RAAM GLOBAL ENERGY COMPANY. Shareholder Presentation

Transcription

1 RAAM GLOBAL ENERGY COMPANY Shareholder Presentation May 21 st, 2014

2 Disclaimer Statement Except for historical information, statements made in this presentation, including those relating to significant potential opportunities; future earnings; resource potential; cash flow; capital expenditures; production growth; planned number of wells; timing of rig operations; pipeline operations; fracture stimulation activities; the completion of wells; the expected dates that wells are producing hydrocarbons that are sold are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are indicated by words such as expected, expects, assumes, anticipates and similar words. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and the company's future performance are subject to a wide range of business risks and uncertainties, and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including (without limitation) the following: adverse economic conditions in the United States and globally; the difficult and adverse conditions in the domestic and global capital and credit markets; domestic and global demand for oil and natural gas; sustained or further declines in the prices the company receives for oil and natural gas; the effects of government regulation, permitting and other legal requirements; the geologic quality of the company s properties with regard to, among other things, the existence of hydrocarbons in economic quantities; uncertainties about the estimates of the company s oil and natural gas reserves; the company s ability to increase production and oil and natural gas income through exploration and development; the company s ability to successfully apply horizontal drilling techniques; the number of well locations to be drilled, the cost to drill and the time frame within which they will be drilled; the effects of adverse weather on operations; drilling and operating risks; the ability of contractors to timely and adequately perform their drilling, construction, well stimulation, completion and production services; the availability of equipment, such as drilling rigs and transportation pipelines; changes in the company s drilling plans and related budgets; the adequacy of capital resources and liquidity including (without limitation) access to additional borrowing capacity; and uncertainties associated with our legal proceedings and the outcome. The company undertakes no obligation to publicly update or revise any forward-looking statements. Further information on the company s risks and uncertainties is available in the company's filings with the Securities and Exchange Commission. The company's internal estimates of reserves may be subject to revision and may be different from estimates by the company's external reservoir engineers at year end. Although the company believes the expectations and forecasts reflected in these and other forward-looking statements are reasonable, it can give no assurance they will prove to have been correct. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. 2

3 Agenda I. Damaging Events in Financial Statement Restatements 2. Lawsuit Century vs United States Government (Ewing Bank 920) Ewing Bank 920 Write Off 3. Collapse of the Texas Yegua Reservoir II. III. IV. Reduction of Shareholders Equity 2013 Activity Strategy V. Capital Expenditures, P&A Budget VI Financial Information VII. Reserves, Revenue, and Production Charts VIII. Oil & Gas Pricing Charts IX. Questions 3

4 Damaging Events in

5 Financial Restatement On May 20, 2013, the Company disclosed that it would restate its consolidated financial statements for certain periods. The restated Financial Statements were filed on July 24, The adjustments resulted in no material changes to the Company s previously reported cash flow from operating activities and there were no changes to previously reported oil and gas production or oil and gas reserve values. The net impact of the adjustments to the financial statements over all periods restated was a reduction of Total Shareholders Equity of $12.4 million as of December 31, 2012 mainly resulting from adjustments to depletion expense. 5

6 Lawsuit against the United States Government Ewing Bank 920 On January 25, 2011, the Company filed suit against the United States Government in United States Court of Federal Claims in Washington D.C. claiming a breach of contract on the lease governing the Ewing Bank 920 Project. In March 2013, the United States Court of Federal Claims granted the U.S. Government s motion for summary judgment on those claims. On March 29, 2013, the Company filed a notice of appeal to the summary judgment in United States Federal Circuit Court of Appeal in Washington D.C., reasserting our claim of a breach of contract by the U.S. Government with respect to the Ewing Bank 920 Project. A panel of judges heard the appeal in early January In March 2014, our appeal was denied. The Company s counsel has determined there were material errors made by the court in coming to its conclusion and is currently evaluating our options in this case and the Company has appealed the decision back to the court due to these errors in fact. 6

7 Write off of: Ewing Bank 920 Proved Undeveloped Asset Confidential On August 21, 2013, the Bureau of Ocean Energy Management ( BOEM ) sent a response to the Company s resubmitted plan of exploration indicating that the BOEM recalculated the worst case discharge ( WCD ) and revised the volume up to 218,269 barrels of oil per day ( BOPD ) for 120 days from the original approved WCD of 1,500 BOPD for 30 days. Our financial responsibility increased from $4 million to $10 billion. During September 2013, the Company determined that it could not meet the financial certifications required to obtain permits to develop its offshore Ewing Bank 920 Project in the Gulf of Mexico, due in large part to the substantially increased Worst Case Discharge calculation imposed by the BOEM. As a result, the proved undeveloped reserves associated with the Ewing Bank 920 Project no longer met the requirements of reasonable certainty to remain booked as proved reserves at September 30,

