Doxa Energy Presentation Update May 2012 Accelerating Production, - - PowerPoint PPT Presentation

Doxa Energy

Presentation Update – May 2012

Accelerating Production, Proven Execution

Safe Harbor

• All statements other than statements of historical fact may be forward‐looking statements. These statements relate to future events or the

Corporation's future performance. Forward‐looking statements are often, but not always identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward‐looking statements.

• The Corporation believes that the expectations reflected in those forward‐looking statements are reasonable but no assurance can be given that

these expectations will prove to be correct and such forward‐looking statements included in this presentation should not be unduly relied upon by

• investors. These statements speak only as of the date of this presentation and are expressly qualified, in their entirety, by this cautionary statement.
• In particular, this presentation contains forward‐looking statements. The Corporation's actual results could differ materially from those anticipated in

these forward‐looking statements as a result of the risk factors set forth below and elsewhere in this presentation. The forward‐looking statements

• r information contained in this presentation are made as of the date hereof and the Corporation undertakes no obligation to update or revise any

forward‐looking statements, whether as a result of new information, future events or otherwise, unless required by applicable securities laws.

• Certain of the forward‐looking statements regarding the Corporation’s financial outlook, anticipated revenue, future expenditures and cash flow

forecasts may constitute future‐orientated financial information (“FOFI”). The FOFI included in this presentation has been provided only for the periods listed and for the sole purpose of providing an estimated guideline for the Corporation’s possible future financial position and the FOFI may not be appropriate for other purposes.

• References to "contingent resources" or "resources" in this presentation do not constitute, and should be distinguished from, references to

"reserves". "Reserves" are those remaining quantities of oil and gas anticipated to be economically recoverable from these known accumulations from a given date forward. "Resources" are oil and gas volumes that are estimated to have originally existed in the earth's crust as natural accumulations but are not capable of being classified as "reserves", and "contingent resources" are a sub‐category of resources that means those quantities of oil and gas estimated to be potentially recoverable from known accumulations but which cannot be classified as "reserves" for a variety

• f reasons, including that they may not be currently economic. There is no certainty that any portion of the resources will be discovered. If

discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

• Barrel of Oil Equivalent: Where amounts are expressed on a barrel of oil equivalent (“BOE”) basis, natural gas volumes have been converted to BOE

at a ratio of 6,000 cubic feet of natural gas to one barrel of oil equivalent. This conversion ratio is based upon an energy equivalent conversion method primarily applicable at the burner tip and does not represent value equivalence at the wellhead. BOE figures may be misleading, particularly if used in isolation.

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Executive Summary

• Doxa Energy Ltd. (TSXV:DXA)

www.doxaenergy.com

– Founded mid‐2010 – Independent oil and gas E&P – Shares senior management with Dynamic Production, Inc.

• Dynamic Production, Inc.

www.dynamicproduction.net

– Privately held Ft. Worth E&P founded 1968 – Proven, 40‐year track record, veteran staff

• Strategy

– Apply specialized E&P expertise to identify, acquire and develop diverse and strategic portfolio of oil & gas assets

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Capitalization

Shares % Insiders 12,124,929 35.68 Public 21,855,212 64.32 Total: 33,980,141 100.00

Key Figures

Net Proved Reserves (12/31/11) 234.2 MBOE Net Proved PV(10) (12/31/11) US $7.107 MM Basic shares (as of 12/31/11) 33,980,141 Fully diluted shares 52,978,288 Recent Share Price CDN $0.17 Market Capitalization CDN $5.8MM Producing Wells (as of 5/1/12) Wells Drilling or in Progress 10 3

• Est. Net Daily Production

BOPD MCFD BOEPD (6:1 Conversion) 45 740 170

• Est. Monthly O/G Production

Revenues (5/12 net of taxes only)

$213,000

Investment Highlights

• Skilled and expeditious ramp‐up of production since May 2010 launch

– 10 producing wells (1 producing well sold in Q4 2011) – 170 barrels of oil equivalent per day (BOEPD) brought on production – Expecting ramp up of drilling and associated production in Sarco Creek 3D and Mississippian Oil Play throughout 2012 (Anticipate participation in 18 gross wells in 2012)

