TransMeridian Exploration, Inc. IPAA OGIS Small Cap Conference February 8, 2005
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Transcript of TransMeridian Exploration, Inc. IPAA OGIS Small Cap Conference February 8, 2005
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TransMeridian Exploration, Inc.IPAA OGIS Small Cap Conference
February 8, 2005
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Forward Looking Statements
This presentation contains “forward-looking statements” within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including changes from anticipated levels of sales, future national or regional economic and competitive conditions, changes in relationships with customers, access to capital, difficulties in developing and marketing reserves and other factors disclosed in the Company’s Annual Report on Form 10-K for the year ended Dec. 31, 2003 and the Company’s subsequent Quarterly Reports on Form 10-Q, especially in the risk factors sections of these SEC reports. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company does not undertake any obligation to update the forward-looking information contained in this presentation.
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Corporate Profile
OTC:BB TMXN 52 week high/low: $2.20 / $0.79 Shares outstanding: 80 million shares Market cap/Enterprise value: $140 mil./$178 mil. FMV of reserves: $295 million Average trading volume: 197,200 per day
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Business Strategy
Acquire and develop overlooked/underdeveloped reserves
Current focus -- Caspian Sea Region of FSU Target medium sized fields with –
Low initial entry costs Identified reservesSignificant upside reserve potentialQuick payback period (two to three years)Likelihood of lower than average international
findings cost
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Why the Caspian Region?
4% - 5% of the world’s total reserves - Largely undeveloped or underdeveloped
Very favorable economics relative to global peers - Full cycle costs average less than $5.00/bbl
Favorable tax and regulatory environment
Transportation bottlenecks set to be removed - Existing and proposed pipelines continue to expand
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Expanding Regional Pipeline System
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First Asset: South Alibek Field
Kazakhstan government actively encouraging foreign investment – Goal of increasing production from 1 to 3 mm bopd over the next decade
Good infrastructure - all-weather roads - electric power - rail and pipeline facilities
Service company support - Improving capability of local service companies - Improving presences of Western service companies – access to Western technology and methods
Existing and proposed pipelines continue to be expanded
Atyrau-Samara Pipeline
CPC Pipeline
Pipeline
Aktobe
Emba
South AlibekField
Tengiz9 BBO
Kashagan7 BBO++
Atyrau
Rail line
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South Alibek Field - Detail Map
Adjacent to the Alibekmola Field - under active development - currently producing 23,600 bopd
South Alibek is on the down-thrown side of a large North / South trending fault which separates the two fields.
License acquired by TMEI covers 14,000 acres.
Drillied five wells to date - all commercial - various stages of completion
Per Ryder Scott evaluation (Feb. ’04) - 65 million bbls “proved” - 193 million bbls “proved” and “probable”
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Proved Area
Reinterpretation of seismic improved mapping of the SA Field and increased areal extent of field in 2004,
Proved – 1,600 acres
+ Probable – 6,500 acres
+ Possible – 13,000 acres
Completed wells
Currently completing
Proved Area
2005 planned wells
KT2 Top Depth Structure Map
Alibekmola Field
South Alibek Field
Currently completing
Probable Area
Approx. Possible Area
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Multiple Reservoirs – Good Seals
South Alibek and Alibekmola Fields
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Combination Porosity and Fractures
Post depositional faulting - deeper oil water contact in South Alibek Field
Limestone and dolomitic reservoirs with combination porosity and fractures
Seals provided by inter-bedded shales
Vertical and lateral migration pathways
Combined up to 500 net feet of pay
SA -1
Jurassic
Triassic
U. Perm
L. Perm shale
Visean Clastics
East
Prospective basal conglomerates
MKT Shale
KT-II
KT-I
Kungarian Salt
Kungarian Salt
Zone 4
4o dip
8-10o dip
Zone 2
Prospective Devonian Carb?
Main bounding fault
West
South Alibek and Alibekmola Fields
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Accomplishments
AccomplishmentsExploration contract covering 14,000 acres –
recently extended through April 2007Drilled five wells – currently in various stages of
completion. Sixth well drilling -- near TD.Completed permanent production facilities –
capacity to process up to 30,000 bopdExecuted transportation agreement with KazTrans
Oil – allow access to pipelines/export market
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Near Term Objectives
Near Term ObjectivesComplete/stimulate new wells
- Increase productionContinue to improve pricing Install de-mercaptane unitComplete connection to pipeline (1.5 km)Finalize production contractRe-finance field development loans – lower cost
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Other Opportunities in the Region
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Future Projects -- Azerbaijan
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Future Projects – Saizan Area
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Financial Overview
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Summary Balance Sheet
(In thousands) December 31, September 30, 2004 2003 Historical Pro Forma
(a)
Current assets $ 2,068 $ 2,087 $ 26,087Property and equipment, net 54,560 71,830 71,830Other assets 471 279 279
$ 57,099 $ 74,196 $ 98,196
A/P and accrued liabilities $ 3,778 $ 12,614 $ 2,614Total debt and interest 52,815 43,914 43,914Minority interest -- 8,256 18,756Stockholders’ equity 506 9,412 32,912
$ 57,099 $ 74,196 $ 98,196
(a) Reflects net proceeds from issuance of $25 million of Cumulative Convertible Preferred Stock and $10.5 million capital contribution to Caspi Neft by Bramex
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Results of Operations
(In thousands) Nine Months Ended September 30, 2004 2003
Revenue $ 3,049 $ 159Costs and expenses 5,569 3,530
Operating loss (2,520) (3,371)
Other income (expense) (849) (599)Minority interest 492 --Preferred dividends -- (20)
Net loss $ (2,877) $ (3,990)
Net loss per share $ (0.04) $ (0.06)
Wt. average shares outstanding 78,227 62,958
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Private Placement
Closing Date: November 12, 2004
Securities: Series A Cumulative Convertible Preferred Stock
Issuance Amount: $25,000,000 USD
Yield: 4.50%
Conversion Price: $1.40 per share
Warrants: 25% warrant coverage – five year term; strike price equal to $1.55 per share
Registration: Form S-3 covering underlying shares filed in December 2004
Use of Proceeds: Working capital Fund development drilling program Complete treatment facilities and pipeline
connection Seed capital – new projects
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Target Well Economics
Cost per well: $5.5 million
Target production rate: 1,000 Bopd
Current price: $20.00 / bbl
Expected future price: N. Sea Brent, less approx. $7.00 (trans. cost)
Royalty rate: 6.0%
Operating costs: < $2.00 / bbl
Income tax rate: 35.0% (all inclusive)
Cash payback : 8 – 12 months
Working interest 50% (subject to 10% net profits interest after payout)
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Investment Considerations
People, property and prospects
Transitioning from development stage to operating company
Value has not been reflected in stock price
Multiple new projects in region that fit business plan
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