Projects blending production with development and exploration potential

  • Significant resource and reserve base in low cost, stable fiscal regime of increasing interest to the majors
  • West Rustavi company-making potential confirmed through exceptional oil production test rates at well 16aZ of 1,100 bbl/d – more than three times higher than forecast
  • Fully funded programme to rapidly scale oil production and appraise legacy gas discoveries
  • Low cost services available in close proximity to all assets – Block is partnered with Georgian Oil and Gas (GOG), one of Georgia’s most respected oil companies and biggest licence owners
  • Production and transportation infrastructure
  • Operating and oil sale marketing structure
  • Significant understanding of legacy and present data with 3D seismic survey of West Rustavi to be acquired to increase subsurface knowledge
  • Norio and Satskhenisi fields adjacent and contiguous with block operated by major service company and asset owner Schlumberger

Map of the Republic of  Georgia and the Area of Interest

Map of Oil Field

West Rustavi Onshore Oil and Gas Field

Licence with company-making oil and gas potential:

  • 71.5% Working Interest with agreement to move to 100%
  • 36.5km2 with multiple wells that have tested oil and gas from multiple geological horizons

Proven oil field

  • Has produced 41 Mbbl light sweet crude with remaining 0.9 MMbbls 2P gross reserves in the Middle Eocene
  • 38 MMBbls of 2C gross contingent resources in Middle, Upper and Lower Eocene (condensate)
  • First horizontal sidetrack 16aZ tested at 1,040 bbl/d from the Middle Eocene – more than three times higher than 325 bbl/d target
  • $36/bbl netback at $65/bbl Brent – $16.6 NPV10 per barrel

Company-making gas resource

  • 608 BCF 2C gross contingent resource target in the Eocene/Cretaceous – vertical wells tested at 1-1.5 MMscf/d
  • $3.40/MCF netback (WR16aZ associated gas) – $1.1 NPV10 per MCF

Strategy

  • Horizontal sidetracks at West Rustavi wells 3, 30 and 38 analogous to 16aZ to scale up oil production and fund future capital programmes
  • Appraise two of the field’s existing gas discoveries and drill a new gas well
  • Expand the field’s facilities to increase production capacity to 4,000-5,000 bbl/d
  • Acquire a 3D seismic survey to provide a critical understanding of West Rustavi’s subsurface

Attractive PSC licence terms

  • Very low cost production and good fiscal terms: 25(+5) year term effective from 1 September 2018 with CPR to be updated once 3D seismic programme completed and interpreted
  • Industrial gas market less than 10km at Rustavi industrial complex
  • No taxes or discovery bonus applicable

Reserves and Future Cash Flow Projections, West Rustavi

 
Gross Oil Reserves, MBbl
Net Oil Reserves, MBbl
Net Cash Flow, MM$
NPV10, MM$
Total
470.8
906.8
1,606.2
210.7
347.8
565.2
6.1
13.6
25.6
4.1
9.6
18.4
Reserve Classification
P90
1P
P50
2P
P10
3P
P90
1P
P50
2P
P10
3P
P90
1P
P50
2P
P10
3P
P90
1P
P50
2P
P10
3P
Producing
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Developed Non-Producing
470.8
906.8
1,606.2
210.7
347.8
565.2
6.1
13.6
25.6
4.1
9.6
18.4
Undeveloped
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Based on completion of farmin for 75% Working Interest. Net is net of government share and partner’s interests. (MBbl = thousand barrels of oil; MM$ = millions of US$)

 

Gross Unrisked Contingent Resource Estimates, West Rustavi

Contingent Oil/Condensate Resouces, MMBBl
Contingent Associated/Free Gas Resouces, Bcf
Risk Factor
P90
1P
P50
2P
P10
3P
P90
1P
P50
2P
P10
3P
18.6
37.9
69.3
314
608
1,000
75%
(MMBbl = million barrels of oil; BCF = billion cubic feet)

Norio Onshore Oil Field

Low cost production and development with established facilities and marketing process

  • 100% Working Interest
  • Low cost production and development with established facilities and marketing process
  • 35km from the centre of Tbilisi, requiring low capex recompletions of existing wells and new horizontal wells to significantly increase existing production
  • Storage facilities onsite, well maintained and in use, and currently using a fraction of their capacities

Proven oil field

  • 1.8 MMbbls of light sweet crude oil produced to date
  • Specialist drilling tool used to increase production from 10 bopd towards 60 bopd during ongoing recompletion programme

