NW Paraguay, Pirity Basin - Envoi...

NW Paraguay, Pirity Basin

“Management Presentation”

Pirity, Hernandarias, Pilcomayo & Don QuijoteConcessions

SHORT Pre-CA Version

September 2017

Presentation Prepared by

Discovery AppraisalPirity Sub Basin

Upside Exploration

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Contents Opportunity Overview

Executive Summary

Regional Setting & Orientation

Petroleum Geology

KEY Prospectivity

Technical Detail

Cretaceous Oil Play Nearby wells & Analogues The Prospects & Prospectivity Resource Estimates

Palaeozoic Play Nearby wells & Analogues The Prospects & Prospectivity Resource Estimates

Licence Status & Obligations

Obligations

Planned Work Programmes

Commercial Potential (Fiscal & Economics)

Deal Terms

Additional Information

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EXECUTIVE SUMMARY“Opportunity Overview”

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Executive SummaryNW PARAGUAY: Pirity, Hernandarias, Don Quijote & Pilcomayo Concessions

• Opportunity to participate in discovery, appraisal,exploitation & forward exploration of entireprospective area of Paraguayan Pirity Sub Basin &extension of proven Argentinian (Olmedo Sub Basin).

• PLAYS: Proven Palaeozoic & Cretaceous Play fairwaysidentified by President’s G&G with recent geochemstudy support, including Lapacho discovery & existingfields on-trend in Argentina including Parma Largo(only 30km from nearest prospect in Paraguay)

• RESOURCE POTENTIAL: Currently mapped prospects& leads on offer combined total 10+ Tcf Gas potentialin Palaeozoic & 500+ MMbo in Cretaceous plays.

• PLANNED WORK: Min 2 wells to test prime ‘look-a-like’ Cretaceous analogue prospect and a Palaeozoicwell to follow-up the Lapacho discovery before Oct2018 with a view to converting exploration toexploitation Licences.

Proven Palaeozoic Plays (Devonian & Silurian) Analogue Cretaceous Plays

(30km from proven Argentinian Fields)

Pirity Sub-Basin

Proven Foreland Play Trend

Compression

President Concessions

Olmedo Sub BasinPresident’s Argentinian Fields

Palma Largo Field

• OPPORTUNITY. Earn up to 50%interest in Paraguayanportfolio by funding, as aminimum, the plannedCretaceous & Palaeozoic twowell drilling programme (Est.combined costs US$ 25million) which is sub groundfloor based on US$ 100 millionpast costs

Refinery

Moth-balled Refinery

Potential topping plant

Villamontesgas tie-in

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Regional Setting & OrientationAcreage• 4 Concessions covering 26,000 km & entire

prospective area of Pirity Sub-Basin, which is extension of proven/producing Olmeda Sub Basin in Argentina

Play Trends•Northern Flank (Fractured Palaeozoic

Devonian & Silurian objectives)

•Southern Flank (Quality Cretaceous Sands/volcanics, Yacoriate, deeper Palaeozoic)

Discoveries• Palaeozoic Play proven by foreland fields &

Lapacho Discovery on Pirity N. Flank

• Cretaceous play undrilled in Paraguay proven by Palma Largo field only 30-70km across Argentinian border from prime ‘look-a-like’ analogues

PiritySub-Basin

Proven Foreland Play Trend


Palma Largo Field

Northern Flank (Palaeozoic Plays)

Southern Flank (Cretaceous Plays)

Imperial Complex(Mean 193 MMboe

Resources)Delray Complex(Mean 394 MMboe

Resources)

Don Quijote

Hernandaries

Pilcomayo

Pirity

President’s Fields

A

A’

LepachoDiscovery

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BLOCK3A

BLOCK 2

BLOCK 1

BLOCK II

BLOCK I

UGANDA: Lake Albert Rift - > 1 bn barrels discovered resources

How Big?Areal Comparisons of other Proven Global Basin’s with Under-explored Pirity Basin

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5 original Concessions in two countries covered entire Lake Albert Rift

