Board of Directors Meeting 2Q14

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Sep 30, 2014 - A Presentation to. THE LAGOS OIL CLUB by. Curtis Cohen. Chief Operating Officer. Sahara Group, Upstream ..... Sahara's first Christmas tree ...
Sahara’s First Oil Discovery, Appraisal & Production A Presentation to THE LAGOS OIL CLUB by

Curtis Cohen Chief Operating Officer Sahara Group, Upstream September 30, 2014

Outline • Introduction – – – – – – –

The Sahara Group Upstream portfolio Shell & Chevron auctions Tsekelewu MF OPLs 284 & 286 Ghana ECTP Cote d’Ivoire 500 & 502

• Sahara’s first oil discovery, appraisal & production – OPL 274

Introduction • Sahara privately owned, established 1996 • Vertically integrated conglomerate & “incubator”

• 20+ operating companies, 650+ worldwide employees • Trading, Shipping, E&P, Refining, Power, Infrastructure • Nigeria, Cote d’Ivoire, Ghana, UK, Switzerland, Dubai, Singapore

• Audited turnover ~ $11B • CAGR growth past four years up 30% annually http://www.sahara-group.com/our_business.html

Group strategy • To replicate our trading success & accomplishments in infrastructure energy & elsewhere • We invest in people, processes, principal investments, strategic acquisitions & continuous expansion • West Africa focused, expanding regionally then globally

Sahara Group MIDSTREAM

DOWNSTREAM

UPSTREAM

INFRASTRUCTURE

POWER

Sahara Sea Support Services

Sahara Energy Services

So Energy

So Aviation

Sahara Energy Field

Enageed Resource

Sahara Power Resource

KERL (Egbin Genco)

Sahara Bulk Storage

Sahara Trade W Africa

P-Lyne Energy

Sahara Gas

Sahara Energy Field Ghana

Sahara Energy Field Cote d’Ivoire

NG Power

NEDC (Ikeja Disco)

Sahara Energy Intl

Sahara Energy Resource

Sahara Energy E&P

NG Power HPS

Sahara Infrastructure & Investment Vehicle

Upstream portfolio CI-500

CI-502

ECTP

OPL 286

OPL 284

Tsekelewu

OPL 274

OPL 228

Opl 228

Opl 286

?

?

?

Shell & Chevron auctions

OML 55

OML 24

OML 55

OML 18 OML 52

Auction results • Sahara invited to bid on Chevron OML 52, 53 & 55 • Sahara invited to bid on Shell OML 18 & 24 • Formed consortia for both auctions • Stanbic & McDaniel advised Chevron bid • Citi, First Bank & Xodus advised Shell bid • Sahara was finalist but not winner in both • Sahara’s near term growth will be organic

Sahara’s Nigerian assets

OPL 274

NIGER OPL 228

T

D E LTA OPL 284

BASIN OPL 286

Tsekelewu marginal field OPL 274

Tsekelewu

Tsekelewu marginal field section Tsekelewu-01

Tsekelewu -02

Opuekeba -07

Gas Oil Unknown Water

A U1 OUT 1522 U1 OWC @ 1533

U1 OUT 1522 U1 OWC @ 1533

B

U1

U4 U4 GOC @ 1946

U5

U4 GOC @ 1946

U5 GWC @ 1963

U5 GWC @ 1963

U4 GOC @ 1946

U4 ODT 1953

U7 OUT 2201

U7

U7 OWC @ 2212

U7 OWC @ 2212 U8_U OUT 2246

U8_U OUT 2246

U8_U U8_L

U8_L

V2 GDT @ 2573

V2

V2 GDT @ 2573

V2 GDT @ 2573

V3 OUT 2644

V3 OUT 2644

V4 ODT 2751

V3 OWC @ 2662

V3

V3 OWC @ 2662

V4 OUT 2743

U8_U

U8_L OWC @ 2212

U8_L OWC @ 2212

V4

V4 OUT 2743 V4 ODT 2751

V4

V3

V2

U7

Tsekelewu depth map





U8U OWC 2258m

Tsekelewu block limit



Tsekelewu-2 up-dip location SE





Time slice map

NW

Crestal outline on time slice





Area of common contacts

Tsekelewu block limit

Time slice



Tsekelewu block

OPL 284 prospects

OPL 284 DHI

Sahara’s Ghana block

ECTP 1500 km2 85% equity

Sahara’s Cote d’Ivoire blocks 500

502

35% 200 km2

20% 221km2

New CI-502 3D seismic

Nigerian blocks

OPL 274

OPL 274

T

Tsekelewu

OPL 284

OPL 284

OPL 286 OPL 286

OPL 228 OPL 228

OPL 274 Benin City

OPL 274

625 km2 3D

T s e k e

l

e w u

Escravos

Forcados

Warri

Work program time line

Seismic acquisition team

Receiver cable prep

Prepped cable groups

Land seismic

Swamp seismic

Safety vest is obligatory

Drilling shot holes

Seismic shot records

Fast track migration

Seismic processing: Raw PSTM

~20 km

PSTM (time migration)

