Creating Shareholder Value via Strategic Oil & Gas Targets

Transcription

1 Creating Shareholder Value via Strategic Oil & Gas Targets Corporate Presentation December 2011

2 Looking Forward Statement Statements made by representatives of Stratex Oil & Gas, Inc. ( Stratex or the Company ) during the course of this presentation are for informational purposed only and does not constitute an offer to issue or arrange, or the solicitation of an offer to issue, securities of Stratex or other financial products. The information contained herein is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. The views, opinions and advice provided in this presentation reflect those of the individual presenters, and are provided for information purposes only. The presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions in this presentation. To the maximum extent permitted by law, non of Stratex no its directors, officers, employees or agents, nor any other person accepts any liability, including without limitation, any liability arising out of fault or negligence, for any loss arising from the use of the information contained in this presentation. These statements are based on certain assumptions and expectations made by the Company which reflect management s experience, estimates and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. No assurances can be given that such assumptions and expectations will occur as anticipated and actual results may differ materially from those implied or anticipated in the forward looking statements. Such statements are subject to a number of risks and uncertainties, many of which are beyond the control of the Company, and which include risks relating to the global financial crisis, our ability to obtain additional capital needed to implement our business plan, declines in prices and demand for gas, oil and natural gas liquids, our minimal operating history, loss of key personnel, lack of business diversification, reliance on strategic, third party relationships, ability to obtain rights to explore and develop oil and gas reserves, financial performance and results, our indebtedness under our senior secured promissory notes, our ability to replace reserves and efficiently develop our current reserves, our ability to make acquisitions on economically acceptable terms, and other important factors. Stratex undertakes no obligation to publicly update any forward looking statements, whether as a result of new information or future events Stratex Oil & Gas October 2011 Presentation Page 2

3 Overview of Company Stratex Oil & Gas is an independent energy company focused on the exploration, acquisition and production of crude oil in the Bakken and Three Forks formations in North Dakota and Montana. Our oil and natural gas operations are primarily concentrated in two Rocky Mountain basins, the Williston Basin of North Dakota and Montana and the Green River Basin of Wyoming. Stratex corporate strategy is to internally identify prospects, acquire lands encompassing those prospects, and evaluate those prospects using subsurface geology and geophysical data and exploratory drilling. Using this strategy, we are developing an oil portfolio of proven reserves, as well as development and exploratory drilling opportunities on high potential conventional and non-conventional oil prospects that we have the opportunity to explore, drill, and develop. Stratex core operating areas are the Williston Basin in North Dakota and Montana and the Green River Basin in Wyoming. In the Williston Basin, Stratex focuses on oil production from multiple zones including the Bakken shale, Mission Canyon and Red River formations. Stratex uses geologists, petroleum engineers and geophysicists that have years of relevant industry experience in the basins where the Company operates. Stratex strives to retain operations on its lands wherever possible in order to control the timing of the development of its leasehold. Stratex Oil & Gas October 2011 Presentation Page 3

4 Overview of Company Business Model Stratex explores and produces oil and gas through a nonoperated business model. The Company participates in Bakken wells proportionately to the leasehold interest in each drilling unit that is drilled by its operating partners. As a non-operating participant, Stratex minimizes operating and overhead costs. The low-cost model allows the Company to diversify through different operators and regions Operations Stratex management team structures its operations in a manner that minimizes operating and overhead costs as a leasehold interest owner. As a non-operating participant, Stratex relies on operating partners to conduct the drilling process. Before drilling begins, the operator must give all interest owners in the well unit the opportunity to join the drilling costs and revenues on a pro-rata basis. The owner receives a pro-rata share of production corresponding to their pro-rata share of costs. The majority partners bear operating and overhead costs, which allows Stratex to invest the highest possible working interest while minimizing costs. Stratex Oil & Gas October 2011 Presentation Page 4

