Crimson exploration inc
Download
1 / 29

Crimson Exploration Inc. - PowerPoint PPT Presentation


  • 96 Views
  • Uploaded on

Crimson Exploration Inc. Company Overview June 30, 2007. Cautionary Statement Regarding Forward-looking Statements.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Crimson Exploration Inc.' - violet-mueller


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Crimson exploration inc

Crimson Exploration Inc.

Company Overview

June 30, 2007


Cautionary statement regarding forward looking statements
Cautionary Statement Regarding Forward-looking Statements

Certain statements included in this presentation are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Crimson Exploration Inc. (“Crimson” or “the Company”) cautions that strategic plans, assumptions, expectations, objectives for future operations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. Some of the key factors which could cause actual results to vary from those Crimson expects include changes in natural gas and oil prices, the timing of planned capital expenditures, availability of acquisitions, uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as the Company’s ability to access them, and uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting Crimson’s business. Statements regarding future production are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, inflation or lack of availability of goods and services, environmental risks, drilling risks and regulatory changes and the potential lack of capital resources. The SEC has generally permitted oil and gas companies, in filings made with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. The Company and its independent third party reservoir engineers use the terms “probable” and “possible” to describe volumes of reserves potentially recoverable through additional drilling or recovery techniques that the SEC's guidelines may prohibit the Company from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being actually realized by the Company. All estimates of probable reserves in this presentation have been prepared by independent third party engineers. More information about the risks and uncertainties relating to Crimson’s forward-looking statements are found in the Company’s SEC filings.

CONFIDENTIAL


Summary company overview
Summary Company Overview

  • The Company was renamed Crimson in June 2005 following the February 2005 recapitalization of GulfWest Energy

    • Publicly traded on the NASDAQ bulletin board (TK: CXPO)

    • Producing assets primarily focused in South Louisiana and South Texas / Texas Gulf Coast

    • Emerging plays in the DJ Basin, Ft. Worth Barnett Shale and Mississippi CBM

  • $289.5MM acquisition from EXCO Resources, Inc. in May 2007

    • Pro Forma 2006 EBITDAX of $166 million

    • Financed 100% through an increased revolver ($200MM) and a second lien facility ($150MM)

    • Equity capitalization of $87 million (common, plus liquidation value of preferreds)

  • Pro forma proved reserves of 141 Bcfe @ 1/1/07

    • 79% proved developed; 84% natural gas; 6.8 year proved reserve life

    • ~80% operated; ~70% average working interest

    • Strip pre-tax proved PV-10% of $567 million (based on NYMEX strip on 5/8/07)

    • 56.7 MMcfe/d current production (January 2007)

    • 140 bcfe in unrisked probable and possible reserves; over 100 drilling locations

  • Experienced management and technical staff teamed with high quality financial sponsor

    • Average experience of over 25 years

    • Oaktree Capital Management (“Oaktree”) owns ~62% of Company on a fully diluted basis (1)

      (1) assuming conversion of preferreds, and exercise of vested options)

CONFIDENTIAL


History
History

2000-- Funding from Aquila Energy Capital – bought Colorado, South Texas

2001 and Grand Lake/Lacassine properties

2002- -Aquila Energy Capital withdraws funding due to Aquila liquidity crunch

2004 - Limited capital for development/exploration

- December 2004 – desperate financial state

2005 - Oaktree Capital Management acquires stake through preferred equity infusion (February)

- CEO Allan Keel and CFO Joseph Grady join Company in connection with Oaktree recapitalization (February)

- Reincorporated as a Delaware corporation / becomes Crimson Exploration Inc. (June)

2007 - Announces acquisition of assets from EXCO (May)

CONFIDENTIAL




Gulf coast acquisition overview acquired 5 2007
Gulf Coast Acquisition Overview(acquired 5/2007)

  • Primarily underexploited assets acquired by Kerr-McGee in April 2004 from the Westport Resources acquisition

