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Slide 1
Company Overview June 30, 2007 Crimson Exploration Inc.
Slide 2
CONFIDENTIAL 2 Cautionary Statement Regarding Forward-looking
Statements Certain statements included in this presentation are
"forward-looking statements" under the Private Securities
Litigation Reform Act of 1995. Crimson Exploration Inc. (Crimson or
the Company) cautions that strategic plans, assumptions,
expectations, objectives for future operations, projections,
intentions, or beliefs about future events may, and often do, vary
from actual results and the differences can be material. Some of
the key factors which could cause actual results to vary from those
Crimson expects include changes in natural gas and oil prices, the
timing of planned capital expenditures, availability of
acquisitions, uncertainties in estimating proved reserves and
forecasting production results, operational factors affecting the
commencement or maintenance of producing wells, the condition of
the capital markets generally, as well as the Companys ability to
access them, and uncertainties regarding environmental regulations
or litigation and other legal or regulatory developments affecting
Crimsons business. Statements regarding future production are
subject to all of the risks and uncertainties normally incident to
the exploration for and development and production of oil and gas.
These risks include, but are not limited to, inflation or lack of
availability of goods and services, environmental risks, drilling
risks and regulatory changes and the potential lack of capital
resources. The SEC has generally permitted oil and gas companies,
in filings made with the SEC, to disclose only proved reserves that
a company has demonstrated by actual production or conclusive
formation tests to be economically and legally producible under
existing economic and operating conditions. The Company and its
independent third party reservoir engineers use the terms probable
and possible to describe volumes of reserves potentially
recoverable through additional drilling or recovery techniques that
the SEC's guidelines may prohibit the Company from including in
filings with the SEC. These estimates are by their nature more
speculative than estimates of proved reserves and accordingly are
subject to substantially greater risk of being actually realized by
the Company. All estimates of probable reserves in this
presentation have been prepared by independent third party
engineers. More information about the risks and uncertainties
relating to Crimsons forward-looking statements are found in the
Companys SEC filings.
Slide 3
CONFIDENTIAL 3 Summary Company Overview The Company was renamed
Crimson in June 2005 following the February 2005 recapitalization
of GulfWest Energy Publicly traded on the NASDAQ bulletin board
(TK: CXPO) Producing assets primarily focused in South Louisiana
and South Texas / Texas Gulf Coast Emerging plays in the DJ Basin,
Ft. Worth Barnett Shale and Mississippi CBM $289.5MM acquisition
from EXCO Resources, Inc. in May 2007 Pro Forma 2006 EBITDAX of
$166 million Financed 100% through an increased revolver ($200MM)
and a second lien facility ($150MM) Equity capitalization of $87
million (common, plus liquidation value of preferreds) Pro forma
proved reserves of 141 Bcfe @ 1/1/07 79% proved developed; 84%
natural gas; 6.8 year proved reserve life ~80% operated; ~70%
average working interest Strip pre-tax proved PV-10% of $567
million (based on NYMEX strip on 5/8/07) 56.7 MMcfe/d current
production (January 2007) 140 bcfe in unrisked probable and
possible reserves; over 100 drilling locations Experienced
management and technical staff teamed with high quality financial
sponsor Average experience of over 25 years Oaktree Capital
Management (Oaktree) owns ~62% of Company on a fully diluted basis
(1) (1) assuming conversion of preferreds, and exercise of vested
options)
Slide 4
CONFIDENTIAL 4 History 2000- - Funding from Aquila Energy
Capital bought Colorado, South Texas 2001 and Grand Lake/Lacassine
properties 2002- - Aquila Energy Capital withdraws funding due to