5 Drilling and Acreage Plans The Company s focus is acquiring leasehold interests in the Bakken Formation, Niobrara Formation, and Three Forks-Sanish Formation The Bakken Formation The Bakken Formation is an oil bearing strata underlying parts of the Williston Basin of Montana and North Dakota. The Bakken is located between 8,000 and 11,000 feet and is comprised of three members: the lower shale, middle dolomite, and upper shale. The middle member holds the majority to the oil reserves. Oil production in this region dates back to the 1950 s, but was largely unsuccessful. The vertical wells drilled around this time couldn t produce oil at high rates. The vertical wells only had about 50 to 100 feet of the shaft that reached the middle Bakken. The application of horizontal wells with fracturing technology has allowed production to dramatically increase. Stratex Oil & Gas October 2011 Presentation Page 5

6 Drilling and Acreage Plans Bakken Oil Estimates A 2008 USGS report has estimated the amount of recoverable oil at 3.0 to 4.3 billion barrels in the Bakken, which makes it the largest current USGS oil assessment of the lower 48 states as well as the largest continuous oil accumulation ever assessed by the USGS. Recently, estimates have been revised upward to about 11 billion barrels of oil in both the Bakken and underlying Three Forks-Sanish formation by the state of North Dakota. Niobrara Formation is a shale rock underlying parts of Colorado and Wyoming. Oil and natural gas can be found at depths from 3,000 to 14,000 feet. The Niobrara is a new oil formation that is part of the Denver-Julesburg basin. It is an early oil formation that is being compared to the Bakken Shale The Three Forks- Sanish Formation is an oil area below the Bakken Shale zone. Three Forks is an early play, and the wells so far have been strong producers. Stratex Oil & Gas October 2011 Presentation Page 6

7 Drilling Hydraulic Fracturing is a technique that can increase the flow of oil or gas from a well. The procedure is done by pumping high quantities of liquid down a well into the reservoir rock at a high pressure to fracture the rock. The technique creates a network of interconnected fractures that allow more oil to flow through the rock. Horizontal Drilling is useful in reaching targets and stimulating reservoirs in ways that can not be achieved with vertical wells. A rock unit that is only 50 feet thick is limited to a pay zone that is 50 feet in length with a vertical well. A well drilled horizontally can expand the limited pay zone thousands of feet. Also, horizontal drills can deliberately intersect fractures. The productivity of these wells can be increased tremendously with the use of horizontal drills. Stratex Oil & Gas October 2011 Presentation Page 7

8 Horizontal Drilling and Fracturing The introduction of new technology has led to rapid growth in the daily oil production in the Bakken in recent years. The application of both horizontal drilling along with fracturing has increased the productivity of wells and made the wells much more efficient. e application of both horizontal drilling along with fracturing has increased the productivity of wells and made the wells much more efficient. Stratex Oil & Gas October 2011 Presentation Page 8

9 Horizontal Drilling and Fracturing Recent Oil Activity Recent News January 2011: Continental Resources Inc. told North Dakota bankers that their geologists have estimated about 20 billion barrels of recoverable crude oil in the Bakken January 2011: Government officials revised their estimates and said that the North Dakota fields could hold 11 billion barrels of oil, doubling their previous estimate Marathon Oil announced plans of their first horizontal Bakken/Three Forks activity in Sheridan County, Montana Stratex Oil & Gas October 2011 Presentation Page 9

