STX: AEI Frankfurt Stock Exchange: A1E

STX: AEI Frankfurt Stock Exchange: A1E

TSX:
S AEI
Frankfurt Stock Exchange: A1E
Forward Looking
g Information
This presentation contains forward looking statements relating to financial condition
condition,
results, reserves, development, and cash flows among other matters. These
forward looking statements are estimates in the best judgment of Arsenal Energy
Inc. They involve a number of known and unknown risks and uncertainties
including but not limited to commodity prices, drilling costs, exploration success
g and environmental items that could cause actual results
rate,, interest rate changes
to differ materially from those suggested in the statements. Reader is cautioned not
to place undue reliance on these forward looking statements which speak only as of
th d
the
date
t th
they were made.
d Additi
Additionally,
ll we d
do nott undertake
d t k tto any obligation
bli ti to
t
publicly release any revisions to these forward looking statements.
Information
As at June 23, 2008
●Estimated
E ti t d currentt production:
d ti
1 750 boe/d
1,750
b /d
●Production behind pipe:
550 boe/d (estimated)
●Enterprise value:
$ 85.3 million
●Focus areas:
Evi
East Central, AB
Stanley, ND
●Issued and outstanding :
90.7 million
●Fully diluted :
95.5 million
●Officers and directors own:
19%
Management
g
Team
Tony van Winkoop, Director, President and CEO
•
•
•
•
B.Sc Geological Engineering with 25 years experience
Co-Founder of Venator Petroleum (12 years) which sold to Prime West for $32 million after $4 million
investment capital
Manager of Development Prime West Energy Trust (5 years)
Hired as Arsenal VP Exploration July 2006 and was appointed President July 2007
J. Paul Lawrence, Vice President Finance and CFO
•
•
•
Chartered accountant with 30 yyears experience
p
including
g 13 yyears as CFO of both p
private and p
public
companies
Founder and Director of Clearwater Energy Inc. and Lexxor Energy Inc. a private exploration venture
Previously employed at Silverwing Energy Inc., Quadron Resources Inc. and Westmin Resources Limited
Jay LaForge, Vice President Operations
•
•
13 years operations and field experience
Previously employed at Renaissance Energy Ltd. and most recently at Enerplus Resources
Gjoa Taylor, Vice President Land
•
•
•
20 years experience as a Professional Landman
Previously employed at Imperial Oil, Crestar Energy and most recently as Manager Negotiations at
PrimeWest Energy
Ms. Taylor has served as a Director on the Canadian Association of Petroleum Landmen
Greg Kaidannek, Chief Geophysicist
•
•
10 years exploration and development experience
Pre io sl emplo
Previously
employed
ed at Crestar Energ
Energy, Conoco Phillips and most recentl
recently as Geoph
Geophysical
sical Manager at Prime
West Energy
Independent
p
Directors
Bill Powers
Founder and General Partner/Portfolio Manager of Powers Asset Management, LLC (Arsenal’s largest
shareholder). Mr. Powers is currently Chairman of the Board of Petroglobe Inc., a company listed on the TSX
Venture Exchange
Exchange. Previously Mr.
Mr Powers was the analyst and editor of two successful investment newsletters
newsletters, the
Canadian Energy Viewpoint and the US Energy Investor.
Neil MacKay
Partner with the law firm MacPherson Leslie & Tyerman LLP, a law firm with offices in Regina, Saskatoon,
Edmonton and Calgary
Calgary. Mr
Mr. MacKay’s
MacKay s practice includes banking
banking, corporate finance and resource law
law. Mr
Mr. MacKay
has been a director of Arsenal since June 29, 2004.
William Hews
President of Fideliter Inc , a private consulting and investment company. Mr. Hews has previously served on the
boards of companies listed both on TSX and TSX-V
TSX V exchanges.
Curtis Stewart
Partner with the law firm Bennet Jones LLP, a national law firm. Mr. Stewart has practiced law since 1990 principally
in the area of tax litigation.