Significant reserve/resource potential

  • 1.6 MMbbls of 2P oil reserves gross
  • 7.2 MMbbls gross (2C) contingent oil resources

Attractive PSC terms

  • Operating costs recovered 100%
  • Of remaining production Block retains 50% as cost oil and the residual profit oil is split 50:50 with the state during cost recovery phase
  • Terms are valid until 2026 with optional five year renewal

Reserves and Future Cash Flow Projections, Norio

 
Gross Oil Reserves, MBbl
Net Oil Reserves, MBbl
Net Cash Flow, MM$
NPV10, MM$
Total
899.2
1,630.9
2,533.3
681.8
1,107.8
1,496.9
21.2
45.6
67.4
11.6
29.5
45.1
Reserve Classification
P90
1P
P50
2P
P10
3P
P90
1P
P50
2P
P10
3P
P90
1P
P50
2P
P10
3P
P90
1P
P50
2P
P10
3P
Producing
28.1
32.7
37.2
16.4
21.7
28.5
0.2
0.2
0.4
0.1
0.2
0.3
Developed Non-Producing
65.8
93.0
167.5
61.6
80.9
133.5
1.0
2.3
5.7
0.6
1.5
3.8
Undeveloped
805.2
1,505.3
2,328.6
603.5
1,005.2
1,334.9
20.0
43.1
61.3
10.9
27.8
41.0
For 100% Working Interest. Net is net of government share. (MBbl = thousand barrels of oil; MM$ = millions of US$)

 

Gross Unrisked Contingent Resource Estimates, Norio

Contingent Oil/Condensate Resouces, MMBBl
Contingent Associated/Free Gas Resouces, Bcf
Risk Factor
P90
1P
P50
2P
P10
3P
P90
1P
P50
2P
P10
3P
3.1
7.2
13.9
0.8
1.9
3.7
75%
(MMBbl = million barrels of oil; BCF = billion cubic feet)

Satskhenisi

Cumulative production 500,000 bbl from vertical wells drilled 1956-1964.

  • 90% Working Interest
  • Production from the Maikop and shallow Sarmatian lithologies
  • Maikop is believed to have considerable unconventional potential
  • Similar geological setting and formations to Norio
  • Learnings from one permit apply to the other
  • 2D seismic acquired over last 20 years
  • Reprocessed in 2014
  • Well depths 600-1500m

Proven oil field

  • Currently producing c.6 bopd and cash flow positive
  • Norio results to inform forward plan for Satskhenisi
  • Significant reserve/resource potential
  • c.14 Mbbls of 2P oil reserves gross
  • 27.8 MMbbls gross (2C) contingent oil resources
  • 16.4 BCF gross (2C) contingent gas resources

Attractive PSC terms

  • Operating costs recovered 100%
  • Of remaining production Block retains 50% as cost oil and the residual profit oil is split 50:50 with the state during cost recovery phase
  • Terms are valid until 2026 with optional five year renewal

Reserves and Future Cash Flow Projections, Satskhenisi

 
Gross Oil Reserves, MBbl
Net Oil Reserves, MBbl
Net Cash Flow, MM$
NPV10, MM$
Total
11.6
13.8
17.3
7.9
9.6
12.7
0.22
0.29
0.42
0.18
0.23
0.32
Reserve Classification
P90
1P
P50
2P
P10
3P
P90
1P
P50
2P
P10
3P
P90
1P
P50
2P
P10
3P
P90
1P
P50
2P
P10
3P
Producing
4.4
4.4
4.4
2.3
2.3
2.4
0.03
0.03
0.03
0.03
0.030.03
Developed Non-Producing
7.2
9.4
12.9
5.6
7.3
10.3
0.19
0.26
0.39
0.16
0.2
0.29
Undeveloped
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
For 90% Working Interest. Net is net of government share and partner’s interests. (MBbl = thousand barrels of oil; MM$ = millions of US$)

 

Gross Unrisked Contingent Resource Estimates, Satskhenisi

Contingent Oil/Condensate Resouces, MMBBl
Contingent Associated/Free Gas Resouces, Bcf
Risk Factor
P90
1P
P50
2P
P10
3P
P90
1P
P50
2P
P10
3P
16.4
27.8
43.7
9.3
16.4
26.5
75%
(MMBbl = million barrels of oil; BCF = billion cubic feet)