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Elk Antelope Review Update Template July 2009 Final
Elk Antelope Review Update Template July 2009 Final
Elk Antelope Review Update Template July 2009 Final
This presentation includes forward-looking statements as defined in United States federal and Canadian securities laws. All statements, other than statements of historical facts, included in this presentation that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. In particular, this presentation contains forward-looking statements pertaining to business plans and strategies; testing at the Antelope-1 well; the Elk/Antelope seismic program; the proposed farm-out or sale of interest in the Elk/Antelope and exploration assets; the proposed condensate stripping project and expected benefits therefrom (based in part on the EDG Consulting condensate feasibility study); proposed development of a liquified natural gas processing facility; proposed exploration and development activities, including drilling, seismic programs and commitments; and the BWATA field delineation and regional exploration program; These statements are based on certain assumptions made by InterOil based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. No assurances can be given however, that these events will occur. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of InterOil, which may cause our actual results to differ materially from those implied or expressed by the forward-looking statements. Some of these factors include the inherent uncertainty of oil and gas exploration activities; the availability and cost of drilling rigs, oilfield equipment, and other oilfield exploration services; InterOil's ability to finance the development of its LNG facility; InterOil's ability to timely construct and commission the LNG facility; turmoil in the financial and capital markets; political, legal and economic risks in Papua New Guinea; landowner claims; weather conditions and unforeseen operating hazards; the impact of legislation regulating emissions of greenhouse gases; and the risk factors discussed in InterOil's filings with the Securities and Exchange Commission and Canadian securities commissions, including but not limited to those in InterOil's Annual Information Form in the year ended December 31, 2008 and its annual MD&A for the year ended December 31, 2008. Readers are cautioned that the foregoing list of factors that may affect future results is not exhaustive. The forward-looking statements contained in this presentation are made as of the date hereof and InterOil does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable securities laws. The forward-looking statements contained herein are expressly qualified by this cautionary statement. We currently have no reserves as defined in Canadian National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. InterOil includes in this presentation information that the SEC's guidelines strictly prohibit InterOil from including in filings with the SEC. Investors are urged to consider closely the disclosure in InterOil's Form 40-F, available from us at www.interoil.com or from the SEC at www.sec.com and Annual Information Form in the year ended December 31, 2008 on SEDAR at www.sedar.ca InterOil has commenced a process to enter into an agreement with suitable industry farm-in partner(s) to acquire interests in the Elk/Antelope structure and the proposed LNG plant. There is no assurance that any suitable farm-in partner will be identified or that any agreement will be completed as proposed or at all.
Agenda
Antelope-1 Well Technical Summary
Well Review Drill Stem Test Update Elk/Antelope Field Resource Estimate
Current Activities
Antelope-2 Rig Move and Spud Antelope-1 Long Term Well Test Elk/Antelope Seismic Program Phase 1 Update on Farm-out/Sale to Strategic Partner(s) Antelope-2 Well Objectives Elk/Antelope Appraisal Strategy Condensate Stripping Project Feasibility Study Exploration Program and Commitments Bwata Gas Field Delineation and Regional Exploration Seismic Program
Forward Plans
Summary
WELL REVIEW
PPL238 PPL237
Antelope-1
Highly Productive Reservoir Record flows of 382 MMcfd and 5,000 BCPD and Calculated Absolute Open
Flow of over 17 BCF per day From 5,840 ftMD (1,780 m) to setting of the 7 casing, all drilling/testing operations conducted with no-returns to surface indicating significant permeability and porosity Over 500,000 Bbls of drilling fluid (mostly freshwater) lost to the formation Dolomite Zone: Net reservoir 746 ft (227 m) Av. Porosity 13% up to 30% Limestone Zone: Net reservoir 1,345 ft (410 m) Av. Porosity 7% Upper Transition Zone: Net reservoir 108 ft (33 m) Av. Porosity 5% Lower Transition Zone: Net reservoir 217 ft (66 m) Av. Porosity 4% Excellent hydrocarbon saturation characteristics confirmed by wireline logs and capillary height data
