Questfire Energy Corp. insert logo Corporation Presentation

A New Junior
Oil Exploration Opportunity
Corporate Presentation June 2012
WWW.QUESTFIRE.CA
TSXV: Q.A, Q.B
Forward-Looking Disclaimer
• This presentation contains certain forward-looking statements, including management’s assessment of future plans and
operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks,
uncertainties, and assumptions certain of which are beyond Questfire’s control. Such risks, uncertainties, and assumptions
include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing
and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates,
environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting
from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external
sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions,
changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how
they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management,
fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect
to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities.
Questfire’s actual results, performance or achievements could differ materially from those expressed in, or implied by,
these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of
proceeds, that Questfire will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive.
All subsequent forward-looking statements, whether written or oral, attributable to Questfire or persons acting on its
behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking
statements contained in this news release are made as at the date of this news release and Questfire does not undertake
any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required by applicable securities laws.
• Petroleum and natural gas volumes are converted to an equivalent measurement basis referred to as a “barrel of oil
equivalent” (boe) on the basis of 6 thousand cubic feet of natural gas equalling 1 barrel of oil. This is based on an energy
equivalency conversion method applicable at the burner tip and does not necessarily represent a value equivalency at the
wellhead. Readers are cautioned that boe figures may be misleading, particularly if used in isolation .
1
Questfire Energy:
Focused on Building Value per Share
Our niche: Explore for and
develop 1+ MMboe recoverable
medium to light oil pools using
the latest technology
• Target multi-zone areas with
year-round access
• Drilling depths of less
than 2,200 metres
2
• Potential for horizontal/multi-stage fracturing
technology being developed by resource players
• Grow core areas through focused exploration,
exploitation, selective acquisitions and control
of infrastructure
• Generate operated, high working interest,
quality assets
A Solid Team. A Proven Track Record.
Six-man technical and
management team with
over 150 years of
combined experience
Significant horizontal
drilling and strong
operations experience
All necessary disciplines
are in-house: land,
exploration, engineering,
operations and finance
History of organic growth and
value-creation: Stonefire Energy
Corp. and Tempest Energy Corp.
3
All team members have
invested significant capital
– On an equal basis
All team members
have experience at
senior and junior
public E&P companies
Management:
Experienced. Skilled. Driven.
Richard Dahl, President & CEO
Professional Engineer
• 24 years’ experience
• President, CEO, Director and
Co-founder of Stonefire
Energy Corp.
• Tempest Energy Corp., Tier
One Energy Corp., Grad &
Walker, HCO Energy, Amoco,
Dome
4
John Ramescu, VP Land
Professional Landman
• 26 years’ experience
• VP Land, Director and
Co-founder of Stonefire
Energy Corp.
• Tempest Energy Corp.,
Vermilion, Ranger, Opinac,
Amoco, Dome
Fred Laudel, VP Exploration
• 31 years’ Basin-wide
exploration experience –
275+ wells
Discovered >30 MMboe.
• VP Exploration and
Co-founder of Stonefire
Energy Corp.
• Tempest Energy Corp.,
Real Resources, EOG,
Newquest, Paloma, Gulf
Ronald Williams, VP Finance & CFO
• 20 years industry finance
experience
• VP Finance, CFO and Co-founder of
Stonefire Energy Corp.
• Director Finance Vermilion Energy
Trust (1999-2006)
• Carmanah Resources, Ernst &
Young, Collins Barrow
Management:
Explorationists. Operationally Strong.
Darren Kisser, VP Engineering &
Operations
• Professional engineer with >20
years’ experience with junior,
intermediate and senior E&Ps
• VP Engineering & Operations
and Co-founder of Stonefire
Energy Corp.
• Tempest Energy Corp., Vermilion,
Norcen, Wintershall
5
Bruce Shepard, VP Exploitation
• 31 years’ extensive Basin-wide
exploration and exploitation
experience. Drilled 145+ wells;
discovered >19 MMboe
• Exploration Manager and Cofounder of Stonefire Energy
Corp.
