Corporate Presentation - Investor Documents - Novus …€¦ · · 2014-09-25This Presentation is...
Transcript of Corporate Presentation - Investor Documents - Novus …€¦ · · 2014-09-25This Presentation is...
Corporate Presentation
November 2010
2
Forward Looking Statements
This Presentation is for information purposes only and is not intended to, and should not be
construed to, constitute an offer to sell or the solicitation of an offer to buy securities of Novus
Energy Inc.
Certain disclosures set forth in this Presentation constitute forward-looking statements. Any
statements contained herein that are not statements of historical facts may be deemed to be
forward-looking statements. Forward-looking statements are often, but not always, identified by
the use of words such as “anticipate”, “believes”, “budget”, “continue”, “could”, “estimate”,
“forecast”, “intends”, “may”, “plan”, “predicts”, “projects”, “should”, “will” and other similar
expressions. All estimates and statements that describe the Company’s future, goals, or objectives,
including Management’s assessment of future plans and operations, may constitute forward-looking
information under securities laws. Forward-looking statements involve known and unknown risks and
uncertainties which include, but are not limited to: exploration, development and production risks;
assessments of acquisitions; reserve measurements; availability of drilling equipment; access
restrictions; permits and licenses; aboriginal claims; title defects; commodity prices; commodity
markets, transportation and marketing of crude oil, liquids and natural gas; reliance on operators
and key personnel; competition; corporate matters; funding requirements; access to credit and
capital markets; market volatility; cost inflation; foreign exchanges rates; general economic and
industry conditions; environmental risks; Climate control legislation; and government regulation and
taxation.
Forward-looking statements relate to future events and/or performance and although considered
reasonable by Novus at the time of preparation, may prove to be incorrect and actual results may
differ materially from those anticipated in the statements made. Novus does not undertake any
obligation to publicly update forward-looking information except as required by applicable securities
law.
3
Measurements
NON-GAAP FINANCIAL MEASUREMENTS
Included in this Presentation are references to certain financial measures commonly used in the oil and gas industry, such as operating netbacks and recycle ratios. These measures have no standardized meanings, are not defined by Canadian generally accepted accounting principle (“GAAP”), and accordingly are referred to as non-GAAP measures. These measures are used by management to assess operating results between periods and between peer companies as they provide an indication of the results generated by the Company’s principal business activities before they are taxed and how efficiently its resources are replaced.
Novus determines operating netbacks as production revenue less royalty, transportation and operating expenses. Novus determines recycle ratios as operating netbacks per boe divided by finding costs per boe. Novus’ reported amounts may not be comparable to similarly titled measures reported by other companies. These terms should not be considered an alternative to, or more meaningful than, cash provided by operating, investing and financing activities or net income as determined by Canadian GAAP as an indicator of the Company’s performance or liquidity.
Included in this Presentation are references to Original Oil in Place (“OOIP”) which is equivalent to Discovered Petroleum Initially-In-Place (“DPIIP”). DPIIP, also known as discovered resources, is defined as that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially-in-place includes production, reserves and contingent resources; the remainder is unrecoverable. A recovery project cannot be defined for this volume of discovered petroleum initially-in-place at this time. There is no certainty that it will be commercially viable to produce any portion of the resources.
OTHER MEASUREMENTS
The reporting and measurement currency of this Presentation is the Canadian dollar.
Reported production represents Novus’ ownership share of sales before the deduction of royalties. Where amounts are expressed on a barrel of oil equivalent (“boe”) basis, natural gas has been converted at a ratio of six thousand cubic feet to one boe. This ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Boe’s may be misleading, particularly if used in isolation. References to natural gas liquids (“liquids”) include condensate, propane, butane and ethane and one barrel of liquids is considered equivalent to one boe.
