March 2011 THE nExT fronTiEr in unconvEnTional oil ExcEpTional sHarEHoldEr rETurns in a rising pETrolEum markET 1
invEsTmEnT HigHligHTs DEVELOPMENT & PRODUCTION PLAN – Strata is progressing forward with its USD $250 million fjve-phase capital plan to produce 56,000 barrels (bbls) per day by 2017 PHASE 1 UNDER WAY – Engineering exploration and pre- production development of Cadotte holdings LAND POSITION – 52,480 acres (87.6 sections) in Peace River region WORKING INTEREST is 100% Strata’s CADOTTE PROJECT – Best Estimate NPV USD $1.3 Billion (10% disc.) at $85/bbl over 20yrs 28% Internal Rate of Return 1.99 Billion bbls in place 517 Million bbls recoverable THE nExT fronTiEr in unconvEnTional oil more on the nExT page 2
invEsTmEnT HigHligHTs ( continued ) TREMENDOUS UPSIDE – High side estimates: Up to NPV USD $1.9 Billion for Cadotte Project with 36% IRR (disc. 10%) at $95/bbl High probability of exceeding 26% recovery rate with existing and new technology Cadotte West resources untapped Price of oil rising ($150/bbl?) TECHNOLOGY – Exclusive licensing agreement with University of Alberta for proprietary “Steam over Solvent” recovery method nExT | our business THE nExT fronTiEr in unconvEnTional oil 3
our businEss Company : Strata Oil & Gas was incorporated in the US in Nov 1998, moved headquarters to Calgary, Alberta in 2005 and incorporated under Canadian law Sector : Heavy oil (carbonate hosted bitumen deposits) exploration and production in Alberta’s Peace River area Goal : Provide exceptional shareholder returns in a rising petroleum market, by focusing on high-value carbonate-hosted bitumen deposits * As of March 10, 2011 nExT | world’s oil reserves THE nExT fronTiEr in unconvEnTional oil 4
World’s oil rEsErvEs 1.258 Trillion bbls proved oil reserves Canada holds 15% of the world’s reserve - 335 Billion bbls crude bitumen – 315 Billion bbls crude oil – 19.7 Billion bbls World Oil Reserves ( billions of barrels ) 315 260 113 78 60 22 Canada Saudi Arabia Iraq Venezuela Russia U.S. Source: Alberta Energy and Utilities Board, British Petroleum - 2008 nExT | canadian crude oil production THE nExT fronTiEr in unconvEnTional oil 5
canadian crudE oil producTion Currently produces 3.3 Million bbls/day There are an estimated 50.7 Billion bbls in oil sands that are not under active development (000’s barrels/day) 5000 Oil Sands In-Situ 4500 Oil Sands Mining 4000 Conventional Heavy 3500 Conventional Light 3000 2500 2000 1500 1000 500 0 1990 1995 2000 2005 2010 2015 2020 Source: May 2005 – Alberta Energy and Utilities Board, British Petroleum -2008 nExT | alberta oil facts THE nExT fronTiEr in unconvEnTional oil 6
albErTa oil facTs Growing production with approximately 1.1 Million bbls/day with 176 Billion bbls of proven oil reserves: crude bitumen – 174 Billion bbls crude oil – 1.6 Billion bbls Peace River Oil Sands holds over 188 Billion bbls of Oil Long life resource Typically 30 year reserve life with minimal declines Only 3% of initial established reserves produced to date 69% of possible oil sands areas are available for exploration and leasing Attractive royalty and tax regime - Alberta Energy Innovation Strategy offers royalty offsets of up to $200 million over 5 years to pilot projects that use new, innovative technology to development of oil and gas reserves Source: May 2005 – Alberta Energy and Utilities Board nExT | peace river oil sands area THE nExT fronTiEr in unconvEnTional oil 7
pEacE rivEr oil sands arEa The Peace River Oil Sands area covers 11,052 sections (2.37 million hectares) Historic Bitumen exploration and production has focused on Bluesky and Gething Formations, Cretaceous-age clastic sediments Recent Exploration addresses the Debolt Carbonate Debolt is similar to the Grosmont play in the Wabasca area nExT | land position THE nExT fronTiEr in unconvEnTional oil 8
land posiTion Source: EUB ST98-2006 nExT | current land tenure THE nExT fronTiEr in unconvEnTional oil 9
currEnT land TEnurE 82 Sections in Total in the Cadotte Area nExT | cadotte project THE nExT fronTiEr in unconvEnTional oil 10