~30 original Licences in two countries covered the North Sea Viking Graben

Equivalent Area of President’s Concessions

UK - Viking Graben Rift - >10 giant fields

Equivalent Area of President’s Concessions

Uganda’s Albertine Graben

Play Fairway

North Sea Viking Graben Play

Fairway

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Late CretaceousM. Devonian

Palaeo-Stratigraphic DepositionParaguay is characterized by tectono-stratigraphic complexity associated with Palaeozoic depositionnear an accreting continental margin, followed by Mesozoic rifting and Cenozoic deformation relatedto the Andean Orogeny• Sedimentary sequences of Paraguay were deposited in a complex series of epi- and intracontinental rift basins, subject to

epeiric marine through continental deposition, and overprinted by several accretionary orogenic events

• The Palaeozoic sedimentary sequence, spanning the Ordovician to Carboniferous/Permian, contains marine, glacial and continental facies deposited in foreland basins related to successive regional terrane accretions

• The Mesozoic sedimentary sequence is characterized by predominantly continental deposits, rift tectonics with related magmatism, local marine deposits and fragmentation related to the break-up of Gondwana and the opening of the Atlantic basin

• The uppermost sedimentary sequence represents Cenozoic deposition and was characterized by the Andean Orogeny

Paraguay

Paraguay Paleogeography

Pirity Palaeo-Basin Location

Pirity Palaeo-Basin Location

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Boqueron Prospect

Play Stratigraphy

Summary of Petroleum Geology

Permo-Carboniferous

Proven by Palmar Largo

Imperial & Delray Prospects

Silu

rian

Dev

on

ian

Fractured Palaeozoic Play

Play Elements Targets Play

R

R S Primary Source

SealsPrimary Reservoir

Secondary Reservoir

KEY

Huamampampa

R

S

Icla SstSanta Rossa Sst

Kirusillas

R

R

R

S Los Monos

R

Yacoraite, Lecho, volcanic

R

S

Proven by Lapacho Discovery

Proven by Lapacho Discovery

Cre

tace

ou

s

Cretaceous Play

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Paraguay Exploration HistoryExploration in Paraguay goes back nearly 70 years, but combinations of factors have hindered commercial development to date, leaving potentially huge volumes of hydrocarbons yet to be discoveredHIGHLIGHTS:Paraguay exploration spans 67 years but has involved only 52 wells over entire country in 3basin areas

• 1st well drilled in 1947 & last well by Amerisur in 2016• Large number of wells drilled reported oil and gas shows

• Mendoza #1R (Pure Oil Co., 1959) registered a gas blow-out at 609 m (5 MMCFGD - Carboniferous) and another gas blow-out at 2600 m (25 MMCFGD Emsian/Pragian source/reservoir). This was re-drilled in 1993 as Independencia-1 where gas is now produced at low rate into an E-gen unit.

Over same period, >900 wells were been drilled in NW Argentina and Bolivia, targeting the same formations now definedin Paraguay’s Pirity basin

• Over 73 Tcf gas + 2 Billion barrels of liquids have been produced from 128 fields, flanking NW ParaguayCombination of technical and economic factors have prevented successful commercialization of hydrocarbons inParaguay and small un-sustained exploration efforts:

• Technical:• Poor & undeveloped understanding of regional tectonic concepts necessary to explain and predict stratigraphic complexities resulting in incorrect

geologic modeling & petroleum system assessment• Most resulting historical exploration was single well or small drilling campaigns which did not adequately test play concepts or satisfy high

economic threshold parameters (early elephant hunting) weighted against competing portfolio interests• Poor historic use of technology to properly interpret & analyse exploration results, including acquisition of inadequate seismic and use of poor

drilling & testing equipment

• Economic:• Challenging economic environment during exploration programmes

• During 1971-73, Pennzoil drilled 16 wells in a US$ 2 - US$ 8/bbl oil environment*, with no local gas market, where gas traded at $0.15-0.25/mcf• Lack of export infrastructure to support major discoveries

Paraguayan political environment previously not western-facing and supportive of large foreign corporations* Money of the day. Equates to ~US$13-17 adjusted to 2013 prices. ChartsBin.com

Mendoza Well


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DEMATTEI Licence

PIRITY Licence

PILCOMAYO Licence

2D Reprocessing(2013)

DON QUIJOTE Licence

President’s Concession History2012-2014 Engagement• President farmed into original Pirity & Demattei

Concessions in 2012 & completed its farmin to Hernandarias upon Concession award in 2014

2013 G&G Studies & Seismic• Regional evaluation, reprocessing & interpretation

of existing well & geophysical data• Global Geophysical Inc acquired 1,662km new 2D

data & 791 km2 new 3D2014 Drilling• Lapacho-1 discovery & Jacaranda-1 wells

(Palaeozoic Prospects)• Proved eastern extension of the Devonian & Silurian

petroleum systems

• Lapacho-1 Encountered oil in the lower Devonian sands and

gas in the Silurian sands.