• Strategic portfolio of conventional and non‐conventional projects within 2 years

– 3,600 net acres leased in Mississippian Oil Play, North Oklahoma – 5,376 net acres of coverage in Sarco Creek 3D Seismic, South Texas – 861 net acres leased in Eagle Ford shale play, South Texas – 152 net acres HPB and other conventional vertical well prospects, Texas Gulf Coast

• Private equity management style

– Stricter, return‐focused project selection criteria – Bottom line focus

• 40 years of Dynamic Production, Inc. E&P experience

– Low overhead by leveraging Dynamic Production staff – Allows immediate deployment of financing proceeds – Gulf Coast E&P veterans with notable partners and full staff

• 36% management ownership stake

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Dynamic Production, Inc.

• Family owned, Ft. Worth E&P company –

founded in 1968

– Longstanding industry reputation – Fully staffed with E&P veterans

• 30‐year tenures with Dynamic

– Geology – Engineering – Land management – Accounting & project administration

– Operator of 500+ Gulf Coast wells

• 75 wells currently operated
• Notable Dynamic discoveries

– Dynamic Gas Field ‐ Wharton County, TX

• 120 BCF Expected Ultimate Recovery (EUR)

– Sligo Oil and Gas Field – Live Oak County, TX

• 30BCF Projected EUR
• Producing 20 MMCFD
• Historical Transaction Partners

– Newfield, Cimarex , Penter VII, Chesapeake, XTO, Petrohawk, Rosetta, Pioneer

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Doxa Shares Management and Opportunities with Dynamic

Koehn Unit No. 1

Doxa’s Focus Areas

Page 6

• Emerging horizontal oil play led by Chesapeake, SandRidge and Eagle Energy

– Potential to become premier US onshore resource type play – Potential of 300‐500 MBOE reserves at $3‐4mil cost per well

• Extensive historical vertical well control
• High perm, thick fractured carbonate
• Shallow depths, above 6,000’
• Ample rig availability ‐ low horsepower & low pressure pumping
• Acquired 20% working interest in ~18,000 gross acres

– Woods, Alfalfa, Grant, Garfield and Kay Counties – Oklahoma forced pooling – Land acquisition complete

• SandRidge data points*

– 232 wells drilled

• Avg. peak 30 day production: 275 BOEPD

– Other players include: Eagle Energy, Range Resources, Chesapeake

• Over 255 wells drilled (excluding SandRidge)
• Focused Acquisition Strategy

– Based on evaluation and identification of “core” play area – Veteran local brokers engaged – Early mover – low acreage cost

Mississippian Resource Play, Oklahoma

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*SandRidge Presentation,– February 28, 2012,

Doxa’s Activity in the Mississippian

• 2012 Ramp Up of Drilling and Completion Activity

– 4 wells drilled and completed, 3 currently producing (4 gross/.12 net). – 2 wells drilled and waiting on completion (2 gross/.06 net). – 2 additional wells currently drilling (2 gross/.06 net). – 7 proposed wells (7 gross/.11 net). – Anticipate average 1‐2 well starts each month in 2012.

• Initial Average Well Performance Meeting Expectations

– 3 producing wells, average initial peak production rates as follows:

• 170 BOPD, 650 MCFD, or 278 BOEPD (SandRidge average is 275 BOEPD).

– Doxa’s net interest and production in the 3 gross producing wells are as follows:

• 0.09 net wells, 18 BOPD, 66 MCFD, or 29 BOEPD (total for 3 wells NAR).
• Est. Monthly O/G Revenue net of royalties and taxes (3 producing wells), $56,000.
• Total estimated drill and complete cost net to Doxa (3 producing wells), $336,000.
• Average drill and complete well cost net to Doxa, $112,000 per well.
• Estimated LOE per month net to Doxa, $10,000 (3 producing wells).
• Long Term Expectations

– Expect participation in 300‐400 gross wells, up to 17 net wells with average WI of 3‐4% – Estimate each net well (based on SandRidge type curve) will add $5.6mil in net PDP value to Doxa (NPV10), plus 5.6mil in PUD value assuming 1 development location. Total Potential Resource Value, $93.2mil.

