CanArgo Energy Corporation. Shareholder Briefing Oslo 1 st September 2005

Transcription

1 CanArgo Energy Corporation Shareholder Briefing Oslo 1 st September 2005

2 CanArgo Energy Corporation Qualifying Statement With Respect To Forward-Looking Information The matters discussed in this presentation include forward looking statements, which are subject to various risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated in such forward looking statements. Such risks, uncertainties and other factors include the uncertainties inherent in oil and gas development and production activities, the effect of actions by third parties including government officials, fluctuations in world oil prices and other risks detailed in the Company`s reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission. The forward-looking statements are intended to help shareholders and others assess the Company`s business prospects and should be considered together with all information available. They are made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company cannot give assurance that the results anticipated herein will be attained.

3 CanArgo Current Focus Areas Georgia Kazakhstan

4 CNR Value Creation GEORGIA GEORGIA KAZAKHSTAN KAZAKHSTAN Samgori & Ninotsminda Horizontal Development Kumisi Gas Project Manavi Oil Discovery Development (Cash Flow) Appraisal (Cash Flow & Reserves) Kyzloy Gas Development Greater Kyzyloy Gas Development Norio Exploration Nazrevi Cretaceous Exploration Exploration (Reserves) Akkulkovsky Exploration Area Greater Akkulkovsky Exploration Area

5 Georgia

6 CanArgo Energy Corporation Georgia Location Map CanArgo Acreage Trans-Caucasus line Baku-Tbilisi-Ceyhan Railway Ship to Ship to Central Central Europe Europe Early Oil Pipeline Tskhinvali Tbilisi Norio River Major Town Capital National Boarder Offshore Offshore loading loading tankers - tankers - Supsa Supsa Ninotsminda/ Manavi Tankers to Tankers to Mediterranean Mediterranean Tbilisi Nazvrevi Block XIII Samgori To Ceyhan To Ceyhan BTC Pipeline Rustavi From Caspian From Caspian

7 CanArgo East Georgia Assets IX Rail & Pipeline to Black Sea Norio / Martkopi XI C Samgori Oilfield X XI E CANARGO ACREAGE Ninotsminda PSC Nazvrevi PSC Norio PSA Tbilisi PSC XI A Kumisi Shavsakdari XIII TBILISI XI G XI E XI F XI B RUSTAVI XI H XI D River Iori XII A Ninotsminda Sartichala Processing Plant Samgori PSC Manavi Nazvrevi Marabda XII B River Kura Gardabani Power Plant GEORGIA W Rustavi AZERBAIJAN Rail & Pipeline from Baku ARMENIA kilometres

8 Exploration and Appraisal

9 Exploration & Appraisal CanArgo Rig #3 drilling for Cretaceous

10 Schematic Stratigraphic column 1000 m 2000 m Sarmatian Norio, Ninotsminda Maikopian Ninotsminda, Norio Upper Eocene Ninotsminda, Samgori Upper Reservoirs Formation damage potential for additional production 3000 m Middle Eocene Main oil & gas reservoir Ninotsminda / Samgori Current Primary Producing Zone Horizontal Program 4000 m Lower Eocene oil & gas Samgori, N100 Cretaceous oil & gas Manavi, Teleti, Kumisi Potential for world class production

11 CanArgo Energy Corporation Fields, Discoveries and Prospects in CanArgo Kura Basin Acreage Ujarma Zhati XI C Norio / Martkopi Well MK72 River Kura Ninotsminda Field Manavi Well M11 Varketili Samgori / Patardzeuli Field XI E TBILISI South Dome Field North Teleti West Teleti XI G North Kumisi XI F XI B XI D River Iori Tsitsmatiani Nazvrevi Krtsanisi E Nakarali Kumisi XI E Nakarali XIII RUSTAVI XI H Teleti Field Rustavi Natsvaltskali kilometres 0 15 Shavsakdari Marabda W Rustavi

