Swala Oil & Gas (Tanzania) Limited - Swala Gas and...

Swala Oil & Gas (Tanzania) Limited

East African Exploration

December 2013

www.swala-energy.co.tz

Company Presentation December 2013 2

Disclaimer

Certain statements contained in this presentation, including information as to the future financial or operating performance of Swala Oil & Gas (Tanzania) Limited (“Swala” or “Company”) and its projects, are forward-looking statements. Such forward-looking statements: • are necessarily based upon a number of assumptions and estimates that, while considered reasonable by Swala, are

inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies;

• involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward-looking statements; and

• may include, among other things, statements regarding targets, estimates and assumptions in respect of production, prices, operating costs, results, capital expenditures, reserves and resources and anticipated flow rates, and are or may be based on assumptions and estimates related to future technical, economic, market, political, social and other conditions.

Swala disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements made in this presentation are qualified by the foregoing cautionary statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and accordingly investors are cautioned not to rely on forward-looking statements due to the inherent uncertainty therein. Persons compiling information about hydrocarbons: In accordance with ASX Listing Rules, any geological or hydrocarbon reserves information in this presentation has been reviewed by Mr Neil Taylor, a non-executive director, who has over 30 years experience in the sector. He consents to that information in the form and context in which it appears.

3

2013 – Seismic work on all licences

Kilosa Basin. Ca. 2,000 km2. Survey 8th August – 7th September 2013. 130km of 2D seismic. Apparent Karoo basin fill.

Kidatu Basin. Structural Closure of 30 - 60 Km² on largest lead. Survey 10th September– 10th October 2013. 137km of 2D seismic. Apparent Karoo basin fill.

Kilombero Basin. Ca. 2,000 km2. Survey 15th October– 8th November 2013. 110km of 2D seismic. Apparent Neogene basin fill.

Company Presentation December 2013

Moshi Basin. Ca. 207 km2. Survey 4th December – 20th December 2013. 125km of 2D seismic. Likely Neogene basin fill.

Mvungwe Basin. Ca. 550 km2. Survey 18th November– 4th December 2013. 75km of 2D seismic. Likely Neogene fill in a shallow (ca. 1,000m deep) basin.

4

Kilombero Basin – Probably Neogene


5

Two main horizons identified

Yellow Horizon – possible top shallow reservoir, with P50 and P10 closures.

Blue Horizon – possible top deep reservoir, with P50 and P10 closures.


6

Possible Lokichar analogue

The Kilombero rift is potentially analogous to Lokichar Basin, Kenya. The Kilombero Basin is approximately 100km long and about 20km wide whereas the Lokichar Basin in Kenya is approximately 150km long and 25-30km wide.


7

Comparable Trap Geometries

Twiga South-1 Discovery, Lokichar Basin, Kenya. [(rom Africa Oil Presentation Cape Town 2012)

Seismic Line across Kilombero Basin


8

First prospective resources

Recovery factor range used is 20% (P90) - 30% (P50) – 40% (P10) for the Yellow Horizon, and 10% (P90) – 20% (P50) – 30% (P10) for the Blue Horizon. (2) TPDC retains a 20% back-in right to any successful development in the Kilosa-Kilombero licence.

Yellow Horizon (mmstb) Low estimate

(P90) Best estimate

(P50) High estimate

(P10)

Gross undiscovered unrisked oil in place 153 387 862

Gross prospective unrisked oil resources(1) 42 112 269

Net of Government back-in rights(2) 33.6 89.6 215.2

SOGTL (50%) 16.8 44.8 107.6

Blue Horizon (mmstb) Low estimate

(P90) Best estimate

(P50) High estimate

(P10)

Gross undiscovered unrisked oil in place 40 209 740


Net of Government back-in rights(2) 4.8 31.2 124

SOGTL (50%) 2.4 15.6 62

Combined (Yellow & Blue) (mmstb) Low estimate

(P90) Best estimate

(P50) High estimate

(P10)

Gross undiscovered unrisked oil in place 193 596 1,602


Net of Government back-in rights(2) 38.4 120.8 339.2

SOGTL (50%) 19.2 60.4 169.6


9

Kilosa, Kidatu assessment continues

• Seismic surveys over the Kilosa and Kidatu basins completed 3Q 2013

• Significant structures

identified in both basins • Initial review suggests the

basins contain sedimentary fill of Karoo age

• Currently completing geochemical analysis of samples from seismic shot holes.

• Bouguer Gravity Map. • Blue areas are interpreted basins


10

Pangani – seismic work completed

Bouguer

Mvungwe Basin

Moshi Basin

• Bouguer Gravity Map. • Blue areas are interpreted basins


• Pangani survey commenced in late November 2013

• 200 line Kms in two

separate basins – Mvungwe and Moshi

• These were always

technically challenging basins

• Mvungwe basin appears to be smaller than Moshi. Initial results are promising and suggest a shallow Neogene basin (ca. 1,000m deep).

