FirstEnergy Capital EnergyGrowth Conference November 18 19, 2008 by lsd12841

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									   FirstEnergy Capital
EnergyGrowth Conference
 November 18 & 19, 2008
         Toronto
Forward Looking Statements
• All statements other than statements of historical fact may be forward-looking
statements. Forward looking statements include forecasts for production, cash flow,
capital expenditures and debt levels and are based on estimates for commodity
prices, reservoir performance, drilling performance and industry conditions including
availability of services and weather. These statements involve known and unknown
risks, uncertainties, assumptions and other factors, some of which are beyond Rock
Energy's control, that may cause actual results to differ materially from a conclusion,
forecast or projection in such forward-looking statements. Rock Energy believes that
the expectations reflected in those forward-looking statements are reasonable at the
time made but no assurance can be given that these expectations will prove to be
correct and such forward-looking statements included in, or incorporated by reference
into, this presentation should not be unduly relied upon. These statements speak only
as of the date of such information, as the case may be, and may be superseded by
subsequent events. Rock Energy does not intend, and does not assume any
obligation, to update these forward-looking statements whether as a result of
information, future events or otherwise.
Who We Are – A Snapshot
•    A junior oil and gas exploration and development company with a
     balanced and diversified portfolio of production and drilling
     opportunities.
•    Delivering significant growth in production and funds flow in 2008
•    Developing our exploration success for further growth in 2009 and
     beyond


Two Core Areas
West Central Alberta
•  Deep Basin multi-zone stacked gas and light oil
•  Mix of year-round and winter-only access areas (30-100% WI)

Plains
•    Heavy oil and shallow gas
•    100% working interest and operated
Current Profile

Production (Q3/2008)           3,526 boe/d
Current Estimate               4,000 boe/d

Land (net undeveloped acres)      70,000

Total Debt at Sept 30, 2008    $34.9 million
Total Bank Lines Available     $51.0 million
Market Profile

TSX stock symbol                          RE

Shares outstanding Sept 30/2008

        Basic                     25.9 million
        Fully diluted             27.9 million

Recent trading range              $1.75 – $2.00

Market capitalization             $50 million
Management Team

Allen Bey – President and CEO
     Demonstrated business and leadership skills. Founded Avid Oil and
     Gas 1996, sold to Husky in 2001 for $160 MM

Peter Scott – VP Finance and CFO
     Over 24 years of financial experience the last 11 as CFO of Canadian
     public companies

Jeff Campbell – VP Operations and COO
      Over 25 years experience in all aspects of production engineering. Co-
      Founded Avid Oil and Gas in 1996

Arezki Ioughlissen – VP Exploration
     Over 24 Years experience in the oil and gas industry, the last three with
     Rock as a key contributor in developing the exploration program.
Production Growth                                                   4200

                                             4000                          160

                                                                3500
Rock has been able to grow                   3500                          140

production year over year both in
                                             3000                          120
absolute measures, and on a per




                                                                                 Boepd/MM Share
share basis.                                 2500                          100
                                                             2198




                                     Boepd
                                                          2098
During 2008 Rock is forecasting to           2000                          80
grow production by 55%.
                                             1500                          60
                                                      1122
During 2009 Rock is forecasting to           1000                          40
                                                                                                  Boepd
grow production by 20%.                                                                           Forecast
                                             500                           20
                                                    181                                           Boepd/MM
Q3/07 = 1,965 boepd                                                                               Share
                                               0                           0
Q4/07 = 2,672 boepd




                                                 09 st
                                                       st
                                                      04
                                                      05
                                                      06

                                                 08 7
Q1/08 = 2,798 boepd




                                               20 200
                                               20 Fc
                                                    Fc
                                                   20
                                                   20
                                                   20
Q2/08 = 3,454 boepd
Q3/08 = 3,526 boepd
Funds from Operations                                          50
                                                                                                   1.9
                                                               45                        43
Q3/ 2008 =             $13.9 Million                           40
                                                                                                   1.7

                       $0.54/Share                                                                 1.5
                                                               35                             33




                                                                                                         Funds Flow ($/share)
                                            Funds Flow ($MM)
2008 Fcst =            $43 Million                             30
                                                                                                   1.3

                       $1.66/Share                                                                 1.1
                                                               25