10 Assets and Acreage Holdings STRATEX CONTROLS 28,200 ACRES IN THE WILLISTON BASIN / BAKKEN 22,000 Acres in Golden Valley, ND On 7/12/2011 Land in both North Dakota and Montana was auctioned, including two pieces in Golden Valley North Dakota. Land in sections 140N and 144N was sold bringing in lease prices in excess of $2,890 per acre. Stratex has leaseholds totaling 22,000 gross acres in Golden Valley North Dakota which were acquired under a long term lease option negotiated several months ago. The conventional oil play consist of three objective formations; 1) Tyler Formation a sandstone which has produced over 80M Barrels of Oil and is present over our acreage; 2) Mission Canyon formation; 3) Red river. The unconventional resource play is the heath formation. Petrohunt and Chesapeake Energy have been aggressively acquiring acreage just north of Stratex land in Golden Valley. 2,950 acres located in Sheridan County, MT 37N 57E & 35N 58E TAQA North (TAQA), also has an active Bakken program in 37n 57e TAQA has four wells in 37n-57e with daily production of 450 and 650 barrels of oil, respectively TAQA is drilling in adjacent quadrant 3,200 Acres in McKenzie County, ND Permitted for 12 Bakken Wells with 1 well currently completed and flowing 450 BOPD Upon completion of wells 2 through 12 on this property will generate approx. $22.7M annually Operating well in Roosevelt County, MT Producing 30 Barrels per day with one Bakken drilling unit of 320 Acres Stratex Oil & Gas October 2011 Presentation Page 10

11 Golden Valley- Red River Formation The land leased by Stratex Oil and Gas is highlighted in yellow. If the fault in the Williams Creek field extends to the southeast, through the land leased by Stratex Oil and Gas, then this land may be similar to the land in Bowman County where horizontal wells through the B zone which hosts a particularly important reservoir in the Red River formation since it is laterally pervasive over much of the Williston Basin. are productive. If a fault is present, horizontal drilling with a northeast azimuth will run through the fault and fracture zone, perpendicular to the fracture zone, increasing the amount of oil available to the wells. Stratex Oil & Gas October 2011 Presentation Page 11

12 Golden Valley- Tyler and Heath Time-Temperature Index (TTI) for the Tyler formation of North Dakota. Shades of yellow and green (values greater than 65) represent the TTI values that correspond with peak oil generation. TTI values in shades of blue and purple (values between 65 and 15) represent conditions that could generate oil. A TTI value of 15 is the minimum level of maturation that could generate oil. It should be noted that highly productive oil wells (as per the bubble map of cumulative well production) are found in areas outside of the ideal TTI range of 65 and higher. The linear eastwest bubbles correspond to the barrier island reservoirs whereas the northwest-southeast series of bubbles (intersection of Slope, Billings and Stark counties) correspond to the Rocky Ridge field. The land leased by Stratex Oil and Gas have TTI values that range from 30 to 50, indicating that the Tyler formation in this area is in the oil window. Stratex Oil & Gas October 2011 Presentation Page 12

13 Sheridan County, MT: Leasehold Multiple formations have produced oil in northeastern Sheridan County, Montana and Divide County, North Dakota (borders Sheridan County) including the Red River, Duperow, Birdbear, Bakken, Lodgepole and the Madison Group carbonates. Clearly, having multiple objectives beneath the land leased by Stratex Oil and Gas adds value to the leased land. Each of these formations has a different set of geologic features that enables them to economically produce oil. Stratex Oil & Gas October 2011 Presentation Page 13

14 Sheridan County, MT Production from both the middle Bakken and Three Forks formations throughout the Williston Basin is enhanced by the presence of natural fractures and carbonate diagenesis. Dissolution and subsequent collapse of the underlying Prairie salt beneath Sheridan County may have substantially fractured these formations and may result in enhanced production in horizontal wells drilled into this formation. Carbonate diagenesis, including the dolomitization of existing carbonates sediments and porosity enhancement due to meteoric diagenesis (Birdbear), has occurred in nearby fields in Montana and in Saskatchewan, Canada and may increase production from these formation beneath the land leased by Stratex Oil and Gas as well. Isopach map of the middle Bakken. The middle Bakken is approximately 50 feet (16 meters) thick in eastern Sheridan County, where Stratex Oil and Gas has leased land. Stratex Oil & Gas October 2011 Presentation Page 14

15 Sheridan County Land Positions TAQA Wells 37N 56E, 37N 57E, 36N 58E TAQA Bakken Wells 4 active Bakken TAQA wells Completed in 2 nd half of ,500 cumulative barrels of oil through Feb 2011 STRATEX land positions Stratex Oil & Gas October 2011 Presentation Page 15

