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Zargon Oil & Gas Ltd
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January 2020 Corporate Presentation
| Craig Hansen | Page 4 of 11 |
May 11, 2024
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"January 2020 Corporate Presentation"
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Key Considerations Strategic Process Deep Discount to NAV ? Zargon’s Q 2019 oil production averaged 1,518 bbl/d, which reflected a four percent decline from the Q 2018 rates of 1,575 bbl/d. Similarly, Zargon’s total Q 2019 production averaged 1,76 boe/d, a two percent decline from the Q 2018 rates. Zargon’s relatively stable production is enabled by low production declines, as Zargon has not drilled a well since 201. ? Zargon has 10 “drill ready” undeveloped locations at higher oil prices and if capital is available. ? Zargon brings an actively managed well abandonment and site reclamation program/plan that retires our future liabilities. ? Zargon brings $171 million of valuable non-capital tax losses and a TSX listing. Exceptional Torque to Oil Prices Other Attributes ? Zargon’s long-life oil reserves provide investors exceptional torque to oil prices: ? Operational – Zargon’s production tends to be from mature low-decline, low-rate wells with relatively higher operating costs. Small changes in oil prices have a significant impact on cash flows. ? Exploitation – The economics of Zargon’s ASP exploitation project and the North Dakota, Taber and Bellshill Lake undeveloped oil locations are also very sensitive to the field oil prices that Zargon receives. ? With last year’s corporate restructuring completed, Zargon is seeking a sale or business combination. However, the current cash property market for Zargon’s assets remains challenged. Consequently, Zargon is seeking a business combination which provides (as many as possible) of the following attributes: ? Safety – Zargon faces uncertain commodity prices, lacks access to traditional financing sources, and has high operating leverage; a successful business combination should improve Zargon’s risk profile. ? Eliminates Costs – Zargon is a suboptimal size to operate as a public oil and gas company; a successful business combination will eliminate duplicate g&a costs, and (possibly) field costs. ? Adds Opportunity – Zargon’s undeveloped location inventory provides good quality but finite opportunities; a successful business combination would add opportunities that could be funded by go-forward joint free cash flows. ? Retains Upside – Ideally, Zargon’s shareholders will be presented a transaction that provides liquidity (if desired), but also preserves significant shareholder option value if higher field oil prices materialize.