Incremental Oil and Gas Limited INCREMENTAL OIL and GAS (asx: IOG)
Initial Public Offer
EXCELLENCE in OIL MARCH 2012
www.incrementaloilandgas.com 1
DISCLAIMER AND IMPORTANT NOTICE This presentation contains forward looking statements that are subject to risk factors associated with oil and gas businesses. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates. All references to dollars, cents or $ in this presentation are to Unite states currency, unless otherwise stated.
2
Incremental Business model – A producing oil company with a cash flow focus – We acquire underperforming oilfields and increase production – Focus is Onshore California • Five projects: – Round Mountain producing oilfield – Sheep Springs producing oilfield – Ventura development project – McDonald Anticline development project – Raven Pass exploration project
– We are 100% WI and operate all of our projects 3
Capital Structure • Formed 2009 as Private Company • Listed January 2011 after raising $5.3m at 30 cents. • 459 shareholders • 135.6m shares (Directors and management 43%) 92.8m unlisted options1
• Market cap about $35 million • NO DEBT
REVENUE EBITDA 1.
Options exercisable at $0.20 on or before 1 November 2014
4
2010
2011
$6.06m
$7.72m
$2.40
$3.04
IOG TEAM
From left:
Asquith: 20 years CPA. MacDonald: 13 years in Senate, LLB
CALIFORNIA
Cronin: No 2 in Woodside (23 years)
Stowell: Founder of Anvil and Mawson West, CPA McGann: 40 years geologist worldwide, CPG CFO
DIRECTORS
M Pet Eng, Over 25 years in California
The team have done it before... SELMO FIELD PROJECTED PRODUCTION PROFILE
• INCREMENTAL PETROLEUM formed 2005.
5000 4500
• Raised $61m, bought second largest oilfield in • Built production from 1500 bopd to 2000 bopd • Commercialized West Turkey Gas
3500 3000
BOPD
TURKEY
4000
2500 2000 1500 1000 500
• Bought California producing assets
0 Jan-00
Jan-02
Jan-04
Jan-06
Jan-08
Jan-10
Jan-12
Past Production
Jan-14
Jan-16
Jan-18
Jan-20
Jan-22
Jan-24
Re-entries & New Wells
Share Price 10/05 to 02/09
HOSTILE TAKEOVER ATTEMPT 2008
80%
SETTLED MARCH 2009.
40%
Similar Board formed INCREMENTAL OIL & GAS (IOG) in JULY 2009
20%
-40% -60% -80% -100%
Dividend
AZZ
ROC
SAE
AMU
TAP
STU
OEL
NDO
NXS
COE
STX
AED
BPT
AWE
IPM
WPL
STO
0% -20%
OSH
Return on Equity
TOTAL RETURN OVER 3 YEARS 27%
60%
Why California ? – Significant bypassed oil left by early producers – Few mid-sized oil companies operate in California – Cheap and competitive service suppliers – Excellent Fiscal regime
The San Joaquin Basin has:
Sacramento Basin
• 10 times Australia’s reserves • 150% Australia’s production San Joaquin Basin
Ventura Basin
Los Angeles Basin
7
Why California ? – Few mid-sized oil companies operate in California – Excellent Fiscal regime
Comparison of Fiscal Terms Turkey Spain Argentina USA Portugal G. Mexico New Zealand Australia Peru Phillipines Tunisia Thailand Colombia Morocco Mongolia China Indon. Gas Congo E. Indonesia PNG Vietnam India Ivory Coast Trinidad Ecuador Albania Venezuela Algeria Angola Syria Myanmar Egypt Malaysia Brunei Indonesia
Royalty/Tax System Production Sharing Contract
Service Agreement
(Modified from Daniel Johnston & Co., Inc.)
0
8
10
20
30
40
50
Contractor Share of Income Post Gov't Cut & Taxes (%)
60
70
Incremental Projects • Producing ROUND MOUNTAIN
• Producing SHEEP SPRINGS • VENTURA Development • McDONALD A/C Development • RAVEN PASS Exploration
9
Round Mountain • Field has produced 110m barrels • Shallow, 18-20° API gravity oil • 100% Working Interest
10
Round Mountain, 2011 drilling Smoot 5
Smoot 6 Drilled 6 wells in 2011
All successful Production about 110 bopd
CAPEX only $3.5 million Six additional locations Have acquired >800 acres on trend
11
Ventura Project Area produced over 160 million barrels Very thick oil columns West Mountain inadequately developed
12
Ventura Project Oil column >1500’ thick
Very little water production Plan to drill in mid year
13
McDonald Anticline Produced 22 million barrels
Shallow, light oil Multi reservoirs
Plan to drill 2012 At least 3 well locations
14
Sheep Springs Oilfield • 100% owned since January 2010
• Revenue $350-400k/month • Paid out in cash terms in 2011
15
Sheep Springs Oilfield (2) Shallow heavier oil (15-17 API) Produced nearby
Remaining 2P Reserves of 1.43 MMB
16
Raven Pass • Flowed light oil in 1942. Not drilled since • Reservoir, seal, trap all demonstrated • 200 m barrel potential
• True wildcat
17
Gross Revenue IOG Monthly Gross Revenue $ 1.0 m
$ .8 m
$ .6 m
$ .4 m
$ .2 m
$ .0 m
18
Microcredit Project Santa Paula
Incremental wanted to give something back Found first Rotary Microcredit project in not just the US, but in the developed world. $230k pilot project, Funded 50% Internationally
80% hispanic population >20% unemployment
19
MICROCAPS (<$50m) MONEY RAISED vs MARKET CAPITALISATION
Source: Oil & Gas weekly
2012 Projected News Flow • Drill 4-6 wells, Round Mountain vertical wells
• Drill 1-2 wells, Ventura Project • Drill 2-3 wells, McDonald Anticline
• Raven Pass farmout • Acquire additional projects
• Declare another after tax profit