4
Company Snapshot
November 4, 2010
Ticker Symbol (TSX-V) NVS
Recent Share Price $0.96
Shares Outstanding (Basic) 166.4 million
Market Capitalization $160 million
Positive Working Capital $12 million
Unused Bank Lines $5 million
Current Production 1,475 boe/d
Dodsland Viking Oil Acreage 105.25 net sections
Tax Pools $176 million
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Corporate Evolution
• New management appointed in March 2009
• Company name changed to Novus Energy Inc. and 10:1 share consolidation completed in August 2009
• Completed $30 million Financing on November 24, 2009 ($0.65/share)
• Acquired Ammonite Energy Ltd. on December 11, 2009 for $22.5 million in common shares of Novus
• Completed 4 other Dodsland area acquisitions in 2009 totalling approximately $7 million
• Acquired a private company on February 3, 2010 for $17.0 million in common shares of Novus
• Completed $25 million financing in May 2010 ($1.10/share)
• Continued consolidation in Dodsland area with 14 further acquisitions and farm-in agreements announced to date in 2010, for consideration of approximately $11 million, totalling 71.25 net sections
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Business Strategy
• Target significant “Original Oil In Place” (OOIP) opportunities with
low recovery factors
• Apply horizontal multi-stage fracture technology to
exponentially increase recovery factors
• Focus on light oil
• Continuously improve horizontal multi-stage fracing
technology to reduce costs and uncover additional reserves
with improved economics
• Emphasize well delineated, low geological risk reserves with large
development drilling inventories
• Have core areas with large land positions, operatorship and
infrastructure control to facilitate executing larger scale drilling
programs
Focused Asset Base
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ALBERTA
Oil
Gas
Dodsland(Viking Oil)
Roncott(Bakken Oil)
Wapiti(Cardium Oil & Dunvegan Gas)
Grande Prairie
Edmonton
Calgary
Saskatoon
Regina
Wembley(Halfway Oil)
SASKATCHEWAN
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Our Cornerstone – Dodsland Viking Light Oil
• Large original oil in place (OOIP) of in excess of 2 billion barrels
• Low risk resource style light sweet oil (35O API)
• Horizontal drilling with multi-stage frac completions
• Horizontal drilling incentive programs from the Saskatchewan
government (1)(2)
• Low geological risk, well delineated reservoir
• Repeatable, scalable, shallow depth play
• Low operating costs, result in high netback production
• Attractive economics with a short payback period and strong
project Internal Rate of Return (“IRR”)
• Upside from technology and cost reductions
(1) 2.5% royalty rate on crown lands on the first 37,000 barrels produced
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The Viking – A Significant Oil Resource
• The use of horizontal multi-stage
frac technology has the potential
to unlock significant incremental
reserves in the Viking play 2-3 m
3-9m
Sandstone
compartments
isolated with silt
Permeable
sandstone
Previous oil in place estimates
of approximately 2.0 bln.
barrels(1) considered only the
portion of the Viking, which
was economic with traditional
vertical drilling
6.0 bln. Barrel OOIP estimate(2)
includes oil trapped in the silty
“compartmentalized” sections of the play,
which has the potential to be recoverable
with new horizontal completion
techniques
Horizontal Fracturing “Widens” Viking Oil Pools
• The Viking could hold up to
6 billion barrels of original oil in
place(2)
Viking – Resource Potential (2)
(1) Source: Saskatchewan Geological Survey
(2) Source: Report Published September 8, 2010 by CIBC World Markets Inc., report titled “CIBC Resource Play Watch”
Source: GeoScout; CIBC World Markets Inc.
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Dodsland - Viking Development History
• Producing since the 1950’s from over 7,500 vertical wells
• Currently producing over 12,000 barrels per day of light Viking oil
• First horizontal multi stage fracture technology well drilled by
Reece Energy in November 2007 (1)
• 300 horizontal wells have been drilled to date all with multi-stage
frac completions
• 174 additional horizontal wells are currently licensed for drilling in
the area
• Recent horizontal drilling activity by Penn West Energy Trust,
Novus Energy Inc., Crescent Point Energy Corp., Baytex Energy
Trust, Husky Energy Inc., Wild Stream Exploration Inc., Renegade
Petroleum Ltd., Enerplus Resources Fund, Harvest Energy Trust,
PetroBank Energy and Resources Ltd., Westfire Energy Ltd.
(1) Reece Energy was purchased by Penn West Energy in May 2009 for approximately $92 million
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Viking Overview(1)
Viking (SW Sask)
Rock Type Sandstone/Siltstone
OOIP/Section (mmboe) 5.0 to 10.0
Wells Per Section +8
Total OOIP (mmboe) 6,000
Recovered to Date (%) 2% to 3%
Incr. Recovery Rate (%)
Primary Only 6% to 12%
Including Waterflood 20%
Porosity +20%
Permeability (millidarcies) 2.0 to +50
Net Pay Thickness (metres) 5 to 10
API (degrees) 31 to 38
Depth (metres) 750
HZ Leg (metres) 450 to 800
Realized Prices (as % Ed. Par) 90% to 100%
Associated Gas 15% Nat. Gas
(1) This table and associated notes were published January 29, 2010 by Scotia Capital, in a report titled “Oil and Gas – Resource
Play Spotlight”
Source: Geological Atlas of the Western Canadian Sedimentary Basin; GeoScout; The Edge, Canadian Discovery Digest;
company reports; Scotia Capital estimates.