Depth conversion methods ❶ T-D function

Time

Depth

X

= Big difference

Velocity cube



Depth Velocity density 1.6 M/1000 km2

Time-depth functions from wells

Depth

Time

Wrong well choice in depth conversion risks missing target by 750’

T-D function choice impacts depth conversion

Time

Using wrong velocity, actual trajectory cuts fault, misses deeper targets

Planned trajectory

PSDM (depth migration)

PSTM interpretation

PSDM interpretation

Interpretation difference PSDM

PSTM

1.4 km

Oki-1 cut fault, missed deep pay

PSDM slice 1 km2

Oki-Oziengbe S

PSTM slice

Caveat emptor PSTM 45° strike difference

s p r e a d

1.4 km focused

PDTM

● Displace image ● Focus image ● Raise resolution ● Volume impact ● Target impact (horizon & fault, e.g.,Oki-1)

Spared cost can cost value • Seismic processing commonly stopped after time image • Time image, location, volume is different from depth image • Differences are material, impact – Work program duration, delay, completeness – Missed opportunity – Investment in wrong opportunity (build road, drill well in wrong place)

• Economic consequence include – – – –

Oil in place Reserves Valuation Bankruptcy

• Operators, lenders, investors prone to cutting costs lose value

Drilled wells before doing 3D seismic. $1.3B in lost value!

Hunts Propose $663M Bankruptcy Settlement for Placid Oil http://www.nytimes.com/1988/07/24/us/hunts-propose-a-663-million-bankruptcy-settlement-for-placid-oil.html

OPL 274 prospect inventory Gilli Gilli S New Tonjour

New

Tonjour E

Swamp

Land Scotta

Pologbene

New

New

Oluegi Oziengbe South

Oki

Oki-Oziengbe S & Oluegi fields S2 Oluegi Oluegi

SS1 1 S2

S4

PSDM

S5 S5 Oluegi

Oki S4 Oki

1 km2

Oki-1 cut fault

Oki & Oluegi discoveries S

Oki-1

Oluegi-1

N

Oki-1 cut fault, missed deep pay

N Oluegi

Oki OPL 274 OML 111

S

Oki-Oziengbe S4 Oki-Oziengbe S4

A1 A3

C6 C8 C9

Oki-Oziengbe S5 Oki-Oziengbe S5 Oki-Oziengbe S4

A1 A3

B1 C6 C8 C9

OKI LOCATION PREPARATION

Drill site

Sahara takes the field

Civil engineering

Base camp

Chemical shed

Waste pit form

Waste pit function

Making mud in rainy season is easy

Drilling location & trajectories

Olu1 8500’

3500’

S4

4000’

S5

Drilled trajectories

54°

49° 36°

to N

to SW to S

2 mi

Drilling results summary 0

Piling Fatality, 20” casing, well head

2000

4000

Auto-track failed 13 3/8 casing

Depth (ft)

6000

Lost centralizers 13 3/8” casing, cmt, well head

8000

9 5/8” casing, well head

10000

Stuck tool, fish Logging, 9 5/8” casing, pills & curing mud loss Logging, SWC, VSP, hi torque, early TD

12000

Logging, testing, OP, Oki-BA

14000

Logging, 7” liner run, lost tool, fishing

OKI-CA OLUEGI-1X

16000 0

10

20

30

40

50 Time (Days)

60

70

80

90

100

Drilling performance comparison $30

Oluegi

Drilling & logging

$25

Oki-O S4 Avg.

$20

($M)

Cost

Oki-O S5

$15

Completions & testing $10

PANOCEAN

$5

SEPLAT

SAHARA

AMNI

ENERGIA

AVERAGE

PANOCEAN

SEPLAT

SAHARA

AMNI

ENERGIA

AVERAGE

$0 0

20

40

60

Time (days)

80

100

120

140

Three well drilling program • • • • • • • • •

Two Oki-OS appraisal wells tested contacts Oluegi exploration well tested new fault block Appraisals logged 211 & 298’ net pay in 12 & 19 sands Discovery logged 100’ net pay in 4 sands Appraisals discovered seven new pays absent down-dip DSTs flowed 3129, 2397 & 1600 bopd Doubled certified, bankable field reserves Three wells drilled from eco-friendly common location Minimal footprint saves time, money, rig move

Sahara’s first oil test

Oki-OS DSTs Oki-Oziengbe S4

A3

C1

Oki-Oziengbe S1

C2

C3

Program highlights • First seismic operated onshore • First operated wells • First onshore wells • First appraisal wells • First discovery well • First operated multi-well drilling program

• First production tests >7000 bopd • First production (coming soon!)….

