© Copyright 2014

Petralon Energy

Confidential. Not for further reproduction or distribution.

DAWES ISLAND Investor Presentation October 2014

Outline

2

• Introduction

• Petralon Energy

• Country Overview

• Asset Overview

• Economics

• Appendices

1. Comparable Companies

2. Sponsor Profile

3

Introduction

Introduction

4

• Petralon Energy (“Petralon”) is considering a farm-in into the Dawes Island Field in OPL’s

2005 & 2006 (“the Asset”), in partnership with Tako E&P Solutions Ltd. / Accelerated

Compact Energy Solutions Ltd. (“ACES”).

• Previously owned by Chevron (formerly OML 54), the field is currently owned by Eurafric

Energy Limited (“Eurafric”).

• The field has an existing well, with development plans including re-entering this well, and

drilling a subsequent twin well.

• Of the immediate development CAPEX requirement of $13 million (Thirteen Million

Dollars), Petralon’s contribution will be $10 million (Ten Million Dollars), for which it will

own:

• 35% prior to cost recovery (with Tako E&P Solutions owning 14%)

• 21% post cost recovery (with Tako E&P Solutions owning 28%)

5

Petralon Energy

Petralon Energy

• Petralon is an African Exploration & Production company, set up to acquire, develop, and

operate assets, primarily in the Nigerian oil and gas sector.

• Its business focus is focused primarily in Nigeria, where its founders have extensive industry

experience, strong local contacts among various industry stakeholders and the technical and

financial capacity necessary to quickly originate and execute Nigerian oil and gas transactions

and then also subsequently in other African countries, that have rapidly evolving oil and gas

sectors, including Angola, Ghana, Kenya, Namibia & Uganda.

• Petralon has a strong Management team with solid financial and technical/operating

competencies and experience in the local and international oil & gas sectors, who have

successfully managed medium to large-sized private & public companies.

• The company is well positioned for growth through further increases in the Dawes Island field

reserves, gaining access to proven marginal fields to be awarded by the Nigerian government,

and fields available via future IOC divestments, and also by farming into assets in Africa.

6

7

Country Overview

Country Overview: Nigeria

8

• Nigeria has the largest oil & gas reserve base in Sub-

Saharan Africa with an estimated 30+ billion bbls of oil

and 180 Tcf of Gas. Oil production averages 2.6 million

bbls per day with ongoing government initiatives to

increase to 4 million

• There are over 1,000 fields discovered, with only 35% of

these producing

• The long standing presence of major Oil and

Independent Companies provides industry stability

• The country has an attractive risk/reward profile, with:

• Numerous proven/undeveloped field opportunities

• An attractive Fiscal Regime

• High quality crude oil

• Established infrastructure for transportation and

export

Country Overview: Nigeria’s Marginal Field Program

• A Marginal Field refers to:

• Fields owned by major international oil companies

and the state oil company (NNPC) which have

remained non-producing for over 10 years

• Fields not under development due to marginal

economics for major oil operators and high fiscal

terms

• Fields with exploration discoveries but no

appraisal activities

• Nigeria’s program was initiated in 2001, to fuel the growth of Independent Nigerian E&P

companies. Over 24 marginal fields were allocated to indigenous companies in 2003

• It is characterized by considerably improved fiscal terms (from historical 20% royalty and 85%

profit tax) and reduced royalty, based on a sliding scale and lower profit tax, i.e.:

• Sliding-scale royalties to government

• Sliding-scale royalties to original field owners

9

10

Asset Overview

Dawes Island

Asset Overview: Dawes Island

• The Dawes Island Marginal Field is located in OPLs 2005 & 2006 (formerly OML 54), in Swamp

Terrain, about 15km SW of Port Harcourt, 7km West of the Onne Free Trade Zone, and 35km

North of Bonny Terminal, and with a Field Coverage Area of 40km2

• It was previously held by Chevron, which drilled on it an oil and gas discovery well in 1979.

• The field was subsequently covered by 3D

seismic surveys, and in 2004, was awarded to

Eurafric.

• The one discovery well that was drilled did not

progress beyond a depth of 10,355ft.

• Various prospectivity studies and evaluations

have been carried out on the field, indicating the

presence of hydrocarbons (mainly oil).

11

Asset Overview: Development Plan

12

• A Phase 1 Development Plan has been proposed, which will involve the re-entry of Dawes

Island-1 well, and the drilling of a Twin well

• The anticipated base case production from the field is 2,000 bopd, at an average of 1,000 bopd

from each of the two sands

• The well stream will be processed using a Barged Early Production Facility, with crude

evacuated to nearby Crude Gathering Terminals

Asset Overview: Field Production Profile

13

High Case 3,000 bopd in Year 1

Base Case 2,000 bopd in Year 1

Low Case 1,200 bopd in Year 1

0.00

0.50

1.00

1.50

2.00

2.50

2014 2015 2016 2017 2018 2019 2020

High Case

Base Case

Low Case

Asset Overview: Work Program (DI-1 Well)

14

Activity Days Activity Days

1. Position Equipment at Well Location and

Rig Up 3.4 9. Carry out wellbore cleaning 4.6

2.

