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THE nExT fronTiEr in unconvEnTional oil1ExcEpTional sHarEHoldEr rETurns in a rising pETrolEum markET
June 2013
THE nExT fronTiEr in unconvEnTional oil2
invEsTmEnT HigHligHTs
more on the nExT page
DEVELOPMENT & PRODUCTION PLAN – Strata is progressing forward with its USD $365 million five-phase capital plan to produce 56,000 barrels (bbls) per day by 2019
PHASE 1 UNDER WAY – Engineering exploration and pre-production development of Cadotte holdings
LAND POSITION – 52,480 acres (87.6 sections) in Peace River region
WORKING INTEREST is 100% Strata’s
WORLD CLASS RESOURCE
NPV USD $1.3 Billion (10% disc.) over 20yrs (Cadotte Central)
28% Internal Rate of Return (Cadotte Central)
3.41 Billion bbls in place
887 Million bbls recoverable
THE nExT fronTiEr in unconvEnTional oil3
invEsTmEnT HigHligHTs ( continued )
nExT | our business
TREMENDOUS UPSIDE – High side estimates
Up to NPV USD $1.9 Billion for Cadotte Central Project with 36% IRR (disc. 10%)
High probability of exceeding 26% recovery rate with existing and new technology
Cadotte West, 22 Cold-flow potential exists in Bluesky/Gething
Price of oil rising ($150/bbl?)
Great value amongst peers
RecoverableResource1 (barrels)
Shares Outstanding(fully diluted)
Share price(June 2013)
MarketCapitalization
Recoverablebarrels per share
Deemed marketvalue per barrel
Strata Oil & Gas
887 million
106.7 million
$0.14
~$15 Million
8
$0.02
Laricina Energy
4.6 billion
72.4 million
$42.50*
~$3 Billion
64
$0.67
comparison
1 Contingent & prospective resources * As per Aug 2011 financing
THE nExT fronTiEr in unconvEnTional oil4
our businEss
nExT | world’s oil reserves
Company: Strata Oil & Gas was incorporated in the US in Nov 1998, moved headquarters to Calgary, Alberta in 2005 and incorporated under Canadian law
Sector: Heavy oil (carbonate hosted bitumen deposits) exploration and production in Alberta’s Peace River area
Goal: Provide exceptional shareholder returns in a rising petroleum market, by focusing on high-value carbonate-hosted bitumen deposits
* as of June 4, 2013
THE nExT fronTiEr in unconvEnTional oil5
World’s oil rEsErvEs
nExT
1.258 Trillion bbls proved oil reserves
Canada holds 15% of the world’s reserve - 335 Billion bbls
crude bitumen – 315 Billion bbls
crude oil – 19.7 Billion bbls
Source: Alberta Energy and Utilities Board, British Petroleum - 2008
315
Canada Saudi Arabia Iraq Venezuela Russia U.S.
World Oil Reserves
260
11378
6022
( billions of barrels )
THE nExT fronTiEr in unconvEnTional oil6
canadian crudE oil producTion
nExT | alberta oil faCts
Currently produces 3.3 Million bbls/day
There are an estimated 50.7 Billion bbls in oil sands that are not under active development
Source: May 2005 – Alberta Energy and Utilities Board, British Petroleum -2008
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
1990 1995 2000 2005 2010 2015 2020
Oil Sands In-Situ
Oil Sands Mining
Conventional Heavy
Conventional Light
(000’s barrels/day)
THE nExT fronTiEr in unconvEnTional oil7
albErTa oil facTs
nExT | peaCe river oil sands area
Growing production with approximately 1.4 Million bbls/day with 176 Billion bbls of proven oil reserves: crude bitumen – 171 Billion bbls crude oil – 1.5 Billion bbls
Peace River Oil Sands holds over 188 Billion bbls of Oil
Long life resource Typically 30 year reserve life with minimal declines Only 3% of initial established reserves produced to date 69% of possible oil sands areas are available for exploration and
leasing
Crude Bitumen production expected to more than double to 3.5 million bbls/day by 2020.