Sahara’s first Christmas tree

Where we are ! (cont.)

Laying flow lines

2014 PLANNED ACTIVITIES

Welding flow lines

2014 PLANNED ACTIVITIES

Flow lines to flow station

Flow lines to manifold

Manifold extension

2014 PLANNED ACTIVITIES

Manifold base excavation

2014 PLANNED ACTIVITIES

FL-FS manifold tie-in

2014 PLANNED ACTIVITIES

Flow station tank farm

First production pathway Well Head XMAS TREE

manifold

DEGASER

METERS

SEPARATOR STOCK TANK

FLOWLINE

MANIFOLD

TEST SEPARATOR

RESERVOIR WASTE PIT

00000

00000

HSSE highlights  Achieved > 1,000,000 LTI-free man-hours in seismic operations  Marine setting with 1800 men & 150 boats in daily use

 Achieved 631,928 LTI-free man-hours in Oki drilling campaign  Instituted 50,000 man-hour safety alert for each well

 Promoted staff safety incentive program  Security & community incident-free operations

 Developing new production security protocols

Community initiatives • “Sight for All” Program cataract eye surgeries • Cleft palate & benign jaw tumor surgeries • Bungalow construction for community workers • Jetty Refurbishment, Ajoki and Koko Communities • Road rehabilitation, Ajoki Community

• Local employment & contract labor slots • Contractor provisions

Sight for All Eye tests, drugs, eye glasses & cataract surgery in Ajoki and Ajamogha communities. Visual exams, tests, medical interventions & surgeries at the University of Benin Teaching Hospital, Benin City

Cleft lip & benign jaw tumor surgery Cleft Lip & Benign Jaw surgeries performed for 21 people at University of Benin Teaching Hospital

Bungalow construction Construction of accommodations in Ajoki and Ajamimogha communities for secondary school & health center

First production & growth • Infrastructure in place to begin production • Drilled 3 wells, installed 4 FLs to Oziengbe S FS • Forecast 4KBD est. initial production from Oki-OS 4

• Double to 8 KBD in 2015 once Oki-OS 5 completed • Facility, current existing production constrain rate • New FS & PL capacity expansion to grow production • 2016-17 FDP adds 6 new horizontals, one reentry • Oluegi development options via Oki or EPF adds more • New OML 274 drilling tied to new spare capacity adds

Production growth outlook 25

OKOS C6 A7 Dev Total Oil

Oil Rate (kbpd)

20

OKOS B2 H

OKOS C4 H Oil

15

OKOS A5 H Oil

OKOS A1 H Oil

10 Batch drilling OKOS 1 C1 STR Oil

5

OKOS A3H Oil

OKOS 5 Oil

OKOS 4 Oil

0

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

OPL 274 outlook • Appraise swamp assets 2015-6 – Tsekelewu drill 1+ wells

– Pologbene drill 1+ wells

• Explore & appraise land assets 2016-7 – Oluegi field – Scotta – Gilli Gilli

New swamp drilling campaign • • • • • • • •

2 well drilling campaign Tsekelewu development well Surveying contracted, underway Dredging contract in negotiation Swamp rig negotiation ongoing Surveying underway Evacuation route planning Pologbene appraisal well planning

Upstream outlook • Oil flow commissioning 2H14 • OML conversion & 1st production 2H14 • Swamp drilling campaign 1Q15 • Offshore OPL 284-6 drilling campaign 2H16-17* • Offshore seismic reprocessing 1H15*

• Ghana 3D seismic shoot 1H15* • Ivory Coast seismic 2014-15 & drilling 2015-16 * Farmin opportunity available

Our success serves the nation

We thank you for your support! • To the DPR, NNPC, NAPIMS & NPDC • Our bankers Diamond Bank • Host communities Ajoki, Ajamogha & Koko

• Our contractors IDSL, SLB, BHI, HPEB/TNL • Lagos Oil Club

Thank you! Curtis Cohen Chief Operating Officer Sahara Group, Upstream +234-705-899-1727 [email protected]