Virtus Oil and Gas Corp Investor Presentation April 2017
Disclaimer Extent of Information This document has been prepared by Virtus Oil and Gas Corporation( “ Virtus Oil ” or “ Company ” ). This Presentation, including the information contained in this disclaimer, does not constitute an offer, invitation or recommendation to subscribe for or purchase any security and neither the Presentation, disclaimer not anything contained in such forms the basis of any contract or commitment. This Presentation does not take into account your individual investment objective, financial situation or particular needs. You must not act on the basis of any other matter contained in this Presentation but must make your own assessment of the Company. No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information contained in this Presentation, including the accuracy, likelihood of the achievement or reasonableness of any forecast, prospects, returns or statements in relation to future matters contained in the Presentation ( “ Forward-looking statements ” ). Any such forward-looking statements that are contained in this Presentation or can be implied by the same are by their nature subject to significant uncertainties and contingencies associated with the oil and gas industry and are based on a number of estimates and assumptions that are subject to change ( and in many cases are outside the control of Virtus Oil and Gas and its directors) which may causes the actual results or performance of Virtus Oil and Gas to be materially different from any future results or performance expressed or implied by such forward-looking statements. To the maximum extent permitted by law, none of Virtus Oil and Gas ’ s, or related corporations, directors, employees, agents nor any other person accepts and liability, including without limitation arising from fault or negligence, for any loss arising from use of this Presentation or its content or otherwise arising in connection with it. Exclusion of Financial Product Advice This Presentation is for information purposes only and is not a prospectus or other offering under United States law or under any others laws in the jurisdictions where the Presentation might be available. Nothing herein constitutes investment, legal, tax or other advice. This Presentation is not a recommendation to acquire shares and has been prepared without taking into account the investment objectives, financial situation or needs of individuals. Independent Advice You should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and seek appropriate advice, including, legal and taxation advice appropriate to your jurisdiction. Virtus Oil and Gas is not licensed to provide financial advice in respect of its shares.
Key Benefits- Paradox Basin • 90 boepd of existing production with ability to scale quickly 1 Introduction Production/ to 800 boepd by mid-2017 and 1,500 boepd by the end of Cash Flow/Self 2017 • funding Restarting low cost conventional shut-in production • Cash flow positive at current oil prices by Summer 2017. • Projected Gross Revenue to go from $1 million annual run- 2 Strategy rate to $12 million annual run-rate with growth in production and modest uplift in oil prices • 4.3mmboe oil & gas reserves certified by independent third Reserves party 3 Challenges Forward - PV-10 of $94 million - Revenue of $137 million • Ability to significantly expand reserve base over the next 12 months 4 History • Conclusion Includes affiliate-controlled gas plant (200 MMscfpd capacity) Key and 25-mile pipeline Infrastructure - Key infrastructure assets of former Delta Petroleum - Assets represent over $295 million of cumulative capex • First deal completed on March 2017 • Platform for Targeting significant production and cash flow growth: expansion - FYE 2017: 1,000 Bopd; FYE 2018: 3,000 Bopd; FYE 2019: 5,000 Bopd • Production uplift to coincide with price recovery • Over 250 drill sites with ability to grow production • Board Ex Nevada Governor and US Oil and Gas executives with appointments proven track records of success
Company Assets Net Acreage NRI 1P 3P Production Squaw Canyon 160 82.50% 315 Mbo 315 Mbo 10 bopd 880 85.50% 1,730 Mbo 6,110 Mbo 20 bopd Tin Cup Paradox Federal Unit* 21,271+/- 81.00% 2,100 Mbo 10,600 Mbo 60 bopd Totals 22,311 4,145 Mbo 17,025 Mbo 90 bopd Transaction delivers reserve base of 4.2mmboe; FNOR $137 million PV-10, USD$94 million revenue * Paradox Federal Unit to be closed in 2017. LOI Signed
Production/Revenue Scenarios Oil Price Revenue Scenarios USD (m) Total Revenue USD (m) 25.00 20.00 90boepd 15.00 400boepd 600boepd 10.00 ($10/bbl) 800boepd 5.00 (net VOIL) - $45/bbl $55/bbl $65/bbl $70/bbl Production Scenarios USD (m) Net Revenue USD (m) 10.00 9.00 8.00 7.00 90boepd 6.00 400boepd 5.00 4.00 600boepd 3.00 800boepd ($10/bbl) 2.00 1.00 - $45/bbl $55/bbl $65/bbl $70/bbl (net VOIL)
Company Assets with Midstream
Pipeline and Gas Plant • Sellers of Recent Acquisitions also own a gas plant and a 25-mile pipeline (200 MMscfpd capacity) - Key infrastructure assets of former Delta Petroleum Corporation - Assets represent over $295 million of cumulative capex - Virtus Oil is in process of negotiating to acquire the legacy assets tied to these prospects.
Value* Delivered in Recent Deals Asset Potential Value Comments 1P Reserves $94,000,000 PV-10 Gas Plant $ 5,000,000 Based on Revenue and Inventory of items in closing Pipeline $40,000,000 Based on Revenue Potential and Capex Spent by Delta to permit across BLM, State and County Lands Total $139,000,000 ALL STOCK TRADE
Virtus Investment The Company has acquired proven assets in the Paradox Basin. These assets were bought with company stock and needed workover capital as the Seller had deferred maintenance during the recent decline in oil prices. Virtus Management has identified de-risked opportunities for re-entry and workover wells. As of March 2017, The Company began to bring these existing wells back on production. The company has recently spent ~$100k in costs to repair a water disposal well and replaced two pumps on wells that are now ready for production.
De-Risked Upside for Production Virtus has identified 10 wells needing workovers from pump jack changes, flow lines installed, valves replaced, etc. Capital of ~$3 million will be used to work-over these wells. The company is flexible with respect to structure in accommodating the right investors. Options include but are not necessarily limited to: i) Stock Issuance; ii) Debt tied to Production (VPP); iii) Direct Equity Investment; and iv) a combination of all of the above. The company has excellent well control in the area along with an extensive Reserve Report from Ralph E. Davis and Baker Hughes Analytical Review and Study. Upside Case Downside Case Base Case 30 Days- 100 30 Days- 30 Days- 250 boepd 200boepd boepd 60 Days- 250 60 Days- 400 60 Days- 500 boepd boepd boepd 90 Days- 400 90 Days- 750 90 Days- 1,000 boepd boepd boepd 120 Days-600 120 Days-900 120 Days-1,100 boepd boepd boepd 150 Days 800 150 Days 1,200 150 Days 1,300 boepd boepd boepd
Increased Density Drilling Potential A capital investment of $6 million for drilling increases the company’s production significantly and the cash flow generated from this investment can fund ten additional work-over projects and the drilling of fourteen new wells by 2020. Working bopd Mcfd Revenue LOE Net Rev G&A CapEx Capital 2017* 1,100 2,100 6,828,000 1,005,000 5,823,000 466,000 5,528,000 6,000,000 2018 2,000 2,300 26,262,000 2,187,000 24,075,000 960,000 6,000,000 2019 2,600 4,200 44,216,000 2,187,000 42,029,000 1,320,000 12,000,000 2020 3,100 5,900 57,818,000 2,187,000 55,631,000 1,800,000 12,000,000 * Eight months of production in 2017 Oil price increases from $52/bbl to $65/bbl Gas price $3.00 Mcf CapEx from $6MM from Investment and balance from cash flow Drill Six Horizonal wells in 2018 Drill Four Offsets in 2019 Drill Four Offsets in 2020
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