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GTL: Exploiting Remote Gas Discoveries

GTL: Exploiting Remote Gas Discoveries. IPAA London Oil and Gas Investment Symposium Ron Stinebaugh Senior Vice President, Finance July 2005. Forward Looking Statements.

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GTL: Exploiting Remote Gas Discoveries

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  1. GTL: Exploiting Remote Gas Discoveries IPAA London Oil and Gas Investment Symposium Ron Stinebaugh Senior Vice President, Finance July 2005

  2. Forward Looking Statements • This presentation includes forward-looking statements as well as historical information. These forward-looking statements may include statements relating to the Syntroleum Process and related technologies, liquefied natural gas development, the GTL Barge and other gas-to-liquids plants based on the Syntroleum Process, anticipated costs to design, construct and operate these plants, anticipated costs to make products from these plants, the timing of commencement and completion of the design and construction of these plants, obtaining required financing for these plants, the economic construction and operation of gas-to-liquids plants, the value and markets for plant products, testing, certification, characteristics and use of plant products, the continued development of the Syntroleum Process (alone or with partners), anticipated capital expenditures, anticipated revenues and any other statements regarding future growth, cash needs, operations, business plans and financial results. When used in this presentation, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should” and similar expressions are intended to be among the statements that identify forward-looking statements. Although we believe that expectations reflected in these forward-looking statements are reasonable, these kinds of statements involve risks and uncertainties. Actual results may not be consistent with these forward-looking statements. For discussion of these risks and uncertainties we refer you to the risks described under “Risk Factors” in our Annual Report on Form 10-K.

  3. NASDAQ: SYNM (Common) SYNMW (Warrants) SYNMZ (Warrants) Shares O/S (Mil): 55.2 Warrants O/S (Mil): 3.5 Market Cap (Mil $): 559.7 Date: 6/21/2005 Float (Mil): 41.7 Equity Research: Foresight Research (Bernie Picchi) Jefferies (Frank Bracken) Merrill Lynch (Andrew Fairbanks) Management & Insiders: 25% Institutional (1) : 40% Retail: 35% Top Institutional Holders: PEAK Investments LLC(2) Legg Mason Opportunity Trust Wellington Management Merrill Lynch Investment Managers Southern Fiduciary Group Dimensional Fund Advisors Security Management Company Barclays Bank Plc (1) Excludes PEAK Investments (2) Sits on the Board of Directors, owns 13.2% Syntroleum Investment Profile Investor Relations Contact: Mel Scott, Director of Communications (918) 592-7900

  4. Syntroleum HistoryMeeting the Requirements for GTL Commercialization • 20 years of comprehensive technology development • 127 US and foreign patents pending and issued • Over $200 million invested in development • Ready for commercial deployment

  5. The Syntroleum Process is Air Blown • Unique air-based design eliminates costly oxygen plant to make syngas • Air offers several key competitive advantages: • Safe to operate in marine environment • Ability to compress footprint – “mobility” • Scales down to capture smaller accumulations

  6. Catoosa Demonstration Cherry Point The Shed Facility ( CDF ) 1985 1986 1987 1988 1997 1998 1999 2000 2001 2002 2003 2004 2005 Tulsa Pilot Plant ( TPP ) Refining Pilot Unit ( RPU ) Advanced Reactor Unit ( ARU ) Technology Development Facilities:Twenty Year Evolution

  7. 70 bpd demonstration plant Fully integrated operation with all 3 steps commercially scalable: Syngas, F-T, and Product Upgrading Commercial catalyst with regeneration, wax separation, full heat transfer internals in FT reactors Plant will train operators for commercial plants Catoosa Plant Demonstratesall Three Process Technologies Syntroleum Catoosa Demonstration Facility - A Fully Integrated GTL Plant

  8. Significant Technology Barriers To Entry • Requires significant time and capital • Invested greater than $200 million over 20 years • Requires three process technologies • New entrants must navigate patents of others • Limited club of companies have GTL technology • Syntroleum • Sasol • Shell • ExxonMobil • ConocoPhillips • BP