    • Significant low-risk development opportunities due to low historical investment

    • EXCO divested due to preference for longer-lived reserves, outside core areas

    • 255 producing wells

    • >83,000 gross acres in prolific producing trends

  • Proved reserves of 95 Bcfe

    • Strip pre-tax PV-10% of $425 million(1)

    • 75% proved developed; 92% natural gas

    • 80% operated, 65% average working interest

    • Unrisked 3P reserves of 235 Bcfe(2)

  • Over 100 identified drilling opportunities

  • Current production of 50.7 MMcfe/d(3)

  • 2006 EBITDAX of $157 million

Field Overview

  • Over the course of the last 5 years, the EXCO assets were owned by multiple companies as a result of industry consolidation

(1) Based on Netherland, Sewell & Associates, Inc. report as of December 31, 2006, and NYMEX strip as of May 8, 2007.

(2) Proved reserves are third party engineered. 3P reserves include unrisked probable and possible reserves per Crimson management.

(3) As of January 2007.

CONFIDENTIAL


Benefits of the gulf coast acquisition
Benefits of the Gulf Coast Acquisition

  • Establishes platform for visible, capital efficient asset growth

    • Critical mass in core operating regions

    • Sizable acreage position in prolific producing trends, over 83,000 gross acres

    • Drilling inventory of ~24 Bcfe of PUDs and 140 Bcfe of probable / possible reserves (unrisked)

    • Strong cash flow for debt reduction and drilling capital

    • Over 100 drilling opportunities on probable / possible reserves

    • Potential exploitation from new prospect generation

  • Management’s past affiliation with the assets makes Crimson a uniquely qualified buyer

    • Familiarity allows for better understanding of low-risk upside (95%+ ex-Westport assets)

    • Ability to rapidly identify existing production / cost enhancement opportunities to increase value

CONFIDENTIAL


Areas of operation proforma for exco property acquisition in 5 2007
Areas of Operation(proforma for EXCO Property Acquisition in 5/2007)

($ in millions)

Total

Mississippi

Proved Reserves (Bcfe): 141.4

% Gas: 84%

Production (MMcfe/d)1: 56.7

Strip PV-10%: $567

Reserve Life (Years): 6.8x

3P Reserves (Bcfe): 281.6

Proved Reserves (Bcfe): 0.3

% Gas: 0%

Production (MMcfe/d)1: 0.1

Strip PV-10%: $1

3P Reserves (Bcfe): 0.3

DJ BASIN

BARNETT SHALE

Colorado

Proved Reserves (Bcfe): 7.9

% Gas: 75%

Production (MMcfe/d)1: 0.7

Strip PV-10%: $24

3P Reserves (Bcfe): 7.9

WEST TEXAS

GULF COAST

SOUTH TEXAS

Texas

Louisiana

Proved Reserves (Bcfe): 116.1

% Gas: 87%

Production (MMcfe/d)1: 46.5

Strip PV-10%: $464

3P Reserves (Bcfe): 256.3

Proved Reserves (Bcfe): 17.1

% Gas: 47%

Production (MMcfe/d)1: 9.4

Strip PV-10%: $78

3P Reserves (Bcfe): 17.1

Note: Proved reserves as of December 31, 2006 and are third party engineered. 3P reserves only include the EXCO assets’ unrisked probable and possible reserves per Crimson management. Strip PV-10% as of May 8, 2007.

(1) Based on average daily production in January 2007.

CONFIDENTIAL


Proved reserves summary proforma
Proved Reserves Summary (Proforma)

December 31, 2006 proved reserves were prepared by independent reservoir engineering firms

  • Netherland, Sewell & Associates, Inc. (“NSAI”) for the acquired EXCO properties

  • Pressler Petroleum Consultants, Inc. (“Pressler”) for the legacy Crimson properties

CONFIDENTIAL


Proved reserve distribution proforma for exco property acquisition in 5 2007
Proved Reserve Distribution(proforma for EXCO property acquisition in 5/2007)

Pro Forma Reserves by Category

Pro Forma PV-10% by Category (1)

Pro Forma Reserves by Region

Pro Forma PV-10% by Region (1)

141 Bcfe

$567 MM PV-10%

(1) Pre-tax figure based on proved reserves and NYMEX strip as of May 8, 2007.

