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Oil & Gas Business Plan

Denali Oil & Gas is an independent oil and gas company founded in 2003 that focuses on exploration and development of tight gas resources in South Texas below 12,000 feet. The company has raised $100 million from private equity investors and has drilled over 65 wells, completing several small acquisitions. Through multiple asset sales, Denali has realized total proceeds of $230 million, generating strong returns for investors of over 200% on the initial investment. Moving forward, Denali plans to continue their focus on South Texas tight gas, pursuing exploration opportunities and joint ventures or acquisitions with other operators seeking to reallocate capital to other basins.

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Khalil Ibrahim Ahmed
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1K views29 pages

Oil & Gas Business Plan

Denali Oil & Gas is an independent oil and gas company founded in 2003 that focuses on exploration and development of tight gas resources in South Texas below 12,000 feet. The company has raised $100 million from private equity investors and has drilled over 65 wells, completing several small acquisitions. Through multiple asset sales, Denali has realized total proceeds of $230 million, generating strong returns for investors of over 200% on the initial investment. Moving forward, Denali plans to continue their focus on South Texas tight gas, pursuing exploration opportunities and joint ventures or acquisitions with other operators seeking to reallocate capital to other basins.

Uploaded by

Khalil Ibrahim Ahmed
Copyright
© © All Rights Reserved
Available Formats
Download as PPS, PDF, TXT or read online on Scribd
Download as pps, pdf, or txt
Download as pps, pdf, or txt
You are on page 1/ 29

Denali Oil & Gas

Rick Louden
President & CEO
1

Denali Oil & Gas


Background

Founded June, 2003 with a $50 million commitment

from Quantum Energy Partners, Energy Trust and


Walter Oil & Gas. Denali II funding commitment of
$50 million in 2006.

Focus on S. Texas tight gas below 12,000


Drilled 17 exploratory wells, 48 development wells,

four small acquisitions.

Sold assets in 2004 and 2006 in multiple asset

sales totaling $230 million.

Currently producing 13 Mmcfed.

Denali Oil & Gas


Fields Currently Producing
and Fields Sold
South
Bearhead
Creek

Raptur
e
S. Friar Ranch

Hardeman
Slough

Destino
Finley Webb
La
Perla
Haynes
Exsun
Tierra
Blanca
Arrowhead
Ranch

Robinson Lake

Las Hermanitas
S. Escobas
Shivers Deep
Edinburg South

Denali Oil & Gas


Investor Partners

Bring Value to the Table


Sounding Board and Brainstorming on key

decisions and strategy

Financial Expertise and Muscle


Financial Strength and Staying Power

Planning Discussion with


Quantum Energy Partners

Denali Oil & Gas


Business Plan

Primary focus on deep tight gas in South

Texas.

Create value through exploration and

small acquisitions with significant


drilling potential.

Operate the majority of properties and

reserves.

Be patient, wait for exceptional

opportunities.

Denali Oil & Gas


Business Plan

Starting Point Conditions


Private Equity Funded Company
Target 30%+ IRR and ROI of 3.0+
Dont bet on rising oil and gas prices.
Minimize risk.
No rank wildcatting.
Prudent level of borrowing.
Conservative Acquisition analysis assumptions.7

Denali Oil & Gas


Strategy

.How do we generate 30%+ IRR and

3.0+ ROI without rising gas prices and


without significant risk?

Basin Characteristics? Wells with high initial

rates and steep declines or wells with moderate


initial rates and flatter declines?...........high
initial rates generate higher IRRs despite
steeper declines.

Exploration or

acquisitions?........exploration minimizes

upfront capital improving ROI and IRR if success


rate is good.

Denali Oil & Gas


Strategy

Continued..
Sell discoveries early or fully

develop?.........selling fields early in life after

minimum drilling further improves IRR and ROI ,


but sacrifices a portion of the future present
value.