                                                                                                   0.9
2009 Fcst=             $33 Million                             20
                                                                                  15.2
                       $1.28/Share                             15
                                                                              13.9                 0.7
                                                                          11.4                                                  $M
                                                               10                                  0.5                          Forecast
Forecast Assumptions   WTI = $70.00US/bbl
                       AECO = $7.00/mcf                                                                                         $/share
                                                               5                                   0.3
                       FX = 0.85                                    1.2
                                                               0                                   0.1
                                                                    200420052006 20072008 2009
                                                                                     Fcst Fcst
Reserve Growth
                                                         10000
                                                                                         9,309
During 2007 Rock added 1.98                              9000
MMboe of P+P reserves, and                               8000                    7,334
grew our base by 27%.                                                                    50%
                                                         7000
                                                                         5,952




                                   P+P Reserves (MBOE)
                                                         6000                     31%
During the last 3 years Rock has                                                                 Gas
                                                                                                 NGL
generated CAGR of 106% on our                            5000
                                                                                                 Oil
                                                                          55%                    Heavy Oil
P+P reserve base and 36% on a                            4000


per share basis.                                         3000

                                                         2000
                                                                 1,065
                                                         1000
                                                                  40%
                                                            0
                                                                  2004    2005    2006    2007
F&D Costs                                                  20
                                                                                  18.66
                                                           18

During the last three years Rock                           16
generated a Drill bit F&D of
                                                           14                               13.20
$13.20/boe, and an operating




                                   Operating F&D ($/boe)
                                                                12.18
Recycle Ratio of 1.9                                       12            11.28

                                                           10
During the last three years Rock
                                                           8
generated a total corporate FD&A
rate of $16.35/boe and a recycle                           6
ratio of 1.5
                                                           4

                                                           2

                                                           0
                                                                  2005     2006     2007   3 Year
   Drilling Results


             2005            2006            2007           YTD 2008*
Heavy Oil    15 (15.0 net)   25 (25.0 net)   8 (8.0 net)    16 (16.0 net)

Light Oil    3 (0.1 net)     2 (0.7 net)     Nil            Nil
Gas          9 (2.1 net)     4 (1.4 net)     6 (3.09 net)   12 (4.6 net)
D/A          6 (5.2 net)     2 (1.1 net)     2 (1.12 net)   Nil
Total        33 (22.4 net)   33 (28.2 net)   16 (12.21 net) 28 (20.6 net)
Success      77 %            96 %            91 %           100%
Rate (net)

* As of September 30,2008
                                                            the
                                                    FindingFinding the
                                                           Opportunities
                                                    Opportunities
                 ALBERTA
                                                  Rock is focused in two main
                                                  Core areas:
                                                    Rock is focused in two main
               ELMWORTH                             Core areas:
                                                  West Central
                                                     • Multi-zone
                                                    West Central stacked gas &
                 MUSREAU/KAKWA

WEST CENTRAL                                         light oil in the Deep Basin
                    KAYBOB/SAXON
                                                          Multi-zone stacked gas &
                                                  Plains light oil in the Deep Basin
                      PLAINS       LLOYDMINSTER
                                                      • Heavy Oil & Shallow gas
                                                    Plains

                                                          Heavy Oil & Shallow gas
West Central Core Area


The Deep Basin fairway of Alberta is
characterized as a region of stacked
gas charged Cretaceous sands.

New completion techniques and
production practices allow us to
combine reserves and production from
numerous formations. This results in
higher initial production rates and
reserves per well, and lower on-stream
costs.
Elmworth, Alberta
 R12          R11            R10   R9   R8   R7   R6    R5W6


                                                               T72
                                                                     Current Production 600-800 boepd
                                                                     D&A Cost        $1.0-$1.5 million
                                                  GRANDE
                                                  PRAIRIE
                                                                     DCET Cost         $2.0-$2.5 million
                                                               T71   Initial Rate            1-3 mmcf/d
                                                                     Reserves/Well           2-3 BCF

                                                               T70


                                                                     2008 Activities
                                                                     •Drill 7 wells
                                                               T69   •Expand Compression Facilities
                                                                     •Added 16,000 net acres (94% WI)
                                                                     •Identified over 30 drilling locations
                                                               T68
                                                                     2009 Plans
                                                                     •Drill 4 wells
 Rock Energy land
                                                                     •Continue to build land position
 2008 drilling locations
 Future drilling locations
 3D seismic
Kaybob Area                                                   Current Production           600-700 boepd
 R24   R23        R22         R21    R20W5
                                                              D&A Cost                     $1.0-$1.5 million
                                         T66                  DCET Cost                    $2.5-$3.5 million
                                                              Initial Rate                 2-5 mmcf/d
                                         T65
                                                              Reserves/Well                2-4 BCF

