Velocys Plan to "Build the Business" - Gas-to-Liquids Plants

Building the business…roadmap to sustainable growth

December 2016

• Commissioning underway at ENVIAEnergy’s Oklahoma City GTL plant

• Building from a position of strength

• New business model increases controlover delivery - building scale and pacethrough partnership

• Focus on material opportunities ingrowing and attractive markets with thelowest risk

• Realistic strategy – we deliver inpartnership

…the timing is now right!Building the business

2

Achievements

• Commissioning underwayat ENVIA Energy’sOklahoma City GTL plant

• Recognised as thetechnology market leader

• Attractive economics fromlicensing model

• World class technologyand operations team

• Engineering capability isscalable with partners

• Robust major shareholdersupport

Today’s scorecardPositioned for growth

Challenges• Commercial traction of

opportunities and controlof delivery

• Projects require significantcapital

• Exploit our first moveradvantage

• Continue driving downoverall plant costs toaccess broader & deepermarkets

• Organisational scale-up

“...well positioned,but we must nowadopt a newbusiness model thatdrives greatercontrol and focus.”

3

Velocys has the answer to critical needs...Economic bridge connecting stranded and low value feedstocksto markets needing renewable and premium products

Supply of wax – a premiumspeciality product

Supply of premium renewablediesel fuel

Monetisation of stranded gas

Monetisation of landfill gasSupply of premium renewable jetfuel

4

Prevention of gas flaring

Fundamentals that drive the new Velocys

5

Four strategic themes

• Become the marketleader

• Develop and deliverprojects with partners

• Revenues fromreactor, catalyst,operations andlicence

• Selectively inject earlycapital

• Build and enhancetechnology,engineering andoperationscapabilities

• Work seamlesslywith partners

• Drive lowest cost

• Partners withcomplementaryresources andcapabilities

• Drive access andgrowth in material,high-returnmarkets

• Create scale andrepeatability atpace

• Fully integrated,financed, cost-effective andoperations-readyplant solution

Fundamentals that drive the new Velocys

5

Strategicalliances –

world classpartnerships

Businessmodel – takecontrol butremain “capital-light”

Leveragedifferentiatedcapabilities –natural ownerof valuableassets

The offer –“one stop

shop”

• US• Canada: route to global

stranded gas• Asian markets

Robust platform to enter and exploit other markets in the worldBusiness framework

6

• Gasificationtechnology integration

• Offshore flare gasoffer

• One-stop shop offer• Offer ownership• Leverage large and

complementary partners• Lowest cost

• Stranded gas• Landfill gas• Woody biomass

• Renewable jet fuel• Renewable diesel fuel• Wax

Next 5 yearsin focus

High valuegeographic

markets

Strategicenablers

Strategicsolution

development

Robustrevenuemodel

Premiumproducts

Low costlow risk feed

stocks

• Main income from reactor,catalyst, operations, licence

• Continue to license to thirdparties where it makesstrategic sense

Market focus

High value and material markets – next 5 years in focusPremium quality renewable fuels and wax from landfill gas

USA

Renewable fuels and specialitychemicals from landfill

USA

8

Premium quality renewable fuels from woody biomassHigh value and material markets – next 5 years in focus

Supply of premium renewable fuels & carboncredit trading opportunities

USA

California

Renewable diesel markets

Renewable jet market

9

Asian marketdevelopment

Premium quality FT waxes from stranded gas reserves inWestern Canada

High value and material markets – next 5 years in focus

Supply of premium speciality products

Monetisation of stranded gasCanada

10

High value and material markets – next 5 years in focusDevelopment of integrated GTL solution for offshore flared gas

Prevention of gas flaring offshore

Initially entering extended welltest (EWT) market in North America

Longer term, accessing deploymenton-board floating production, storageand offloading (FPSO) vessels fordeployment in Asia and Latin America

11

Substantial short-term potential volume and growthLarge addressable markets

5 year addressable market

10 year addressable market

10 20

Renewable diesel, US

20 10

Renewable jet, US

15 5

Landfill gas-to-wax, US

7 4

Stranded gas-to-wax, Canada

Indicative number of plants

62 29

Total

12

10

Implementation

Targeting strategic partnerships to drive deliveryMobilisation – immediate focus

3Strategic business

partners

“….we are now developing our “go-to-market” plans to unlock strategic deals”

2EPC partners

2Strategic

technologypartners

1Modularisation &

fabrication partner

14

Driving simplification at every possible opportunityMobilisation matrix

Technology EPC

WaxCanada

RenewablejetUS

RenewabledieselUS

Mod

ular

isat

ion

and

fabr

icat

ion

Co

Gas

ifica

tion

Co

Asia

nba

nks

Cornerstonefinance

Trad

ing

Co R

efin

er C

oR

efin

er C

o

Airli

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o

Stra

nded

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owne

rs

N. A

mer

ica

Feedstock

N.A

m C

o.s

biom

ass

Stra

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ipe

Customer

Ref

iner

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Trad

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ican

Asia

n

15

Key implementation activities

• Implement marketentry plans

• Finalise “the one-stop-shop offer”

• Sign strategicpartner deals

• Position theorganisation toscale

• Establish top-priority projects

• Finalise plan andbudget

Mobilisation

• Implement firstrenewable fuelsand wax plants inUS and Canada

• Developintegratedoffshore GTLsolution

• Develop materialAsian marketopportunities

Market entry

• Rollout multipleplants in targetmarkets

• Mobilise to exploitstranded gasmarkets in SEAsia and Africa

• Enter offshoreGTL market

Growth

16

• Realistic markets create substantial, cash-generativebusiness— An average of 1-2 plants per year over next 5 years would be

sufficient to establish Velocys in its key markets and generatesustainable business

• Strategic partners with need for material volume drive fasteradoption and investment options

• Further upsides not included:— Recovering oil prices broadening GTL market— Blend volume of bio-jet in jet fuel pool exceeds 3%— Incentive schemes (e.g. Californian) extended to other states

and products

17

Deliverable business – next 5 yearsFoundation for a significant business is being developed