DST #12, #13 and #14 were successful tests that recovered gas, condensate, oil and valid pressure data in each
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33o-35o API oil has flowed from below 7,769 ftMD (2,368 m) / 7,133 ftTVDss
(2,174 m) Due to the tight reservoir in these lower intervals, analysis indicates two possible base case outcomes i. A gas/oil contact at approximately 7,769 ftMD (2,368 m) and an oil/water contact at
8,156 ftMD (2,486 m) with possible transitions between these contacts ii. A gas/water contact at approximately 8,156 ftMD (2,486 m)/ 7,520 ftTVDss (2,292 m)
These results confirm the basis for a long term well test across the deeper
intervals for further oil and condensate characterization
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Light Oil Condensate / Light Oil (44-45 API) (47-49 API) Possible Condensate Oil Mixing
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Resource Estimate for Gas and Condensate Net to InterOil* As At December, 31, 2008 Contingent Gas Resources (Tcf) Contingent Condensate Resources (MMBbls) Contingent Resources MMBOE Low 1.3 20.4 235.7 Case* Best 1.9 33.0 351.3 High 2.6 48.9 487.8
An evaluation of the potential resources of gas and condensate for the Elk/Antelope field has been completed by GLJ Petroleum Consultants Ltd., an independent qualified reserves evaluator, as of December 31, 2008 The estimates presented are in accordance with the definitions and guidelines in the COGE Handbook and Canadian NI 51101 standards Best Case estimate of 3.43 Tcf gross (1.9 Tcf net) and High Case estimate of 4.73 Tcf gross (2.6 Tcf net).
*55.67% Participating Interest assumes all IPWI Investors and the PNG Government elect to fully participate after a Production Development License has been granted.
Please refer to the statement of resources in the Companys 2008 Annual Information Form filed on www.sedar.com for additional disclosure.
Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development. There is no certainty that it will be commercially viable to produce any portion of the resources. These resource estimates are not classified as reserves primarily due to lack of marketing infrastructure, further project application, facility and reservoir design work. There is no guarantee that all or any part of the estimated resources will be recovered. Although a final project has not yet been sanctioned, pre - Front End Engineering and Design (FEED) studies are ongoing for LNG and condensate stripping operations as options for monetization of the gas and condensate.
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Current Activities
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17
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7" x 9-5/8" liner hanger at 1697m 7" x 9-5/8" ACP at 1736m 9 5/8" casing at 1747m
TOC @ 2143m
7" x 8-1/2" ACP at 2310m 2-7/8" x 7" Completion Packer @ 2300m 7" Liner at 2347m X landing nipple Perforated Joint 6" open hole XN Landing nipple
near the hydrocarbon water contact Determine connected gas in-place to the well and evaluate the potential for reservoir boundaries Determine the possible reservoir connectivity between the Elk-4 and Antelope-1 wells Evaluate reservoir transmissibility
(permeability-thickness) and natural fracture conductivity
Current Activities
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Current Activities
The Aims of the Program will be to: Further delineate Elk/Antelope structure
In fill seismic to reduce the interline spacing with specific focus on the Antelope reef Coordination of the seismic acquisition with drilling to allow acquisition of offset and walk
away vertical well seismic profiles Survey Planning and design of acquisition lines and parameters for : Increased data density and resolution for reservoir geophysics - Inversion and AVO analysis Image the top dolomite and top limestone Image the Antelope and Elk faults Optimize seismic-well ties (Elk-4, Antelope-1 & 2) Better constrain lateral extents of the Elk/Antelope Field Understand fractures and stress fields (anisotropy) via possible WAVSP recording during surface acquisition (Antlope-1/Antelope-2)
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Current Activities
Further define
the Antelope reef
Image major
faults
Increase
seismic data density
Perform
higher end reservoir geophysics
Optimize
seismic-well ties
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*55.67% Participating Interest assumes all IPWI Investors and the PNG Government elect to fully participate after a Production Development License has been granted.