8 Write off of: Ewing Bank 920 Proved Undeveloped Asset - Continued Confidential Proved undeveloped reserves related to the Ewing Bank 920 Project were estimated at 8.4 million barrels of oil equivalent at December 31, 2012, or 71.2% of our total proved undeveloped reserves and 33.3% of our total proved reserves at such date. As a result of the downward revisions to eliminate the Ewing Bank 920 Project proved undeveloped reserves, the Company incurred an increased depletion rate and a significant non-cash impairment charge for the quarter ended September 30, The ceiling test write off of Ewing Bank 920 was $265 million. The net effect of the write off of Ewing Bank 920 resulted in a reduction in Retained Earnings of $167 million (Net of Taxes). 8

9 Collapse of the Texas Yegua Reservoir Flipper Reservoir Production Monthly Gas Oil BOEPD Net MMCFD BBLs Revenue December , ,960 $ 2,023,900 In May 2013 the Company determined that the Flipper Reservoir had collapsed, and the casing in all four productive wells had been sheared resulting in a substantial reduction in production. Monthly Gas Oil BOEPD Net MMCFD BBLs Revenue May $ 184,329 9

10 Collapse of the Texas Yegua Reservoir - Continued Revenues net to the Company were reduced from $38 million in 2012 to $11 million in A reduction in Revenues of $27 million. Workover Drilling Total Cost Cost Cost to Restablish Production $ 1,134,161 $ 12,465,425 $ 13,599,586 The sum of the estimated reduced revenues and actual costs incurred to re-establish production equaled $40 million in

11 Collapse of the Texas Yegua Reservoir - Continued In April 2014 the Flipper Reservoir was producing: Gas Oil BOPED Net MMCFD BBLs Revenue Production April , $ 895,149 The Flipper #7 well is scheduled to be drilled in July

12 Reduction of Shareholders Equity 12

13 Reduction in Shareholders Equity The 3 events we have just discussed: 1. Financial Restatement 2. Ewing Bank 920 Write Off 3. Flipper Reservoir Collapse Have resulted in a dramatic reduction in Shareholders equity March 2014 Shareholder's Equity $ 302,391,000 $ 293,549,000 $ 50,015,000 $ 41,791,000 13

14 2013 Activity 14

15 Gulf of Mexico: 2013 Activity 2013 Activity - Drilled one new producing well - Performed two workovers Onshore Texas: - Drilled new wells in the Texas Yegua Trend & performed workovers to re-establish production - Drilled one new well in the Phineas Reservoir Unconventional Oil Resource Play: - Acquired 123,500 acre position Divested non-core assets and narrowed the Company s focus to 4 core areas: - Offshore Gulf of Mexico - Onshore Texas - California Conventional Oil Play - Unconventional Oil Resource Play 15

16 2013 Divestitures The Company sold 40,000 acres of its Mississippi Lime and Chat acreage in Osage and Kay Counties, Oklahoma to the current operator during the 4 th quarter 2012 and collected the proceeds of $10 million in The Company sold 44,500 net acres or 50 percent of its Texas Mississippian Lime acreage to an unrelated company during the first quarter of The Company received $17.3 million cash plus a $17.3 million carried interest on development capital. This arrangement was included in the sale listed below in third bullet point. During the fourth quarter of 2013, the Company sold approximately 62,000 net acres in oil, gas and/or mineral leases located in Texas and Colorado. The Company also sold approximately 34,000 net acres in oil, gas and/or mineral leases located in Oklahoma. The acres sold in Oklahoma represented 3.6% of the Company s reserves as of December 31, The acreage sold in Texas and Colorado did not have proved reserves associated with it. The Company received $51.6 million in cash consideration, which it plans to use for capital expenditures. Proceeds from divestitures $78.9 million. 16

17 Core Areas Alberta Bakken/Exshaw Bakken/ Three Forks Niobrara- Mowry Oil Resource Play #1 Niobrara Antrim Shale Utica Shale Marcellus California Monterey Shale Yeso/ Lower Abo Wolfcamp/ Wolfbone Tonkawa Granite Wash Wolfcamp Mississippian Barnett Cline Wolffork Woodford Fayetteville Haynesville/ Bossier Texas Gulf Coast Eagle Ford Gulf of Mexico

18 Strategy 18

19 Strategy and Priorities for 2014 Farmout of Breton Sound Prospects - (Offshore Gulf of Mexico): 1. Corvus North Drill and Complete 2. Virgo North Drill and Complete 3. Europa Drill and Complete 4. Sagittarius Drill and Complete Yegua development - (Onshore Texas): 1. Phineas #2 workover 2. Phineas #4 Drill and Complete 3. Flipper #7 Drill and Complete 4. Farm-out Yegua/Cook Mountain prospects Elbert Resource Play (Onshore Mid-Continent): 1. Recover $15 million lease cost and drill initial wells 19

