FORWARDLOOKINGSTATEMENTS
Thispresentationcontainsforward‐lookingstatementswithinthemeaningofthePrivateSecuritiesLitigationReformActof1995.Allstatementsincludedhereinthataddressactivities,eventsordevelopmentsthattheCompanyexpects,believes,intends,oranticipateswillormayoccurinthefuture,areforward‐lookingstatementsaswellaswordslike“could”,“should”,“will”,“can”,andwordsofasimilarnature.Actualeventsmaydiffermateriallyfromthoseanticipatedintheforward‐lookingstatements.AlthoughtheCompanybelievesthattheassumptionsunderlyingtheforward‐lookingstatementscontainedhereinarereasonable,anyoftheassumptionscouldbeinaccurate.Therecanbenoassurancethattheforward‐lookingstatementsincludedinthispresentationwillprovetobeaccurate.Inlightofthesignificantuncertaintiesinherentintheforward‐lookingstatementsincludedherein,theinclusionofsuchinformationshouldnotberegardedasarepresentationbytheCompanythattheobjectivesandexpectationsofthecompanywillbeachieved.
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ANEWMODELFORREALESTATELENDERS
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$300MillionBondInterestRate6%ReturnOver4‐6YearsEquityBehindDebtRisk:EconomicSlowdown
OldBusinessLendingModel
• $300MillionBond• InterestRate9%• Annual Distributions10%+• EquityOwnership• CapitalReturned5Years• 100%EquityBehindDebt• NoDrilling,NoExplorationandNoFracking
• Risk:LowRisk,CashFlowPositiveOilFields
• OilPriceHedged
NewModelwithLowRiskOilFields
LOWRISKOILPROPERTY
ACQUISITIONS
NODRILLINGNOFRACKING
NOEXPLORATIONSTEADYCASHFLOW
UNIQUEBENEFITSTOLENDER
• LowRisk• EarnHighInterest• EarnHighDistributions• Own50%ofMultipleOil
FieldsAfter LoanisRepaid• EquityValueEarned2‐5X
morethanOriginalLoan• Loans100%BackedBy
RealAssetUntilLoanRepaid
• CashFlowPositiveOilFields
YOURLOAN100%ASSETBACKED
ALLOWINGYOUTO:
EARNHIGHINTERESTRATEPLUSDISTRIBUTIONS
PLUSEQUITYINLOWRISKOILFIELDS
UNIQUELOWCOSTOILRECOVERYTECHNOLOGY
SIGNIFICANTLYINCREASESOILFIELDVALUE
AVERAGEGLOBALPRODUCTIONINCREASES:92%
TitanOilRecoveryTheTitanProcessGlobalResults
• 48OilFields• FourContinents• 300WellApplications• AverageProduction
Increase:92%• LowestCostOil
RecoveryintheWorld• Biodegradable
DEALPOINTS• LenderCommits$100milliontostartforacquisitionsoflowriskoilfields
• LenderandTitanOilRecoveryFormSeparateJVCompany(Owned50‐50)
• FieldisPurchasedwith100%DebtfromLender
• Lenderhas100%ofLowRiskOilFieldasCollateralforLoan
• InterestRate9%
• FiveYearTerm
• LenderGets50%ofallDistributionsfromDayOne.MonthlyDistribution.
• AfterLoanRepaid,LenderOwns50%ofFieldsPurchasedbyJVCompany
• AdditionalOilFieldsPurchasedfromInternallyGeneratedCashFlowandAdditionalLoansfromOriginalLenderifDesired
• JVOperationProfitssplit50‐50BetweenLenderandTitan
• ProjectedDistribution toRangebetween10%and30%ofFreeCashFlow
• FirstPhase:$100million.NextPhaseCouldUtilize$100‐500MillionofDebt
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DRAMATICGROSS PROFITCHANGEFROMALTERINGOILPRODUCTIONDECLINE
1000BOPDFIELD,$50OIL,5%ORIGINALDECLINE
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050,000
100,000150,000200,000250,000300,000350,000400,000450,000500,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Annual Oil Production (bopd)
Annual Production Before Titan Annual Production After Titan
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
$10,000,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Annual Gross Profit
Gross Profit Before Titan Gross Profit After Titan
FINANCIALRETURNSTOLENDERAFTERTHREEYEARSAND$300MILLIONLENTTOTHE
JVCOMPANY
• Interestearned:$79million
• DistributionsEarned:$41million
• LendersEquityinOilFieldsLessallDebtAfterYearThree:$549million
• YearFiveValuationofJVCompanyat6xCashFlow:$1.96billion
• EquityValueforDebtLender$980million
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ASSUMPTIONSTOTHEJOINTVENTUREMODEL
• Addyourfirstbulletpointhere
• Addyoursecondbulletpointhere
• Addyourthirdbulletpointhere
Oil Price $50 Starting Field(s) Size BOPD 5,500
Acquisition Cost $100 millionPurchase Price of Field at PV 10%
Debt Level 100%Investment Equity Nil
Debt $100 millionInterest Rate 9%
Original Production Decline -10%Before Titan Lease Operating Expense / Bbl $22.07 Titan Production Increase (1st two years only) 30%
Distribution Payout of Free Cash Flow 30%
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JVCOMPANYECONOMICSSENSITIVITYTOTITANPROCESS
PRODUCTIONINCREASEItem 10%Increase 30%Increase
NPVofFieldsLess DebtYearThree $583million $1.0billionDistributions PaidtoJVOwnersFirstThreeYears $28million $41 millionNetIncomeYearFive $109million $198 millionValuationat10xEarnings $1.0 billion $2.0billionCashFlowYearFive $224 million $333millionValuation ofJVCompanyat6xCashFlow $1.3billion $2.0billion
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DividendpayoutsfromcashflowdependentonTitanProcessProductionIncrease.Thetableaboveassumesa30%allocationoffreecashflowfroma30%productionincreaseonfieldspurchasedthataredecliningbeforeTitanat10%peryear.Alsoshownisa10%productionincreasescenario.Productionincreasesareforthefirsttwoyearsoffieldownershiponly,followedbyagradualreturntothefielddeclineinyearfive.