Aquila liquidity crunch 2004 - Limited capital for
development/exploration - December 2004 desperate financial state
2005- Oaktree Capital Management acquires stake through preferred
equity infusion (February) - CEO Allan Keel and CFO Joseph Grady
join Company in connection with Oaktree recapitalization (February)
- Reincorporated as a Delaware corporation / becomes Crimson
Exploration Inc. (June) 2007 - Announces acquisition of assets from
EXCO (May)
Slide 5
CONFIDENTIAL 5 Experienced Management Team
Slide 6
CONFIDENTIAL 6 Experienced Board of Directors
Slide 7
CONFIDENTIAL 7 Over the course of the last 5 years, the EXCO
assets were owned by multiple companies as a result of industry
consolidation Gulf Coast Acquisition Overview (acquired 5/2007)
Field Overview (1)Based on Netherland, Sewell & Associates,
Inc. report as of December 31, 2006, and NYMEX strip as of May 8,
2007. (2)Proved reserves are third party engineered. 3P reserves
include unrisked probable and possible reserves per Crimson
management. (3)As of January 2007. Primarily underexploited assets
acquired by Kerr-McGee in April 2004 from the Westport Resources
acquisition Significant low-risk development opportunities due to
low historical investment EXCO divested due to preference for
longer- lived reserves, outside core areas 255 producing wells
>83,000 gross acres in prolific producing trends Proved reserves
of 95 Bcfe Strip pre-tax PV-10% of $425 million (1) 75% proved
developed; 92% natural gas 80% operated, 65% average working
interest Unrisked 3P reserves of 235 Bcfe (2) Over 100 identified
drilling opportunities Current production of 50.7 MMcfe/d (3) 2006
EBITDAX of $157 million
Slide 8
CONFIDENTIAL 8 Benefits of the Gulf Coast Acquisition
Establishes platform for visible, capital efficient asset growth
Critical mass in core operating regions Sizable acreage position in
prolific producing trends, over 83,000 gross acres Drilling
inventory of ~24 Bcfe of PUDs and 140 Bcfe of probable / possible
reserves (unrisked) Strong cash flow for debt reduction and
drilling capital Over 100 drilling opportunities on probable /
possible reserves Potential exploitation from new prospect
generation Managements past affiliation with the assets makes
Crimson a uniquely qualified buyer Familiarity allows for better
understanding of low-risk upside (95%+ ex- Westport assets) Ability
to rapidly identify existing production / cost enhancement
opportunities to increase value
Slide 9
CONFIDENTIAL 9 Areas of Operation (proforma for EXCO Property
Acquisition in 5/2007) Note:Proved reserves as of December 31, 2006
and are third party engineered. 3P reserves only include the EXCO
assets unrisked probable and possible reserves per Crimson
management. Strip PV-10% as of May 8, 2007. (1) Based on average
daily production in January 2007. SOUTH TEXAS BARNETT SHALE WEST
TEXAS GULF COAST DJ BASIN Proved Reserves (Bcfe):17.1 % Gas:47%
Production (MMcfe/d) 1 :9.4 Strip PV-10%:$78 3P Reserves
(Bcfe):17.1 Proved Reserves (Bcfe):116.1 % Gas:87% Production
(MMcfe/d) 1 :46.5 Strip PV-10%:$464 3P Reserves (Bcfe):256.3 Proved
Reserves (Bcfe):141.4 % Gas:84% Production (MMcfe/d) 1 :56.7 Strip
PV-10%:$567 Reserve Life (Years):6.8x 3P Reserves (Bcfe):281.6
Total Proved Reserves (Bcfe):7.9 % Gas:75% Production (MMcfe/d) 1
:0.7 Strip PV-10%:$24 3P Reserves (Bcfe):7.9 Colorado Proved
Reserves (Bcfe):0.3 % Gas:0% Production (MMcfe/d) 1 : 0.1 Strip
PV-10%:$1 3P Reserves (Bcfe):0.3 Mississippi TexasLouisiana ($ in
millions)
Slide 10
CONFIDENTIAL 10 Proved Reserves Summary (Proforma) December 31,
2006 proved reserves were prepared by independent reservoir
engineering firms Netherland, Sewell & Associates, Inc. (NSAI)
for the acquired EXCO properties Pressler Petroleum Consultants,
Inc. (Pressler) for the legacy Crimson properties
Slide 11
CONFIDENTIAL 11 Proved Reserve Distribution (proforma for EXCO
property acquisition in 5/2007) Pro Forma Reserves by CategoryPro
Forma PV-10% by Category (1) Pro Forma Reserves by RegionPro Forma
PV-10% by Region (1) 141 Bcfe $567 MM PV-10% (1) Pre-tax figure
based on proved reserves and NYMEX strip as of May 8, 2007.