Attractive royalty and tax regime - Alberta Energy Innovation Strategy offers royalty offsets of up to $200 million over 5 years to pilot projects that use new, innovative technology to development of oil and gas reserves
Source: May 2005 – Alberta Energy and Utilities Board
THE nExT fronTiEr in unconvEnTional oil8
pEacE rivEr oil sands arEa
nExT | land position
The Peace River Oil Sands area covers 11,052 sections (2.37 million hectares)
Historic Bitumen exploration and production has focused on Bluesky and Gething Formations, Cretaceous-age clastic sediments
Recent Exploration addresses the Debolt Carbonate
Debolt is similar to the Grosmont play in the Wabasca area
THE nExT fronTiEr in unconvEnTional oil9
land posiTion
nExT
Source: EUB ST98-2006
THE nExT fronTiEr in unconvEnTional oil10
currEnT land TEnurE
nExT | Cadotte proJeCt
82 Sections in Total in the Cadotte Area
THE nExT fronTiEr in unconvEnTional oil11
cadoTTE projEcT
nExT | maJor operators: Cadotte area
During 2006-2007 Strata drilled three wells on this block
Resource estimate for this block was announced in September, 2007
Contingent Resource designation, April 2010
Cadotte West Resource Evaluation completed 2013
Cadotte West Cold-flow study underway
THE nExT fronTiEr in unconvEnTional oil12
major opEraTors: cadoTTE arEa
nExT | maJor bitumen resourCe
THE nExT fronTiEr in unconvEnTional oil13
major biTumEn rEsourcE
nExT | stratigraphy
3.41 Billion bbls of bitumen (most likely estimate)
Ore zone thickness exceeds 10 metres and 10wt%
High continuity between wells
High concentration of bitumen per section
Bedded platform carbonate and cretaceous oil sands
THE nExT fronTiEr in unconvEnTional oil14
sTraTigrapHy
nExT | drill hole loCations
THE nExT fronTiEr in unconvEnTional oil15
drill HolE locaTions
nExT | typiCal wireline log
Winter 2006-2007 (29 sections)
THE nExT fronTiEr in unconvEnTional oil16
Typical WirElinE log
nExT | Cross seCtion
THE nExT fronTiEr in unconvEnTional oil17
cross sEcTion
nExT | PrE-fEASiBiliTy STUdy
THE nExT fronTiEr in unconvEnTional oil18
cadoTTE cEnTral prE-fEasibiliTy sTudy
nExT | petroleum initially in plaCe
Prepared by Norwest Questa Engineering Corporation Feb 2008
Method of extraction utilized for study – Horizontal Cyclical Steam (HCS)
Norwest used effective OBIP* estimates rather than a gross OBIP (Gross OBIP is about 50% higher)
Shell’s Carmon Project pad and development block design used
Production schedule developed over 29 sections (each at 1sq mile)
Each pad includes 20 wells of 1,400 m length, each about 600 m in the vertical direction and 800 m horizontally
The pads are “brought on stream” over a four year build-up period
*OBiP = Original Bitumen in Place
THE nExT fronTiEr in unconvEnTional oil19
pETrolEum iniTially in placE
nExT | reCoverable resourCe estimate
Source: Norwest Corporation
Cadotte Block (51 sections) Millions of Barrels (MMSTB)
Low Estimate Low Estimate Most Likely Estimate High EstimateFormation
Bluesky/Gething
Debolt
Elkton
TOTAL
N/A 275 545 682
1,436 2,100 2,157 2,534
N/A N/A 709 1,008
1,436 2,375 3,411 4,225
10 wt% grade &10 m thick. minimum
8 wt% grade &10 m thick. minimum 8 wt% grade minimum
THE nExT fronTiEr in unconvEnTional oil20
rEcovErablE rEsourcE EsTimaTE
nExT | eConomiC evaluation
RECOVERABLE PORTION OF CONTINGENT AND PROSPECTIVE RESOURCE FOR THE CADOTTE AREA BY TARGET ZONE IN MILLIONS OF STOCK TANK BARRELS (MMSTB)
Source: Norwest Corporation
Formation Low Estimate Most Likely Estimate High Estimate
Bluesky/Gething 47 142 259
Debolt 571 561 963
Elkton N/A 184 383
TOTAL 404 887 1,605
THE nExT fronTiEr in unconvEnTional oil21
Economic EvaluaTion ( updated 2010 )
nExT | PrE-fEASiBiliTy fiNdiNgS
DIFFERENT OIL PRICE ASSUMPTIONS (USD $ BILLIONS)
Sproule and Mcdaniel and Associates forecast that Alberta Heavy Crude Oil will sell for USd $30 less than WTi