                                                              2008 Activities
                        TONY CREEK       T64
                                                              Drill 4 wells
                                                              Installed P/L, compression and dehydration facilities
             WASKAHIGAN
                                         T63                  Negotiated Farm in
                                                              Increased drilling inventory to over 15

                                         T62                  2009 Plans
       SAXON
                                                              Drill 2-3 wells
                                         T61
                                                              Expand compression facilities
                                                              Continue to build land position
                                         T60
                                               R22W5
                                                        T62
                                                                Farm-in land
                                                                Rock Energy land
                       6-17                                     New compressor station
                                                                Gas well
                                                        T61
                 3-7                                            Drilling locations
                                                                Dunvegan
                                                 15-5           Gething
                                                                Bluesky
                                                        T60     100% Rock-owned pipeline
3-7 Well Location
The Completed Compressor
      Station at 15-5
Riser Location on Saxon Pipeline
  Plains Core Area

In the Plains core area Rock is focused
on heavy oil and shallow gas from the
Manville group at depths of 500-
                                                                                   6
1000m.
                                                                                                                      Q1-Q3 2008




                                          O p e r a t in g R e c y c le R a t io
                                                                                   5
During the last 3 years Rock has been                                              4
able to generate an average F&D cost
                                                                                   3
for heavy oil of $9.46/boe and received                                                     3 yr Avg
an average LLB price of $48.23/bbl                                                 2
which yields a recycle ratio of 1.9.                                               1

For the first 3 quarters of 2008 Rock                                              0
                                                                                       40        50     60       70      80     90   100
received an average LLB price of
                                                                                                       LLB Blend Price ($Cdn)
$95.03. Currently Rock is receiving an
LLB price of $50.00 /bbl, generating a
recycle ratio of 2.0.
Lloydminster, Alberta
 R3                     R2         R1W4         R28        R27W3

                                                                             T51


                                                                                   Current Production                  1,600-1,800 boepd
                                                                                   D&A Cost                            $250-$300 thousand
                                                                             T50   DCET Cost                           $500-$550 thousand
                                                                                   Initial Rate                        40-60 boepd
                                                                                   Reserves/Well                       75,000 boe
                                          LLOYDMINSTER




                                                                                   2008 Activities
                                                                             T49
                                                                                   •Drill 19 wells
                                                                                   •Maintain drilling inventory of over 50 locations

              R2W4                    R28                R27W3                     2009 Plans
                             T51
                                                                                   •Drill 28 wells
                                                                                   •Continue to add land and drilling locations

                                                 UPGRADER

                                                                            T49
                    l
                  ne
                an
              Ch




                             T50
          hic
      Lit




                                                           Lithic Channel
                                                                            15-5

         Thick Sparky
                                                                                           Rock Energy land
            Trend                                                                          Future drilling locations
                                                                                           Producing oil wells
    Results and Guidance
                                     2007             Fcst 2008        Fcst 2009
                                     (12 months)      (12 months)      (12 months)
  Production Avg. (boepd)            2,198            3,400-3,600      4,100-4,300
  Funds from Ops. ($Millions)        15.2             43.0             33.0
  Funds/Share                        0.71             1.66             1.28
  Capital Spending ($Millions)       25.6             52.0             37.5
  Debt ($ Millions)                  29.1             38.0             42.5
  WTI ($US/bbl)                      72.31            102.50           70.00
  AECO ($CDN/mcf)                    6.45             8.23             7.00
  F/X                                0.935            0.95             0.85

2009 Sensitivities    $7.00 US/bbl Change in WTI = $3.7 million Change in Cash Flow
                      $.70 CDN/mcf Change in AECO = $0.65 million Change in Cash Flow
Analyst Coverage
•FirstEnergy Capital Corp.
•Tristone Capital Advisors LLC
•Wellington West Capital
•Acumen Capital Partners
•Blackmont Capital
•Haywood Securities
•National Bank Financial
•Scotia Capital
•Dundee Securities
Conclusion

Rock has laid a solid foundation of production, cash flow and financial
capability

Rock has increased it working interest and operatorship in it’s core areas

Rock has developed a large inventory of drilling locations which span the
spectrum of risk and reward

Rock has a balanced portfolio of oil and gas production from a variety of
play types

Rock is generating solid growth in production which will continue through
2009 and 2010

								
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