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Mississippian Economics

• 18,000 gross acres (3,600 net)

– WI:20%, Est. NRI: 16% –

• Avg. cost per acre: <$760

– 52 – 62% oil production

• 85 gross wells locations (17 net)

– 213 acre spacing (3 wells per Section)

• Doxa NAV resource value potential

– NPV (10) per well of $5.6MM**

• Based on avg. SandRidge NPV*

– Total: $93.2MM ($466mil x 20% WI)

• Doxa lease acquisition cost

– $2.8MM

• Initial drilling plan 2012

– 12 gross wells (Avg WI 3‐4% of 8/8ths)

• ~1,500,000 net acres (as of 2/28/12)

– >7,000 potential wells based on 3 wells per section spacing

• Completed wells costs*

– $3.2MM – 275 BOEPD Avg 30 day IP – AVG EUR: 456 MBOE per well

• Potential resource value

– NPV(10) per well: $5.484mil** – Implied Acreage Value: $4,236/acre – Implied NAV Resource Value: $15,000/acre –

• Int. Rate of Return (IRR): 91% **

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Doxa Acreage SandRidge Acreage*

Eagle Ford style reserves at a fraction of the well cost

*SandRidge Investor/Analyst Meeting Presentation – February 28, 2012 **NYMEX strip 1/17/12

• One of the fastest growing

– South Texas play – Over 140 operating rigs; up from 15 in January 2009

• Doxa assets in coveted liquids

window

– Most Eagle Ford activity in gas window

• Local well characteristics

– IP rates up to 1,220 BOPD – High permeability/porosity – Shallower than other shale plays

Doxa’s Eagle Ford Position

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• One of the most active and viable resource plays in US

Peeler Ranch Eagle Ford Shale Prospect

• 2,005 gross acres in Peeler lease

– Plan 2 wells per year (12 wells total) – $7‐8mil well cost – 250‐350 MBOE per well gross EUR potential

• Initial completed well

– Peeler Ranch 1H (March 2011)

• IP: 300 BOPD & 150 MCFD, currently producing 50 BOPD
• EUR: 200 MBOE
• 20% WI/15% NRI
• Current drilling and completion activity

– Peeler Ranch 2H (drilling completed 4Q11)

• Frac completed 2/12
• Initial Production 2/12, 300 BOPD IP, currently producing 160

BOPD

• 9.48% WI/7.11% NRI
• Next well commences late 2012
• 10 additional well potential with 160 acre spacing
• 5,797 gross acres in Peeler lease*

– Using 140 acre spacing**

• Completed wells announced

– Peeler 2H (May 2010)

• IP: 605 BOPD
• EUR: 258 MBOE

– Peeler 10H (May 2010)

• IP: 342 BOPD
• EUR: 356 MBOE

– Peeler 4H (February 2011)

• Peak production: 1300 BOPD

* According to TX RRC permit application ** Doxa management calculations

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Doxa Acreage EOG Acreage

Peeler Ranch is an active area with upside to reserves when using tighter EOG spacing

35 37 37

PEELER RANCH PROSPECT

Completing

PEELER RANCH PROSPECT

Producing

PEELER RANCH PROSPECT

Producing

Doxa’s Eagle Ford Projects

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PROJECT NAME PROJECT TYPE EXPECTED PRODUCTION COUNTY STATUS GROSS ACRES NET ACRES WORKING INTEREST NET REVENUE INTEREST POTENTIAL GROSS LOCATIONS Peeler Ranch 1‐H Eagle Ford Shale Oil/Gas Atascosa Producing 2,005.9 401.2 20.00% 15.00% 10 Peeler Ranch 2‐H Eagle Ford Shale Oil/Gas Atascosa Producing 9.48% 7.11% Atascosa Eagle Ford (Exc. Peeler) Eagle Ford Shale Oil/Gas Atascosa Spud 3Q12 680.0 88.4 13.00% 9.75% 4 Zavala County Eagle Ford AMI Eagle Ford Shale Oil/Gas Zavala Pending 1,138.8 116.2 10.00% 7.50% 8 Epley Prospect Eagle Ford Shale Gas/Cond. McMullen Producing 320.0 48.0 15.00% 11.25% 2 Total Eagle Ford Shale Play 4,144.7 653.8 24

