Nomad Opportunities in Jerbia

1
Nomad Opportunities in Jerbia

• Team Generator

2
Recommendations

• Aggressively seek contract extension for License
  R-10 (494M of Value)
• Existing fields with infill drilling 242
  Million (J 109M, K 63M, L 69M)
• Moose Newt with infill drilling (204)
• Prospect fields (48M)
• Pursue Moose Newt with Extension with Infilling
• Moose 109M with 30 / bbl oil
• Moose 302M with internal oil price estimates
• Do Not Pursue Moose Development without Extension
  (3.6M), unless
• Infill drilling is possible
• Arent responsible for well capping in 2012
• Capital constraint does not suggest other
  projects
• Deciding does not jeopardize chance of extension
  (Jerbia claims residual)
• Comfortable with oil price estimate above 30 /
  bbl (breakeven below 31 / bbl)
• Strategic Considerations
• 30 / bbl Brent Crude is too conservative
• Compared to Long Term Brent Crude forecasts
  futures

3
R-10 Renewal Benefits Existing Fields

• Infill drilling is attractive regardless of
  contract status (242M)
• Financial gain from two sources
• Additional revenue from Jerbian Light Crude
  (60.7 Million BBLs)
• Increased tax shields resulting from a larger
  asset base to be depreciated (Current Base
  530M, Contract Extension Base 780M)

4
R-10 Renewal Benefits Moose Newt Fields
Note Infill assumes 12M for a 8 production gain
5
R-10 Renewal Benefits Prospective Fields

• At least 4 prospective fields have been
  identified in geographical territory under the
  R-10 license, nicknamed Wolf, Caribou,
  Marmot, and Panther
• Additional NPV of 48 million anticipated from
  prospect fields
• Explore prospective wells only if the license is
  renewed
• Begin when Newts appraisal phase is over to
  maximize production
• 3-Step decision tree for NPV calculation initial
  exploration, appraisal, and production
• Staggered start of one year between projects
  (creating a window of 10-14 years to produce oil
  before the license runs out in 2027)
• The size of the new discoveries will be key
  drivers in any future negotiation for license
  renewals beyond 2027

6
Risks and Risk Mitigation Strategies

• Salvage value of equipment
• Convey project uncertainty to Government partner
• Evaluate increased near-term production and asset
  transferability
• Partner Participation
• Identify potential replacements in advance of
  go/no-go decision
• Government stability
• Remain neutral in internal political matters
• Disruption to existing Jerbian industries
• Use known construction firms and identify risks
  of expanded production in advance
• Nationalization Tax / Royalties changed
• Negotiate lagged payments align profit
  incentives
• Typhoons / natural disasters
• Share design and management best practices with
  existing facilities

7
Brent Crude Price Forecast (/bbl)
Source Energy Information Agency
(www.eia.doe.gov) and inflationdata.com
(http//inflationdata.com/inflation/Inflation_Rate
/Historical_Oil_Prices_Table.asp)
8
Recommended Priorities

• First Priority
• Renewal of the R-10 Contract
• Refining capabilities and Ethanol
• Good citizen programs
• Consider competition / alternatives
• Infilling drilling in the Existing 3 Fields
• Development of the Moose field
• Second Priority
• Development of the Newt field
• Further exploration and development in R-10
• Third Priority
• Evaluate new plots in Jerbia to leverage
  infrastructure
• Ongoing risk mitigation
• Evaluate impact of increased Jerbian production
  on transport costs

9
Appendix
10
Implications of Crude Oil Forecasts

• Estimate is below futures contracts for 5yrs
• Suggest overvalued futures contracts
• Not an Arbitrage Opportunity
• Different forecast periods
• Low level of estimate certainty
• Better profit opportunities in core business

11
R-10 Renewal Benefits Existing Fields

• Continued exploitation of existing fields with
  infill drilling (242M)
• Financial gain the result of two primary sources
• Additional revenue from Jerbian Light Crude (60.7
  Million BBLs)
• Increased tax shields resulting from a larger
  asset base to be depreciated (Current Base
  530M, Contract Extension Base 780M)