CONFIDENTIAL


Felicia field summary
Felicia Field Summary

Area of Operations

Highlights

Field Overview

  • Legacy Westport Resources property

  • 21,658 gross / 12,910 net acres

  • Yegua, Cook Mountain, Wilcox and Vicksburg reservoirs (9,000’ to 15,000’)

  • Well defined hydrocarbon traps

  • Five 3-D surveys total over 500 square miles within immediate trend

    Upside Potential

  • Probable & Possible Reserves: ~72 Bcfe

  • 30 amplitude related prospects (3 PUD, 10 Probable, 17 Possible)

  • Abandonment pressure could add as much as 25 Bcfe (net)

    2007 & 2008 Plans

  • Drill 7 wells total (3 PUD); $2.5MM each (DHC)

Field Summary

Operator Crimson / Edge Petroleum

Working Interest 75%

Proved Reserves (Bcfe) 30.0

% Gas 85%

% PDP 96%

Current Production (MMcfe/d) 32.0

PV-10% ($MM) $198

CONFIDENTIAL


Cage ranch field summary
Cage Ranch Field Summary

Area of Operations

Highlights

Field Overview

  • Legacy Westport Resources property

  • 18,623 gross acres / 15,168 net acres

  • Frio and Vicksburg reservoirs (8,500’ to 12,000’)

  • Highly faulted structural traps

  • Ten 3-D seismic surveys covering 176 square miles of outlined area

    Upside Potential

  • Probable & Possible Reserves: ~14 Bcfe

  • Identification of additional shallow Frio oil traps

  • Evaluation of Deeper Vicksburg sands below existing production

    2007 & 2008 Plans

  • Drill 3 PUD wells; $1-2MM each

Field Summary

Operator Crimson

Working Interest 85%

Proved Reserves (Bcfe) 28.0

% Gas 94%

% PDP 24%

Current Production (MMcfe/d) 3.8

PV-10% ($MM) $77

CONFIDENTIAL


Speaks field summary
Speaks Field Summary

Area of Operations

Highlights

Field Overview

  • Legacy Westport Resources property

  • 10,987 gross / 5,861 net acres

  • Miocene to Deep Wilcox reservoirs (2,000’ to 17,000’)

    Upside Potential

  • Probable & Possible Reserves: ~42 Bcfe

  • 26 identified drilling locations

  • Multiple behind pipe opportunities

    2007 & 2008 Plans

  • Drill 9 wells total (5 PUD); $6MM each

Field Summary

Operator Crimson / Wofford

Working Interest 35%

Proved Reserves (Bcfe) 21.0

% Gas 98%

% PDP 30%

Current Production (MMcfe/d) 5.3

PV-10% ($MM) $59

CONFIDENTIAL


Grand lake lacassine field summary
Grand Lake / Lacassine Field Summary

Area of Operations

Highlights

Grand Lake

Field Overview

  • 640 acres

  • 3-D seismic recently acquired

    Upside Potential

  • Targeting multiple pay, Miocene formations

  • Evaluating deeper sands and infill of existing formations

    2007 & 2008 Plans

  • Recomplete 3 wells

  • Capital expenditures of $2 million

    Lacassine

    Field Overview

  • 940 acres

    Upside Potential

  • Over 150 Bcfe original gas in place; only 50% recovered

  • Acquiring proprietary 3-D seismic

    2007 & 2008 Plans

  • None; further technical review of field

Field Summary

Operator Crimson

Working Interest 100%

Proved Reserves (Bcfe) 13.0

% Gas 48%

% PDP 52%

Current Production (MMcfe/d) 3.0

PV-10% ($MM) $48

CONFIDENTIAL


Madisonville rodessa field summary

Madisonville / Rodessa

(Madison County)

