Norse Energy "Extraordinary General Meeting" Presentation - July 5, 2012
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Transcript of Norse Energy "Extraordinary General Meeting" Presentation - July 5, 2012
Corporate Presentation
Mark Dice, Chief Executive Officer
5 July 2012
Norse Energy’s Vision
2
A leader in identifying and unlocking the full
potential of under-valued oil and gas assets
Norse Energy Core Values
3
EHS Protecting the environment, health, and
safety is our top priority
INTEGRITY Trustworthy in our approach to others
EXCELLENCE Striving to be the best
COLLABORATION Seeking out and valuing the input of
others
INGENUITY Leveraging creative thought
Norse Energy Recent Achievements
Grew Resource Base
Delivered Asset Sales
Reduced Debt
Restructured Organization
Cut Costs
4
Norse Energy Recent Share Performance On Par with 6 Month Oslo Benchmark Index (OSEBX)
5
Reverse
10/1
Split
Positive
SGEIS
News Asset Sale of
~ 18,000
Acres in CNY
Sale of
Herkimer and
Related Assets
Conversion
of Bond Debt
to Equity
Bond Portfolio
Refinancing
Agreement
Repayment of
Bonds and
Restructuring
6 Month NEC Share Price and OSEBX updated 27 June 2012
NEC
OSEBX
Key Business Risks
Key Business Risks and Mitigation
7
SGEIS Delay Developing economic projects not
dependent upon SGEIS regulations;
Opportunities outside of New York
Commodity Prices Balanced portfolio of long-
term oil and gas projects; continuous application
of industry-leading technology
Funding Efficient operations; asset sales; capital
markets
SGEIS Legal Challenge Coordinated industry
efforts to emphasize science and counter legal
obstacles
Shale Operating Capability Pursuing
experienced shale partners, illuminating the
value of projects
New York Regulatory Climate
New York Governor Cuomo’s Recent Remarks Albany’s WGDJ-AM Radio Interview, 22 June 2012
New York Governor Cuomo has
given every indication that passage
of the SGEIS is imminent
• “We don’t have a hard date, but it
will be done shortly”
• “I think it’s actually better that we
do it when the Legislature is not
here, because I don’t want a
political discussion”
• “I want to get the conversation
back to facts and logic and
science and information…”
9
New York Business Climate
Neighboring states (Ohio,
Pennsylvania, West Virginia) are
safely developing and reaping
tremendous economic rewards from
oil and gas development in the
Appalachian Basin
New York contains large rich
deposits of untapped oil and gas
• State leadership recognizes the
economic potential of development
• Norse Energy has resources of
~ 900 MMBOE in New York
10 Internally Estimated Resource Total
Asset Value
Norse Energy Balanced Portfolio of Oil and Gas Projects
12 Internally Estimated Resources
Oil Price Forecast US Energy Information Administration
13 Oil Base Price Forecast (AEO2012 Reference), High Price Forecast and Low Price Forecast are based on the energy price
forecasts included in the June 2012 Publication of the U.S. Energy Information Administration | Annual Energy Outlook
High Price Forecast
Base Price Forecast
Low Price Forecast
Gas Price Forecast US Energy Information Administration
14
High Price Forecast
Base Price Forecast
Low Price Forecast
Natural Gas Base Price Forecast (AEO2012 Reference), High Price Forecast and Low Price Forecast are based on the energy price
forecasts included in the June 2012 Publication of the U.S. Energy Information Administration | Annual Energy Outlook
Attractive Project Economics At Base Case Prices
15
4
MMBOE
511
MMBOE
Diverse Portfolio of
Resources:
CNY Marcellus
Shale significant
value already
illuminated by
industry activity
Yet Unproven by
Industry Activity: • WNY Bradford
Sands
• CNY & WNY Utica
• WNY Marcellus Oil
Shale
72
MMBOE
Oil and Natural Gas Price Forecasts are based on the energy price forecasts included in the June 2012 Publication of the U.S. Energy Information Administration | Annual Energy Outlook’s Base Price Forecast (AEO2012 Reference), also depicted on “Oil Price Forecast” and “Gas Price Forecast” slides.
WNY Marcellus Oil Shale contains liquids-rich gas.
Highly Attractive Portfolio Economics
16
Oil Gas
114%
Oil and Natural Gas Price Forecasts are based on the energy price forecasts included in the June 2012 Publication of the U.S. Energy Information Administration | Annual Energy Outlook’s Base (AEO2012 Reference), High and Low Price Forecasts also depicted on “Oil Price Forecast” and “Gas Price Forecast” slides.
WNY Marcellus Oil Shale contains liquids-rich gas.
2012-13 Business Plan
• SGEIS is expected imminently
• Pursue partners for the Bradford Sands (4 MMBOE), WNY Marcellus Oil Shale (117 MMBOE), and WNY & CNY Utica (511 MMBOE)
• Secure funding via asset sales, partnerships, and capital markets
• Generate positive EBITDA within a few months of commencing a drilling program
17
3Q 4Q 1Q 2Q 3Q 4Q
Secure Strategic Partner
Test & Develop Bradford Sands
SGEIS Approval
Shale Vertical Core Tests
Initial HVHF Flow Tests
Test & Develop Marcellus Oil Shale
Test & Develop Utica Shale
2012 2013
Post-Restructuring Cash Requirements Liquidity and Capital Expenditures
Capital Requirements:
Bradford Sands wells:
– ~USD 1 Million
Shale Vertical Cores:
– ~USD 2 Million
Shale horizontal test well with
HVHF
– ~USD 6-7 Million
18
General & Administrative includes Legal, Consulting &
Contract Labor, Audit Fees, Office Rents, Travel, Computer &
Communication
Salaries & Benefits include Employee Salaries & Benefits
and Directors' Fees
Exploration Expense includes Delay Rentals & Lease
Extensions
Interest Expense
Monthly Expense: ~USD 1 Million /month
Restructuring activities already completed or currently underway include debt refinancing and restructuring, reduction in headcount and office consolidations.
The effects of these activities will be visible in the third quarter of 2012.
Current Context for Norse
19
• ~USD 10-15 Million needed to recapitalize the business
• Seeking partner(s) to carry the initial phase of a shale drilling
program
• ~USD 65 Million current enterprise value
• ~900 MMBOE net resource position
• Less than USD 0.10 enterprise value per BOE of resources
• SGEIS issuance will unlock the values, and is expected
imminently
• Positive EBITDA is expected within a few months of
commencing shale drilling
Enterprise value ~USD 65 Million updated 27 June 2012
Summary of Funding Alternatives
Pursuing transactions
offering the lowest cost of
capital and shareholder
dilution
– Convertible Loan
– Asset Sales
– Partnerships
– Debt
– Equity Issuance
20
EGM Agenda
• Reduction in share capital – to facilitate issuance of new shares, warrants, or convertible loans
• Authorization to issue convertible loan – 12 Million NOK to provide short-term liquidity
• Authorization to issue additional convertible loans – To provide additional short-term liquidity if needed
• Authorization to issue new shares – Valid until the 2013 Annual General Meeting
– Up to 50% Increase
– Provides flexibility to the Board of Directors
• Employee option program – To align goals and incentives of employees and shareholders
– To be awarded 2012-2014
– Strike price equal to volume-weighted average trading price for the 5 days preceding the grant date
• EGM 14 day notice period – Valid until the 2013 Annual General Meeting
– Provides flexibility to the Board of Directors
• Election of new Board member
21
End of Presentation