Slide 12
CONFIDENTIAL 12 Felicia Field Summary Area of
OperationsHighlights Field Summary Operator Crimson / Edge
Petroleum Working Interest75% Proved Reserves (Bcfe)30.0 % Gas85% %
PDP96% Current Production (MMcfe/d)32.0 PV-10% ($MM)$198 Field
Overview Legacy Westport Resources property 21,658 gross / 12,910
net acres Yegua, Cook Mountain, Wilcox and Vicksburg reservoirs
(9,000 to 15,000) Well defined hydrocarbon traps Five 3-D surveys
total over 500 square miles within immediate trend Upside Potential
Probable & Possible Reserves: ~72 Bcfe 30 amplitude related
prospects (3 PUD, 10 Probable, 17 Possible) Abandonment pressure
could add as much as 25 Bcfe (net) 2007 & 2008 Plans Drill 7
wells total (3 PUD); $2.5MM each (DHC)
Slide 13
CONFIDENTIAL 13 Cage Ranch Field Summary Area of Operations
Field Summary Operator Crimson Working Interest85% Proved Reserves
(Bcfe)28.0 % Gas94% % PDP24% Current Production (MMcfe/d)3.8 PV-10%
($MM)$77 Highlights Field Overview Legacy Westport Resources
property 18,623 gross acres / 15,168 net acres Frio and Vicksburg
reservoirs (8,500 to 12,000) Highly faulted structural traps Ten
3-D seismic surveys covering 176 square miles of outlined area
Upside Potential Probable & Possible Reserves: ~14 Bcfe
Identification of additional shallow Frio oil traps Evaluation of
Deeper Vicksburg sands below existing production 2007 & 2008
Plans Drill 3 PUD wells; $1-2MM each
Slide 14
CONFIDENTIAL 14 Speaks Field Summary Area of Operations Field
Summary Operator Crimson / Wofford Working Interest35% Proved
Reserves (Bcfe)21.0 % Gas98% % PDP30% Current Production
(MMcfe/d)5.3 PV-10% ($MM)$59 Highlights Field Overview Legacy
Westport Resources property 10,987 gross / 5,861 net acres Miocene
to Deep Wilcox reservoirs (2,000 to 17,000) Upside Potential
Probable & Possible Reserves: ~42 Bcfe 26 identified drilling
locations Multiple behind pipe opportunities 2007 & 2008 Plans
Drill 9 wells total (5 PUD); $6MM each
Slide 15
CONFIDENTIAL 15 Grand Lake / Lacassine Field Summary Area of
Operations Field Summary Operator Crimson Working Interest 100%
Proved Reserves (Bcfe)13.0 % Gas48% % PDP52% Current Production
(MMcfe/d)3.0 PV-10% ($MM)$48 Grand Lake Field Overview 640 acres
3-D seismic recently acquired Upside Potential Targeting multiple
pay, Miocene formations Evaluating deeper sands and infill of
existing formations 2007 & 2008 Plans Recomplete 3 wells
Capital expenditures of $2 million Lacassine Field Overview 940
acres Upside Potential Over 150 Bcfe original gas in place; only
50% recovered Acquiring proprietary 3-D seismic 2007 & 2008
Plans None; further technical review of field Highlights
Slide 16
CONFIDENTIAL 16 Madisonville / Rodessa Field Summary Area of
Operations Field Summary Operator Crimson Working Interest 75%
Proved Reserves (Bcfe)13.0 % Gas80% % PDP23% Current Production
(MMcfe/d)1.0 PV-10% ($MM)$39 Highlights Field Overview Average
working interest of over 75% in region Two recent Rodessa wells
Upside Potential Proprietary 3-D over section of acreage recently
acquired Deep gas potential: offset operators successful in Rodessa
Deep Bossier, Cotton Valley, Smackover formations untested 2007
& 2008 Plans Potentially drill 1 probable location Complete and
hookup new wells drilled in 2006 Capital expenditures of $12
million Madisonville / Rodessa (Madison County)
Slide 17
CONFIDENTIAL 17 DJ Basin Summary Area of Operations Field
Summary Operator Crimson Working Interest92% Proved Reserves
(Bcfe)8.0 % Gas75% % PDP52% Current Production (MMcfe/d)0.7 PV-10%
($MM)$24 Highlights Field Overview 14,000 gross / 10,000 net acres
Acquired in 2000 with Aquila Energy Capital financing Two
development wells drilled in 2006, adding net production of
approximately 368 Mcfe/d Long-life reserves; 35 producing wells
Upside Potential Further potential evaluation in Niobrara, Codell
and deeper formations 2007 & 2008 Plans Drill 8 wells;
$300-500K each Capital expenditures of $3 million DJ Basin
(Colorado)
Slide 18
CONFIDENTIAL 18 Barnett Shale / Mississippi CBM Ft. Worth
Barnett Shale Joint Venture Mississippi CBM 2,500 gross undeveloped
acres Acreage positioned in Tarrant / Johnson counties (core area)
Offset operators include Chesapeake Energy, EOG Resources, etc.
