Company Overview:
The Company is engaged in the exploration, development and production of petroleum and natural gas properties in the Black Sea Region, with a current focus on Ukraine and Turkey. The Company is incorporated in Ontario, Canada and in February 2012, the Company filed for continuance to become a Canadian corporation. The Company is currently listed on the Toronto Stock Exchange.
Company Capital Structure:
- Capital Structure Millions (unless noted)
- Share price (CAD$) (as of September 11, 2013) $0.19/sh
- Shares Outstanding 311.7
- Options 23.9
- Warrants 11.1
- Fully Diluted Shares Outstanding 346.8
- Market Capitalization (CAD$) 59.2
- Working Capital (USD$) (as of June 30, 2013) 10.2
- Total Debt (USD$) (as of June 30, 2013) –
- Total Enterprise Value (CAD$) $45.7
Investment Highlights:
- Increasing production & Strong Netbacks:
- 1,575 boe/d of current production with additional projects to be tied in during Q3 and Q4 2013
- Over 1.4 million gross acres of prime land in Ukraine and Turkey with large inventory of drill locations including 18 new drills between Oct’13 and Dec ’14
- Realized gas prices of approximately $11/Mcf
- Netback of approximately $7/Mcf
- Experienced Management:
- Proven track record in the region
- Unique political and economic relationships
- Access to deal flow and growth opportunities
- High Capital Efficiency & Low F&D Costs:
- IRRs in excess of 800%
- Well payback in as little as three months
- Disciplined capital allocation strategy
- Strong Ownership Fundamentals:
- Currently c. 40% controlled by management, board and insiders
- Development potential and established platform for future growth
- Further c. 35% held by institutional investors
- Technological Advantage:
- First company to frac and dually-complete wells in Ukraine
- Forefront of unconventional drilling with horizontal multistage frac in the Turkey Shale field
- Utilizing 3D seismic and fracture stimulation
Black Sea Focus:
Ukraine acreage: 244,000 gross (180,000 net)
- Transcarpathian Sedimentary Basin, West Ukraine
- 4 licenses 100% owned
- Dnieper-Donets Sedimentary Basin, East Ukraine
- 5 licenses 30% owned
- 3 licenses 100% owned
Turkey acreage: 1,163,000 gross (581,500 net)
- Southeast Basin, Turkey
- 9 licenses 50% owned
- 2 licenses 25% owned
Proposed Transaction:
- Estimated exit production rate for the year 1,800–2,200boe/d
- Annual work program expenditures $19million–$22million
- Company is looking for $20mm debt for 3 years offering 12% quarterly or semi-annual coupon payment and principal at the third year with securities provided. Current production revenues can cover the interest and the principal.
- Security: Subordinate to the EBRD Loan (EBRD loan on Company’s assets will be repaid January 2016 or earlier (present net balance is USD $2.4 million).
- Average Monthly Interest Coverage = 25:1
- Principal Repayment Coverage = 2.5:1