Madisonville / Rodessa Field Summary

Area of Operations

Highlights

Field Overview

  • Average working interest of over 75% in region

  • Two recent Rodessa wells

    Upside Potential

  • Proprietary 3-D over section of acreage recently acquired

  • Deep gas potential: offset operators successful in Rodessa

    • Deep Bossier, Cotton Valley, Smackover formations untested

      2007 & 2008 Plans

  • Potentially drill 1 probable location

  • Complete and hookup new wells drilled in 2006

  • Capital expenditures of $12 million

Madisonville / Rodessa

(Madison County)

Field Summary

Operator Crimson

Working Interest 75%

Proved Reserves (Bcfe) 13.0

% Gas 80%

% PDP 23%

Current Production (MMcfe/d) 1.0

PV-10% ($MM) $39

CONFIDENTIAL


Dj basin summary
DJ Basin Summary

Area of Operations

Highlights

Field Overview

  • 14,000 gross / 10,000 net acres

  • Acquired in 2000 with Aquila Energy Capital financing

  • Two development wells drilled in 2006, adding net production of approximately 368 Mcfe/d

  • Long-life reserves; 35 producing wells

    Upside Potential

  • Further potential evaluation in Niobrara, Codell and deeper formations

    2007 & 2008 Plans

  • Drill 8 wells; $300-500K each

  • Capital expenditures of $3 million

DJ Basin

(Colorado)

Field Summary

Operator Crimson

Working Interest 92%

Proved Reserves (Bcfe) 8.0

% Gas 75%

% PDP 52%

Current Production (MMcfe/d) 0.7

PV-10% ($MM) $24

CONFIDENTIAL


Barnett shale mississippi cbm

LAUDERDALE

CLARKE

JASPER

WAYNE

JONES

Barnett Shale / Mississippi CBM

Mississippi CBM

Ft. Worth Barnett Shale Joint Venture

Ft. Worth Barnett Shale

(Johnson and Tarrant Counties)

  • 2,500 gross undeveloped acres

  • Acreage positioned in Tarrant / Johnson counties (core area)

  • Offset operators include Chesapeake Energy, EOG Resources, etc.

  • 12.5% WI (non-operated)

  • 2007 plans

    • 8 gross wells, first in May 2007

    • $7 million capital in 2007, net

  • No proved reserves booked as of 12/31/06

  • 125,000 acre CBM option agreement

  • 85% WI

  • Three core holes in 1Q07 ($100,000 / core)

  • 6 – 10 foot coal seams identified

  • Need to determine economic productivity

CONFIDENTIAL


West texas barnett woodford shale culberson county tx

SOUTHWESTERN LOCATION

HALLWOOD LOCATION

CRIMSON 24,000 ACRES

WI: 100%

NRI: 77%

EXPIRY: 2010

ENCANA TD 13,500’

HALLWOOD LOCATION

ENCANA TD 11,000’

PETRO-HUNT DRILLING

EOG TD 9,100’ 2 LOCATIONS

HALLWOOD DRILLING

BULLDOG TD 14,775’

SOUTHWESTERN TESTING

ENCANA TD 11,000’

BURLINGTON TD 13,450’

ENCANA TD 11,000’

SOUTHWESTERN ACREAGE

PETRO-HUNT DRILLING

PETRO-HUNT TD 13,500’

CXP ACREAGE

CONCHO TD 11,900’

RANGE LOCATION

HALLWOOD LOCATION

MATADOR LEASES

HUDSPETH

CONCHO DRILLING

DRILLED WELL

LOCATION

THOMPSON DRILLING

QUICKSILVER LOCATION

DALLAS 2 LOCATIONS

QUICKSILVER ACREAGE

QUICKSILVER TD 10,368’