12.5% WI (non-operated) 2007 plans 8 gross wells, first in May 2007
$7 million capital in 2007, net No proved reserves booked as of
12/31/06 WAYNE CLARKECLARKE LAUDERDALE JONES JASPER 125,000 acre
CBM option agreement 85% WI Three core holes in 1Q07 ($100,000 /
core) 6 10 foot coal seams identified Need to determine economic
productivity Ft. Worth Barnett Shale (Johnson and Tarrant
Counties)
CONFIDENTIAL 21 2007 Capital Expenditures Estimated 2007 Capex
by Category $42.8 million $45 Estimated 2007 Capex by Region $42.8
million (1) (1) Excludes estimated seismic data purchases of
approximately $9 million Lease Acquisition 5%
Slide 22
CONFIDENTIAL 22 Financial Strategy Maintain manageable debt
levels Senior revolver $200MM borrowing base; $77MM available
post-acquisition; L+125-200; 4 year maturity Second lien facility -
$150MM fully drawn at closing; L+525; 5 year maturity Excess cash
flow, after capital expenditures, for revolver repayment,
preserving flexibility Maintain conservative financial policy: Fund
capex from operating cash flow Preserve financial flexibility
through undrawn revolver capacity Utilize oil and gas derivatives
to limit commodity price downside risk Target net debt / EBITDAX
ratio under 2.5x; projected 2007 under 2.0x (based on NYMEX strip
on 5/8/07) Target net debt / proved reserves under $1.80 / Mcfe
($2.0/mcfe @ close) Target adjusted EBITDAX/interest over 3.5x
(projected for 2007 at 4.4x) (based on NYMEX strip on 5/8/07)
Balanced, conservative capital program Low-risk drilling inventory
to increase cash flow and asset value, and reduce debt Exploration
consists of further delineation / step-out drilling of existing
fields in well-defined producing trends Limited wildcat exploration
Increase equity investor base and opportunistically access equity
capital for growth Proceeds used to reduce revolver indebtedness
Dont need equity new to reduce debt levels Increase liquidity in
stock to unlock value Intensify efforts to increase efficiency:
Lower cash operating costs (LOE and G&A) per Mcfe produced
Slide 23
CONFIDENTIAL 23 Historical Financial Summary (1) Excludes
non-cash stock-based compensation expense (2) Unaudited, proforma
for Exco acquisition as of January 1, 2006 (3) Excludes MTM
gains/losses on commodity hedges.
CONFIDENTIAL 27 Attractive Valuation vs. Peers PV-10 values and
proved reserves as of most recent SEC proved reserve filing.
Source: Capital IQ EV / Proved Reserves (Bcf) EV / PV-10
Slide 28
CONFIDENTIAL 28 Attractive Valuation vs. Peers Production based
on companies most recent SEC filings. Source: Capital IQ EV / LTM
EBITDA EV / LTM Daily Production (Mmcf) 2.14x 18.4x 14.6x 13.6x
10.5x 2.14x 2.7x 5.7x 7.4x 5.4x 6.1x 9.6x 24.8x 0.0x 5.0x 10.0x
15.0x 20.0x 25.0x 30.0x CRZOGDPGPORPLLLEACCWEIEPEXROSEPQBEXPTMRCXPO
Mean Median
Slide 29
CONFIDENTIAL 29 Corporate Summary Experienced management team
with proven track record of growth through exploration, production
and acquisition Attractive portfolio of properties with low risk
growth potential through significant upside from PUDs, probable and
possible reserves Visible near-term debt reduction through free
cash flow Limited commodity risk due to aggressive hedging program
and low relative basis differentials Strong financial partner in
Oaktree who has vested interest in assisting the company achieve
its growth plans and increasing shareholder value Developing
exploration/exploration capability far above average value creation
Inventory of lower risk exploitation and exploration opportunities
in the Barnett and Woodford Shale, South Texas Lobo and Mississippi
coal bed methane plays