Primeline Energy Holdings Inc. Corporate Presentation Se pte mbe r 2016 Pr ime line Cor por ate Pr e se ntation - Se pte mbe r 2016 1
Building a L e a ding China F oc use d Oil and Ga s Company 1. T SX-V liste d E &P China g a s pla y with stro ng ma na g e me nt te a m 2. Pro duc ing fo r o ve r 2 ye a rs fro m $700m+ re g io na l pro duc tio n infra struc ture hub in E a st China Se a in pa rtne rship with CNOOC 3. Ga s is so ld unde r a 15 ye a r ta ke o r pa y c o ntra c t fe a turing a fixe d b a sic pric e 4. Ac c e ss to the e a ste rn China g a s ma rke t. China is the wo rld’ s se c o nd la rg e st e ne rg y ma rke t, b ut with g a s a t just 5.5% o f to ta l e ne rg y mix, inc re a se d g a s utiliza tio n ha s b e c o me a fo c us o f Chine se g o ve rnme nt e ne rg y po lic y Hig h ma rg in hydro c a rb o n upside in the fie ld a nd in the 4,397 km 2 e xplo ra tio n 5. c o nc e ssio n whe re we ha ve e le c te d to e nte r the se c o nd pha se o f the ro lling e xplo ra tio n pro g ra m. Altho ug h c o mme rc ia l hydro c a rb o ns we re no t fo und in pha se 1, the te c hnic a l disc o ve ry pro vide s vita l info rma tio n fo r future e xplo ra tio n Pr ime line Cor por ate Pr e se ntation - Se pte mbe r 2016 2
L oc ation • Pro ve n pe tro le um pro vinc e • Ne w E &P fo c us in Xihu T ro ug h (Ba sin) in No rthe rn E a st China Se a , a nc ho re d o n two e xisting fie lds: • Ping hu F ie ld: o nstre a m in 1998, 386 km 14” pipe line to Sha ng ha i te rmina l • Chunxia o F ie ld: o nstre a m in 2006, 360 km 28” pipe line to Ning b o a nd fo ur pro duc tio n pla tfo rms. E xpa nsio n de ve lo pme nt unde rwa y • L S36-1 Ga s F ie ld: o n stre a m in 2014 Pr ime line Cor por ate Pr e se ntation - Se pte mbe r 2016 3
Pr oje c t • L S36-1 g a s fie ld in pro duc tio n, a c c e ssing ma rke t Newly acquired 600 km 2 of 3D thro ug h the re g io na l seismic pro duc tio n infra struc ture hub Ro lling de ve lo pme nt • in fie ld E xplo ra tio n in the • 4,397 km2 737 km 2 of existing 3D c o nc e ssio n c a n b e seismic data ho o ke d into the pro duc ing L S36-1 fa c ility Pr ime line Cor por ate Pr e se ntation - Se pte mbe r 2016 4
Mar ke t: Ac c e ss to Zhe jiang Gas Gr id L S36-1 is a stra te g ic • g a s fie ld c lo se to Zhe jia ng Pro vinc e - po pula tio n 50 Ningbo millio n L NG F o urth la rg e st • e c o no my in China • Co nso lida tio n a fte r ra pid g ro wth in pa st 10 ye a rs to ~6.6 b c mpa • Ga s is o nly 2.8% o f to ta l e ne rg y mix Pr ime line Cor por ate Pr e se ntation - Se pte mbe r 2016 5
L S36- 1: Infr astr uc tur e Hub is Comple te d Pr ime line Cor por ate Pr e se ntation - Se pte mbe r 2016 6
Chine se Gas Mar ke t in 2014 - 2015 • Ra pid g a s infra struc ture de ve lo pme nt (L NG te rmina l a nd lo ng dista nc e pipe line ) in the la st 10 ye a rs • Dra ma tic o il a nd c o a l pric e re duc tio ns sinc e la te 2014 Slo w do wn o f Chine se e c o no my ha s le d to a slo w do wn o f g a s de ma nd • a nd a n o ve rsupply • Ga s pric e fo r o nsho re pipe line g a s in China dro ppe d o n Se pte mb e r a nd No ve mb e r 20, 2015 b y 34% in Zhe jia ng Pro vinc e • Sig nific a nt pre ssure o n L S36-1 g a s o n pric e a nd q ua ntity • L o ng te rm, still re ma ins a ve ry a ttra c tive ma rke t Still the hig he st g a s pric e re g io n in the wo rld • China g a s usa g e is o nly 5.5% o f to ta l e ne rg y mix • Pr ime line Cor por ate Pr e se ntation - Se pte mbe r 2016 7
E ast China Gas De ve lopme nts We st- E ast Pipe line Pr oje c ts • Pha se 1: 4,000 km pipe line fro m Xinjia ng pro vinc e to Sha ng ha i; 18 b c mpa , o n-stre a m Se pte mb e r 2004 • Pha se 2: We st Ga s to E a st: 6,000 km (9,000 inc luding b ra nc he s) fro m T urkme nista n to Gua ng zho u a nd Sha ng ha i; 30 b c mpa pla nne d; o n-stre a m 2012 • Sic hua n Ga s T o E a st: 2,150 km pipe line fro m Sic hua n to Sha ng ha i; 12 b c mpa ; o n-stre a m Se pte mb e r 2010 L NG Pr oje c ts • She nzhe n L NG (3 mto n): first de live ry in 2006; Pla nne d e xpa nsio n to 7 mto n • F ujia n L NG: (2.6 mto n) first de live ry 2009 • Ning b o L NG: first de live ry 2013 • Othe r L NG te rmina ls c o mple te d o r unde r de ve lo pme nt Offshor e Gas F ie lds • T he re a re e ig ht g a s pipe line s to E a st China tha t a re o pe ra tio na l fro m o ffsho re g a s fie lds Pr ime line Cor por ate Pr e se ntation - Se pte mbe r 2016 8
