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Slide 1
Johnson Rice 2008 Emerging Growth Energy Conference Houston, TX
January 23, 2008 CRIMSON EXPLORATION INC.
Slide 2
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.
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3 COMPANY PROFILE Corporate Overview NASDAQ bulletin board (TK:
CXPO) EV approx $390MM; Fully-diluted equity cap of approx $130
million (com & pref) Oaktree Capital Management as equity
sponsor Producing assets focused in South Texas / Texas Gulf Coast
& South LA Emerging plays in the DJ Basin, FW Barnett Shale and
West Texas Barnett Shale $289.5MM acquisition from EXCO Resources,
Inc. in May 2007 Pro Forma 2006 EBITDAX of $166 million 95 bcfe of
proved reserves; 236 bcfe 3P (unrisked); 100+ drilling locations
>83,000 gross acres in prolific producing trends; 255 producing
wells Management familiarity with assets 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 Approx 50 mmcfe/d current production (December 2007)
Slide 4
COMPANY HISTORY Gulf West Energy, predecessor to Crimson,
obtains funding from Aquila Energy Capital buys Colorado, South
Texas, and Grand Lake/Lacassine properties Aquila Energy Capital
withdraws funding merchant banking meltdown No capital for
development/exploration December 2004 in desperate financial state
Oaktree Capital acquires stake though preferred equity infusion
(Feb) CEO Allan Keel and CFO Joseph Grady join Company in
connection with Oaktree recapitalization (Feb) Expansion of
management team Reincorporated in Delaware renamed Crimson
Exploration Inc. (June) Evaluated/pursued approximately $3B in
various acquisition opportunities Announces acquisition of assets
from EXCO (May) 3-prong strategy of acquisition, exploitation, and
exploration 4 2000 2001 2002 2004 2005 2006 2007 Future
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5 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. 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%:$24
3P Reserves (Bcfe):7.9 Colorado TexasLouisiana ($ in millions)
SOUTH TEXAS WEST TEXAS GULF COAST DJ BASIN BARNETT SHALE
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6 PROVED RESERVE DISTRIBUTION 1/1/07 (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.
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7 MANAGEMENT TEAM
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8 BOARD OF DIRECTORS
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ORGANIZATION SUMMARY 9
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10 FELICIA FIELD AREA Area of OperationsHighlights Field
Summary Operators Crimson/Cimarex/Edge Working Interest 10 - 75%
Proved Reserves (Bcfe) 1/1/0730.0 % Gas85% % PDP96% Producing
Wells23 12/07 Production (MMcfe/d)18.4 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 sq
miles within immediate trend Upside Potential Probable &
Possible Reserves: ~72 Bcfe 30 amplitude related prospects (3 PUD,
10 Prob, 17 Poss) Abandonment pressure could add as much as 25 Bcfe
(net) 2007 Actual & 2008 Plans 2007: Drilled 4 successful wells
out of 5 total 2008: Drill 10 gross wells total (costs: 8/8) 10
(6.1 Net) exploitation wells: ~$3.5MM to drill, ~$5MM to
D&C
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11 CAGE RANCH FIELD AREA Area of Operations Field Summary
Operators Crimson/CHK/El Paso/Forest Working Interest85% Proved
Reserves (Bcfe) -1/1/0728.0 % Gas94% % PDP24% Producing Wells43
12/07 Production (MMcfe/d)2.9 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 PUD Reserves: ~13 Bcfe Probable
& Possible Reserves: ~14 Bcfe Identification of additional
shallow Frio oil traps Evaluation of Deeper Vicksburg sands below
existing production 2008 Plans Drill 4 gross wells total (costs:
8/8) 2 (1.9 Net) PUDs: ~$2.0MM to drill, ~$2.7MM to D&C 2 (2
Net) exploitation: ~$2.0MM to drill, ~$2.5MM to D&C
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12 SW SPEAKS FIELD AREA Area of Operations Field Summary
Operators Crimson/El Paso/XTO Working Interest35% Proved Reserves
(Bcfe) -1/1/0721.0 % Gas97% % PDP58% Producing Wells24 12/07
Production (MMcfe/d)2.7 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 PUD Reserves:
~8 Bcfe Probable & Possible Reserves: ~42 Bcfe 26 identified
drilling locations Multiple behind pipe opportunities 2007 Actual
& 2008 Plans 2007: Drilled 1 successful well out of 1 total
2008: Drill 5 gross wells total (costs: 8/8) 4 (1.3 Net) PUDs:
~$4.0MM to drill, ~$6.0MM to D&C 1 (0.8 Net) exploitation:
~$4.0MM to drill, ~$6.0MM to D&C
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13 STX LOBO Area of Operations Field Summary Operators