• Results also indicate that the Moshi basin is also Neogene and some 2,000-3,000m deep.

Work Programmes and Budgets


12

2014 work programme


Decision point under the PSAs. LLI = ‘Long-lead items’

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

PANGANI

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

KILOSA-KILOMBERO

Evaluation of 2013 seismic

Seismic planning & EIA

200km seismic acquisitionInterpretation & evaluation

G&G studies

Well planning & LLI

Kito well

2014 Budgets (net)


FIRM CONTINGENT

Pangani $2.3MM Kilosa-Kilombero $2.4MM

FIXED BUDGET $4.7MM Eyasi $1.0MM Kilosa-Kilombero $4.8MM Increase due to the contingent budget: 125%

$4.7MM $5.8MM

Corporate


15

Top 20 Shareholders


SWALA TOP 20 SHAREHOLDERS (1st December 2013) SHARES AS %

1 Swala Energy Limited 22,906,044 65.13%

2 Erncon Holdings Limited (Ernest Massawe) 3,458,395 9.83%

3 Swala Energy (held in trust) 3,272,292 9.30%

4 Ameir Munif Abdallah Nahdi 1,064,120 3.03%

5 Maryanne Massawe 323,076 0.92%

6 Gabriel M Kessy 292,832 0.83%

7 Joseph Philemon Mgaya 276,672 0.79%

8 Florian Eustack Ngunangwa 276,027 0.78%

9 Harold Enock Temu 264,614 0.75%

10 Anna Buganda Ballali 250,000 0.71%

11 Basil Mramba 242,088 0.69%

12 Wilgis and Christina Mwanyika 242,088 0.69%

13 Simon Mbilinyi 212,823 0.61%

14 Abdullah Mwinyi 212,823 0.61%

15 Bayharbour Holdings Limited 184,614 0.52%

16 Dr. & Mrs. Fratern Michael Mboya 166,408 0.47%

17 Abel Kalulu 133,010 0.38%

18 Harry Kitiya 120,000 0.34%

19 Nasama Mahanyu Massinda 112,816 0.32%

20 Erasmus Mardai Mallya 106,408 0.30%

TOTAL 34,117,150 97.01%

Balance of Register 1,052,807 2.99%

Grand TOTAL 35,169,957 100.00%

Dar Listing Timetable

16

Conditional CMSA approval received

Prospectus (English and Swahili) in preparation

Late CMSA approval meant that roadshow would have started before Christmas – decision was therefore taken to continue in the new year.

Event Date

Lodgement of Prospectus with the DSE and the CMSA 13th November 2013

Opening Date of Offer 3rd February 2014

Closing Date of Offer 3rd March 2014

Allotment 12th March 2014

Announcement of results of the offer 14th March 2014

Electronic crediting of shares to CDS Accounts, Dispatch of Depository receipts and payments of refunds 20th March 2014

Anticipated date of admission to the official list of DSE 31st March 2014


17

Opportunity Summary


Significant exposure to the East African Rift System

Local lisitng for local participation

Active business development pipeline Clear pathway through 2014 activity Experienced management and board of directors Committed cornerstone investors Gaining market credibility and confidence