CULBERSON

REEVES

JEFF DAVIS

5 MILES

West Texas Barnett/Woodford ShaleCulberson County, TX

CONFIDENTIAL



2007 capital expenditures
2007 Capital Expenditures

Estimated 2007 Capex by Region

Estimated 2007 Capex by Category

Lease Acquisition

5%

$42.8 million

$42.8 million

$45

(1)

(1)Excludes estimated seismic data purchases of approximately $9 million

CONFIDENTIAL


Financial strategy
Financial Strategy

  • Maintain manageable debt levels

    • Senior revolver –$200MM borrowing base; $77MM available post-acquisition; L+125-200; 4 year maturity

    • Second lien facility - $150MM fully drawn at closing; L+525; 5 year maturity

    • Excess cash flow, after capital expenditures, for revolver repayment, preserving flexibility

  • Maintain conservative financial policy:

    • Fund capex from operating cash flow

    • Preserve financial flexibility through undrawn revolver capacity

    • Utilize oil and gas derivatives to limit commodity price downside risk

    • Target net debt / EBITDAX ratio under 2.5x; projected 2007 under 2.0x (based on NYMEX strip on 5/8/07)

    • Target net debt / proved reserves under $1.80 / Mcfe ($2.0/mcfe @ close)

    • Target adjusted EBITDAX/interest over 3.5x (projected for 2007 at 4.4x) (based on NYMEX strip on 5/8/07)

  • Balanced, conservative capital program

    • Low-risk drilling inventory to increase cash flow and asset value, and reduce debt

    • Exploration consists of further delineation / step-out drilling of existing fields in well-defined producing trends

    • Limited “wildcat” exploration

  • Increase equity investor base and opportunistically access equity capital for growth

    • Proceeds used to reduce revolver indebtedness

    • Don’t need equity new to reduce debt levels

    • Increase liquidity in stock to unlock value

  • Intensify efforts to increase efficiency:

    • Lower cash operating costs (LOE and G&A) per Mcfe produced

CONFIDENTIAL


Historical financial summary
Historical Financial Summary

(1) Excludes non-cash stock-based compensation expense

(2) Unaudited, proforma for Exco acquisition as of January 1, 2006

(3) Excludes MTM gains/losses on commodity hedges

.

CONFIDENTIAL


Balance sheet
Balance Sheet

Actual

CONFIDENTIAL



Hedging detail effective 5 8 2007
Hedging Detail(effective 5/8/2007)

CONFIDENTIAL


Attractive valuation vs peers pro forma 12 31 06
Attractive Valuation vs. PeersPro Forma 12/31/06

CXPO EV is pro forma the EXCO acquisition

PV-10 values and proved reserves as of 12/31/2006 SEC filings. EV based on companies’ 6/30/2007 SEC filings.

Source: Company filings

CONFIDENTIAL


Attractive valuation vs peers pro forma 12 31 061
Attractive Valuation vs. PeersPro Forma 12/31/06

CXPO EV & EBITDA is pro forma the EXCO acquisition

LTM daily production and LTM EBITDA based on companies’ 12/31/2006 SEC filings. EV based on companies’ 6/30/2007 SEC filings.

Source: Company filings

CONFIDENTIAL


Corporate summary
Corporate Summary

  • Experienced management team with proven track record of growth through exploration, production and acquisition

  • Attractive portfolio of properties with low risk growth potential through significant upside from PUDs, probable and possible reserves

  • Visible near-term debt reduction through free cash flow

  • Limited commodity risk due to aggressive hedging program and low relative basis differentials

  • Strong financial partner in Oaktree who has vested interest in assisting the company achieve its growth plans and increasing shareholder value

  • Developing exploration/exploration capability far above average value creation

  • Inventory of lower risk exploitation and exploration opportunities in the Barnett and Woodford Shale, South Texas Lobo and Mississippi coal bed methane plays

CONFIDENTIAL