Harley Kempthorne
Vice President Engineering of Gentry Resources, a Canadian based company listed on the TSX Exchange. Mr.
Kempthorne has extensive industry experience in reserve evaluations, reservoir development and acquisitions. Mr.
Kempthorne was previously employed by Petro-Canada and Imperial Oil.
2008 Objectives
●Grow average production 25% in 2008 to
average 2,135 boe/d
●Improve reserve base quality
• Longer reserve life index
• Lower operating expenses
• Improved encumbrances
●Drill high impact Bakken target in North Dakota
●Target debt / cash flow
f
ratio off 1:1 by year-end
●Strategic alternative for Egypt
Net Asset Value
Net Asset Value
An estimate of Arsenal's net asset value at March 31, 2008 is as follows:
March 31, 2008
December 31, 2007
Percentage
Change
113,208
87,582
+29%
1 500
1,500
1 500
1,500
-
800
800
-
1,118
109
+926%
(18,710)
(20,732)
(10%)
Net asset value
97,916
69,259
+41%
Fully diluted common shares outstanding
(000s)
91,258
83,807
+9%
$1.07
$0.83
+29%
Reserves discounted at 10% before tax (1)
Undeveloped land (2)
Seismic (3)
Cash proceeds from exercise of stock
p
options
Net debt
Net asset value per common share
(1)
A evaluated
As
l t db
by AJM P
Petroleum
t l
C
Consultants
lt t as att M
March
h 31
31, 2008 and
dD
December
b 31
31, 2007
2007.
(2)
As evaluated internally based on land sale prices in the immediate area.
(3)
As evaluated internally.
Q1 Reserve Reconciliation
December 31, 2007 Production Adds/Rev March 31, 2008 Change
Total Proved (Mboe$)
Total proved value (Mboe$)
Proved plus probable (Mboe$)
Proved plus probable value (MM$)
Evaluations conducted by AJM Petroleum Consultants
3,198
(157)
372
3,413
7%
60.6
(5.6)
24.5
79.5
31%
5,360
(157)
422
5,626
5%
87.3
(5.6)
32.2
113.9
30%
Arsenal Operational
p
Areas
Evi
400 boe/d
Light Oil
Other minor areas
T t l 20 b
Total
boe/d
/d
Blueridge
90 boe/d
Gas
Lloyd
550 boe/d
Heavy Oil
E. Central AB
290 boe/d
Medium Oil
North Dakota
400 b
boe/d
/d
Light Oil
Galahad Project
j
AEI WORKING INTEREST
Killam Ellerslie NN Pool
IP 2500 bbls/d
bbl /d & 5.5
5 5 mmcf/d
f/d
100%
Reserves 4.8 MMbbls & 9.4
Bcf
2008 ACTIVITY
7 wells:
• 3 exploration
• 4 development
AVERAGE WELL COSTS
Arsenal Production IP
450 bbls/d
Reserves 600 Mbbls
Drilling
$270,000
Completion
$140,000
Equip
New Discovery
IP 200 bbls/d & 6 mmcf/d
Reserves 0.45 MMbbls
$250,000
TARGETED RESERVES
120 Mboe per well
New 300 acre structure
potential for 3 MMbbls
Galahad Project
j
02/4-35-40-15W4
02/4
35 40 15W4 Dec 07
02/11-27-40-15W4
02/11
27 40 15W4 Mar 08
00/6-27-40-15W4 Mar 08
Lloyd Gas Sand 4m pay
@ 1mmcf/d on prod.