12 Manavi Discovery Saipem Rig operating on Manavi M11Z

13 Manavi M11 Oil Discovery First Cretaceous oil discovery in Georgia (South Caucasus) Potentially very significant oil discovery CanArgo main appraisal focus over next 12 months Significant prospect size in the order of several hundred million barrels potential World class reservoir producing at high rates in North Caucasus Same formation as prolific fields in Northern Caucasus Reported well rates ~ 15,000 bopd in that area Reported Cretaceous production ~ 300,000 bopd Cretaceous Limestone at outcrop 40 km from Manavi 1,000 ft (300 m) thickness

14 Regional Cretaceous Russian Federation Chechnya Cretaceous Oil Production CanArgo CanArgo Acreage Acreage Chechnya Dagestan Cretaceous Condensate and Oil Oil Production Dagestan Georgia Armenia Azerbaijan Gas Field Oil Field Mesozic Basin Manavi Manavi Cretaceous Cretaceous Turkey Iran Kura Kura Basin Basin

15 Manavi M11 Well Test Manavi M11 well clean-up flow prior to tubing collapse Top Cretaceous 14,268ft (4,350 m) 492 ft (150 m) of hydrocarbon bearing Cretaceous limestone penetrated no OWC 230 ft (70 m) interval tested Initial strong clean-up flow with 35o API oil Good reservoir pressure Tubing collapsed due to pressure

16 Manavi Top Cretaceous Structure Manavi M12 Appraisal Manavi M11 Discovery Manavi M11Z Appraisal Ninotsminda Field N100 Exploration Well Manavi 7 Deep Cretaceous Hydrocarbons well lost Planned M13 Planned EPS

17 Manavi M11Z Appraisal Well Drilled with Saipem rig and Baker-Hughes OBM system Reached TD of 4,570 metres (14,993 ft) Deviated to approximately 600 metres from M11 Top Cretaceous Limestone (primary reservoir target) encountered at 4,277 metres (14,032 ft) some 70 metres higher than M11 Cretaceous volcanics at ~4,560 metres (14,961 ft) Top Middle Eocene (main reservoir in Ninotsminda & Samgori Fields) at 3,965 metres (13,009 ft) Much thicker section than in M11 Appear to be in same pressure system as Cretaceous Hydrocarbon indications from drilling data and wireline logs Well currently being prepared for testing Testing anticipated late September 2005

18 Schematic comparison of the Manavi M11 and M11Z wells Top Middle Eocene 3965 m Manavi M11z Manavi M11 Volcanoclastics Top Cretaceous Limestone 4277 m Top Cretaceous Limestone 4348 m Chalky Limestones Test Interval flowed 34.4 API oil + drilling fluid prior to to casing collapse TD 4500 metres Interbedded Limestones TD 4570 metres Cretaceous Volcanics

19 Manavi - Summary Potentially very significant oil discovery in regionally prolific reservoir Appraisal program underway M11z test planned before end September 2005 M12 planned spud date December 2005 Early Production System planned Target 5,000 bopd If successful, move to full field development Potential for very substantial production if analogous to North Caucasus fields Nearby export pipelines Several Manavi look alike prospects in CanArgo acreage Nazvrevi prospect next target Potential for further exploration drilling in 2006

20 Norio

21 Norio Large exploration block with significant potential North of Samgori and Ninotsminda fields On trend with Manavi discovery Middle Eocene reservoir anticipated to be thicker and with good reservoir properties Over 10,000 bpd flows obtained on block in past Additional potential in Upper Eocene / Oligocene CanArgo hold 100% interest in PSA

22 Schematic Middle Eocene Reservoir Quality Lizi Lizi #1 #1 Thermal Thermal Water Water Well Well M. M. Eocene Eocene Isochore Isochore = 815m 815m Initial Initial Water Water Flow Flow Rate Rate = >10,000 >10,000 bwpd bwpd MK-72 Location Increasing Middle Eocene Flow Rates Increasing Middle Eocene Thickness Ninotsminda Ninotsminda Well Well #49 #49 M. M. Eocene Eocene Isochore Isochore = = 450m 450m 1,000 1,000 bopd bopd Samgori Well #106 Samgori Well #106 M. Eocene Isochore = 700m M. Eocene Isochore = 700m 6,000 bopd 6,000 bopd Kumisi Kumisi Outcrop Outcrop M. M. Eocene Eocene Isochore Isochore = = 150m 150m