THE nExT fronTiEr in unconvEnTional oil22
prE-fEasibiliTy findings (cadoTTE cEnTral)
nExT | Carbonate Comparisons
Economically Viable
NPV (disc. 10%) of cash flows before income taxes of USD $1.3 Billion (over initial 20yrs, producing only 360 million bbls of the total 517 million bbls available)
Daily Production Rate of 56,000 bbls per day
Based on a review of public data for similar projects
Product anticipated to be “dil-bit”, rather than synthetic crude oil
Transportation of bitumen via trucking or pipeline to Haig Lake terminal for transfer to the Rainbow Pipe Line which connects to the Edmonton refineries
Source: Norwest Corporation
THE nExT fronTiEr in unconvEnTional oil23
carbonaTE comparisons
nExT | suCCess in Cadotte
source: norwest Corp.
PROPERTY
Depth of Top Zone (m)
Zone thickness (m)
Net Pay Thickness (m)
Average Porosity (%)
Avg. Horizontal Permeability (mD)
Average Water Saturation (%)
Average Oil Saturation (%)
Original Formation Pressure (kPa)
Original Formation Temperature ( C)
Bitumen Gravity ( API)
Bitumen Density (kg/m3)
Bitumen Viscosity at Res. Temp (cP)
UPPERGROSMONT
ORE 1
285
30 - 34
12
19
400
25
75
1400
10 - 11
7
1.037
1,800,000
CADOTTEDEBOLT
ORE
451 - 597
27 - 29
10 - 19
+24
500
7 - 37
67 - 93
4100
17 - 20
9
1.007
650,000 - 1,770,000
THE nExT fronTiEr in unconvEnTional oil24
succEss in cadoTTE
nExT | CAdOTTE dEvElOPMENT – CAPiTAl PlAN
Grosmont (Buffalo Creek & Maclean) and the Debolt (Cadotte) formations have heterogeneous characteristics
Net pay thickness, porosity, permeability, and other properties in the two formations are very similar
Debolt is more desirable due to higher reservoir pressure and temperature which would cause a lower viscosity in bitumen
“Breccia zones” or “Bitumen Breccia” are reported in both cases
CSS recovery method generated highest production levels in Grosmont;
This suggests that the success that was experienced in the historic tests of the Grosmont formation may also be found in the Debolt at Cadotte
THE nExT fronTiEr in unconvEnTional oil25
cadoTTE cEnTral dEvElopmEnT - capiTal plan
nExT | PHASE 1 – dEvElOPMENT STrATEgy
THE nExT fronTiEr in unconvEnTional oil26
pHasE 1 dEvElopmEnT sTraTEgy
nExT | PHASE 1 – CAdOTTE dEvElOPMENT
I. CADOTTE
Initial Drilling Program
Results Addressed Resource Evaluation & Pre-Feasibility Study
Production Testing
Determine Additional Drilling Locations
Water Survey
Submit Application for Pilot Plant
II. CADOTTE WEST
Preliminary Recognition of Resource Potential
Delineate Resource Through a Seismic / Drilling Program
Add to the Current Resource
Submit Applications for the Appropriate Extraction and Processing Methods
THE nExT fronTiEr in unconvEnTional oil27
pHasE 1 - cadoTTE dEvElopmEnT
nExT | Cadotte development timeline
THE nExT fronTiEr in unconvEnTional oil28
cadoTTE dEvElopmEnT TimElinE
nExT | west Cadotte loCation map
2013 2014 2015 2016 2017 2018+
ProductionTesting
Water Survey
Pilot DesignEngineering
PlantApplication
PlantConstruction Production
Cadotte WestTesting
THE nExT fronTiEr in unconvEnTional oil29
WEsT cadoTTE locaTion map
nExT | leadership
West Cadotte Geology
Data sources are from existing drilling information
Bluesky/Gething, Debolt, and Elkton ore zones on the leases
Drilling reports bitumen in the ore zones
Baytex, PennWest, Murphy Oil are Cold-Flow producing from Bluesky/Gething formation
THE nExT fronTiEr in unconvEnTional oil30
lEadErsHipRon Daems (President & CEO) Extensive financial and resource industry experience Career has focused primarily on business development, strategic planning and
financial analysis in the resource sector Currently engaged as President and CEO of Capex Energy Services, a privately
held company Previous experience: Portfolio Manager for a multinational investment firm, founded