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Novus Viking Horizontal Well Economics(1)
• Novus’ typical horizontal Viking well is estimated to provide
an IRR of 60%, NPV of $1.4 million and recycle ratio of 3.1x
Well Economics
NPV 10% Before Tax $1.4 mm
IRR 60%
Recycle Ratio 3.1x
Reserve Addition Costs $13.73/boe
Production Addition Costs $15,984/boe
(1) Internal Estimates
(2) 90% of reserve and production volumes are comprised of oil
Assumptions
Well Cost $0.975mm
Recoverable Reserves 71,000 boe (2)
One Month IP 61 boe/d (2)
1st yr Decline Rate 58%
2nd yr Decline Rate 30%
Novus Forecast Horizontal Viking Type Curve
0
10
20
30
40
50
60
70
1 12 24 36 48
Avera
ge M
onth
ly P
roducti
on B
OE/D
Normalized Production Month
Novus Whiteside
Oil Battery
Baytex
Novus Avon Hills
Oil Battery
ISH Energy
ARC
Harvest
Compass
ISH Energy
ISH Energy
Baytex
Penn West
Penn West
Enerplus Harvest
Penn West
Baytex
Husky
Husky
Crescent Point
NAL
Husky
Husky
Husky
HuskyFlagstone
Crescent Point
WestFire
Paririedale
Smiley Dewar
Whiteside
Flaxcombe
Kindersley
Verendrye
KerrobertPlenty
Dodsland
Fiske
Plato North
PlatoForgan
9 Novus
Horizontal
Wells Drilling 2 Novus
Horizontal
Wells Drilling
1 Novus
Horizontal
Well Drilling3 Novus
Horizontal
Wells Drilling
Dodsland Area Viking Oil Resource Play
• 560 potential net locations
• 750m Depth
• $975 k to Drill and Complete a
Horizontal well
• Estimated 71,000 boe
reserves/well
• Estimated 61 boe/day/well
production
Legend:
Viking producers Oil/Gas
Novus lands (105.25 Net Sections)
300 Drilled Viking Hz wells
175 Licensed Viking Hz wells
H1 -16 Novus Operated Viking Hz wells
Q4 – 15 Novus Viking well locations
Dodsland – The Size of the Prize
Majority of Opportunity Base is Undrilled and Unbooked
Novus Risked Drilling Locations 560
Wells Drilled to Date 42
Undrilled Inventory 92%
Novus Net Potential Risked Recoverable Oil
5% Recovery Factor 10% Recovery Factor 20% Recovery Factor
35 mmboe 70 mmboe 140 mmboe
Large Original Oil in Place Resource
Potential OOIP/Section (1) 10 mmboe
Novus Net Viking Sections 105.25
Novus Net Risked Sections 70
Potential Risked Novus OOIP 700 mmboe
(1) Internal estimate
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Wapiti – Exciting Cardium Oil Developments
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R4W6R5R6R7R8R9R10R11R12
File: Wapiti Cardium Basemap.MAP Datum: NAD27 Projection: Stereographic Center: N54.59586 W119.08315 Created in AccuMap™, a product of IHS
Wapiti Cardium A & B Pool
Production: 6.6 MM bbls Oil
22.1 Bcf Gas
Bilbo Cardium A Pool
Production: 1.5 MM bbls Oil
1.6 Bcf Gas
Kakwa Cardium A Pool
Production: 18.1 MM bbls Oil
353.7 Bcf Gas
Recent Cardium Horizontal
IP: 200 boe/d (85% oil)
3 month IP: 133 bbl/d
Vertical Cardium Type Log
15m Zone
9% Porosity cut-off
Cardium Potential
•11.6 net locations
•1,700m Depth
•$3.5 MM to Drill and Complete a Hz well
•Estimated 125,000 bbls reserves/well
•Estimated 150 bbl/day/well production
Legend:
Cardium Oil producers
Novus lands (13 Sections @ 73% WI)
6 Drilled Cardium Hz wells (2010)
Recent Cardium horizontal
IP: 215 boe/d
Recent Cardium horizontals
IP: 200 bbl/d
IP: 235 boe/d