  9. Abundant Stranded Gas Presents Significant Business Opportunity TOTAL Gas Reserves = 6,200Trillion cubic feet (Tcf)1Stranded Gas = 3,000 Tcf2 Europe & CIS 2199 Tcf North America 258 Tcf Middle East 2531 Tcf Africa 486 Tcf Asia Pacific 475 Tcf S. & Cent. America 253 Tcf 1 Trillion Cubic Feet of Gas = 100 Million Barrels of GTL Fuels 1 BP Statistical Review of World Energy June 20042 EIA (DOE) International Energy Outlook 2004

  10. Plenty of Gas for Both GTL & LNG

  11. Middle distillate demand growing at 2.5% per year worldwide – 4 years growth equals the entire size of the LNG market In 3 years, announced GTL capacity in Qatar is 1/3rd of current LNG market – which took 3 decades to develop 27 Million Bpd 2.9 Million BOE/d 1.5 Million BOE/d 0.5 Million BOE/d 2003 2003 2001 ‘01 Methanol Ammonia Middle Distillates LNG Market for GTL Liquids is Much BiggerThan the LNG Market Sources: 2001- American Methanol Association, Fertecon Ltd., 2004 BP Statistical Review of World Energy

  12. Clean Fuels, Easily Sold Syntroleum GTL Diesel – • Can be sold in existing markets • Compatible with existing infrastructure (pipelines, storage terminals, retail pumps) • No sulfur or aromatics • Biodegradable and non-toxic • Performs better than conventional diesel • Valuable blending stock to meet new guidelines Syntroleum Diesel Burns Cleaner Than Regular Diesel

  13. LNG and World scale GTL projects target a few larger fields Syntroleum GTL targets many smaller fields. 1) Gas fields outside of North America Syntroleum Strategy Targets 1-3 TCF Gas Fields • 200+ non producing fields world wide with reserves of 1 to 3 TCF

  14. Billion Barrels ≈ 6.3 1.4 Syntroleum’s Niche is Potentially Huge High-graded 40 locations in 15 countries • Uncontracted gas • Proximity to shore • Low delivery cost Potential from 40 fields ≈ 8 Billion Barrels

  15. Modular plants for onshore Ship-based plants for offshore Air Based Technology Enables Access to Target Fields Barge for swamp and coastal locations

  16. Syntroleum’s First Project:Aje Field Offshore Nigeria • Previously discovered oil and gas field offshore Nigeria • Two wells successfully tested oil and gas • GTL Technology was enabling factor in acquiring the block • Acquired rights to develop Aje field (September 2004) • Re-processed and mapped geophysical data • Current status: • Drilling permit granted • Assignment of interest approved by the Nigerian Government • Aje-3 to spud in 3Q05

  17. ☼ ☼ Proposed AJE 3 X: 489962 Y: 680716 W.D.: 310’ Surf. Loc. AJE 2 Depth (ft.) X: 488848 Y: 674325 W.D.: 3,110’ PTD -8250 Permeability Flag Hydrocarbon Pay Flag T/Turonian 400 ft. high to Aje-2 Max Hydrocarbon column height 662 ft. Turonian: 154 ft. net gas cond pay 37 ft. net oil pay DST #4: 3,866 bopd + 6.7 MMcfg/d T/Cenomanian 450 ft. high to Aje-2 Max Hydrocarbon column height 450 ft. AJE 1 T/Turonian T/Cenomanian T/Albian Cenomanian: 29 ft. net oil pay DST #3: 3,473 bopd + 1.4 MMcfg/d Aje-2 Turonian + Cenomanian has additional 480 ft. net wet reservoir sands that could be productive at Aje-3 location SW NE TD 16189 ft MD (11601 TVD) Arb. Line ‘D’ 1997 3D, 2004 PSDM Processing Aje Field: Potential ReservesOil – 201 MMBO and Gas – 1.6 TCF

  18. Aje Field – Participant Group • Syntroleum acquired 100% working interest and developed the integrated field development concept • Participant group farmed in and pays 90% of first two wells to earn 67.5% cost bearing interest • Syntroleum pays 10% of the cost of the first two wells to earn a 32.5% cost bearing interest in the project