12
R-10 Renewal Benefits Existing Fields (Erik
Prices)

• Continued exploitation of existing fields with
  infill drilling (389M)
• Financial gain the result of two primary sources
• Additional revenue from Jerbian Light Crude (60.7
  Million BBLs)
• Increased tax shields resulting from a larger
  asset base to be depreciated (Current Base
  530M, Contract Extension Base 780M)

13
R-10 Renewal Benefits Moose Newt Fields (30
Price / bbl)
Note Infill assumes 12M for a 8 production gain
14
R-10 Renewal Benefits Moose Newt Fields
(Forecasted Price / bbl)
Note Infill assumes 12M for a 8 production gain
15
Strategic Considerations

• Price Forecast Sensitivity
• 30 probably too conservative
• Jerbian alternatives to Nomad Team
• Competitors
• National Oil Company
• Inflation and Exchange Rates
• PPP should hold for Long-Term Jerbia relationship

16
Supporting the Advancement of all Jerbians

• Team R-10, consisting of Nomad Petroleum,
  Luxpetrol, and Speck Oil
• Translations in French and Jerbian

17
Agenda

• History of Jerbia and Team R-10 Partnership
• Vision for Future Collaboration
• Desirable License Extension Opportunity
• Terms of Proposed License Extension
• Value of Choosing Nomad as Service Provider

18
History of our Partnership

• Long and successful history of working with our
  Jerbian partners
• 1994 Discovered the Jackal field
• Koala 2nd major field discovery
• Leopard Recent continuance of success
• Has provided 642M (?16.2B) to Jerbia in Royalty
  revenues
• Has provided 2.0B (?50.0B) to Jerbia in Taxes
• Oil from fields developed by Team R-10 is
  equivalent to 3.9 of GDP and 16 of total
  Jerbian oil produced

19
Opportunities for Future Growth

• Moose Field
• Tax Royalties of 386M (?14.6B) over the
  license life
• Newt Field
• Tax Royalties of 443M (?6.2B) over the license
  life
• Continued exploration of the R-10 area
• 4 prospect Fields

20
Proposed R-10 License Renewal Terms

• Contract Terms
• Nomad is prepared to bid 340M for rights to
  explore and develop the R-10 area
• Assumes 20 discount rate
• 15 for shareholder required returns 5 for
  additional risk of operating
• Payment in installments, ½ at contract signing
  and ½ at commencement of contract
• Portion of fee to be invested in domestic
  refining capacity
• Anticipated product cost savings offset license
  payments
• Same royalty structure as existing license
• Commitments to Jerbia
• Possible Refinery / Ethanol plant
• Training for national workers and community work
• Operational skill and safety
• Environmental Protection
• Commitments from Jerbia
• Honor contract terms
• Consistent application of Royalty / Tax
  regulation

21
Benefits of License Renewal to Jerbia

• Tax Royalty Revenue (2013-2027, non-prospect
  fields)
• Taxes 1,222M (?30,550)
• Royalties 585M (?14,625)
• Employment
• Training and employment for additional Jerbian
  citizens and businesses
• Refinery Addition
• Reduce cost of finished product (shipping costs)
• Boost domestic sugarcane industry with Ethanol
  facility
• Corporate Citizenship
• Environmental and Safety benefit

22
Bid Justification Scope of Work

• Team R-10 has experience in Jerbian fields and
  has the know-how to return maximum benefits to
  Jerbia
• Our bid is based on the assumption that Team R-10
  will
• Fully develop Moose and Newt fields
• Infill existing fields
• Prospect unexplored regions of R-10
• Continue partnership with existing partners
• The Jerbian government will honor the contract
  terms as drafted
• Our operations will not disrupt tourist industry

23
Summary Thoughts

• Extension of R-10 license is a low risk option
  for both parties
• Team Nomad has become a proven steward of the
  Jerbian economy and environment and trusted
  partner
• We look forward to continuing our investment in
  the Jerbian economy and people
• Long live King Iwera Mumu!