Check Wellhead Pressures, Carry Out

Casing Integrity Test, Install and Test

BOPs

3.4 10. Gauge Ring Run + Log CBL 4.1

3. Drill Out Cement below shoe, set cement,

tag and dress of to tag hard cement 7.7 11. Run Gun + Perforate G Sand 4.1

4. Sidetrack + drill to 12-1/4" hole section

TD 9.4 12. Run Gun + Perforate E Sand 3.8

5. Run + cement 9-5/8" Liner 4.6 13. Install Pre-Pack Screen across C4 Sand 4.3

6. Drill Out shoe track + drill 8-1/2" hole 11.1 14. Install Pre-Pack Screen across B4 Sand 3.9

7. Run + cement 7" Liner 6.0 15. Complete Well as Two Strings Dual

Completion 10.3

8. Run 7" liner tie-back to surface 4.6 16. Install Xmas Tree & make Well Ready for

Hookup and Production 4.6

Sub-Total 90.0

Contingency (15%) 13.5

Total 103.0

Asset Overview: Development Strategy (Phase 1)

15

I. Phase 1 (De-risk)

• De-risk the field in a cost-effective manner to execute well re-entry, sidetracking,

completion and well testing activities to enhance the value of the field

o Re-enter Dawes Island-1 with with the dedicated Jack-Up rig owned by JV partner

o Carry out integrity checks

o Drill out all cement plugs, sidetrack well and drill, set casings and complete well as

dual string producer on E & G sands

o Carry out extended well test on the sands using Early Production Facility, EPF (6

months to 1 Year)

o Use performance data and fluid samples to reduce uncertainty, minimize risks and

optimize the full-field development

o Carry out flow test on F and H sands which look like high radioactive sands, which

are common in the area

Asset Overview: Development Strategy (Phases 2&3)

16

II. Phase 2 (Consolidate)

• Use the results from Phase 1 to plan full-field integrated oil and gas development

o Work on expanding the processing, storage and evacuation facility or constructing

pipeline to a nearby processing / gathering facility if the upside is proven

o Work with other Partners for Gas Commercialization and distribution

o Prepare exploration / appraisal program to test prospects

III. Phase 3 (Expand)

• Build on Phase 1 and 2 results to target field upside potential

o Infill drilling (2 – 20 wells depending on upside)

• Great Potential Resources,

with 1 well already drilled

(but to be re-entered)

• Attractive Fiscal Terms

• Comparatively modest

CAPEX requirement

Asset Overview: Attractions & Challenges

• Accessibility of Dawes Island-1

well location

• Subsurface Uncertainties

• Crude Evacuation Options and

Challenges

• Personnel & Rig Availability

17

Risks Mitigants

Over/Under Payment

• Ensure robust evaluation and due diligence

• Seek equity partners

Capital Cost Over-run

• Extensive review of CAPEX requirements, scope and cash calls

Change in fiscal regime

• Carry out sensitivity analysis on various scenarios

Community Challenges

• Robust community engagement strategy, with active community

involvement – This process has already begun with MOU signed with the

community & the hiring of community youths for various initial activities on

the field

Asset Overview: Risks & Mitigants

18

19

Economics

Marginal Fields

o Royalty: 2.5%

o PPT: 55%

o NDDC Levy: 3%

o Education Tax: 2%

o Abandonment Cost: 5%

o Production Scenarios:

o Low Case = 1,200 bopd

o Base Case = 2,000 bopd

o High Case = 3,000 bopd

o YoY Production Decline of 10%

o CAPEX: $13m (Petralon = $10m; Co-Farmee = $3m)

o OPEX: $18/bbl (YoY rise of 5%)

Producing

Assets

Crude Oil

o Case Scenarios from $50/bbl - $100/bbl, with $60 base case

o YoY increments from 1% – 20%

o WACC: 10%

o EV/EBITDA Multiple: 12.98*

Fiscal Regime

Commodity

Price

Economics: Key Assumptions

Financing

* Refer to Appendix 1

20

Economics: Profit Share

21

• Under the terms of the Farm-in

Agreement, Petralon will fund 63%

of all capital expenditure, and is

entitled to 35% of distributable

funds as Cost Oil until it has fully

recovered the capital spend

• After full recovery of capital costs,

Petralon is entitled to 21% of

distributable funds.