• Tempest Energy Corp.,
numerous technical and
manager roles with junior to
mid-sized E&P companies
Rod Keller, Project Manager
• >42 years’ experience in
environmental, surface land,
construction, drilling and facilities
• As President of Advance Energy
Ltd. has consulted to numerous
junior to senior E&P companies.
• Field project manager for Stonefire
Energy Corp., Tempest
Energy Corp. and Tier
One Energy Corp.
Directors
6
Roger MacLeod
Independent Director
•
•
•
•
Neil Dell
Independent Director
• Professional engineer with > 40 years’ industry experience,
including 31 years with GLJ Petroleum Consultants
(VP Small Business Services)
• President, Delmar Consulting
• Senior reservoir engineer with Mesa Petroleums Ltd.
• Reservoir engineer with the ERCB
Richard Dahl
President & CEO,
Director
• 24 years’ experience
• President, CEO, Director and Co-founder of Stonefire Energy Corp.
• Tempest Energy Corp., Tier One Energy Corp., Grad & Walker,
HCO Energy, Amoco, Dome
John Ramescu
VP Land, Director
• 26 years’ experience
• VP Land, Director and Co-founder of Stonefire Energy Corp.
Graham Norris
Corporate Secretary
• Graham Norris is an associate in the Securities & Corporate
Finance Practice Group of Davis LLP.
• Graham's practice focuses on corporate and securities law.
23 years’ experience in corporate law and finance
Partner, Davis LLP
Formerly Partner, Burstall Winger
Director of Stonefire Energy Corp.
Stonefire Energy Corp:
Building a Junior E&P Company
─ 2006-2009 Milestones
7.0 MMboe
$12/boe
1,400 boepd 60 sections
2P reserves
2P F&D cost
All found through
drill-bit (75% gas)
Industry-leading
all-in cost (incl. FDC)
net peak
production
5.5 mmscfd
$4.60/boe
51 (41.5 net)
30+
gas plant
operating cost
($6.00 with
transportation)
vertical exploration
and development
locations in inventory
horizontal
locations
identified
100% WI, build and
operated in Edson
area to process
75% of company
production
7
Excellent safety and
environmental
record
98% Stonefire
operated
Focused land base
73% WI acquired
through Crown sales
and key farm-ins
Stonefire Energy Corp:
Monetizing Value for Investors
Corporate sale to
Angle Energy for
$75 MM cash
closed January 2010
$2.00/A share (26%
Sale price of $61,000/flowing
boe was one of highest metrics for
gas-weighted corporate sale in 2009
– reflecting quality of the assets
premium*) and full
$10.00/B share (44%
premium*)
Total equity raised, was approx.
$26.5 MM vs. the corporate sale
equity value of $46.6 MM
All 4 Stonefire share issuances received
positive after-tax return on investment
of 10-127% in a tough market for
gas-weighted energy stocks
*premium to previous 10-day weighted average trading prices
8
Questfire Energy Corp - Achievements
to Date
IPO in October 2011
Drilling:
Raised $6.2MM via a Flow-Through ‘AB’
share offering.
Drilled 3 – 100% W.I. Wells to date.
Preparing 2 – 100% W.I,. Locations for
Q3 2012 (oil targets).
Inventory of 16 – 100% W.I. oil
locations
Capex of $5.4MM
Current positive W.C of $0.6 MM
Low G&A company
Production:
100 boepd on Feb. 2012
Currently 55 boepd (8% oil & NGLs)
100 – 150 boepd awaiting tie-in at
Thorsby.
9
Land & Seismic:
29 sections (18,535 Acres)
100% W.I.
28.4 square km of 3D seismic
Questfire Energy: Two Exploration Areas
ALBERTA
• Target depths: 1,200-2,200 metres
 Glauc oil at Thorsby.
 Ellerslie and Ostracod oil at Niton
and Leaman
• Other oil zones: Leduc, Wabamun, Rock
Creek, Upper Mannville, Viking, Cardium
• 16 net sections of land – 100% W.I.