Doxa’s Conventional Projects

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PROJECT NAME PROJECT TYPE EXPECTED PRODUCTION COUNTY STATUS GROSS ACRES NET ACRES WORKING INTEREST NET REVENUE INTEREST POTENTIAL LOCATIONS Martin State Gas Unit No. 1 Wilcox Gas McMullen Producing 623.8 87.7 14.06% 10.48% 1 Martin State Gas Unit No. 2 Wilcox Gas McMullen Spud 3Q12 14.06% 10.48% 1 Kynette No. 1 Wilcox Gas McMullen Producing 280.0 40.0 14.06% 10.55% 1 Koehn Unit No. 1 Wilcox Oil/Gas Colorado Producing 401.6 25.1 6.25% 4.81% 1 Koehn Unit No. 2 Wilcox Oil/Gas Colorado Spud 2Q12 6.25% 4.81% 1 Sartain Prospect Austin Chalk Oil Frio Sold 4Q11 Total Conventional Play 1,305.4 152.8 5 *Sarco Creek 3D Seismic Project Frio/Miocene Oil/Gas Goliad/Bee Prospect Generation 26,880.0 5,376.0 20.00% 15.00% 5‐10 Sarco Creek First Well Frio/Miocene Oil/Gas Goliad/Bee Spud 2Q12 20.00% 15.00% Sarco Creek Second Well Frio/Miocene Oil/Gas Goliad/Bee Spud 3Q12 20.00% 15.00% Sarco Creek Third Well Frio/Miocene Oil/Gas Goliad/Bee Spud 3Q12 20.00% 15.00% Total Seismic Development 26,880.0 8,064.0 5 TOTALS: 29,175.1 8,216.8 10 * Doxa has farmed out 10% WI of its original 30% WI in Sarco Creek in consideration of $568,552 cash plus 25% proportionate reversion and 90 day repurchase option.

RECENT CONVENTIONAL PLAY SUCCESSES

• Martin‐State Unit No. 1
• A South Texas Wilcox discovery drilled and

completed in early 2011. This is the initial well on the County Line Prospect, in which Doxa owns a 14.0625% working interest and a 10.4867% net

• revenue. Located in McMullen County, the well

was initially completed in a lowermost pay interval from 10,466‐482’, with additional perfs recently

• added. After initiating sales in June 2011 is

currently producing approximately 4,000 MCFPD and 33 BOPD. Doxa expects to drill 1‐2 additional wells on this prospect.

• The County Line Prospect covers approximately

623.8 gross acres imaged by 3D seismic data and is prospective in various Wilcox Sands.

• Kynette Unit No. 1
• Also a South Texas Wilcox discovery located in

southern McMullen County, the Kynette Unit No. 1 well is situated approximately 2 miles northeast of the Martin‐State Unit No. 1 well. Doxa owns a 16.70625% working interest in this project before payout (12.5% net revenue), reverting to an estimated 12.5% working interest after payout (est. 8.94% net revenue interest). The Kynette well was drilled and completed late in 2011 and put on line in October, 2011, and is currently producing approximately 2,000 MCFPD and 45 BOPD. The well is perforated and producing naturally from the lowermost pay in the well at 10,116‐138’.

• The County Line North Prospect is comprised of an

initial 320 acres block of leases imaged by 3D seismic data, and is prospective in various Wilcox Sands.

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• P. Kynette No. 1 Wellhead, McMullen County, Texas

Sarco Creek 3D Seismic

• 42mi2, Goliad & Bee Counties, TX

– 26,880 gross acres newly acquired 3D seismic survey – Good mix of oil producing and gas producing zones – Individual wells with cumulative production ‐ 200M BO in the target zone – Shallow targets in Frio and Miocene above 5,000’ – Doxa: 20% WI; 15.0% NRI – Project cost to Doxa: $1,100,000

• Field operations complete

– Permitting, optioning, surveying and data acquisition

• Data processing complete

– Performed by Geotrace Technologies

• Data evaluation commenced 4Q 2011

– Have identified multiple prospect drilling locations – 3D seismic improves success rate, minimize dry holes