Elrl Oil Pay 5m pay
Elrl Oil Pay 5.5m pay
Elrl Oil Pay 7m pay
Consort Project
j
AEI WORKING INTEREST
100%
2008 ACTIVITY
3 development wells
100% owned battery
Average Well Costs
Drilling
$305,000
Completion
$80,000
Equip
$140,000
TARGETED RESERVES
100 Mboe per well
Analog
Pool
5-33 Oil
discovery
Consort Project
j
5-33 Consort Production
D
BBL/D
Ellerslie Oil 5m Pay
200
190
180
170
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
200%
190%
180%
170%
160%
150%
140%
130%
120%
110%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Oil Rate
Water Cut
1/0
1/30
2/29
3/30
4/29
5/29
6/28
Evi Project
j
AEI AVG WORKING
INTEREST
50%
2008 ACTIVITY
3 exploratory wells
Extent of Gilwood Sand
AVERAGE WELL COSTS
Drilling
$725,000
,
Completion
$110,000
Equip
$240 000
$240,000
TARGETED WELLS
150 Mboe per well
Slave Point Shoal
Evi Project
j
Wells Drilled
Locations/Leads
3D Seismic Outline
Evi Project
11-7 Producer
9-7 Producer
4-7 March 4, 2008
Granite Wash
5.5 m Oil Pay: Producing at 425 bbl/d
Evi Project
j
13-9 March 14
14, 2008
Slave Point
4 m Oil Pay: Production 200 bbl/d
Mountrail County Project
Bakken Play
AEI WORKING INTEREST
15-35%
AEI Stanley
2008 ACTIVITY
1 exploratory well (28%WI)
AVERAGE WELL COSTS
Drilling
$5,000,000
Completion
$1,000,000
Equip
$300,000
TARGETED RESERVES
350 Mboe per well
Parshall Area
• 38 producing wells (April 2008)
• 12130 b
boe/d
/d (A
(Apr 2008)
• Average 312 boe /d/well (April 2008)
Stanley Project
Bakken Play
WI
31.25%
WI
12.5%
WI
12.5%
WI
14.06%
WI 17.19%
WI 18.75%
WI
28.75%
2008 G
Gross D
Drills
ill (0
(0.5
5N
Net)
t)
2009 Gross Drills (0.6 Net)
2009 Down-spaced Drills (1.1 Net)
Murex well producing
~350 bbl/d unstimulated
Operating
p
g Margin
g
120.00
Operating Margin
Royalites/Boe
100.00
OPEX/Boe
67.08
66.70
59.48
60.00
51.30
24 10
24.10
11.87 14.28 21.61
17.80 14.34
40.00
14.85
10.71 7.95
35.44
36 47
36.47
23.12
16.95
33.81
20.00
8-JUNE
E-EST
8-MAY
Y EST
8-APR
R EST
8-Mar
8-Feb
8-Jan
7-Dec
7
7-Nov
7
7-Oct
7-Sep
7
7-Aug
7
7-Jul
7-Jun
7-May
7
7-Apr
7-Mar
7-Feb
0.00
7-Jan
$ BOE
80.00
2008 Cash Flow Target
g
Q4
Actual
Q1
Q2
Q3
Actual Forecast Target
Q4
Target
2008
Target
Production volume
1,685
1,725
1,950
2,125
2,550
2,088
Oil & gas sales
8,358
11,309
16,275
18,605
22,045
68,234
Royalty
1,559
2,077
2,973
4,237
4,849
14,136
Operating expense
3,900
3,555
3,433
3,748
3,748
14,484
Operating
p
g margin
g
2,899
,
5,677
,
9,869
,
10,620
,
13,448
,
39,614
,
Interest & hedging
1,821
262
809
700
700
2,471
General & administrative
1,751
1,271
953
816
866
3,906
Current tax
-
348
350
400
400
1,498
Cash flow
-
3,796
7,757
8,704
11,482
31,739
8,097
4,885
3,550
7,800
5,765
22,000
Capital budget
2008 Forecast
Current Forecast
● Estimated average production
2 088 boe/d
2,088
● Average operating per BOE
$18.65
● Cash flow
$31.74 MM
● Cash flow / share diluted
$0.36
● Exit debt / cash flow ratio
0.35
Arsenal Energy
gy Inc.
● New team with innovative ideas
●Three high potential, high profit
exploration and development plays
●High leverage to oil prices
●Trading at approximately 2.3 times
estimated 2008 cash flow multiple