Paloma/CHK/El Paso/Forest Working Interest20-24% Proved Reserves
(Bcfe) -1/1/070.0 % Gas100 % PDPN/A 12/07 Production (MMcfe/d)1.6
Highlights Field Overview Non Operated Joint Venture Lower Wilcox
Lobo 2,800 Gross Acres/ 550 Net Acres Well defined Hydrocarbon
System High Probability of Success Upside Potential Mulitiple Pays,
Complex Geology 2007 Actual & 2008 Plans 2007: Drilled 6
successful wells out of 9 total 2008: Drill 9 gross wells total
(costs: 8/8) 9 (2.0 net) Exploration wells: ~$1.6MM to drill,
~$2.7MM to D&C STX Lobo (Zapata & Webb Counties)
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14 DJ BASIN Area of Operations Field Summary Operators
Crimson/Anadarko/EnCana/Forest Working Interest 70 - 92% Proved
Reserves (Bcfe) 1/1/078.0 % Gas75% % PDP52% Producing Wells32 12/07
Production (MMcfe/d)0.7 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; 32
producing wells Upside Potential PUD Reserves: ~3 Bcfe Probable
& Possible Reserves: ~7 Bcfe 42 identified drilling locations
Further potential evaluation in Niobrara, Codell and deeper
formations 2008 Plans Drill 10 gross wells total (costs: 8/8) 5
(3.5 Net) PUDs: ~$0.5MM to drill, ~$0.6MM to D&C 5 (3.4 Net)
exploitation: ~$0.5MM to drill, ~$0.6MM to D&C DJ Basin
(Colorado)
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15 BARNETT SHALE Ft. Worth Barnett Shale Joint Venture
Approximate 10, 500 gross acreage position in Tarrant / Johnson
counties (core area) Offset operators include Chesapeake Energy,
EOG Resources, etc. 12.5% WI (non-operated) 2007 Actual & 2008
Plans 2007: Drilled 7 of 7 wells 2008: None Announced proposed sale
in 1Q:08 approximately $30MM ; 2.5 3x return Ft. Worth Barnett
Shale (Johnson and Tarrant Counties)
17 CAPITAL EXPENDITURE PROGRAM (Preliminary, subject to Board
approval) Estimated 2008 Capex by Category $62.6 million $45
Estimated 2008 Capex by Region $62.6 million (1) (1) Excludes:
seismic data (~$7.1MM), land delay rentals (~$0.5MM), &
non-O&G capex (~$0.3MM).
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18 FINANCIAL STRATEGY Maintain conservative financial policy:
Borrowing capacity for acquisitions Fund capex from operating cash
flow Utilize oil and gas derivatives to limit commodity price
downside risk - ~75% Target net debt / EBITDAX ratio under 2.5x
Target net debt / proved reserves under $1.80 / Mcfe Target
adjusted EBITDAX/interest over 3.5x Maintain manageable debt levels
Senior revolver $200MM borrowing base; $90MM available Second lien
facility - $150MM fully drawn; L+575; 5/2012 maturity Excess cash
flow, after capital expenditures, for revolver repayment,
preserving flexibility Balanced, conservative capital program
Low-risk drilling inventory to increase cash flow and asset value,
and reduce debt Exploration consists primarily of
delineation/step-out drilling in existing, defined producing trends
Limited wildcat exploration Expand investor base and
opportunistically access equity capital for growth Dont need new
equity to reduce debt levels Provide powder for future acquisitions
Increase liquidity in stock to unlock value
Slide 19
19 TOTAL COMPANY PRODUCTION BY TYPE (MMcfe/d)
Slide 20
20 TOTAL COMPANY PRODUCTION BY CATEGORY (MMcfe/d)
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REVENUE & EBITDAX 21
Slide 22
22 BALANCE SHEET Actual
Slide 23
23 PV-10 values and proved reserves as of 12/31/2006 SEC
filings. EV based on companies 9/30/2007 SEC filings. Source:
Fortis Merchant Banking Weekly Market Update (1/7/08) CXPO EV @
9/30/07 ($7.85/share) is pro forma the EXCO acquisition. ATTRACTIVE
VALUATION VS. PEERS CXPO* EV @1/16/08 ($12.45/share) is pro forma
the EXCO acquisition; assumes all Preferred shares are converted,
thus increasing O/S by 5.8MM.
Slide 24
24 ATTRACTIVE VALUATION VS. PEERS Daily production based on
most recent quarter. EBITDA estimates are Thomson FirstCall
consensus. EV based on companies 9/30/2007 SEC filings. Source:
Fortis Merchant Banking Weekly Market Update (1/7/08) CXPO EV @
9/30/07 ($7.85/share) & EBITDA is pro forma the EXCO
acquisition. CXPO* EV @1/16/08 ($12.45/share) & EBITDA is pro
forma the EXCO acquisition.
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25 SUMMARY Experienced management team proven track record of
growth Low-risk growth potential through significant upside from 3P
reserves Inventory of lower risk exploitation and exploration
opportunities in the Barnett/Woodford Shale, South Texas Lobo and
DJ Basin Visible near-term debt reduction through free cash flow
Limited commodity risk due to aggressive hedging program Strong
financial partner in Oaktree Capital Prospect generation capability
for above-average value creation