• 5‐10 near term well potential

– Target 100 – 400MBOE EUR/well –

• Est. completed well costs: ~$850,000/well

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Project Timetable

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Project Summary‐Timeline Well Activity Planned thru August, 2012 (as of May 1, 2012)

PROJECT

Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 PEELER RANCH NO. 1H PEELER RANCH NO. 2H EPLEY NO. 1H KOEHN NO. 1 MARTIN-STATE UNIT NO. 1 MARTIN-STATE UNIT NO. 2 KYNETTE NO. 1 SARTAIN ASSETS NO. 1H

SOLD

SARCO CREEK 3D SARCO CREEK WELL NO. 1 SARCO CREEK WELL NO. 2 SARCO CREEK WELL NO. 3 MISSISSIPPIAN - CINDER NO. 2H-1 MISSISSIPPIAN - RANITA NO. 1H MISSISSIPPIAN - PENDERY NO. 1-5H MISSISSIPPIAN - MARY KATHRYN NO. 1-20H MISSISSIPPIAN - HUMPHREY NO. 1H-15 MISSISSIPPIAN - PEBBLE BEACH NO. 32-1 MISSISSIPPIAN - OKLAHOMA 1-13H MISSISSIPPIAN - HOFMEISTER 21-1H MISSISSIPPIAN - MYRTLE NO. 1-21H MISSISSIPPIAN - DARLENE NO. 1-16H MISSISSIPPIAN - BADGER NO. 3-1H MISSISSIPPIAN - PARR NO. 1-23H MISSISSIPPIAN - REDBUD NO. 1-20H

ESTIMATED DRILLING COMPLETION IF WARRANTED PRODUCING 3D SEISMIC OPER/EVALUATION

Senior Management

• John D. Harvison – President, CEO, Director

– President & Principal, Dynamic Production, Inc. – Significant interests in over fifty other partnerships and corporations engaged in a variety of business activities, including oilfield supply stores, mining, real estate and banking – Involvement in day‐to‐day operation of Dynamic since 1978, management since 1990

• Gerald Graham – President Doxa USA, Director

– Vice President–Land, Dynamic Production – 30 years experience negotiating, planning, funding oil & gas projects along Texas Gulf Coast and South Texas

• G. Arnold Armstrong – Chairman

– 40 years resource industry management experience – Founder, Red Hill Energy (now Prophecy Resource Corp.) and Founder, Silvercorp Metals – Admitted to British Columbia Bar 1950

• Jonathan Weiss – VP Engineering, Dynamic Production, Director

– Supervised drilling and completion of over 100 wells in Texas, California, Louisiana, Mississippi, and Oklahoma – 25 years experience in all facets of petroleum engineering: vertical, deviated, HTHP, reentry and underbalanced/overbalanced horizontal wells to max depth of 17,000’ – B.S. Petroleum Engineering, University of Texas, 1983 – Member SPE, AADE, and ASME – Co‐inventor, patent: "System and Method for Stimulating and Producing Stratified Reservoirs”

• David Wells – Exploration Manager, Dynamic Production

– 35 years experience in oil/gas development and exploration – prospect review, generation and development, property evaluation, project supervision, and managerial responsibilities, primarily with small and mid‐size independent oil and gas operators – B.S. and M.S. in Geology from UT Arlington

• Mark Bronson – CFO, Director

– CFO, Harvison Companies

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Share Capitalization (as of 2/29/12)

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Common Shares Outstanding: Total 33,980,141 Warrants Outstanding Prior to Financing: Expiration Date Exercise Price Warrants 05/18/12 $0.75 2,706,750 08/26/12 $0.40 1,021,833 10/13/12 $0.40 1,244,834 11/23/12 $0.55 5,816,445 07/01/14 $0.48 5,714,285 Total 16,504,147 Stock Options Outstanding: Expiration Date Exercise Price Options 10/05/14 $0.10 1,050,000 05/26/15 $0.35 205,000 06/11/15 $0.38 269,000 12/01/15 $0.65 970,000 Total 2,494,000 Shares Outstanding Fully Diluted: TOTAL 52,978,288

Canada/ U.S.A Toll Free #: 1.888.662.DOXA(3692)