CAPITAL INVESTMENT FUNDING
Concept Seeking financing to acquire proven producing oil & gas resource assets.
Kent Oil Ltd
The purpose of this proposal is to present an opportunity platform. I am presently seeking financing to acquire proven producing Oil & Gas resource assets. These assets have production facilities in place, are cash flow positive, low decline with medium to low-risk growth potential.
It is my hope that you share my belief that right now is the time to invest in Alberta’s Energy sector due to the extreme difficulties being experienced in the junior to mid-size oil & gas companies, such as:
· Unable to gain access to funding for major projects.
· Unable to increase production due to maxed-out on past capital spending against present production.
· previous losses against drilling high risk, deep, expensive, extreme long term payout shale plays.
These projects have proven to take extensive amounts of up-front capital spending and sharp decline in production and financial returns within first year of production.
I have over 29 years of experience in the Oil & Gas Sector here in Alberta, 16 of which has been as a completions/workover consultant. Other team members (2) involved in this venture bring over 25 years’ experience each in their accredited fields. (production engineering, Geology) They are goal driven and strongly believe in the Oil & Gas Industry.
I believe in medium to low-risk ventures requiring less capital spending:
· Projects that would be researched.
· Proven to be a shorter pay out term.
· Resulting in long term production and profits.
I also strongly believe in limiting the workforce of a company, by:
· minimizing or eliminating the need for large office space which incurs expensive rental cost.
· Establishing ‘as required’ contracting services such as geology and land personnel.
· Merging two (sometimes three) roles into a single person’s responsibility verses having full time positions for each individual task drastically cutting overhead and increasing profit.
It has become evident in my research and solid experience in the field for the past 8 years, there is significant room for improvement and potential to be part of a larger acquisition.
This field currently has a LLR ratio of 1.77, with production of +/- 282 BOE/day with a net profit @$13/BOE at current prices which results in profit of @ $3700.00/day – $109,980.00/month--$1,319,760.00/yr, making this field cash flow positive in current status.
Calculated minimum increase of production from 282 BOE/day to +/- 340 BOE per day with producing presently shut in wellbores
Downsizing overhead cost would increase net payback 10-17% per BOE.
With production now @ 340 BOE/day - net profit $15/BOE at current prices, increases profits to
$5300.00/day--$153,000.00/month translated to $1,836,000.00 Net per year.
Noting a 21% increase in production, increase of net profit to $15/BOE, generating increase in overall revenue of @ 33% within the first year of operations.
Purchase of this field requires an investment of +/- $10,000,000.00. Included in this investment above the purchase of the field are as follows:
· optimizing of production and small workovers of the wells to increase to afore-mentioned BOE/day increase.
· Inspection of pipelines and facilities.
· Optimize existing production through chemical stimulations to the formation, thus increasing production.
· Re-complete, prove liquid rich gas play and oil reserves from these vertical wells.
· Complete zonal geological mapping of area.
· Drill Horizontally in high value targets.
· Acquire land by purchasing of offset producers, there-by obtaining substantial drilling opportunities.
· Increasing production from +/-282 BOE to 1500-2000 BOE per day over the next 2-3yrs
With your investment, I offer 12% return per year over 5-year minimum term on total sum of initial investment. At end of the 5-year term options would include the following:
• 100% payout of initial investment
• Re-invest in further development and diversity
• Sale of property in which investor would be paid 100% of initial investment including negotiated % of profits from sale.
Terms to further re-investment or intention to withdrawal initial investment must be notified 12 months-(1 year) prior to end of 5yr term.
Profits from the producing Oil & Gas company would directly be paid into a royalty corporation from which investors will be paid from for their investment. This excludes investors from liability against said property should any unforeseen circumstances take place. This would also allow the investor the option of obtaining another Oil & Gas producer to take over operations if initial producer fails to meet return commitment on investments. This decreases risk of investment and ensures value for the investor.
This venture would acquire wellbores and production facilities as follows:
· 51 with 100% working interest.
· 8 with 51-98% working interest.
· 2 with 20-30% working interest.
· 8 with 2.6-5.6% working interest.
Present oil production from 5 pumping oil wells is +/- 710m3 per month, with +/- 84m3 per month behind 7 shut in oil wells requiring down hole insert pump or tubing changes.
Present gas production from 5 flowing gas wells including gas produced from pumping oil wells is +/- 68.9e3m3/month. There are presently 27 shut in gas wells with former monthly production +/-700-1000e3m3/month (Gas production numbers calculated by last reported monthly production report and decreased by 30%).
There are 6 water injection wells: 2 active, 4 suspended or downhole abandoned. Production & compression facilities as follows:
· 1 Oil battery 100% working interest complete with treating capability's.
· 1 Gas battery 53.94% working interest complete with re-fridge and compression.
· 8 smaller compression and gathering points with varying from 54%-78% working interest.
Abandonment potential includes 15 downhole and surface abandoned wellbores, 6-8 of these have potential re-complete potential in different zones for oil and gas production.
It is well known the oil & gas industry has not done well in the past 3-4 years, with this last year being the most difficult to survive with gas and oil prices plummeting. This being the reason these wells were shut in (non-economical at the former prices per BOE).
Due to this unforeseen circumstance the present producer has neglected their focus and the potential of this field.
I believe with careful planning, proper execution and continuous increase in prices in the energy market, this field has the potential to grow substantially and offer investors a substantial return in the upcoming years.
With prospect to increasing demand for environmentally friendlier produced energy.
· Decrease and elimination of coal fired and Hydro Electric projects that have huge impacts on the Environment.
There are definite opportunities for further investment, diversity, and growth within this field.
This field has potential for natural gas driven electrical generation turbine projects from 4-8 Megawatts.
This future project would supply the fields own requirements for electrical energy needs and potential energy supply to the public consumer.
These projects would require up front capital spending but would create long term savings and increasing overall net $/BOE produced by est. 20-25%
Both Provincial and Federal government grants are becoming more available to the energy sector for companies willing to diversify and lesson Co2 footprint. These grants would substantially lessen upfront capital spending for this project, shortening the term for return on investment.
I am available to meet with you at your convenience, to discuss this investment opportunity further. Feel free to contact me at my cell or email below.
PDF Business Plan available upon request
Thank you for your time and consideration
We look forward to hearing from you and making both our futures profitable.
Kent Oil Ltd
Cell (403) 506-0026