Sho canaccord presentationmay92012

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Transcript of Sho canaccord presentationmay92012

  • 1. corporate presentation 2012

2. Forward Looking StatementsIn the interest of providing potential investors with information regarding Shona Energy Company, Inc. (Shona"), including managements assessment of the future plans and operations of Shona,certain statements contained in this corporate presentation constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securitieslegislation. Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "project", "could", "plan", "intend", "should","believe", "outlook", "potential", "target" and similar words suggesting future events or future performance. In addition, statements relating to "reserves" are deemed to be forward-looking statementsas they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and can be profitably produced in thefuture. Forward looking statements or information in this presentation include, but are not limited to, statements or information with respect to: the expected closing date and use of proceeds from thefinancing; potential reserves and future production with respect to current assets business strategy and objectives; development plans; exploration and drilling plans; reserve quantities and thediscounted present value of future net cash flows from such reserves; future production levels; wells drilled (gross and net); capital expenditures; cash flow; debt levels; operating and other costs;royalty rates and taxes.With respect to forward-looking statements contained in this corporate presentation, Shona has made assumptions regarding, among other things: future capital expenditure levels; future oil andnatural gas prices; future oil and natural gas production levels; future exchange rates and interest rates; ability to obtain equipment in a timely manner to carry out development activities; ability tomarket oil and natural gas successfully to current and new customers; the impact of increasing competition; the ability to obtain financing on acceptable terms; and ability to add production andreserves through development and exploitation activities. Although Shona believes that the expectations reflected in the forward looking statements contained in this corporate presentation, and theassumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to placeundue reliance on forward-looking statements included in this corporate presentation, as there can be no assurance that the plans, intentions or expectations upon which the forward-lookingstatements are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that thepredictions, forecasts, projections and other forward-looking statements will not occur, which may cause Shonas actual performance and financial results in future periods to differ materially from anyestimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, the ability ofmanagement to execute its business plan; general economic and business conditions; the risk of instability affecting the jurisdictions in which Shona operates; the risks of the oil and natural gasindustry, such as operational risks in exploring for, developing and producing crude oil and natural gas and market demand; the possibility that government policies or laws may change orgovernmental approvals may be delayed or withheld; risks and uncertainties involving geology of oil and natural gas deposits; the uncertainty of reserves estimates and reserves life; the ability ofShona to add production and reserves through acquisition, development and exploration activities; Shonas ability to enter into or renew leases; potential delays or changes in plans with respect toexploration or development projects or capital expenditures; the uncertainty of estimates and projections relating to production (including decline rates), costs and expenses; fluctuations in oil andnatural gas prices, foreign currency exchange rates and interest rates; risks inherent in Shonas marketing operations, including credit risk; uncertainty in amounts and timing of royalty payments;health, safety and environmental risks; risks associated with existing and potential future law suits and regulatory actions against Shona; uncertainties as to the availability and cost of financing; andfinancial risks affecting the value of Shonas investments. Readers are cautioned that the foregoing list is not exhaustive of all possible risks and uncertainties.Any financial outlook or future oriented financial information in this corporate presentation, as defined by applicable securities legislation, has been approved by management of Shona. Such financialoutlook or future oriented financial information is provided for the purpose of providing information about managements current expectations and plans relating to the future. Readers are cautionedthat reliance on such information may not be appropriate for other purposes.The forward-looking statements contained in this corporate presentation speak only as of the date of this corporate presentation. Except as expressly required by applicable securities laws, Shonadoes not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. The forward-looking statementscontained in this corporate presentation are expressly qualified by this cautionary statement.The information contained in this corporate presentation does not purport to be all-inclusive or to contain all information that a prospective investor may require. Prospective investors are encouragedto conduct their own analysis and reviews of Shona, and of the information contained in this corporate presentation. Without limitation, prospective investors should consider the advice of theirfinancial, legal, accounting, tax and other advisors and such other factors they consider appropriate in investigating and analyzing Shona.Barrels of Oil EquivalentBarrels of oil equivalent (boe) is calculated using the conversion factor of 6 Mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boes may be misleading, particularly if used inisolation. A boe conversion ratio of 6 Mcf:1 bbl (barrel) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at thewellhead.Analogous InformationCertain noted drilling and completion data provided in this document may constitute "analogous information", such as mapping information obtained in geographical proximity to prospectiveexploratory lands to be held by Shona. Such information has been obtained from government sources, regulatory agencies or other industry participants. Management of Shona believes theinformation is relevant as it helps to define the reservoir characteristics in which Shona may hold an interest. Shona is unable to confirm that the analogous information was prepared by a qualifiedreserves evaluator or auditor or in accordance with the COGE Handbook and therefore, the reader is cautioned that the data relied upon by Shona may be in error and/or may not be analogous tosuch lands to be held by Shona. 3. Investment HighlightsProduction with stable cash flowDelivering a total of 14.0 million cubic feet per day (mmcfpd) of firm gas sales, with the potential to increase to24.0 mmcfpd under current contractsDiverse portfolio of oil and gas assetsOil exploration program with 3 blocks in Colombia and 1 block in PeruExisting gas production in northwest Colombias Magdalena BasinFully funded development program with favourable economicsRelatively low development costs, attractive termsAssets on trend or in proximity to existing productionMultiple oil targets with growth potential on all blocks 4. Corporate StrategyIncrease value of existing blocksIncrease cash flow with additional gas sales contracts from Esperanza BlockComplete evaluation of unexplored area of Esperanza BlockConfirm potential of heavy oil potential in Caguan Basin in 1st Qtr 2013Further evaluate the potential of Boa Prospect on Block 102 with long term testingIdentify and evaluate additional opportunities utilizing current cash flowSeek assets on trend or in proximity to existing production, with low developmentcosts and attractive fiscal termsConsider higher-risk exploration opportunities that would allow later sell downsEvaluate merger and acquisition opportunitiesCombination of EqualsLiquidity Event 5. Value PropositionExploration targets with significant upside underpinned by existing gas production contracts Experienced management team providing increased exposure to additionalopportunities over time 6. Overview of Assets Esperanza BlockVENEZUELASHONA GROSS NET Serrania COLOMBIA PROPERTY OPERATORW.I.ACRES ACRESBlock Los Picachos Esperanza BlockShona Block (Colombia) (Geoproduction) 100%60,00260,002Macaya ECUADOR Serrania BlockBlock (Colombia) Hupecol 37.5% 110,769 41,538PERU Los Picachos Block (Colombia) Hupecol 37.5% 52,77119,789Block 102 BRAZIL Macaya Block (Colombia) Hupecol 37.5% 195,254 73,220 Block 102 (Peru) Pluspetrol36.5% 313,023 114,253 TOTAL731,819 308,803BOLIVIA 7. Esperanza Location & Infrastructure PromigasPacific Rubiales (La Creciente field 60 MMCFPD) OGX (Recently awarded block w/ $24 MM workprogram); SurroundingEsperanza Esperanza Block (Nelson discovery)7Cerro Matoso 8. Esperanza BlockEsperanzaBlock45 sq kmProgram (2007)100% owned and operated by