• Instability of shales meant open hole test which was

terminated prematurely due to mechanical problems, but after

small gas influx was achieved. Poor cement isolation also

prevented a valid test of the oil in the Devonian sands.

2015 Increased Interest• Relinquished Demattei Licence but increased

Pirity Interest to 100%

Palma Largo FieldProduced 56

MMBo to date)


Cret. Resources)

Delray Prospect Complex

(Mean 394 MMboe

Cret. Resources)

2D Acquisition(2013)

• 40% earned in Hernandarias Concession after completion of initial farmin work programme & converted to Exploration Concession with part relinquishment

• Suspended drilling programme with Force Majeure due to oil price crash• Application for Don Quijote & Pilcomayo Areas as protection acreage

3D Survey(2013)

3D Survey(2013)

HERNANDARIAS Licence

Boqueron Prospect(Mean 145 MMboe

Palaeozoic Resources)

Jarcaranda-1 Well (2014)

Lapacho-1 Well (2014)

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President Pirity Basin Acreage (26,000km ~ 6.4 million Acres)

Pirity Basin Data

Seismic availability is still limited inthe Pirity Basin, resulting in

• President’s reprocessing of a largeamount of the existing 2D over its keyprospect areas

• Most of the 2D seismic reprocessingactivity has been focused in theNorth Flank, around the Lapacho,Jacaranda and Boqueron area

• Extensive reprocessing has also beenundertaken, with most of thereprocessed lines in PSTM and PSDM

• President commissioned GlobalGeophysical Inc to acquire 1,662km ofnew 2D seismic and 781km2 of 3Ddata in Paraguay acreage between2013-2015

• 3D’s are located in the South Flanktargeting Cretaceous play

PresidentReprocessed 2D Lines

President 3D Seismic Areas

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Palaeozoic Prospectivity Overview

North Flank – Pirity Basin• Fractured Palaeozoic

• Devonian & Silurian Play Targets

• 1 Discovery (Lapacho-X1 well)• 24 m fractured Oil pay in Devonian Icla Sst@ 3,926m (12,880 ft)• 54 m Gas pay in fractured Silurian Sst but early TD’d before full section

penetrated due to hole conditions (Est. additional ~26m pay undrilled).

• Existing FMI data supports fracturing indicated by unstable hole caused by formation break-out.

• Inconclusive Open Hole Test: Achieved short gas inflow with mud before failure due to poor hole conditions & tool plugging by hole junk

• 4 Palaeozoic Prospects & 22 Leads mapped on reprocessed 2D• Primary Lapacho closures + Boqueron prospects = 3.9 Tcf alone • Est. Total 10 Tcf Palaeozoic Resources Potential

President Pirity Basin Acreage (26,000km ~ 6.4 million Acres)

SN

Up Dev

30 8

Basement

Lapacho x-1Boqueron Jacaranda Deep

Line PE-2013-NF-1009 / HER-1005

Top Ludlovian Time Structural Map Sub-regional grid

Lapacho-x1 Well

30

8

Geochemical Anomaly Co-incident

With mapped closure

Lapacho-x1

Boqueron Prospect(Mean 145 Mmboe

Palaeozoic Resources)

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BoqueronProspect

Jacaranda-2 Prospect

Lapacho SubcropProspect

Jacaranda -1 Well and Deep

Prospect


30km

Cretaceous Prospectivity Overview

Imperial complex(Mean 193 MMboe

Cret. Resources)

Delray Complex (Mean 394 MMboe

Cret. Resources)

Palmar Largo Complex

South Flank – Pirity Basin• Quality Cretaceous Sandstone Plays

• Proven-Producing 30km from primary prospect in Paraguay on-strike only SW across boarder in Argentina

• Est. Gross 160+ m combined Lecho & Volcanics with 13-20% porosities based on existing well penetrations & Sourced by Yacoraite Shales up to Avg. 78 m thick across Pirity Basin

• Proven by several existing wells in Paraguay and supported by Schlumberger Basin Model Study. Existing wells not valid closures