23 Norio MK72 well Norio Prospect Manavi MK72 well Ninotsminda Samgori

24 Norio MK72 well Large mapped prospect Analogy to nearby Samgori Field Secondary target in Oligocene sandstones 100 metres of oil-bearing sandstone already encountered Remain to be tested VSP & seismic identify event at 4,800 metres Could be primary target Confirmed by recent re-processed surface seismic data Current depth 4,500 metres MK72 well to be finished by Saipem Highly over-pressured claystone unit causing problems for CanArgo rig Analogous to section in Manavi M11Z Pull back & kick-off at ~4,400 metres OBM and Top Drive required Rig to be mobilised mid September, planned to commence October Anticipate one month drilling to reach target zone

25 Gas Project Almost all Georgian gas currently imported from Russia Georgian government strategic imperative to develop indigenous gas resources and diversify supply In-Principle Agreement with the Georgian Government on a take-or-pay contract for up to 7BCM (247 BCF) Several gas discoveries around Tbilisi in Cretaceous Lower Eocene sequence Good reservoir qualities Potential for early development Several un-drilled prospects Close to infrastructure Associated gas in Ninotsminda +gas cap Plan for Kumisi#1 appraisal well Q subject to finalisation of gas contract Updip of WR16 gas discovery

26 CanArgo Energy Corporation Gas Discoveries and Prospects in CanArgo Kura Basin Acreage XI C River Kura North Teleti TBILISI Varketili Ninotsminda Associated Gas + Gas Cap Samgori / Patardzeuli Field Associated Gas + Gas in Lwr Eocene XI E Manavi Associated Gas West Teleti XI G XI F XI B XI D River Iori North Kumisi Kumisi XI E RUSTAVI XIII XI H Gardabani Power Plant kilometres 0 15 Shavsakdari Marabda Rustavi Field

27 Development

28 Field Development Coiled Tubing Drilling CanArgo Rig #2

29 Field Overview Norio Manavi Samgori Samgori Patardzeuli Patardzeuli SAMGORI COMPLEX Produced ~180 MMbbl to date Reported rates to 70,000 bopd XI B XI D NINOTSMINDA Additional potential in east & south of Field South South Dome Dome 3 KM

30 Existing Fields Key New Technology Samgori Ninotsminda Complex fractured reservoirs slightly under-pressured Considerable remaining recoverable oil Horizontal Drilling 4 wells already drilled on Ninotsminda Planned 15 well program target 10,000 bopd Horizontal Sidetrack Vertical Wellbore GAS Major Fractures Minor Fractures OIL WATER Slotted Liner Matrix

31 N22H Horizontal Drilling

32 Ninotsminda UBCTD program Weatherford now demobilised To be replaced by another contractor(s) providing under-balanced coiled tubing drilling services Wells operated on to date: N22H Drilled 150 metre horizontal section (planned 650 metre) Significant Weatherford equipment problems Well flowed gas at a rate of MMscf/d ( MCM/d) whilst drilling under-balanced from gas cap zone previously regarded as tight Encouraging for theory of under-balanced drilling Need to extend section into oil-leg N100H2 BHA stuck in build-up section N49H never exited casing properly

33 Ninotsminda Forward Plan 2 wells to be drilled by year-end using CanArgo rigs & jointed pipe with Baker Hughes directional equipment. Have drilled four horizontal wells successfully in the past on Ninotsminda. Planned wells - N100H2 Planned to commence drilling during September N97H Currently in negotiations with several parties to replace Weatherford for the provision of coiled tubing drilling services for rest of program

34 Development Summary Two adjacent producing oilfields Sweet light oil ~ 40 API Potential for significant remaining reserves Potential for substantial production increases Significant additional capacity in existing processing plant for increased production Limited technology applied in the past Horizontal drilling proved successful 15 new horizontal wellbores planned Target production 10,000 bopd by end 2006 Possibility of further drilling

35 Kazakhstan

36 Kazakhstan Current Current Assets Assets One of the world s largest oil & gas provinces Production ~ 1,000,000 bopd and planned to increase Well established oil & gas legislation major companies involved Established relationships Balanced portfolio Existing contracts Short term cash flow potential Gas development project Access to substantial exploration potential

