INVESTMENT LANDSCAPE AND NEW CHALLENGES IN THE ARGENTINA DREAM TO DEVELOP SHALE OIL & SHALE GAS

Transcription

1 SHALE GAS & TIGHT OIL ARGENTINA II CONGRESS 2012 INVESTMENT LANDSCAPE AND NEW CHALLENGES IN THE ARGENTINA DREAM TO DEVELOP SHALE OIL & SHALE GAS Güimar J. Vaca Coca Buenos Aires, 18 September 2012

2 FORWARD LOOKING STATEMENT Certain statements, table and graphs throughout this presentation may contain forward-looking statements or forward looking information within the meaning of applicable securities legislation. Forward-looking statements or information in this presentation include, but are not limited to, statements, tables and graphs (collectively statements ) with respect to: future economic performance; projected production, sales, reserves and growth estimates for crude oil, natural gas, NGLs and liquids as well as potash, brine and other minerals and mineral resources; projections made on a per share basis; the Company s ability to achieve its production and sales guidance; the potential production, scalability and upside associated with resource plays; the potential future success, growth, timing and production for its various properties; the Company s projections with respect to its ability to develop resource plays and the percentage of production from resource plays in the future; projections of the Company s reserves; projected capital costs and risks associated with respect to API s various regions, assets and initiatives; projected future drilling costs, non-fuel operation costs, potential dispositions of assets, including anticipated proceeds there from, the use of such proceeds and the dates for receipt thereof; projections of future drilling inventories and plans therefore; anticipated currency exchange rates; projected growth rates capable of being sustained from the Company s asset base in the future; projections of the potential future price and market for petroleum, natural gas, potash and other minerals; and reference to potential exploration and the timing and success thereof You are cautioned not to place undue reliance on forward-looking information, as there can be no assurance that the plans, intentions or expectations upon which it is based will occur. By its nature, forward-looking information involves numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. Although the Company believes that the expectations represented by such forwardlooking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Accordingly, the Company cautions that events or circumstances could cause actual results to differ materially from those predicted. Statements relating to reserves or resources or resource potential are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves and resource potential described exist in the quantities predicted or estimated, and can be profitably produced in the future. You are further cautioned not to place undue reliance on forward-looking statements contained in this web site, which are made as of the date hereof, and except as required by applicable law, the Company undertakes no obligation to update publicly or revise any forwardlooking information, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this presentation are expressly qualified by this cautionary statement. All oil and gas reserve information is based on the statement of reserves data and other oil and gas information filed by Americas Petrogas Inc. for the year ended December 31, 2010, a copy which can be found on

3 ARGENTINA OIL & GAS RESOURCES 1 - When Argentina oil and gas production was dropping in 2011, the country catapulted to industry s shinning star, when the EIA (Energy Information Administration) released news that Argentina had 774 TCFE recoverable hydrocarbon resources in unconventional reservoirs, the third largest in world, behind only the USA and China 2 - Considering how shale revolution rejuvenated the USA oil and gas sector, initial skepticism on this large potential was changed quickly, when all types of Companies, hurried to get a position in the profilic Neuquen Basin 3 - In 3 years, over 100 wells were drilled and many old wells studied and tested for production from shale reservoirs in the Neuquen Basin. Results were encouraging, supporting EIA estimates and increasing feeling that Argentina was sitting on a huge opportunity

4 ARGENTINA OIL & GAS RESOURCES Key questions: WHAT IT THE REAL MEANING OF 774 TCF RECOVERABLE RESOURCES FOR ARGENTINA? The country gas consumption is less than 2 TCF per year Total country gas reserves are 9 TCF Production has been declining for the last 6 years Argentina is net gas importer, from Bolivia (10-12 MMm3/d) and LNG (8-10 MMm3/d in winter months) Exploitation of unconventional resources would: a) Solve defficient internal supply b) Solve Argentina energy needs for strong economic growth c) Become a strong exporter ARE THEY REAL?