16 Sheridan Land Positions TAQA Bakken Wells STRATEX land positions Stratex Oil & Gas October 2011 Presentation Page 16

17 TAQA Oil Production Stratex Oil & Gas October 2011 Presentation Page 17

18 TAQA Annual Revenues Stratex Oil & Gas October 2011 Presentation Page 18

19 Upcoming TAQA Bakken Wells PERMIT_NO CURR_OPER_NAME LEASE_NAME WELL_ NO SPUD_DATE LOCATION SECTION RESERVOIR COMP_DATE DATE_RELS TAQA NORTH USA 29233MT INC KROWEN 14-4 H 5/6/201137N 57E 14 BAKKEN 29187MT TAQA NORTH USA INC BOLKE 18-4 H 3/24/201137N 57E 18 BAKKEN 4/30/ MT TAQA NORTH USA INC STATE 16-4 H 37N 57E 16 BAKKEN 28956MT TAQA NORTH USA INC HELLEGAARD 8-8 H 12/12/201037N 57E 8 BAKKEN 1/6/ MT TAQA NORTH USA INC KROWEN H 1/9/201137N 57E 23 BAKKEN 2/8/ MT TAQA NORTH USA INC WESTGAARD 5-5 H 2/9/201137N 58E 5 BAKKEN 3/21/ MT TAQA NORTH USA INC HELLEGAARD 9-13 H 8/6/201037N 57E 9 BAKKEN 9/14/ MT TAQA NORTH USA INC HELLEGAARD H 5/14/201037N 57E 10 BAKKEN 9/22/2010 6/24/ MT TAQA NORTH USA INC HELLEGAARD 9-12 H 1/23/201037N 57E 9 BAKKEN 7/19/2010 2/26/ MT TAQA NORTH USA INC HELLEGAARD 9 H 12/11/200937N 57E 15 BAKKEN 8/2/2010 1/20/2010 Up Coming Bakken Wells in area Present Bakken Wells Stratex Oil & Gas October 2011 Presentation Page 19

20 McKenzie County, ND McKenzie County Well Location Ownership Interest (NRI) AFE (mil) IP Avg. BOEPD W # 1 25% W # 2 25% W # 3 25% W # 4 25% W # 5 25% W # % 7.048(paid) W # % W # % W # % W # 10 47% W # 11 25% W # 12 25% Total Package: ,200 Acres in McKenzie County, ND Permitted for 12 Bakken Wells with 1 well currently completed and flowing 450 BOPD Upon completion of wells 2 through 12 on this property will generate approx. $22.7M annually Stratex Oil & Gas October 2011 Presentation Page 20

21 Capital Structure Stratex Oil & Gas October 2011 Presentation Page 21

22 Investment Considerations Stratex participation in drilling wells as a leasehold interest owner allows the Company to deliver a high value to shareholders at a low cost Government officials have recently changed their estimates to about 11 billion barrels of recoverable oil in the Bakken The Bakken source rock has a high Total Organic Carbon (TOC) of up to 11%; most source rock has at least 0.5% and very rich source rock has up to 10%, according to Schlumberger Stratex business model allows for diversification through different operators and geographic areas Stratex minimizes operating and overhead costs by relying on majority partners to propose, permit, and engage in the drilling process With adequate capital Stratex can achieve the acquisition in excess of 100,000 acres in the Fairway of the Bakken Field before July 2012 Stratex Oil & Gas October 2011 Presentation Page 22

