37,658 117,429 176,784 381,842 44,740 59 LS29-2 Paleocene-M1-2 18,922 47,291 60,768 118,341 14,584 24 LS29-2 Paleocene-M1-2 7,200 22,516 32,884 71,453 7,103 22 LS35-1 Total 20,340 63,044 97,379 210,657 13,284 25 Block 33/07 3D Seismic Area(Sub total) 129,200 387,931 567,970 1,207,181 132,338 Total (1) 173,255 499,796 710,300 1,485,914 204,335 (1) There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be economically viable or technically feasible to produce any portion of the resources. Total based on an arithmetic aggregation of all the Prospect/Zones and as such there is >90 % chance of exceeding the overall Low Total and <10 % chance of exceeding the overall High Total. (2) These are partially risked prospective resources that have been risked for chance of discovery, but have not been risked for chance of development. (3) L23-1, L23-2N &S and LS30-3 total prospect chance of success takes into account the inter-dependency between zones. Primeline Corporate Presentation 11 August 2015
Additional resources in lower zones • Current Producers are in M1-1 an M1-2 sands. • Additional gas in other sands and in lower tight reservoirs. Cross-section of LS36-1 M11 M12 M2 M31 M32 L1 L2 Primeline Corporate Presentation 12 August 2015
Reserve additions via Phase 2 drilling from platform Existing wells shown in black LS36-1 M1 1 Sth well LS36-1 M1 0 well 30-8 Exploration Prospect Wells LS36-1 M2 & M3 LS36-1 M1 1 SW well wells 8 locations and well tracks selected as candidates for reserve additions. • Primeline Corporate Presentation 13 August 2015
M1 0 untested sand • Designed as deviated well targeted to thick M1 0 section. • Well penetrates entire M1 0 stratigraphic section. • M10 GIIP calculates with Top M1 0 3D Horizon Prospect Range of: Shaded to show M1 0 Isochore P90: 6.8 P50: 13.3 P10: 26.0 Bcf LS36-1 M1 0 Isochore Thickness Primeline Corporate Presentation 14 August 2015
Nearby exploration prospects to the LS36-1 field • Exploration drilling in 2015 following interpretation of further 3D seismic of 600 sq. km which has expanded coverage of the gas play to over 1700 sq. km. • Additional 3D seismic may be required for the remainder of the Block where we have identified gas leads through 2D seismic; and to cover the oil play prospects in the eastern part. Primeline Corporate Presentation 15 August 2015
Lishui gas play tiebacks – 2006 3D seismic area LS30-3-1 LS30-3 LS29-2 LS36-1 Platform LS35-1 LS35-3-1 Discovery LS35-3 Primeline Corporate Presentation 16 August 2015
Valuation reflects neither progress to date nor upside potential • Phase 1 of LS36-1 generates significant cash flow - Selling into one of the key provincial economies in China – one of the highest gas price regions in the world. • Long term close relationship with CNOOC. • Management with proven track record & operational expertise. • One of the very few offshore gas developments in China - with a world class $700m+ infrastructure hub. • 2 wells as significant catalysts for 2015 and beyond - 5,877 km 2 concession with ~1.5TCF of upside exploration potential to share infrastructure. • Merger Loyz Energy expected to complete by end-2015 to create a leading Pan-Asia/Pacific E&P company. Primeline Corporate Presentation 17 August 2015
Appendices Supplementary Technical and Operational Data Board of Directors Management and Technical Team Corporate Structure Primeline Corporate Presentation 18 August 2015
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