and became the CEO of Emerging Business Solutions, a privately held business development company focused primarily on assisting startup companies in the resource sector
Dr. Michael J. Ranger (Director) Experienced petroleum consultant with a prolific career providing services to an
array of the world’s largest oil companies PhD. in Petroleum Geology from the University of Alberta, a MSc. Degree in
Sedimentary Geology from Memorial University of Newfoundland, and a BSc. Geology from Concordia University
Currently is independent petroleum consultant and is a director of Canadex Resources Ltd. Recent major contracts include: Ross Smith Energy Group, Golder Associates, Laracina Energy, Nexen, Statoil, Murphy Oil, Norwest Consulting, Sinopec, Oilsands Quest, Talisman, ConocoPhillips, Japan Canada Oil Sands, Marathon, Paramount Energy, Athabasca Oil Corp., Kennecott Canada, Total Canada, OPTI Canada, Koch Canada, Syncrude Canada, Quadrise, Hatch Engineering
Previous experience: Scientific Advisory Board of Gushor Inc. from 2007 to 2009, and as a senior geologist at Gulf Canada Resources between 1977 and 1985
Professional affiliations include the American Association of Petroleum Geologists; Canadian Society of Petroleum Geologists; and the Canadian Well Logging Society
nExT | investment potential
THE nExT fronTiEr in unconvEnTional oil31
invEsTmEnT poTEnTial
nExT | forward looking statements
CADOTTE CENTRAL HIGH SIDE ESTIMATES
NPV USD $1.9 Billion (10% disc.) with 36% IRR at $95/bbl
High probability of exceeding 26% recovery rate with existing and new technology
Price of oil expected to exceed $150/bbl
WEST CADOTTE REGION
Bluesky/Gething, Debolt, and Elkton ore zones on the leases
Drilling reports bitumen in the ore zones
Cold-Flow production in neighboring properties
THE nExT fronTiEr in unconvEnTional oil32
forWard looking sTaTEmEnTs
nExT | ContaCt information
This information may contain forward-looking statements about our exploration, production, and other operating and financial plans. These statements are not guarantees of future performance, involve certain risks, uncertainties, and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Among the factors that could cause actual outcomes and results to differ materially are changes in petroleum prices; changes in refining and marketing margins; potential failure to achieve, and potential delays in achieving, expected reserve or production levels from existing and future oil and gas development projects due to operating hazards, drilling risks, and the inherent uncertainties in interpreting engineering data relating to underground accumulations of oil and gas; unsuccessful exploratory drilling activities; unexpected delays or difficulties in constructing company facilities; general domestic and international economic and political conditions; the ability to meet government regulations; potential disruption or interruption of the Company’s facilities due to accidents or political events and other matters detailed in our publicly available filings with the Securities and Exchange Commission.
Cautionary Note: As an oil and gas company, in our filings with the SEC we only disclose proved reserves that have been demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. However, in the information presented here, we may use certain terms such as “probable reserves”, “potential net recoverable reserves”, “barrels of oil”, “in-place”, “resource”, and “recoverable reserves” that we do not include in our filings with the SEC.
THE nExT fronTiEr in unconvEnTional oil33
conTacT informaTionADDRESS Strata Oil & Gas Ltd.
#408, 918 –16th Avenue N.W.
Calgary, Alberta T2M 0K3
EMAIL invest@strataoil.com
PHONE (403) 237 5443
TOLL FREE 1 877 237 5443
FAX (403) 775 0461
WEBSITE www.strataoil.com
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