For personal use only Annual General Meeting 2015 · Annual General Meeting 2015 Swala Oil & Gas (Tanzania) plc ... “Statistical review of world energy, î ì í ñ” at bp.com;

Annual General Meeting 2015 Swala Oil & Gas (Tanzania) plc

A presentation by the Swala CEO Dr. David Mestres Ridge

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Agenda

• An overview of world oil

• An overview of world gas

• The oil price collapse, 2014-2015

• The Swala Licences

• Pangani

• Kilosa-Kilombero

• Growth opportunities within East Africa

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Oil production history 1965-2014

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Source: “Statistical review of world energy, 2015” at bp.com

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The top 10 oil producers in 2014

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China

Russian Federation

USA

Saudi Arabia

Canada Mexico

UAE Iran Iraq Kuwait


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The top 10 oil producers in Africa in 2014

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East African Oil

Uganda (> 4bn barrels) Kenya(> 600 million barrels)

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Agenda





• Pangani



Page 7

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Gas production history 1970-2014

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The top 10 gas producers in 2014

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China

Qatar

Indonesia

Iran

Saudi Arabia

USA Canada

Russian Federation

Norway

Algeria


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The top gas producers in Africa in 2014

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Gas prices

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Source: to 2014, “Statistical review of world energy, 2015” at bp.com; 2015-2019, Economist Intelligence Unit Economic and Commodity forecast, July 2015.

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Natural gas major trade, 2014 (bcm)

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East African Gas

Mozambique (> 60 TCF)

Tanzania (> 55 TCF)

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Agenda





• Pangani



Page 14

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The story of 2015: the collapse of oil prices

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Oil prices affect oil exploration shares

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0

200

400

600

800

1,000

1,200

1,400

1,600

Shar

e P

rice

(G

B p

ence

)

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And shares recover with oil

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Effects of the collapse in prices

Some positive: • Reduction in fuel prices

• Reduction in gas prices if linked to oil prices

• Reduction in state subsidies (as an example, in 2013/2014 Egypt spent $13.2bn subsidising fuel) Some negative: • Political instability (e.g. Russia, Venezuela);

• Employment (Forbes estimates 75,000 redundancies so far in the oil and gas industry);

• Cancelling projects (Goldman Sachs estimates $1 trillion of investments are at risk);

• Share price volatility.

Supply and demand: cancel projects and you remove future production. That in turn leads to higher prices in the future.

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What are the implications for East Africa?

From Bloomberg (September 16, 2015) : “From Ghana to Angola, the end of the oil boom is destabilizing economies in Africa as revenue slumps and currencies tank. Nigeria, Africa’s biggest oil producer, has imposed foreign-exchange restrictions to stabilize the naira, Angola has cut its budget by about a quarter and Ghana was forced to take almost $1 billion in emergency loans from the International Monetary Fund to bolster reserves.” […] “These big oil-based investments are not feasible,”[said] Aly-Khan Satchu, the chief executive officer of Rich Management Ltd., “Current price structures preclude these big ticket investments.”” From IHS (October 8, 2015) : “Tanzania and Uganda rank unfavorably [in terms of risk] due to a higher government take, regulatory uncertainty, and concerns with investors. The authorities should keep in mind that oil and gas exploration is a global game. Therefore, investors have the choice to invest wherever they see fit.” Likely effects under the current price / fiscal conditions? • Delays to LNG projects? – we are already seeing that in Mozambique.

• Slow down of projects as companies struggle to accomodate to the new low oil price? – we are already seeing that here and in Kenya.

• Reduction in local employment if companies are losing workers elsewhere and are under profit constraints.

• Focus on the onshore, lower-cost projects at the expense of the larger CAPEX offshore projects (the gas projects).

• Invest elsewhere if the currently poor fiscal terms continue.

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The TPL farm-in: a vote of confidence

• Farm out to Tata Petrodyne Limited “TPL” confirmed on 8th October

• TPL will farm in to the two licences – Pangani and Kilosa-Kilombero

• Terms of the deal

– TPL to pay Swala $5.7 million towards our past costs;

– TPL to pay certain costs in respect of the period February to October 2015;

– TPL to pay Swala’s costs for one exploration well in Kilombero (capped at $2.5 million);

– TPL to pay Swala’s costs for one exploration well in Pangani (capped at $2.1 million);

– If there is a successful discovery in Kilombero, TPL will pay another $1 million towards a second exploration well.

• Swala shall retain some funds and shall use others to repay part of its debt to the parent company.

• Deal allows Swala to reduce its cash requirements – no need to raise equity in a difficult market.

• Magnitude of the agreement indicates confidence in Swala’s assets.

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Agenda





• Pangani



Page 21

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Current Licence Interests

• Swala Oil & Gas (Tanzania) plc 25% (Operator) • Tata Petrodyne Limited 25% • Otto Energy Tanzania Limited 50%

Pangani: Licence Overview

• 2016 remaining work commitment

• One exploration well.

• Drilling locations currently under review for JV approval.

• Swala share carried by Tata Petrodyne Limited.

• Work commitments completed to date

• Reprocessing of Getech Magnetic and satellite data.

• Completed 2012 Gravity & Magnetic surveys, with geochemical and field study work.

• Completed 200kms of 2D seismic over the entire licence in 2013.

• Completed a further 200kms 2D seismic over the Moshi Basin in 2014.

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Pangani Location Map

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• Subtle shallowing towards the East

• The high may continue to develop into a bounding fault towards the South.

Pangani- Moshi Basin Lead A

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Agenda





• Pangani



Page 24

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Kilosa-Kilombero: Licence Overview

Current Licence Interests

• Swala Oil & Gas (Tanzania) plc 25% (Operator) • Tata Petrodyne Limited 25% • Otto Energy Tanzania Limited 50%

2016 remaining work commitment

• One exploration well.

• Drilling locations currently under review for JV approval.

• Swala share carried by Tata Petrodyne Limited.

Work commitments completed to date • Reprocessing of Getech Magnetic data.

• Completed 2012 Gravity & Magnetic surveys, with

geochemical and field study work.

• Completed 373kms of 2D seismic over the entire licence in 2013.

• Completed a further 430kms 2D seismic over the Kilombero Basin in 2014.

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Kilosa-Kilombero Location Map

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Kilombero– Lokichar ‘String of Pearls’

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Kilosa-Kilombero Lokichar Basin (Kenya)

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Robust structure at Kito

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• Robust roll-over structure into basement footwall

• No evidence of crestal faulting or trap breach

• Possible brightening over crest.

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Kito– amplitude anomalies to structure

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Size of Kito relative to Dar es Salaam, for comparison.

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Additional prospectivity in Kilosa-Kilombero

Kidatu Basin: Ngaza Lead

Extensional structure with significant regional uplift,

potentially uplifted Karoo

Large closure mapped over Kidatu Line 8

Kidatu-3 was shot to confirm closure of the structure

to the South

Areal extent of 40-50 km2

Currently under review

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Activity summary

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2015 2016 2017

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

EIA completed

Pangani weather window

Kilombero weather window

Fully-funded through two wells.

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• Pangani



Agenda

Page 31

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General observations

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Limited number of direct opportunities in Tanzania Zanzibar licencing round Delays in promoting licence rounds in Tanzania impedes proper corporate growth Grow elsewhere - elsewhere in the EAC - within the EAC (and Tanzania) through corporate deals - Outside the EAC? F

or p

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se o

nly

Thank you for listening

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Documents

For personal use only Annual General Meeting 2015 · Annual General Meeting 2015 Swala Oil & Gas (Tanzania) plc ... “Statistical review of world energy, î ì í ñ” at bp.com;