23 Comparable Companies Company Stock Symbol Annual Revenues Williston Basin Acreage Mkt Cap Valuation Per Acre Samson Oil & Gas SSN $ 7,000,000 37,591 $ 239,700,000 $ 6,377 American Standard Energy ASEN $ 2,000,000 38,500 $ 261,280,000 $ 6,786 Triangle Petroleum TPLM $ - 72,000 $ 302,740,000 $ 4,205 U.S. Energy Corp USEG $ 28,000,000 11,700 $ 122,930,000 $ 10,507 Legend Oil & Gas LOGL $ - 3,840 $ 127,000,000 $ 33,072 Stratex Oil & Gas, Inc. TBD $ 23,700,000 28,200 $ 23,065,000 $ 823 Using $80 per Barrel of oil and based upon completion of all 12 Mckenzie Wells Stratex Currently Controls 28,200 Acres Valuation based on fully dilluted 65.9M shares Stratex Oil & Gas October 2011 Presentation Page 23

24 Management Team Stephen P. Funk, Chief Executive Officer Stephen P. Funk brings over 25 years of experience in finance to Stratex. Mr. Funk is the founder of Alta Investments LLC, a specialized investment banking consultant Mr. Funk has consulted on numerous mergers, acquisitions and strategic alliances. Mr. Funk raised over $90mm of equity in a portfolio of small-cap high growth companies. Prior to Alta, Mr. Funk was a Vice President at Windham Associates. Mr. Funk identified possible companies to be acquired by the NYSE and closed 26 acquisitions. Before joining Windham, Mr. Funk worked at Merrill Lynch as a Vice President in Business Financial Services. At Merrill Lynch, Mr. Funk completed over 20 mergers and acquisitions and built a $160mm investment portfolio along with a $100mm commercial loan portfolio. Mr. Funk graduated from Marist College in 1984 with a B.S. in Business Administration, Finance. Timothy Kelly, President & COO Tim Kelly brings over 20 years experience in the securities industry. Mr. Kelly founded Lynden Capital Management, a equity and venture management company, in While at Lynden Capital, Mr. Kelly invested in dozens of public and private companies. Mr. Kelly also advised on strategic acquisitions as well as debt and equity financings. Prior to Lynden, Mr. Kelly worked at Credit Suisse as a Senior Vice President in equity sales. Before joining Credit Suisse, Mr. Kelly worked at Hambrecht & Quist, which then merged with JP Morgan Chase in equity sales Mr. Kelly began his career at New England Securities in equity sales. Tim Kelly graduated from Providence College in 1990 with a B.S. in Business Administration, Marketing. Tom Hayes, Director of Land Acquisitions, Thomas M. Hayes, the former president of the Montana Association of Professional Landmen, began working in the oil business in 1978 in Montana for Silver Dollar Exploration as a landman. Mr. Hayes examined Mineral Ownership Reports, which is the first step in acquiring an Oil and Gas Lease on a particular tract of land. Mr. Hayes went on to work for several oil and gas companies, leasing and running title throughout Kansas, Montana and North Dakota, including the Williston Basin. In Thomas M. Hayes graduated from the University of Montana. Stratex Oil & Gas October 2011 Presentation Page 24

25 Board of Directors Stephen P. Funk Chairman and CEO of Stratex Oil and Gas Timothy Kelly President and COO of Stratex oil and Gas Tom Hayes -- Director of Land Acquisitions for Stratex oil and Gas Neil LaFever - 25 years of experience in various phases of the oil industry. In 1985, Mr. LaFever began investing in gas wells in the Ratcliff Formation, underlying Montana. Mr. LaFever went on to drill several more wells in the Ratcliff Formation. In 2002, Mr. LaFever went on to drill a successful well that still operates today in the Tyler Formation in Mussellshell County, Montana. Mr. LaFever L&H Resources, LLP with Director of Land Acquisitions, Thomas M. Hayes, which leased parcels of land in Sheridan County and Richland County, Montana. In 2007, L&H Resources acquired an idle well and turned it into a producing well that is operating today. Currently, Mr. LaFever is involved in two wells in North Dakota and in the process of drilling a well in Sheridan County, Montana. Mr. LaFever graduated from the University of Wisconsin, Oshkosh in 1967 with a Bachelor s degree in history and physical geography. Michael Mahan years of experience in the environmental field. Mr. Mahan s is particularly experienced in water treatment, hydrogeology, soil analysis, drilling methods, and hydrofacturing techniques. Mr. Mahan has written and implemented sampling plans, approved by the Environmental Protection Agency, which verify groundwater and soil conditions at various sites. Mr. Mahan has served as project manager for a large remediation project in Washington, DC, involving tank and soil removals, ground water and soil treatment, soil disposal, and litigation. As project manager of an environmental evaluation and cleanup program in the United Kingdom, Mr. Mahan was involved with investigating and remediating the Sherwood Sandstone Aquifer, whish is one of England s largest fresh drinking water supplies. Michael J. Mahan holds a B.S. in Hydrogeology and Soil Science from Ohio University Stratex Oil & Gas October 2011 Presentation Page 25