37 CanArgo in Kazakhstan CanArgo s subsidiary BN-Munai LLP (CanArgo 70%) has the following interests (100%) Kyzyloy Gas Field Production Contract Akkulkovsky Exploration Contract Agreement to acquire Greater Akkul exploration area Located in North Usturyt Basin near Aral Sea Proven Gas Field Significant additional shallow gas potential Close to Bukhara Urals gas trunkline Large upside in deeper horizons potentially analogous to fields to the south

38 Kazakhstan Gas Pipelines Russia Russia Kyzyloy Gas Field Kazakhstan Bukhara Urals Gas Pipeline Uzbekistan Uzbekistan

39 Akkulkovsky & Kyzyloy Greater Akkul Exploration Licence (being acquired) Kyzyloy Production Licence Akkulkovsky Exploration Licence

40 Kyzyloy Gas Field Bazoy UGS Facility Kyzyloy Well 103 Bukhara-Urals Gas Trunkline

41 Kyzyloy - Example Seismic

42 Kyzyloy Field Kyzyloy Field Isochore Map

43 Kyzyloy Field Shallow (<600m) dry gas development Centred on Kyzyloy Gas Field Upper Eocene fine grained sandstones Good seismic data JNOC 1995/1996 Tested wells on field Test rates up to ~ 271 Mm 3 /d (9.6 MMscf/d) Six suspended gas wells to be worked over SEC Proved Reserves 30 BCF (0.85 BCM) Contract signed May 5 th 2005 Tie-in to Bukhara Urals gas pipeline First gas planned Q1/2 2005

44 Additional Shallow Potential Other Proven gas fields nearby Several additional identified shallow gas anomalies on seismic Shallow drilling Potential for significant additional gas in identified shallow structures First exploration well (AKK103) completed. Logs indicate gas present Test late September Rig moved to second well (AKK105) Five new wells planned this summer Tie-in to Kyzyloy development Progressive development Increase production and reserves

45 2005 Program AKK#05 Planned 60 km pipeline Bazoy North Kyzyloy Kyzyloy Field AKK#04 6 Workovers planned AKK#03 AKK#02 AKK#01

46 Akkulkovsky Area - Exploration Greater Akkulkovsky ~10,000 km 2 Akkulkovsky 1,667 km 2

47 Generalised Stratigraphy Kyzyloy & Bazoy Gas Fields Deeper Gas & Condensate Potential e.g. Kuanysh Urga

48 Deep Exploration Potential Kuanysh Reported 445 BCF Gas Condensate Urga Reported 1.36 TCF Gas Condensate Proven hydrocarbon province Proven source rocks Deeper levels Large un-breached structures Significant potential for large gas condensate discoveries in Jurassic as in Uzbekistan to south Additional potential in Carboniferous Identified anomalies USGS World Petroleum Assessment 2000 Kazakh North Ustyurt basin Undiscovered Resources F50 level Oil & Condensate million barrels Gas TCF

49 Regional Seismic Line Akkulkovskoy -Kyzyloy Kyzyloy Gas Field Palaeogene Akkulkovskoy Licence Northern Boundary Likely hydrocarbon migration path Akkulkovskoy Licence Southern Boundary Basement Akkulkovskoy Structure Triassic Regional Source Rock SW (towards Uzbekistan) Palaeozoic Carbonate plays over basement highs Jurassic Potential pinch-out trap up-dip & downthrown blocks Cretaceous hydrocarbons Untested zone in well G6 NE

50 Short-Term Targets Manavi Test well M11z - September 2005 Commence drilling M12 - December 2005 Norio Drill to target zone & evaluate hydrocarbon potential - November 2005 In event of success, case well and continue drilling through reservoir Re-start horizontal development program N100H2 expected to commence drilling September 2005 Georgian gas project Commence drilling Kumisi#1 Q Kazakhstan Complete shallow exploration program and commence testing of exploration wells and Kyzyloy development wells Award contracts for pipeline construction First gas planned Q1/2 2006

51 CanArgo Energy Corporation