W5 Exploration Area
Niton Leaman
EDMONTON
Thorsby
W4 Exploration
Area
Racosta
Richdale
CALGARY
Bow Island
10
• Target depths: 900-1,200 metres
 Banff Oil at Richdale
 Sunburst Oil at Bow Island
• Other oil zones: Ellerslie, Ostracod,
Glauconite, Upper Mannville, Viking
• 13 net sections of land – 100% W.I.
Thorsby – Lower Risk, Quality Oil Play
A Quiet Oil Play
• 3D seismic is a key tool for
development.
• Most Industry Activity focused on
the Cardium to the South-West.
• Crown land and Farm-ins available.
Robust Economics
•
•
•
•
Short Payouts: 11 months
Low Operating Costs.
Very High recycle ratio.
Potential for development to be
largely self funding.
11
Excellent Production
• Potential I.P.: 50 – 100+ bopd
• EUR: 150 – 400+ Mbbls
• Long reserve life – Potential for Hz
development.
• Potential for pools with small areal
extent to produce large reserves.
Simple Development
• Sweet (no H2S).
• Facilities designed to handle high GOR
and liquids rich solution gas.
• Water production is typically low.
• Vertical wells initially with Horiz.
Development potential.
Thorsby – Questfire Drilling Result
13 Meter Thick Glauconitic Channel With Excellent Reservoir Quality
• Results confirmed 3D seismic interpretation
• Both sets of perforations – 19.5 hour flow:
• 1.5 mmscf
• 62 bbls oil (39 API)
• 112 bbls water
12
• Short 500 meter tie-in to 3rd party gas
gathering
• Top perforations – 44 hour flow, final rates:
• 1.1 MMscf/d at 37 psi
• No water or oil
• Potential NGL yield of 35+ bbls/mmscf
• OOGIP estimated at 2.2 Bcf
(1/2 section area)
Thorsby 6-35 Location - Glauc. Targets
Expect to Spud in Late Q1 or Q2
U. Glauc. Ch. Analogy
Location: 11-36-48-2W5M
Cum. Prod. To 12-31-2011
339.3MBO, 1.2BCF
I.P. 83bopd, 475mcfd (April 1985)
Curr. Prod. 15bopd, 74mcfd
L. Glauc. Ch. Analogy
Location: 6-24-48-2-W5M
Cum. Prod. To 12-31-2011
412.9MBO, 1.2 BCF
I.P. 150bopd, 80mcfd (June 1985)
Curr. Prod 6bopd, 93mcfd
13
Thorsby – Full Development Potential
15 wells – 100% W.I.
THORSBY UNRISKED ECONOMICS
Individual Well Economics
14
Full Development Economics
Thorsby
Vertical Well
Vert. Well - No Gas Rev.
I.P.
Oil API
EUR Oil & NGLs (MMbbl)
EUR (Gas) (Bcf)
Ave. Water Cut:
Depth (m):
Capital Cost ($M)
Drill
Complete
Equip & Tie-in
Facilities
Total:
Operating Costs:
Fixed ($/well/mo):
Oil ($/bbl) (includes transpo):
Water ($/bb):
Gas ($/mcf)
Royalties
Economics - B.Tax
ROR(%)
NPV (10%)($M)
Payout (months)
PIR (10%)
F&D cost ($/boe):
Year 1 Netback:
Recycle Ratio:
75 bopd, 250 mcfd
36 (sweet)
175
0.75
25%
1,700
75 bopd
36 (sweet)
175
0.00
25%
1,700
$700
$350
$250
$175
$1,475
$700
$350
$250
$175
$1,475
$5,000
$6.00
$1.50
$0.50
Crown
$5,000
$6.00
$1.50
$0.50
Crown
155%
$4,705
11.0
3.3
$4.92
$49/boe
9.9
102%
$3,103
13.0
2.2
$8.43
$65/bbl
7.7
Thorsby
Full Development
Total Capital ($M)
No. Wells:
Well Capital :
Facilities Capital :
Land & Seismic:
Total Capital:
Ultimate Reserves:
Oil & NGLs (Mbbl):
Gas (Bcf):
Total (Mboe):
Peak Production:
Oil (bbls/d):
Gas (mcfd)
Total (boepd):
NPV(10% ):
All in F&D Cost:
15
$19,500
$2,625
$2,500
$24,625
2,600
10.9
4,420
885
3,200
1,400
$71 MM
$5.57/boe
Commodity Prices:
Oil:
Gas:
GLJ April 1, 2012 Forecast
Edm par less $10/bbl
AECO spot
Bow Island – Low Cost, High Return
Low Capital Costs
•
•
•
•
•
Shallow depth 900 meters
Simple completions – no fracs
Drill, case and complete: $500k
Equip and Tie-in: $200k
Battery Facilities: $200k/well
Robust Economics
•
•
•
•
Short Payouts: 12 months
Low Operating Costs
High recycle ratio
Potential for development to be
largely self funding.