• Distributable funds are defined in as

revenue less royalties, abandonment

operating costs, NDDC, G&A and

taxes.

35%

14%

51%

Before Cost Recovery

Field Owner

Other Farmee

Petralon

21%

28%

51%

After Cost Recovery

Field Owner

Other Farmee

Petralon

Economics: Petralon Revenue & OPEX Profile

Using the Assumption of 2,000 bopd at $70/bbl

22

OPEX REVENUE

0.00

0.50

1.00

1.50

2.00

2.50

3.00

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

2014 2015 2016 2017 2018 2019 2020

$'m

illi

on

$'m

illi

on

Revenue OPEX

Economics: Net Cashflow Profile

23

Using the Assumption of 2,000 bopd at $70/bbl

-12

-10

-8

-6

-4

-2

0

2

4

6

8

10

2014 2015 2016 2017 2018 2019 2020

$'m

illi

on

585

Economics: NPV Sensitivity Analysis

24

-10 -5 0 5 10 15 20 25 30

Crude Oil Price ($50 - $100/bbl)

Volume (+/- 400bbls)

OPEX (+/- $2/bbl)

CAPEX (+/- $1m)

$'million

25

Appendices

• In order to deduce the transaction multiple to use for the valuation, the average EV/EBITDA ratio

of similar companies was used. The companies used are similar mid-size E&P companies, with an

average EV/EBITDA ratio of 12.98, some of which include:

Company Country

1. Abby Inc. Canada

2. Afren Plc. UK

3. Armada Oil Inc. US

4. Dragon Oil Plc. UAE

5. Frontier Energy Corp. US

6. Glen Rose Petroleum Corp US

7. Legacy Oil & Gas Canada

8. MPI Société Anonyme France

9. Oasis Petroleum Inc. US

10. Sterling Oil & Gas Company US

11. Titan Oil & Gas Inc. US

Appendix 1: Comparable Companies

26

• Ahonsi is a seasoned oil and gas professional, with over 15 years of industry

experience. He was a founding Executive of First Hydrocarbon Nigeria from

January 2011 to December 2013, where he served as the company’s CFO &

Executive Director, with primary overall responsibility for the day-to-day

management of FHN’s finance function. Following the company’s sale to

Afren Plc., he successfully oversaw the integration of the company’s finance

function into the Afren Plc. Group. He was a consultant to Afren Plc., right

Appendix 2: Sponsor Profile – Ahonsi Unuigbe

27

up to his founding of Petralon Energy and remains on the board of FHN till date.

• He was previously Budget & Planning Commissioner for Edo State, as the pioneer Commissioner for

that Ministry, where he also served as Chairman of the International Donor Financing and Vice

Chairman of the State Economic and Strategy Committees. He has also previously served as a Special

Assistant to the Minister of Finance, supporting Nigeria’s successful exit from the London club of

creditors.

• He has held positions at Citigroup Corporate & Investment Bank (as Manager, Project & Corporate

Finance), Ocean & Oil Holdings Ltd (as Vice President, Investments and Financial Advisory) and

Standard Bank (as Head of the Project Finance and Government and International Organization

Departments).

Appendix 2: Sponsor Profile – Ahonsi Unuigbe (cont’d)

28

• He has had over 15 years of extensive experience in oil & gas project finance, and sectors spanning the

energy & petrochemicals, power, telecoms & manufacturing sectors, regional governments, as well as

Citibank & Standard Bank clients.

• He successfully raised $450m in debt, equity and project finance, within a 3 year period at FHN (2011

to Q1 2014), to support its expansion plans and led the completion of multiple project and structured

finance deals with Citibank, Ocean & Oil Holdings, and Standard Bank. As Vice President with Ocean

& Oil Holdings, during which he was a core member of the team that incubated Oando’s exploration

and production company, and analysed the company’s initial asset investments.

• Ahonsi has also applied his capital raising skills to the Public Sector and development of his home

State, having successfully secured World Bank funding (to the tune of $150m) for the previously

blacklisted (Edo) State Government, during his Public Sector stint as Edo State’s pioneer

Commissioner for Budget, Planning and Economic Development.

• In addition, he was a part of the core team that successfully acquired 45% interest from Shell, Total,

and Agip, in Oil Mining Lease 26 in Delta State, and led the first reserve based-lending for onshore

Niger-Delta oil block, raising $230m from a consortium of banks (led by Standard Bank Plc. & FCMB)

despite the very difficult economic climate at the time.

CONTACT INFORMATION

o Ahonsi Unuigbe (Founder & CEO)

207 – 209 Canton Concourse

12, Landbridge Avenue

Oniru Estate, Lekki

Lagos Nigeria

T: +234 (0) 803 301 8888

E: ahonsi@petralon.com

THANK YOU