cadoTTE projEcT During 2006-2007 Strata drilled three wells on this block Resource estimate for this block was announced in September, 2007 nExT | major operators: cadotte area THE nExT fronTiEr in unconvEnTional oil 11
major opEraTors: cadoTTE arEa nExT | pre-feasibility study THE nExT fronTiEr in unconvEnTional oil 12
prE-fEasibiliTY sTudY Prepared by Norwest Questa Engineering Corporation Feb 2008 Method of extraction utilized for study – Horizontal Cyclical Steam (HCS) Norwest used effective OBIP* estimates rather than a gross OBIP (Gross OBIP is about 50% higher) Shell’s Carmon Project pad and development block design used Production schedule developed over 29 sections (each at 1sq mile) Each pad includes 20 wells of 1,400 m length, each about 600 m in the vertical direction and 800 m horizontally The pads are “brought on stream” over a four year build-up period *OBIP = Original Bitumen In Place THE nExT fronTiEr in unconvEnTional oil nExT | contingent resource estimate 13
conTingEnT rEsourcE EsTimaTE Source: Norwest Corporation nExT | pre-feasibility findings THE nExT fronTiEr in unconvEnTional oil 14
prE-fEasibiliTY findings RECOVERABLE PORTION OF CONTINGENT RESOURCE FOR THE CADOTTE AREA BY TARGET ZONE IN MILLIONS OF STOCK TANK BARRELS (MMSTB) Source: Norwest Corporation nExT | economic evaluation THE nExT fronTiEr in unconvEnTional oil 15
Economic EvaluaTion DIFFERENT OIL PRICE ASSUMPTIONS (USD $ BILLIONS) Sproule and McDaniel and Associates forecast that Alberta Heavy Crude Oil will sell for USD $30 less than WTI nExT | pre-feasibility findings THE nExT fronTiEr in unconvEnTional oil 16
prE-fEasibiliTY findings Economically Viable NPV (disc. 10%) of cash fmows before income taxes of USD $1.3 Billion (over initial 20yrs, producing only 360 million bbls of the total 517 million bbls available) Daily Production Rate of 56,000 bbls per day Based on a review of public data for similar projects Product anticipated to be “dil-bit”, rather than synthetic crude oil Transportation of bitumen via trucking or pipeline to Haig Lake terminal for transfer to the Rainbow Pipe Line which connects to the Edmonton refjneries Source: Norwest Corporation nExT | cadotte development - capital plan THE nExT fronTiEr in unconvEnTional oil 17
cadoTTE dEvElopmEnT - capiTal plan nExT | phase 1 – development strategy THE nExT fronTiEr in unconvEnTional oil 18
pHasE 1 dEvElopmEnT sTraTEgY I. CADOTTE Initial Drilling Program Results Addressed Resource Evaluation & Pre-Feasibility Study Production Testing Determine Additional Drilling Locations Water Survey Submit Application for Pilot Plant II. CADOTTE WEST Preliminary Recognition of Resource Potential Delineate Resource Through a Seismic / Drilling Program Add to the Current Resource Submit Applications for the Appropriate Extraction and Processing Methods nExT | phase 1 – cadotte development THE nExT fronTiEr in unconvEnTional oil 19
pHasE 1 - cadoTTE dEvElopmEnT nExT | leadership THE nExT fronTiEr in unconvEnTional oil 20
lEadErsHip Ron Daems (President & CEO) Extensive fjnancial and resource industry experience Career has focused primarily on business development, strategic planning and fjnancial analysis in the resource sector Currently engaged as President and CEO of Capex Energy Services, a privately held company Previous experience: Portfolio Manager for a multinational investment fjrm, founded and became the CEO of Emerging Business Solutions, a privately held business development company focused primarily on assisting startup companies in the resource sector Pratt Barndollar (Director) Experienced geophysicist who has served as senior geosciences manager and interpreter for large and small oil companies Bachelor of Science degrees from Kansas State University, in Geophysics and Civil Engineering Currently is Exploration Portfolio Manager at Talisman Energy Previous experience: VP, Exploration of Napa Energy, Chief Geophysicist and Exploration Portfolio Manager for Devon Energy, Senior Geophysicist for Samson Canada, Chief Geophysicist for Apache Canada, and Senior Explorer and Project Leader for Phillips Petroleum nExT | forward looking statements THE nExT fronTiEr in unconvEnTional oil 21
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