Wapiti – Proven Dunvegan Liquids Rich Gas Potential
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R4W6R5R6R7R8R9R10
File: Wapiti Dunvegan Base Map.MAP Datum: NAD27 Projection: Stereographic Center: N54.66528 W119.01448 Created in AccuMap™, a product of IHS
Nuvista Dunvegan Horizontal
Apr- June 2010 Avg.: 1.8 MMCF/Day
Estimated Liquids: 90 BBl/MMCF
Dunvegan Potential
•19 net locations
•2,500m Depth
•$4.5 MM to drill and complete a Hz well
•Estimated 3.0 bcf reserves/well
•Estimated 2.5 mmcf/day/well production
Nuvista Dunvegan
Horizontal
Licence date: July 12, 2010
Legend:
Dunvegan producers Gas
Novus lands (13 Sections @ 73% WI)
3 Offsetting Hz wells
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Time
1.0
E5
1.0
E6
1.0
E7
1.0
E8
1.0
E9
Cum Prd Gas (mcf)
110
100
1000
1.0
E4
Cal Dly Gas (mcf/d)
1.0
E-4
0.0
01
0.0
10.1
1
Cal Dly Oil (bbl/d)
1.0
E-4
0.0
01
0.0
10.1
1
Cum Prd Oil (bbl)
110
100
1000
1.0
E4
Cal Dly Wtr (bbl/d)
10
100
1000
1.0
E4
1.0
E5
Cum Prd Wtr (bbl)
110
100
1000
1.0
E4
Cal Dly Cnd (bbl/d)
1.0
E-4
0.0
01
0.0
10.1
1
Cum Prd Cnd (bbl)
0.1
110
100
1000
Prd Hours (Hours)
NOVUS ENERGYCurr Licensee: G2Orig Licensee: Gas,FlowStatus: DNVGProd Zone(s):
N/AUnit Code:952960Pool Code:
WAPITIField:August 1, 2006On Prod:
NOVUS 102 WAPITI 8-5-65-8
02/08-05-065-08W6/0 September 7, 2010
0Cum Oil/Cnd (bbl):260559Cum Gas (mcf):
160Cum Wtr (bbl):
Created in AccuMap (TM), a product of IHS Datum: NAD27 Licence Data to: August 13, 2010 / Production Data to: June 30, 2010
Novus Dunvegan Vertical
Production
Novus Dunvegan Type Well
17
Roncott – Major Bakken Oil Activity
• Original Bakken oil discovery
made in 1956
• Produced approximately
800,000 bbls of light gravity oil
• Land offsetting Novus’
properties was purchased for
$47.5 million ($1,915 per acre)
• Novus 50% WI in 7.3 Sections
with Crescent Point
Major Bakken Oil Pools
Legend:
Bakken wells
Novus lands
Recently drilled wells
Land Parcel sold
for $26.7MM
Land Parcel sold
for $20.8MM
Atikwa/Crescent Point
Vertical BakkenWell
2 Novus Wells Licenced Q2 2010
Bakken Potential
•12 potential net locations
•1,800 m Depth
•$1.6 MM to Drill and Complete a Hz well
•Estimated 50,000 bbls reserves/well
•Estimated 50 boe/day/well production
•9 Cenovus Wells Licenced
•2 Vertical wells drilled 2009
•1 Vertical well drilled 2010
•2 Horizontal wells drilled 2010
18
Wembley – High Impact Oil
• Wembley Halfway Pool 2.5 mi north
• Novus 96% WI in 2.75 sections land
• 11-36 well placed on production Q4
2010 at 100% WI
Legend:
Halfway Wells > 100,000 bbls oil
Halfway Wells > 1 Bcf gas
Novus lands
Novus Well locations
4” Sour oil effluent line
Wembley Halfway B Unit No.1
• 14 wells, 5 injectors
• Cum Production to Date:
4.218 mmbbls Oil
13.896 bcf Gas
Wembley Development•4 potential net locations
•2,100 m Depth
•$1.3 MM to Drill and Complete a
directional well
•Estimated 100,000 bbls reserves/well
•Estimated 125 boe/day/well production
19
Quantifying the Opportunity Base – Potential to Significantly Increase
Reserves and Production
• Novus has an inventory of approximately 600 horizontal drilling locations on its resource
plays. The majority of the inventory is focused on targeting light oil