Ar bitr ation against Zhe jiang Gas and CNOOC L S36-1 g a s is so ld to Zhe jia ng Ga s unde r a 15 ye a r ta ke o r pa y Ga s Sa le Co ntra c t • (GSC) sig ne d b y CNOOC, o n its o wn a nd Prime line ’ s b e ha lf, o n Oc to b e r 29, 2014. I t is the c o ntinua tio n o f a se rie s o f a g re e me nts da ting b a c k to the o rig ina l ta ke o r pa y g a s sa le a g re e me nt sig ne d in 2008 re q uire d b e fo re de ve lo pme nt c o mme nc e d . • GSC’ s fixe d b a sic pric e a nd ta ke o r pa y pro visio n a re typic a l in this type o f pro je c t a nd pro vide the upstre a m inve sto r with a se c ure inc o me stre a m. Prime line re lie d o n the GSC to se c ure the b a nk fina nc e fo r its sha re o f the de ve lo pme nt c o st. Zhe jia ng Ga s wa nts a re duc e d pric e to ma tc h o nsho re pipe line g a s pric e g uide line s • issue d b y the Chine se Go ve rnme nt. T he GSC pro vide s tha t the pa rtie s sho uld a t so me po int a g re e a pric e a djustme nt me c ha nism b ut Prime line ’ s po sitio n is tha t this must b e sub je c t to mutua l a g re e me nt. CNOOC ha s fa ile d to initia te a rb itra tio n dire c tly. • Zhe jia ng Ga s o we s CNOOC a nd Prime line RMB450+ millio n a s a re sult o f pa rtia l pa yme nt a nd no n-pa yme nt o f invo ic e s. Prime line a ntic ipa te s full c o lle c tio n o f a mo unts o wing a nd ha s no w c o mme nc e d a rb itra tio n a g a inst Zhe jia ng Ga s (CI E T AC) a nd CNOOC (UNCI T RAL ) to e nfo rc e its rig hts. Pr ime line Cor por ate Pr e se ntation - Se pte mbe r 2016 9
2015 E xplor ation Dr illing Pr ogr am Bloc k 33/ 07 showing we ll loc a tions a nd L S36- 1 Ga s F ie ld Western Margin Fault Block Zone LS23-1-1 LS30-3-1 F irst we ll: L S23- 1- 1 T D 2666m Se c ond we ll L S30- 3- 1 T D 2000m Pr ime line Cor por ate Pr e se ntation - Se pte mbe r 2016 10
Se ismic Cor r e lation A A’ LS23-1-1 Gas LS35-3-1 LS36-1 Field LS30-3-1 Shows Gas Flow T 42 Hor izon T 50 Hor izon A’ A Pr ime line Cor por ate Pr e se ntation - Se pte mbe r 2016 11
L S23- 1- 1 Oc tobe r 2015 – L owe r MYF and L ingfe ng Pr imar y tar ge ts LS23-1-1 Zone of gas shows Pr ime line Cor por ate Pr e se ntation - Se pte mbe r 2016 12
L S30- 3 Pr ospe c ts 1C Amplitude Anomaly with AVO ac tion ± 5ms window on F ull stac k Minimum Amplitude E xtr Strongest AVO Weaker AVO P50 Area P10 Area Pr ime line Cor por ate Pr e se ntation - Se pte mbe r 2016 13
We ll L oc ation L S30- 3- 1 LS30-3-1 1A 1C 1B T42 Pr ime line Cor por ate Pr e se ntation - Se pte mbe r 2016 14
2015 Dr illing Re sults • Co st e ffe c tive a nd smo o th drilling o pe ra tio n Blo c k 33/ 07 two e xplo ra tio n we lls We ll lo c a tio n se le c te d a lo ng the we ste rn ma rg in o f the L ishui b a sin with multiple ta rg e t zo ne s; de sig n c o mple te d b y July 2015 Bo th L S23-1-1 a nd L S30-3-1 we lls e nc o unte re d ve ry g o o d sa ndsto ne re se rvo irs, • a s pre dic te d • L S23-1-1: 81 m o f wa te r a b o ut 24 km no rth o f L S36-1 pla tfo rm; re a c he d to ta l de pth (T D) o f 2,666 m o n Oc to b e r 21, 2015, L S23-1-1 we ll ha s g a s sho ws in thre e zo ne s, a nd ha s se ve ra l thin re se rvo irs with pa y q ua lity with a to ta l c umula tive thic kne ss o f 14 m. Othe r re se rvo irs a re wa te r b e a ring • L S30-3-1: 83.5 m o f wa te r a b o ut 20 km no rth o f the L S36-1 pla tfo rm; re a c he d T D o f 2,000 m o n No ve mb e r 27, 2015. L S30-3-1 pro vide d g o o d c ha nne l sa nd g e o me try in the L S36-1 Ga s F ie ld re se rvo ir le ve l, b ut wa te r b e a ring • No c o mme rc ia l disc o ve ry a nd mig ra tio n re ma ins the ke y risk Pr ime line Cor por ate Pr e se ntation - Se pte mbe r 2016 15
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