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Forward Plans
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27
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Acquire additional in-field seismic to improve data coverage Fast track selection of two new well locations
These will be infill locations within the Antelope structure
In summary, by combining a second rig with improvement of infrastructure and equipment, significant synergies and savings are expected to be achieved as the reliance on helicopters is reduced
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Forward Plans
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31
Hides Field
34
36
IRR % 33 38
* Project Mustang Price Escalation ($54 esc. to $130)as outlined in the Information Memorandum) CAPEX includes cost for roads which were not included in the EDG scope OPEX includes $3/bbl condensate transportation fee to the refinery Drilling CAPEX includes 4 additional wells First Production Jan 2011 First Production in 2012
The economics have been calculated on a stand alone basis as this provides the most rigorous test of the project economics returns as an acceleration project are significantly better as most of the CAPEX is absorbed by the LNG Project 37
22.4
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24
27
30
Forward Plans
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Sq km
4,502
Acre
1,112,464
Commitments
Acquire Seismic data Drill 2 Wells Acquire Seismic data Drill 3 Wells (includes Antelope-2) Acquire Seismic data (Antelope Appraisal Seismic Survey 2009) Acquire Airborne Geophysical data Drill 1 Well Summary: Appraisal and Exploration Seismic and Airborne Geophysical Programs. Minimum of 6 Wells 42
PPL237
3,238
800,124
PPL238
8,433
2,083,831
Total
16,173
4,671,756
Forward Plans
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Proposed Bwata Gas Field Delineation and Regional Exploration Seismic Program
Exploration Seismic - Phase 2
Delineate the Bwata Gas Field Delineate near field opportunities
Mule Deer White Tail Big Horn Wolverine Raptor Duck Bill
This program will meet our licence obligations and our objective of accelerating our exploration program
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Summary
Antelope-1 has been drilled, tested and completed as one of the
largest known onshore vertical wells in terms of both column height and flow capacity GLJ Petroleum Consultants has completed an independent assessment for the Elk/Antelope field and provided a certified recoverable resource estimate of 631 million BOE for the best case effective 31 December 2008 An early condensate stripping project is being evaluated and based on the current feasibility study the economics appear very robust The drilling of the Antelope-2 well along with the new seismic program and the planned long term well test at Antelope-1 will solidify the understanding of the Elk/Antelope reservoir An updated resource estimate is planned to be completed by GLJ Petroleum Consultants after the drilling of the Antelope-2 well
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BCF BCPD Certified recoverable resource The estimates presented are in accordance with the definitions and guidelines in the COGE Handbook and Canadian NI 51-101 standards in relation to the estimates provided here in:-
The low estimate is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate. The best estimate is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate. The high estimate is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate. Marketable gas estimates exclude CO2, shrinkage and gas used for fuel.
means Drill Stem Test means a measured depth in feet in the well from the drilling rig datum used to discuss depth within a single well means a depth in feet corrected for well geometry to a true vertical depth from a sea level datum used to compare between wells means a process of deriving from observed field data a subsurface model that is consistent with that data (Sheriff, 2002). Seismic inversion is the process of quantitatively transforming seismic reflection data into a rock property description of a reservoir, achieved via the integration of surface seismic data, well logs, vertical seismic profiles, and geological knowledge. LNG means Liquefied Natural Gas MMcf/MMcfd means a measure of gas volume in Millions of cubic feet or a rate of gas flow in Millions of cubic feet per day PPL means Petroleum Prospecting Licence as defined in the PNG Oil and Gas Act PVT Analysis means a series of detailed analyses of a hydrocarbon sample conducted under different conditions of volume and temperature Tcf means trillion cubic feet (a cubic foot x 1012) WAVSP means Walk Away Vertical Seismic Profile in which seismic data is recorded in the subsurface in a well, using energy sources arranged in everincreasing linear offsets from the well on the surface, and provides the most robust tie of time, depth and seismic character to the well.
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