Denali Oil & Gas


Strategy

.How do we generate 30%+ IRR & 3.0 ROI?


Example: Ten well field, each well costs $4 million
and has a PV10 of $6 million and ROI of 2.5.
Capital

Sale Value ROI

Land & Seismic

$1

Drill 3 wells $12

$30

2.5

Drill 7 PUDs

$28

$70

Total $41

$100 2.44

2.5
10

Denali Oil & Gas


Strategy

.How do we generate 30%+ IRR & 3.0 ROI?


Example: Ten well field, each well costs $4
million and has a PV10 of $6 million and ROI of
2.5.
Capital

Sale Value

ROI

Land & Seismic

$1

Drill 3 wells $12

$30

2.5

Sell 7 PUDs
-- $21
(at 50% of PV10)

11

Total $13

$51

3.9

Denali Oil & Gas


Business Plan

Starting Point Conditions


Private Equity Funded Company
Target 30%+ IRR and ROI of 3.0+
Dont bet on rising oil and gas prices.
Minimize risk.
No rank wildcatting.
Prudent level of borrowing.
Conservative Acquisition analysis assumptions.
12

U.S. Gas Prices


Adjusted for Inflation
1985 - 2009

???

13

Denali Oil & Gas


Business Plan

Minimize Risk
Top 10% Technical Team
Wait for exceptional opportunities
No Rank Wildcatting
State of the Art Technologies
14

South Texas

Wells less than 10,000 deep

Total Wells 361,030


309,919 Wells < 10,000 TD
15

South Texas

Wells deeper than 13,000

13,007 Wells > 13,000 TD


16

Denali Oil & Gas


Business Plan

Minimize Risk
Top 10% Technical Team
Wait for exceptional opportunities
No Rank Wildcatting
State of the Art Technologies
17

Denali Oil & Gas


State of the Art Technology

Denali

18

Denali Oil & Gas


Results

Denali I (2003 2006)


Three small acquisitions ($9.1 Million), 4

exploration wells (3 successful and 1 dry hole),


35 development wells.

$44 million of investor capital and $15 million

debt.

Sold in multiple transactions totaling $230

million.

IRR = 214%, multiple = 4.5.

19

Denali Oil & Gas

Rick Louden
President & CEO
20

Denali Oil & Gas


Results

Denali II (2006 2008)


One acquisition, 13 exploration wells (6

successful and 7 dry holes), 13 development


wells.

$64 million of investor capital and $24 million

debt.

Current proved reserves of 70 Bcfe and

probable reserves of 73 Bcfe.

100,000 net undeveloped acres in resource


play with acreage going for $250-350 per acre.21

Denalis S.
Escobas
Field

Denali Oil & Gas


Escobas
Field
Rick Louden
President & CEO

Fandango
field
22

Escobas Field

89 BCF
Fandango Field

429 BCF

23

South Escobas Type Log

Type Log Cont.

Denalis S.
Escobas
Field

Denali Oil & Gas


Escobas
Field
Rick Louden
President & CEO

Fandango
field
26

Denali Oil & Gas


Finding Costs
Year Reserve Adds

Finding Cost

2003 13 Bcfe

$0.67/Mcfe

2004 28 Bcfe

$1.06/Mcfe

2005 41 Bcfe

$1.24/Mcfe

2006 35 Bcfe

$1.08/Mcfe

2007 25 Bcfe

$1.00/Mcfe

2008 30 Bcfe

$1.44/Mcfe

Total 172 Bcfe

$1.17/Mcfe

27

Denali Oil & Gas


Denali III

Same Investor Group.


$140 million commitment. Additional capital

available for larger acquisition.

Exploration and acquisitions with increased

focus on identifying acquisitions.

Partner with companies who have acreage

and prospects in S. Texas, but are


reallocating capital to other basins
through farmouts and joint ventures.

28

Experience . . .
Focus . . .
Innovation . . .
Technology . . .

29

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