15
Production & Reserves
•
•
•
•
Potential I.P.: 25 – 100 bopd
EUR: 50 – 150 Mbbls
Low decline rates (aquifer support)
Potential for up to 7 MMbbls
recoverable oil
Simple Development
• Sweet (no H2S), low GOR
• Facilities designed to handle high water
production volumes
• Water disposal into bottom aquifer
• “Vertical Waterflood” results in high
recovery factors.
Bow Island Area – Sunburst Oil Play
16
Bow Island – Sunburst Development
17
Bow Island – Full Development Potential
35 Wells – 100% W.I.
BOW ISLAND UNRISKED ECONOMICS
Individual Well Economics
18
Bow Island
Vertical Well
I.P.
Oil API
EUR Oil & NGLs (MMbbl)
EUR (Gas) (Bcf)
Ave. Water Cut:
Depth (m):
Capital Cost ($M)
Drill
Complete
Equip & Tie-in
Facilities
Total:
Operating Costs:
Fixed ($/well/mo):
Oil ($/bbl) (includes transpo):
Water ($/bb):
Gas ($/mcf)
Royalties
Economics - B.Tax
ROR(%)
NPV (10%)($M)
Payout (months)
PIR (10%)
F&D cost ($/boe):
Year 1 Netback:
Recycle Ratio:
50 bopd
24 (sweet)
97
0.00
90%
900
$350
$150
$200
$200
$900
$5,000
$6.00
$1.50
$0.00
Crown
132%
$2,219
12.0
2.5
$9.28
$66/boe
7.1
Full Development Economics
Bow Island
Full Development
Total Capital ($M)
No. Wells:
Well Capital :
Facilities Capital :
Land & Seismic:
Total Capital:
Ultimate Reserves:
Oil & NGLs (Mbbl):
Gas (Bcf):
Total (Mboe):
Peak Production:
Oil (bbls/d):
Water (bbls/d)
NPV(10% ):
All in F&D Cost:
35
$24,500
$7,000
$1,500
$33,000
3,395
0.0
3,395
1,400
48,000
$73 MM
$9.72/bbl
Commodity Prices:
Oil:
Gas:
GLJ April 1, 2012 Forecast
Edm par less $15/bbl
AECO spot
(No gas rev. in economics)
Thorsby and Bow Island – Company
Making Plays (2012 - 2014)
Reserve Potential:
• 6 MMbbls oil, 11 Bcf ( 7.8 MMboe)
• PV(10): $144 MM
Potential Oil Drilling locations:
• 15 (Thorsby), 35 (Bow Island).