5 ARGENTINA OIL & GAS RESOURCES (continued( continued) Neuquen Basin Vaca Muerta (240 TCF) Los Molles (167 TCF) Agrio (xxx TCF) San Jorge Basin Pozo D-129 (180 TCF) Aguada Bandera (50 TCF) Austral Basin Lower Inoceramus (88 TCF) Margas Verdes (88 TCF) North West Basin Yacoraite (xxx TCF) Los Monos (xxx TCF) Cuyana Basin Cacheuta (xxx TCF) Potrerillos (xxx TCF) Chaco Paraná Basin San Alfredo (521 TCF)

6 NEUQUEN BASIN SIMPLIFIED CROSS-SECTION Key Source Rocks and selection of Conventional/Unconventional Reservoirs West Emerging Shale/Unconv. Plays East Historical Production Area Embayment Northeast Pla1orm Key Source Rocks Modified from Cruz et al., 2002; Howell,.J et al.,2005

7 NEUQUEN BASIN SHALE MATURITY AND AMERCIAS PETROGAS BLOCKS Los Molles Vaca Muerta Agrio Americas Petrogas Blocks Fuente: Legaretta & Villar 2011 Modificado: Víctor Lanari

8 VACA MUERTA AND LOS MOLLES SHALES LOS MOLLES VACA MUERTA Geologic Age M. Jurassic Jur-Cret Area sq.miles 9,730 8,540 Thickness (m) 0 3, Rich (m) Net (m) Depth Interval (ft) 6,500-15,000 5,500-10,000 Average Depth (ft) 12,500 8,000 Reservoir Pressure Overpressured Overpressured Average TOC Wt.% 1.1% 4.0% Thermal Maturity Ro 1.5% 1.25% Clay content Low/medium Low/medium GIP (bcf/sq.mi.) Risked GIP (tcf) Risked Recoverable(tcf) Fuente: Gas y Petróleo de Neuquén

9 SOURCE ROCKS COMPARISONS Haynesville Barnett Marcellus Woodford Vaca Muerta Horn River Eagle Ford Lithology Siliceous Marl Average Mature TOC(%) 3 to 4% Net Thickness (Ft) 225 to 300 Maturity (Ro) 1.7 to 2.8 Pressure Gradient (ppg) 13.5 to 17.3 Porosity (%) 7 to 9% Permeability (nd) 100 to 500 Well IP (mcfd peak month) 8 to 25 GIP*/Sq Mi (bcf) 150 to 250 EUR**/Well (bcf) 8 to 12 Siliceous Shale Siliceous Shale 4 to 5% 4 to 7% 150 to to to to to to to 8% 7 to 9% 50 to to to 7 4 to to to to to 6 Chert Siliceous Marl 4 to 8% 3 to 5% 75 to to to to to to to 6% 7 to 12% 40 to to to 6 2 to to to 800 (bcf) 2.5 to 5 8 to 20 Chert 3 to 6% 125 to to to to 10% 100 to to to to 10 Calcareous Shale 4 to 8% 120 to to to to 10% 100 to to to to 6 * Gas in place ** Estimated Ultimate Recovery Source: Gas & Petróleo del Neuquén

10 ELECTRIC LOGS VACA MUERTA (Nqn) and BARNETT SHALE (USA) USA Blocks API Blocks Barnett Los Toldos Up to 500 ft Up to 1000 ft Silica Clay Calcite Permeability Hydrocarbon Los Toldos Los Toldos The similarity of extensive, continuous permeability and silica is compelling

11 AMERICAS PETROGAS BLOCKS LOS TOLDOS III LOS TOLDOS II GOBERNADOR AYALA IV LOS TOLDOS IV LOMA RANQUELES LOS TOLDOS I MEDANITO SUR RINCONADA NORTE HUACALERA VACA MAHUIDA TOTORAL SALINAS GRANDES IX, XI & XII YERBA BUENA BAJADA COLORADA NEUQUEN BASIN 50 km

12 VACA MUERTA REGIONAL CROSS SECTION OFFSETTING LOMA DE LA LATA LOMA DEL SUEÑO x-1 TOTORAL HUACALERA x-1 HUACALERA CERRO LAS NIÑAS x-2 LOS TOLDOS I AGUADA CHIVATO OESTE x-1 LOS TOLDOS 2

13 EARLY RESULTS IN VACA MUERTA Source: YPF Report (Business Plan )

14 NORTH AMERICAN SHALE OIL AND GAS REVOLUTION AND POSSIBILITIES IN ARGENTINA USA The development of Shale Gas and Shale Oil in the USA first, and later in Canada, has been phenomenal Today in the USA, over 500 MM M3/D or 17.6 BCF/D gas is produced from Shale Gas Reservoirs. Approximately the same volume is produced from Tigh Gas reservoirs Oil, from the Williston Basin only (Bakken and Three Forks shales) the production is 584 MBOPD By 2035, gas production is the USA is estimated at 28 TCF, 62% will be Tight Gas and Shale Gas ARGENTINA With very large resources now supported by positive early test information. Argentina has possibilities to make giantic developments of oil and gas resources (if certain conditions are available)