18

2014: 2C resources to underpin value


Data courtesy of First Energy Capital

Year Buyers Sellers Segment Region Paid

(US$ mm) 2C

(boe) $/boe

2013 Tangiers Petroleum Limited Jacka Resources Limited Conventional Diversified 34.98 27.1 1.29

2013 DNO International ASA Atlas Petroleum;Eurogas Int. Shallow Water North Africa 10.5 11.994 0.88

2012 Bounty Oil & Gas NL Key Petroleum Ltd. Shallow Water East Africa 0.41 0.375 1.10

2012 Government of Cote D'Ivoire Rialto Energy Limited Shallow Water West Africa 10 12.76 0.78

2012 Perenco S.A. Bowleven plc Shallow Water West Africa 35 9 3.89

2012 Etablissements Maurel et Prom Cove Energy plc Shallow Water East Africa 19 9.10 2.09

2012 Wentworth Resources Limited Cove Energy plc Shallow Water East Africa 19 9.10 2.09

2011 Jacka Resources Limited Providence Resources plc Deepwater West Africa 16 10 1.60

2010 Rialto Energy Limited ACC Int.;C&L Natural Resources Ltd. Deepwater West Africa 15.75 21.95 0.72

2010 XState Resources Limited Bombora Energy Ltd. Shallow Water Global 2.16 9.9 0.22

2010 Rialto Energy Limited ACC Int.;C&L Natural Resources Ltd. Deepwater West Africa 33.68 74.8 0.45

2010 Tullow Oil plc Heritage Oil plc Diversified East Africa 1450 317 4.57

2009 Cove Energy plc Artumas Group Inc. Shallow Water East Africa 3.29 20.66 0.16

2009 Etablissements Maurel et Prom Artumas Group Inc. Shallow Water East Africa 7.68 48.22 0.16

2009 Vitol Group Bowleven plc Shallow Water West Africa 25 13.27 1.88

2008 Strategic Oil & Gas Ltd. African Petroleum;Greenfields Petroleum Shallow Water West Africa 10.85 1.62 6.70

2006 Bowleven plc FirstAfrica Oil Plc Conventional West Africa 106.83 7.39 14.45

2006 BG Group plc Gulf Keystone Petroleum Ltd. Conventional North Africa 55 61 0.90

Average for all reported transactions $2.3/boe

‘Corporate Sale’ value based on historical transactions and Kito 2C value alone: $139 million

19

Strong Board and Management

Mr. Ernest Massawe, Non-Executive Chairman Mr. Massawe is Certified Accountant (ACCA, UK) and holds a Bachelors of Commerce from the then University of East Africa – Nairobi. He is the founder as well as the former Chairman and Managing Partner of what is now the Ernst and Young Tanzania practice after having led the firm for the past 30 years until his retirement on 31st December 2010. Mr. Massawe is widely respected within the professional and business community in Tanzania, evidenced by his many high profile appointments in the Accountancy profession, Financial services, Mining and Capital Markets sectors.

Dr. David Mestres Ridge, Chief Executive Officer and Director Dr. Mestres Ridge worked first for Total Oil Marine (1998-2000) and then as an independent M&A and business development advisor to oil companies active in the North Sea and North Africa He was a Vice-President at the Royal Bank of Canada, first in the Global Investment Banking Oil and Gas team and then in the Equity Research team. Dr. Mestres Ridge briefly managed Petrodel Resources, a company active in Tanzania. He also worked with Black Marlin Energy during its IPO on the Toronto Stock Exchange. Dr. Mestres Ridge has a BSc in Applied Geology, an MSc in Mining Geology, a PhD in Chemical Engineering and an LLM in Law.

Mr. Selemani Pongolani, Finance Director Mr. Pongolani is a Fellow Chartered and Certified Accountant (FCCA, UK), he is also registered by National Board of Accountants and Auditors of Tanzania as Associate Certified Public Accountant (ACPA). He has Master's degree in Business Administration (MBA Finance and Banking) and Bsc in Electronics & Communication. He has vast work experience of over 10 years in finance, accounting, management, audit and taxation. He started his career with audit firm PricewaterhouseCoopers (PWC) Tanzania, before joining Celtel Tanzania Limited as Tax Manager. He was Finance Manager at Gapco Tanzania Limited, a subsidiary of Reliance Industries Limited dealing with importation, marketing and distribution of petroleum products. He then worked as Senior Finance Manager at PanAfrican Energy Tanzania limited, a subsidiary of Orca Exploration Group engaged in hydrocarbon exploration, development and supply of natural gas in Tanzania.

Ms. Elizabeth Obiero, Non-Executive Director Ms. Obiero is a qualified CPA with a Bachelor of Commerce from the University of Nairobi. She has more than 10 years' experience in various accounting sections and industries. From 2002 to 2006 she worked as accountant and Senior Accountant at Kenya Airways and its subsidiary, Kenya Airfreight Handling Limited. From 2006 to 2008 she was accountant at Woodside Kenya (Nairobi) and responsible for the accounting of the subsidiary; she then moved to Woodside's Head Office in Perth until 2011, where she has been involved in all aspects of oil and gas industry accounting. Ms. Obiero represent the interests of Swala Energy Limited on the board.

Professor Simon Mbilinyi, Non-Executive Director Professor Mbilinyi was Chief Economic Adviser to President Nyerere (1975-1983); Principal Secretary to the Ministry of Agriculture and Livestock Development (1982-1985); and Ambassador to the European Community, Belgium and Luxembourg (1985-1989) before becoming Principal Secretary of the Ministry of Finance. He was Managing Director of the National Development Corporation and, was Minister of Finance for President Mkapa. He was Member of Parliament for Peramiho Constituency and Chairman of the Tanzania Investment Centre; the Open University of Tanzania; the Tanzania Chamber of Mines; and the National Development Corporation. Professor Mbilinyi has a BA in Agricultural Economics (Ithaca University), an MA in Economics (Stanford University) and a PhD in Economics (University of Dar es Salaam).