Two Year Development:
•
•
•
•
Development Capital required: $58MM
Estimated Cash Flow (present to end of 2013): +/- $18MM
Estimated Bank Debt: +/- $20 MM
Equity Required: $15 - $20MM (additional 10 MM shares)
Potential NAV/Share: $4.50/share (25 MM ‘A’ shares)
19
Niton Area – Ostracod Hz Development
Potential
Niton - Horizontal Ostracod Oil
Threshold Economics
Niton
Horizontal Well
Oil API:
Water prod:
No gas revenue
34 (sweet)
0
0
Well Depths:
TVD(m):
TMD(m):
1900 m
3500 m
Drill
Complete
Equip & Tie-in
Total:
$2,000
$800
$400
$3,200
Capital Cost ($M)
Alberta
Niton/Leaman
Operating Costs:
Fixed ($/well/mo):
Oil ($/bbl) (includes transpo):
Royalty Holiday:
Oil vol:
Months:
Threshold Economic Criteria
Payout:
PIR(10%):
Recycle Ratio:
F&D Cost:
Production Declines:
Year 1
Year 2
Year 3
Year 4
Year 5
Minimum Required Initial
Prod. and Ult. Reserves:
I.P.
EUR:
20
$5,000
$5.50
70,000 bbls
30
< 24 months
> 1.0
> 2.0
< $30/bbl
70%
50%
30%
20%
10%
200 - 300 bopd
120 - 100 Mbbls
Niton Ostracod Oil Play – Key Wells
Questfire Re-Entry
December 2011
On Production Feb. 1, 2012
Max. Core Permeability: 205 mD
Max. Core Porosity: 12.9%
21
Ostracod Oil Producer
I.P. 75 bopd
Abandoned in 1995
Potential Ostracod Re-Entry
Landsale in May 2012
Q3 or Q4 2012 Project
Richdale Area – Planned 3D Seismic
22
Leaman area – Liquids Rich Gas
Deep Basin Ellerslie Gas/oil
• 1700 meter TVD
• Average Liquids yield is 30
bbls/mmscf
• 3.5 Net sections of Crown Land.
• Available Farm-ins
• Gross Reserve Potential of 10 – 20 bcf
plus liquids per pool
• Drill, Case, Complete (frac): $1.2MM
• Equip and Tie-in: $0.4MM
• Processing available – Conoco
underutilized gas plant.
23
2012 Planned Projects*
• Thorsby/Pembina:
Equip and tie-in 02/10-27 liquids rich gas well.
Drill 6-35 oil well (prospective for upper and lower Glauc. oil).
Drill up to 2 net additional Glauc oil locations.
3D seismic program at Pembina
• Bow Island:
 Drill 9-20 Sunburst oil location.
* Contingent upon financing. Assumes a $1MM to 3MM financing in June 2012.
24
2012 Forecast*
• Exit rate of 300 – 400 boepd (55% oil & NGLs)
• Forecast annualized Dec. 2012 Cash Flow: $2.1 – $3.5MM
• 2012 Total Capex: $5.8MM - $7.7MM
• 2012 Exit debt: $2.2MM
• 2012 Exit Debt to Annualized Exit Cash Flow: 0.6 – 1.0
* Assumes a $1MM to $3MM financing in June 2012, Thorsby 02/10-27 well on production in
August, drilling success and a bank line in place for Q3.
25
Questfire Energy: Capital and Share
Structure - Current
Current Share Structure:
• 12.813 MM “A” Shares outstanding (59% Insider
ownership)
• 1.281 MM Options on the “A” Shares
• 0.556 MM “B” Shares outstanding
Current Positive Working Capital - $ 0.6 MM
26
Questfire Energy: Reasons to Invest
• New junior oil focused opportunity.
• Experienced and energized management team who have
a track record of creating shareholder value.
• Presence established in two exploration areas with 29
sections of 100% W.I. land and early drilling success.
• Significant exploration upside targeting light to
medium oil.
• An investment with significant leverage to drilling
success due to few shares outstanding and no debt.
27
Questfire Energy Corporate Information
Stock Ticker: TSXV – Q.A and Q.B
Website: www.questfire.ca
Bankers: National Bank of Canada
Auditors: Collins Barrow Calgary LLP
Reserve Evaluators: GLJ Petroleum Consultants
28
Contact
Richard Dahl, P.Eng.
President & CEO
Tel: 403-263-6688
Email: [email protected]
WWW.QUESTFIRE.CA
TSXV: Q.A, Q.B