20 Strategy and Priorities for Continued California Stevens Prospect (Onshore): 1. Sec # 28 well Drill and Complete 2. Sec # 35 well Drill and Complete JV Partner for Offshore Wells (Offshore Federal & State Waters): 1. Gemini well Drill and Complete 2. Palmetto well Drill and Complete 3. Ship Shoal 150 #C-8 well Drill and Complete New Opportunities: 1. Evaluate Heron 2. Lease Pegasus 3. Evaluate Phoenix 20

21 Prospects available to be drilled in Estimated Estimated Name Spud Production Virgo Deep June December Phineas 2 WO July August Flipper 7 July September Phineas 4 August October Stevens 1 August November Stevens 2 September December Gemini Zone #1 & #2 October March 2015 Sagittarius November April 2015 Europa November May 2015 Hydra November March 2015 SS 150 C8 JV December March

22 Capital Expenditures, P&A Budget 22

23 2014 Capital Expenditures, P&A Budget (as of 1 st quarter 2014) Confidential Category (Millions) 2014 Projected 1 st quarter Capex (already expended) $18 Geological, Geophysical, and Leasing $13 Louisiana State Waters - Drilling & Development $6 Onshore Texas Conventional - Drilling & Development $11 California - Drilling & Development $12 Projects in Progress, Recompletions $1 New Ventures $3 Plugging & Abandonment $5 Total $69 23

24 Financial Information 24

25 Financial Information - (Selected Financial Data) For the Years ending December 31, 2011 & 2012 & Average Daily Production (BOEPD) 10,927 11,399 9,210 Year End Proved Reserves (MBOE) Oil & Gas Revenues ($Millions) $214 $204 $150 Production & Delivery Costs ($Millions) $34.3 $35.5 $35.0 Workover Costs ($Millions) $7.7 $2.8 $3.7 Administrative Costs ($Millions) $28.9 $20.8 $21.4 Net Interest Expense ($Millions) $17 $21.2 $29.6 Net Income (Loss) ($Millions) $24 $(4) $(241) 25

26 Financial Information - (Adjusted EBITDA) For the Years ending December 31, 2011 & 2012 & Net Income (Loss) ($Millions) $24 $(4) $(241) Total (gains) losses on derivatives, net, less cash received in settlement of commodity derivatives ($Millions) $(5) $10 $4 Interest Expense ($Millions) $17 $21 $30 Depreciation, Depletion & Amortization ($Millions) $72 $118 $426 Income Taxes ($Millions) $17 $(2) ($134) Adjusted EBITDA ($Millions) $125 $144 $85 26

27 Financial Information - (Production & Prices) For the Years ending December 31, 2011 & 2012 & Net Production Volumes Oil (Bbl) 1,050,092 1,103, ,944 Natural Gas (Boe) 2,938,407 3,068,547 2,476,557 Oil (Boe) 3,988,499 4,172,200 3,361,551 Average sales price per unit: Oil (Bbl) $ $ $ Natural Gas (Mcf) $4.94 $3.45 $4.24 Oil (Boe) $50.34 $43.87 $

28 Financial Information - (Cost and Expenses per BOE) For the Years ending December 31, 2011 & 2012 & Cost & Expenses per BOE Lease Operating Expenses $8.61 $8.52 $10.41 Workover Expenses $1.94 $.66 $1.11 D D & A $17.99 $28.29 $ General & Administration $7.03 $4.98 $

29 Reserves, Revenue, and Production Charts 29

30 Volumes (BCFE) Confidential Oil & Gas Reserves (BCFE) , Gas (BCF) Oil (BCFE) 30

31 Oil & Gas Reserves Makeup (OFFSHORE VS ONSHORE) Reserve Makeup 2011 Reserve Makeup 2012 Reserve Makeup % 71% 39% 61% 52% 48% Offshore Onshore Offshore Onshore Offshore Onshore 31

32 Oil & Gas Revenue Makeup (OIL VS GAS) Revenue Makeup 2011 Revenue Makeup 2012 Revenue Makeup % 57% 35% 65% 41% 59% Oil Revenues Gas Revenues Oil Revenues Gas Revenues Oil Revenues Gas Revenues 32

33 MBOE Confidential Oil & Gas Production (MBOE) 4,500 4,000 3, ,000 2,500 2,000 1,500 1,

34 Oil & Gas Pricing Charts 34

35 35

36 36

37 Gas Storage Chart Confidential 37

38 Questions 38

39 RAAM GLOBAL ENERGY COMPANY Shareholder Presentation May 21 st, 2014