15 PRELIMINARY EXAMPLE OF SHALE DEVELOPMENT IN THE NEUQUEN BASIN AMERICAS PETROGAS participates in over 900,000 Acres in the Neuquen Basin with prospective shales of VACA MUERTA, LOS MOLLES and AGRIO shales. Information on producibility from studies and early work is encouraging APA drilled 4 new wells and the information so far is positive An example of possible development of a Cluster or Clusters in 500 km2 of land could be: - Spacing 60 Acres/Well - Number of wells, 1, years - Investment Billion/Year drilling rigs - Total billion dollars in 12 years - Peak production 105 MBOPD

16 SHALE OIL DEVELOPMENT (Gross Production Estimate) CLUSTER # I AREA 500 KM 2

17 RESULTS FROM VIGOROUS DEVELOPMENT 1.Wide implementation of development projects will turn Argentina into a strong, powerful oil and gas exporter 2.Ample and reasonably priced energy will enhance economic growth in the country and the regions 3. Enormous investments will create jobs 4. Development of technology, education and know how 5. Giant development of infrastructure and services 6.Creation of industries chemical, petrochemical, fertilizers, etc A total transformation of country, to raise standard of living as in developed countries

18 CHALLENGES TO MAKE REAL THE DREAM OF DEVELOPING THE UNCONVENTIONAL RESOURCES IN ARGENTINA SUMMARY OF PREVAILING CONDITIONS: 1. Argentina has 774 TCF recoverable gas resources, as per the EIA, the third largest in the world after China and USA 2. This data has now some validation and support from recent studies undertaken by most companies operating in the country 3. New wells drilled in the Neuquen Basin, focussed to VM, were mostly vertical. Over 100 wells distributed in the basin, showed productivities BOPD per well with 3-4 frac jobs, comparing favorably with horizontal wells in the USA 4. Production from shale wells at this stage not enough to know how homogeneous the shale rock is and what % of basin will yield economic production rates (big challenge is to determine in areas aparently not economic, if frac applied is not optimum for that shale or limitation is in shale properties)

19 CHALLENGES TO MAKE REAL THE DREAM OF DEVELOPING THE UNCONVENTIONAL RESOURCES IN ARGENTINA 5. The two main source rocks with great hydrocarbons potential are VACA MUERTA and LOS MOLLES. THE AGRIO could bring a positive surprise 6. They are thick, rich in TOC, distributed in large acreage, continuos, overpressured, excellent maturity to contain Oil and/or Gas 7. Productivity data with early aplication of technology is competitive with analogus in USA 8. The size of resources have attracted Super Major Corporations. They are sufficient to convert Neuquen and Argentina in the world biggest unconventional development outside North America

20 CHALLENGES TO MAKE IT HAPPEN OPERATIONAL AND INDUSTRY Technology access at reasonable cost. Operators concern to see high concentration on few service companies. M&A versus Association with experts Rigs, frac equipment, spare parts, services Service companies vs owned Not enough, high costs Materials, tubulars, test equipment, sand, chemicals, gas plants and processing equipment. Imports vs local, permits, restrictions, delays Infrastructure of supply and services. Roads, power, housing, heavy transportation, medical Water supply, handling and disposal Human Resources. Insuficient qualified professionals. Lack of trained operational personnel Provincial Governments permits, environmental, water, landlords, etc

21 CHALLENGES TO MAKE IT HAPPEN BUSINESS AND FINANCIAL Fiscal system needs to be stable, reliable and competitive Definition of crude and gas regulations regarding market and sales. When local supply is fulfilled, will export system be free? Prices of crude and gas to be enough to operate under high cost environment Confidence on possibility to repatriate profits and dividents Security that investments above committments will be decided by operator/partners

22 CHALLENGES TO MAKE IT HAPPEN POLITICAL Goverment support for fair activities by Unions Compliance contracts as per prevailing Laws at time of contract approval Facilitate import of technology, materials, equipment Facilitate channels of communications with communities. Help obtain permits to access and work in contracted land Recent Decree Number 1277 to be implemented allowing private companies to operate with certain controls but with confidence to recoup investments and repatriate profits Government to let industry know, that oil and gas prices will be adequate to invest with confidence in the long term

23 Los Toldos Este x-i Frac Job THANK YOU!