• Total 13 prospects defined by existing & new President data

• Defined Cretaceous Prospects: 6 x 3D, 7 x 2D

• Risk Reduction by Geochemical Anomalies

Spectral Geochemical

Anomalies

• Pirity / Olmeda land surface credentials perfect for Satellite spectral analysis (i.e. unpopulated, flat grassland / scrub vegetation with no large bodies of water)

• Unequivocal & Accurate Ground Truth Study over President’s Argentinian fields

• Palmar Largo shows clear anomalies with direct, undrilled 3D defined analogues in President’s acreage

• Primary Prospects• Imperial Prospect Complex (1 prospect + 2 leads)

• Combined mean 193 MMboe resources• Delray Prospect Complex (4 prospects + 2 leads)

• Combined mean 394 MMboe resources

• Economics – 2,000bopd well initials and benign terms • Low Commercial field threshold and early production options

Delray Complex

(Mean 394 MMboe

Cret. Resources)


Cret. Resources)

Palmar Largo Field

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Remote-Sensing Geochemistry

Proven Technology – Case Studies

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Spectral Anomalies Coincide with massive discoveries in

Block 1 Alberta Graben)

Lake Albert (UGANDA) 6.5 Billion bbls in place (2.2 Billion recoverable)

• Results clearly show spectral anomalies fromsatellite are closely relate to known oil fields

• Anomalies created by spectral response due to microseepage & change to soils and impact on flora

Turkana Rift Basin (KENYA) 600 Million bbls

• Anomaly #1: 1 well drilled, 60 million bbl discovery

• Anomaly #2: 10 wells drilled, 2.290 Billion bbls

• Anomaly #3: 1 well drilled, shows but possible seal failure

• Anomaly #4: 2 undrilled prospects

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President Depth MapRemote sensing DH Image*Puesto Guardian Field

Remote sensing DH Image

Dos Puntitas Field

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Cumulative production in 1996 was 8MMBbl, 67% of current recovery

Only 26% of 1996 production from northern block

Main sand quality deteriorates in south block

Conclusion: DHM Image has good match with original oil water contact and indicates relative depletion in time-lapse and sand quality. Supported by 2017 workover on PG-21 which came on at 120 bopd

Sand quality deteriorates to the east

80% production from CG-1/8/12

Conclusion: DHM Image has good match with original fluid distribution and well cumulative production

Technology Ground Truthed on Existing President Fields in Argentina

Canada GrandePalma

Largo Field

Hernandaries

Pirity


Resources)

Delray Complex(Mean 394 MMboe Resources)

More Oil Produced

President Depth Map

Canada Grande

PuestoGuardian

Dos Puntitas

President Depth Map

DP-10 cum 500k bbl& 70% w/c

DP-2/15 good reservoir and area

of renewed production

DP-2/15 have best reservoir quality but HC pore volume/well lower than other fields as carbonates and some CO2 at crest.

Bypassed oil around DP-15 which was worked over in 2017 and came on at 100 bopd

No depletion but aquifer support and high water cuts (eg DP-10 70% W/C by 1996)

Conclusion: DHM Image identifies bypassed oil but has poor match with original oil water contact due to water encroachment & false negative at crest due to CO2 concentration

* 1996 satellite data

Remote sensing DH Image *Canada Grande Field

Area of Renewed

Production

President’s Argentinian

Acreage

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DELRAY COMPLEXPresident Depth Map Over Delray Prospect showing coincident geochemical Anomalies with clear Analogue to Palmar Largo Volcanics

Top Volcanics Map

0 3Km

IMPERIAL COMPLEXIndependent Spectral Evaluation Showing remote-sensing geochemical anomalies over Imperial ProspectRemote sensing Geochem Image

(1996 satellite data)

South Flank - Cretaceous Geochem Anomalies

Palmer Largo

Palmar Largo (8 sq km)

PALMAR LARGO FIELDTop Volcanics Depth Map

Independent Evaluation Showing remote-sensing geochemical anomalies over main volcanic area

Remote sensing Geochem Image (1978 satellite) data)

HighMidLow

Key to anomalies

Delray Prospect

Delray NEDelray NW

Carmen-1

Imperial -1

●

High

Mid

Low

Key to anomalies

Geochemical Anomaly sweet spots

Coincident with mapped structure

ImperialProspect

Imperial

Delray

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Delray Main (2015 map)