26 Consultants Samuel Epstein - Geoval Consulting Certified Petroleum Geologist Geoval Consulting is petroleum geological consulting group headed by Samuel Epstein a certified petroleum geologist and a delegate to the American Association of Petroleum Geologists representing New York State. The group has extensive experience evaluating petroleum potential domestically and internationally. Further to that Samuel Epstein has over 32 years of experience with integrated complex petroleum geochemical, sedimentlogical, and structural systems analysis. Samuel has worked in the onshore-offshore east coast and west coast. Gulf of Mexico, Bahamas and currently evaluating offshore Israel. Sam has done well site work in the offshore for over 6 years Samuel worked as a Senior Petroleum Geologist for Occidental Petroleum and Chevron. His duties included property assessment and reserve reporting for acquisition and production purposes, including drilling the discovery of a major oil field (Harvest Platform), offshore California. He holds a Bachelors of Science Degree (1977) Brooklyn College, and a Masters of Science (1977) from Rensselaer Polytechnic Institute. Samuel has over 25 publications in referenced scientific journals concerning petroleum exploration and production, and the effects of global warming on sea level changes. He has also presented at numerous scientific meetings, including American Association of Petroleum Geologists conferences, the Petroleum Society of Canada s Conjugate Margin Conference, and the Geological Society of America s Northeastern-Southeastern Conference (2010)-(2011). Samuel Epstein is serving as Executive Director/Consultant to Touro College on the origination, conceptualization and development of the Department of Earth and Environmental Studies. He is the curator for the newly acquired Friedman Collection at Touro, a world renowned collection of scientific publications and rare rocks. Juda S. Engelmayer, 5W Public relations Juda S. Engelmayer is a Senior Vice President at 5W Public Relations overseeing the corporate, crisis and advocacy groups. Juda's experience in media, communications, crisis communications, and public affairs are put to work at the firm. He oversees a host of corporate, business, political, advocacy and policy groups and individuals in national and international arenas. He handles public campaigning for clients, direct advocacy and positioning, and a team handling issues of current public debate, as well as issue oriented corporate, financial, and philanthropy related matters. 5WPR's energetic, fast-paced, and focused culture earned the PR firm a spot on the Inc. 500 list and the title of "fastest-growing PR agency" three years in a row. The growth and recognition of 5WPR stems from a focused, smart, and creative staff that executes impactful integrated Marketing and Public Relations programs to impact ROI. Stratex Oil & Gas October 2011 Presentation Page 26

27 Timeline March 2012 Amex Listing October 2011 Continue lease acquisitions activity with focus on Bakken and Niobrara Build technical and executive team Seek Debt Financing in conjunction with acquisition of a late stage developed property with significant reserves and upside potential. November 2011 IPO Financing in conjunction with AMEX Listing 30 to 40 Million Equity/Debt Raise Stratex Oil & Gas October 2011 Presentation Page 27

28 Further Information Corporate Office 888 Seventh Avenue, 12th floor New York, NY Auditors CCR LLP Boston Boston CPA Firm 125 High Street, 21st Floor Boston, MA Field Office 2906 First Ave. North Billings, MT Legal Counsel Meister Seelig & Fein LLP 140 East 45th Street, 19th Floor New York, NY Stratex Oil & Gas October 2011 Presentation Page 28