  19. Early Oil Supports GTL Development 2005 2006 2007 2008 2009 2010 2011 EARLY OIL “A” GAS FIELD DEVELOPMENT “B” GTL Barge / FPSO Drill Aje-3 Develop Oil Field Leased OIL FPSO Production Develop Gas Field Production PDP / FEED New Build GTL Barge or OIL / GTL FPSO

  20. AJE Production Profile

  21. AJE: Syntroleum Cash Flows

  22. Syntroleum’s Aje Economics NYMEX Strip June 28, 2005 100+% * Gross Revenues less royalties plus bonuses and overriding royalty

  23. AJE: Sensitivity to Crude PricesNet to Syntroleum’s Interest

  24. Aje Compared to ConventionalE&P Projects $11.52 $10.70 $7.81 1 2 3 1Source: 2003 John S. Herold, Inc. , Herold Global Upstream Performance Review 2 Aje Oil Only - Costs assume $666 Million oil field development cost to produce 200 million bbl of oil reserves, $2.00/Bbl oil field operations cost and $100,000/day oil FPSO lease rate for an oil production rate of 40,000 Bpd. 3 Aje Gas Dev.- Costs assume $186 Million gas field development cost, $900 million capital cost for a GTL/Oil FPSO, $15,000/day gas field operations cost and FPSO operations cost of $120,000/Day. It is assumed that Aje contains 74 million bbls of condensate and can produce 116 million bbls of GTL fuels. Assumes production of 10,000 Bpd of condensate and 17,000 Bpd of syncrude from GTL.

  25. Accelerate Stranded Gas Acquisition Strategy:Securing Multiple Gas Fields • Expand upstream partner’s commitment to Syntroleum • Increase from 1 team to 6 teams seeking stranded gas • Areas of interest: • West Africa • Middle East • South East Asia • Funding the expanded opportunities • $50 million Stranded Gas Venture • Seed money for project acquisition • 80% Syntroleum, 20% investors

  26. Multiple Opportunities in Nigeria • Existing independent Nigerian field owners • Currently pursuing nine (9) opportunities • Nigerian National Petroleum Company (NNPC)Equity Gas GTL Venture • Negotiations underway • 41 potential GTL Barge sites • Excess barge energy provides needed electric power source • Open blocks with proven gas discoveries • Participating in bid round – 11 blocks of interest • Have formed three bidding consortiums for specific areas

  27. S3A8 NembeCreek 3.9 tcf 3.0 tcf Flare GTLBarge71 GTLBarge69,70 Elpa Approx.500 yd .9 tcf Distance to Coastal Waters12 mi (19 km) Niger Delta Joint NNPC GTL Barge Study

  28. Robust Business Development Pipeline • Participating in Algeria Tinhert tender • Proposals must include a 34,000 barrels per day GTL plant • Consortium is formed • Actively negotiating MOU for an Asian GTL project • Six additional opportunities being developed in the Middle East, Asia and South America

  29. Emerging Coal to Liquids Opportunity • United States Government priority • Energy security • $4.5 million technology Research and Development grant from Department of Defense • Abundant U.S. coal reserves • 270 billion tons recoverable reserves • World’s largest coal reserves • Technology components exist – integration of proven gasification technologies and Syntroleum Fischer-Tropsch required • Numerous unsolicited project opportunities from credible sponsors • New focus on Coal to Liquids • Comprehensive evaluation of opportunities underway

  30. Recent Financings Strategy • Raised $80 million via private offerings to Legg Mason Opportunity Trust and Dorset Group Corporation • Limited equity raise in anticipation of future key events • New investors aligned with long term strategy • $89 million cash position at March 31st • Anticipate less dilutive future capital raises

  31. Summary • Syntroleum has developed the three phase process for converting natural gas into ultra-clean transportation fuels • Major opportunity to directly develop stranded gas using Gas to Liquids • Aje project remains on schedule • Increasing traction on multiple specific projects • 2005 financings enabling acceleration of business plan • Emerging Coal to Liquids strategy

  32. GTL: Exploiting Remote Gas Discoveries IPAA London Oil and Gas Investment Symposium Ron Stinebaugh Senior Vice President, Finance July 2005

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