Delray Geophysical Study and Geochem Data Support

Delray Main(2017 Map)

Top Volcanics

Lecho overlies volcanics

Delray Main

Geochemical anomaly support to charge & intensity relates to thickness of volcanics

Source Rocks and Lechoonlap Volcanicsexactly as in Palmar Largo field

Palmar Largo Model

Delray

NS

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Work Plan with Risk Reduction

Palaeozoic (North Flank)• Drill shallower Boqueron prospect in Hernandarias

• Same section as Lapacho but shallower and structural position likely to have higher fracture density

• Possible 2nd Paleozoic well – eg Lapacho sidetrack in Pirity

• Confirm deliverability of Est. Total 10 Tcf Resource from proven Devonian & Silurian fractured reservoirs • Drill wells with higher mud weight after formation stability in historical wells

• Acquire Full formation evaluation (Comprehensive log suite & FMI: fracture evaluation tools, and/or core / sidewall cores)

• Complete DSTs to establish flow rates

Post Studies & Geochem Analysis

Cretaceous (South Flank)• Drill Imperial Main or Delray Main Prospect in Pirity

• Geochemical Anomaly - Risk Reduction with increase Chance of Success (COS)

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Commercial SummaryFISCAL REGIME & SCOPING ECONOMICSVery attractive Hydrocarbon Law

Tax – Royalty Law 779, enacted December 1995Sliding scale Royalty, 10% <5,000 bopd, 14% >50,000 bopd, Gas 12%Flat 10% tax on all business profitsNo Tax on exploration activityInternational pricing at well head (Brent index)Petropar off-take rights at well head up to 35,000 bopdDormant domestic downstream sector will be fed by new domestic production

Notional Delray DevelopmentEarly production via topping plant

Oil pipeline to Asuncion

Gas pipeline to Villamontes

Delray Economics ExampleNPV10 US$ 1 billion unrisked @ $50/bbl

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Management EstimatesUS$ per barrel

Net margin per barrel

GORR/NPI: $4.3

Government Royalties: $6

Corporate Tax: $3

Transportation: $3.5F&D Cost: $8.5Op Cost: $8

$50 / bbl

$17 / bbl

Split of NPV0 for Delray mean resource @ $50/bbl

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Key Prospect Economics

South Flank (Cretaceous Development Scenarios)

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Assumptions: • Oil Price US$ 50/bbl & Gas Price US$ 8/mmbtu• Costs estimates are based upon 2015 MOD prices and do NOT reflect recent price

North Flank (Palaeozoic Development Scenarios)

Does NOT include Yacoraite sand & carbonate reservoirs which could add 2.5 – 0.8 MMbbl/km2 respectively

KEY NORTH FLANK PROSPECTS• Boqueron• Lapacho & Lapacho Subcrop• Jacaranda & Jacaranda Deep

KEY SOUTH FLANK PROSPECTS• Imperial Complex• Delray Complex

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DEAL TERMS:• Earn up to 50% interest in one or more of its Concessions to a strategic partner willing to• Fund as a minimum, the next wells planned in each of the Pirity and Hernandarias Concessions• Wells estimated likely to cost between US$ 10 – 15 million each*• Funding of additional exploration and appraisal work program

* A rig will be operating in Paraguay from Dec 2017 to April 2018 and negotiations on shared services is expected to result in c. 20% cost savings

Commitments & Deal Terms

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Disclaimer: The information in this presentation is for guidance only. Neither President Energy (President) Envoi Limited (Envoi), its associates (‘Associates’) nor anydirector, officer or employee of President, Envoi and its Associates accepts responsibility for or makes any representation or warranty, express or implied, withrespect to the accuracy or completeness of the information, estimates and opinions contained in this document.

London Office : Old Stables House1d Manor RoadLondon W13 0LDUnited Kingdom

Phone : +44 (0)20 8566 1310E Mail : [email protected] : www.envoi.co.uk

Contact :

Mike LakinManaging Director

Registered Office & Company Secretary:23 Bedford Row, London, WC1R 4EB

Additional DataALL Requests for additional Information to be requested through:

It is requested that all and any subsequent communications withPresident should include Envoi to ensure project coordination:

President Energy Plc

Mr Miles Biggins - COOPhone : +44 (0)7962191162E Mail : [email protected] : www.presidentpc.com

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