Oil Drilling Inventory
Area Net Wells
Total
Capital
($mm)
Potential
Reserve
Additions
(mboe)
Potential
Production
Additions
(boe/d)
Risked
F&D
($/boe)
Risked
$ per
boe/d
Dodsland Viking (1) 560 $546.0 39,760 34,160 $13.73 $15,984
Wapiti Cardium (2) 11.6 $40.6 1,450 1,740 $28.00 $23,333
Roncott Bakken (3) 12 $19.2 600 600 $32.00 $32,000
Wembley Halfway(4) 4 $5.2 400 500 $13.00 $10,400
Total 587.6 $611.0 42,210 37,000 $14.48 $16,514
Liquids Rich Natural Gas Drilling Inventory
Area Net Wells
Total
Capital
($mm)
Potential
Reserve
Additions
(mboe)
Potential
Production
Additions
(boe/d)
Risked
F&D
($/boe)
Risked
$ per
boe/d
Wapiti Dunvegan (5) 19 $85.5 9,500 7,915 $9.00 $10,800
1) Assumes 8 wells per section. $0.975 mm drilling and completion cost per well. 71,000 boe of reserves and 61 boe/d of production per well
2) Assumes 4 wells per section. $3.5 mm drilling and completion cost per well. 125,000 boe of reserves and 150 boe/d of production per well
3) Assumes 4 wells per section. $1.6 mm drilling and completion cost per well. 50,000 boe of reserves and 50 boe/d of production per well
4) Assumes $1.3 mm drilling and completion cost per well. 100,000 boe of reserves and 125 boe/d of production per well
5) Assumes 2 wells per section. Assumes $4.5 mm drilling and completion cost per well. 3.0 bcf of reserves and 2.5 mmcf/d of production per well
20
Analyst Coverage
Recommendation
Target
Price Date
GMP Securities L.P. Buy $1.50 November 2, 2010
Cormark Securities Buy $1.50 November 2, 2010
Haywood Securities Inc. Out Perform $1.50 November 2, 2010
Clarus Securities Inc. Buy $1.50 November 3, 2010
Jacob Securities Buy $1.50 November 3, 2010
Desjardins Securities Buy $1.25 November 3, 2010
Raymond James Ltd. Out Perform $1.15 August 30, 2010
Mackie Research Capital Buy $1.15 November 3, 2010
Stifel Nicolaus Buy $1.10 October 6, 2010
CIBC World Markets Sector Performer $1.10 November 2, 2010
Jennings Capital Inc. Buy $1.05 October 19, 2010
21
Officers and Directors
Management Team Board of Directors
Hugh G. Ross, B.A.
President & CEO and Director
Michael H. Halvorson (2)(4)
President, Halcorp Capital Ltd.
Ketan Panchmatia, B.Mgt., C.M.A.
VP Finance & CFO
Harry L. Knutson (1)(3)
Chairman, Nova Bancorp Group (Canada) Ltd.
Greg Groten, B.Sc., P.Geoph.
VP Exploration
Al J. Kroontje (1)(4)
President, Kasten Energy Inc.
Julian Din, B.Comm., MBA
VP Business Development
A. Bruce Macdonald (2)
Chairman, Jayhawk Resources Ltd.
Jack Lane, P.Eng.
VP Operations
Larry C. Mah (1)(3)
President, Lawrence C. Mah Professional Corporation
(1) Member of the Audit Committee
(2) Member of the Reserves Committee
(3) Member of the Compensation and Human Resources Committee
(4) Member of the Corporate Governance Committee
22
Corporate Advisors
Evaluation Engineers Sproule Associates Limited
Bank National Bank of Canada
Auditor Collins Barrow Calgary LLP
Solicitor Blake, Cassels & Graydon LLP
Transfer Agent Olympia Trust Company
For further information:
Hugh G. Ross President and CEO (403) 218-8895
Ketan Panchmatia VP Finance and CFO (403) 218-8876
Julian Din VP Business Development (403) 218-8896
E-Mail: [email protected]
Web Site: www.novusenergy.ca