JVINCOMESTATEMENTMOSTLIKELYTAXESWOULDBEPAIDBYTHEPARTNERS
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Year 1 2 3 4 5
BOPD 6,567 15,434 28,661 37,736 43,137Annual Revenue (000) $120,578 $291,841 $558,114 $756,747 $890,873 Net After Tax (000) $10,313 $44,484 $96,079 $154,561 $198,382
TITANPROCESSCAUSESMAJORCHANGESINOILFIELDECONOMICS:
• OilProductionIncreases• ReservesIncrease• CosttoRecoveranIncrementalBarrelOnly$5‐6• LifeofFieldisExtended• NoCapitalExpenseRequired• HighProfitMarginswithLoworHighOilPrices• GlobalAverageProductionIncreaseson48OilFields,FourContinentsand300WellApplications:92%Increase
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THETITANPROCESSPEERREVIEWEDSOCIETYOFPETROLEUMENGINEERSPAPERS
• FourSPEPapersWrittenByCustomers• AverageIncreaseinWellTests:200%+• DocumentedCostPerIncrementalBarrelofOilProduction;$6
NEW ENERGY AND FUEL MAGAZINE 18
THETITANPROCESS At one of the oil industry’s major conferences on new technology, The Rice Alliance 2012 Conference, Titan received the prestigious Most Promising New Technology Award. This recognition was voted by the gathering of more than 350 industry professionals and experts.
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THETITANPROCESSGLOBALRESULTS
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Titan Oil Recovery Treatment Summary
Number of Number of Number of Success OilType Treatments Wells Increases Rate Increase
In‐Situ One Well Production Test* 49 47 36 73% 140%Producers 19 18 17 89% 133%Injectors 238 81 234 98% 54% Total 306 146 287 94% 92%* In Situ Production Well Test to verify performance of the Titan Process before proceeding with broader applications
THETITANPROCESSWORLDCLASSOILPROFESSIONALSENDORSINGANDINVOLVED
WITHTHISCUTTINGEDGETECHNOLOGY
• BrianMarcotte– FormerPresidentofthreemajorproductioncountriesforUnocal.
• DrAlanHeeger ‐ NobelLaureateinChemistry
• RonHarrell– FormerCEOandChairmanofRyderScott,consideredthetopOilEngineeringandConsultingfirmintheworld;SeniorAdvisertoCarlyleGroupandMorganStanleyEnergyPartners
• ScotEvans– CurrentlyVicePresidentofHalliburton’sIntegratedAssetManagement
• SaadTuraiki– Ex‐ChiefPetroleumEngineeroverseeingthemanagementofalloilandgasfieldsinSaudiAramco.Ex‐VicePresidentmanagingalloilfieldsinSouthernRegionresponsiblefor6‐7millionbblsofproductionperday
• BillDaily– ExVPofAtlanticRichfield(world’s7th largestoilcompanybeforebeingboughtoutbyBP).InhislastCEOpositionhiscompanywasboughtoutfor$3billion.
• GaryAwad– ExVPofUnocal– Hislastenergycompany(LeadBoardmember)wasboughtoutfor$1.2billion
• Dr.WarrenKourt– ProfessorofOil&GasatStanfordUniversity
• SammyHamzah– ViceChairmanoftheIndonesianPetroleumAssociation,Indonesiaistheworld’s23rd largestoilproducer
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THETITANPROCESS
“WebelievethereisnootherenhancedoilrecoverytechnologyavailableanywhereintheworldthatcanremotelycomparetotheTitanProcess.ItisprobablythelowestcostproducerofoilintheworldevenwhencomparedtothefamousSaudilegacyfields,itrequiresnocapitalexpense,anditworkswithin10daysonsinglewellapplications.Itisproven,effectiveandlowcostonshoreandoffshore.Itisbiodegradable.ThesuccessrateonInjectorwellsisaremarkable98%.
Thereisnodoubtwhenthistechnologyiswidelyadoptedbytheindustryitcouldbeheraldedasoneofthemostimportantnewenergytechnologiesofthelast100years.
Since65%oftheworld’soilistrappedinexistingoilfieldsandcannotbeproduced,theTitanProcesspromisestoallowtheworldtoaccessasignificantpercentofthisvitalandvaluableenergysource.TheultimatevalueoftheTitanProcessinthisregardisalmostimmeasurable.”
….KennethJ.Gerbino,FounderandChairmanoftheBoard,TitanOilRecovery
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