The Hon. Abdullah Mwinyi, Non-Executive Director The Hon. Mwinyi worked firstly as State Attorney for the Ministry of Legal Affairs (1996-1997) before joining BP as Supply and Trade Coordinator (1999-2002), Project Manager (2002-2004) and Company Secretary (2004-2005). From 2005 to 2007 he was an Associate with Mkono and Company. From 2007 he has been a Member of Parliament and a Member of the East African Legislative Assembly, where he is the Chairperson of the Legal, Privileges and Rules Committee. In 2007 the Hon. Mwinyi established Asyla Attorneys, where he specialises in corporate, commercial, labour and employment law. The Hon. Mwinyi has an LLB in Law and an LLM in Commercial Law (both from the University of Cardiff).

Mr. Neil Taylor, Non-Executive Director Mr. Taylor is the former Exploration Manager of East African Exploration Limited ("EAX"), Black Marlin Energy's E&P subsidiary. A geologist by background, Mr. Taylor has over 30 years of experience in the oil and gas business with internationally renowned E&P companies including British Petroleum and Woodside Energy. Through his time with those companies Mr. Taylor has been involved with or led exploration and production activities world-wide. Mr. Taylor joined EAX in 2008 with the remit of growing the company's asset base, and added six new licences to EAX's portfolio during his tenure.


20

Prospective and Contingent Resources

There is no certainty that any discovered resources referred to in this presentation will be commercially viable to produce. There is no certainty that any portion of the undiscovered resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. Risks associated with discovering oil: The estimation of prospective resource volumes for high-risk and poorly calibrated basins can be subject to large variation from the introduction of new information. The estimates presented herein are based on all of the information available at the effective date of the resource estimate. New data or information is likely to have a material effect on the resource assessment values. Whilst additional exploration work will be undertaken, there is no certainty that any additional resources will be discovered. Once discovered, there is no certainty that the discovery will be commercially viable to produce any portion of the resources. It s likely that significant changes to the resource estimates will occur with the incorporation of additional data and information. Risk Associated with the Estimates: In the event of a discovery, basic reservoir parameters, such as porosity, net hydrocarbon pay thickness, fluid composition and water saturation, may vary from those assumed by the Company’s independent third party resource evaluator affecting the volume of hydrocarbon estimated to be present. Other factors such as the reservoir pressure, density and viscosity of the oil and solution gas/oil ratio will affect the volume of oil that can be recovered. Additional reservoir parameters such as permeability, the presence or absence of water drive and the specific mineralogy of the reservoir rock may affect the efficiency of the recovery process. Recovery of the resources may also be affected by well performance, reliability of production and process facilities, the availability and quality of source water for enhanced recovery processes and availability of fuel gas. There is no certainty that certain mineral interests are not affected by ownership considerations that have not yet come to light. Substantial Capital Requirements: Swala expects to make significant capital expenditures for exploration activities in the future. The Company's ability to access the equity or debt markets may be affected by any prolonged market instability. The inability to access the equity or debt markets for sufficient capital, at acceptable terms and within required time frames, could have a material adverse effect on the Company's financial condition, results of operations and prospects. Ability to Execute Exploration and Development Program: It may not always be possible for Swala to execute its exploration and development strategies in the manner in which the Company considers optimal. Execution of exploration and development strategies is dependent upon the political and security climate in the host countries where the Company operates and agreement amongst the Company joint venture partners. The Company's exploration and development programs in East Africa may involve the need to obtain approvals from relevant authorities who may require conditions to be satisfied or the exercise of discretion by the relevant authorities. It may not be possible for such conditions to be satisfied. Absence of a Formal Development Plan including Required Funding: There is no certainty the Company will prepare and have approved a development plan for any portion of the contingent resources or that the Company will be successful in funding any development should such a plan be prepared. General market conditions, the sufficiency of such a development plan and the outlook regarding oil and gas prices are some factors that will influence the availability of funding or the Company’s ability to attract oil and gas industry partners to participate in the project. Access to Infrastructure: Currently there is limited local infrastructure for the production and distribution of oil and gas in the countries in which Swala operates. Export infrastructure to enable other markets to be accessed has not yet been developed and is contingent on numerous factors including, but not limited to, sufficient reserves being discovered to reach a commercial threshold to justify the construction of export pipelines and agreement amongst various government agencies regulating the transportation and sale of oil and gas. Additional Risks: Additional risks associated with the estimate of the prospective and contingent resources include risks associated with the oil and gas industry generally (i.e. financing; operational risks in exploration, development and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of estimates and projections related to production; costs and expenses; health, safety, security and environmental risks; and the uncertainty of resource estimates), drilling equipment availability and efficiency, the ability to attract and retain key personnel, the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with dealing with governments and obtaining regulatory approvals, and the risk associated with international activities.


21 Company Presentation December 2013

For further information please contact: Swala Oil & Gas (Tanzania) Limited David Mestres Ridge (CEO) [email protected] www.swala-energy.co.tz Frontline Porter Novelli Irene Kiwia (MD) T: +255 787 611 213 [email protected]

mailto:[email protected]



http://www.swala-energy.co.tz/




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