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Dune Energy Inc.

Thu, 11 Dec 2008|



Think we bypasses safe harbor and kind of -- and an overview of the June we're listened on the Amex exchange under. About 95 million shares outstanding. Four year fifty million dollar -- market cap depending on what you look at which day and -- we all know it changes rapidly every day here of late. Our capital structures mainland all split what about 230 million dollars a convertible preferred and 300 million senior long term debt. Year and last year we had about a 175. Days -- proved reserves. PV ten value at that point in time was about seven -- and thirty million dollars. Earlier in the year. We made the decision to so about 33 -- of our. Barnett shale position. Which we closed on in and in September of this year. So we could focus primarily on our Gulf Coast NASA it's. And that is the the structure and and where we are at this point in time. And most of our assets are and -- south Louisiana and Texas Gulf Coast. We built the company through through acquisitions. Mainly out of the law of under exploited. A large fields of major companies. And now our effort is moving forward on a more organic effort at -- building up these opportunities. Have a very very large inventory of the expiration exploitation and development opportunities. And to provide reserves. For both growth and production growth in reserves over the next few years. Up and -- very recently. One wouldn't. Make the next slide in the next part of one's presentation and discussion on liquidity in this in history that last few months have changed around -- dramatically. We ended the third quarter -- about 33 million dollars in cash. We have a forty million dollar revolver that was just. Reaffirmed at that forty million dollar level by the terms of our notes it's captive at forty million dollars. We have no cash borrowings against our revolver and -- million dollars. LC's outstanding against it. We have 300 million of ten equipped and a half senior secured notes. These have a 2012 maturity interest payable in December and June 1 so no issues associated with them and then. Through 2012. We do have. About 230 million dollars of convertible preferred shares. There 12% dividend payable and -- pick. Conversion prices -- dollar 75. Against the current price -- thirty to fifty cents. -- number. They do have a make whole provision. That goes through to June 2010. There are no further resets associated with the preferred. And again -- -- to 2000 turow. So the good news on our on our balance -- structuring is we have cash in hand we have availability under -- revolver. Both of our our longer term -- or equity feature -- where you want to relate via the preferred shares have several years. To go. And there are no. Ugly covenants within it that that we're having to. To worry about basically. The only covenant we have to keep in places as long as we have ten million dollars of cash or. Availability under our revolver. It doesn't -- in any of the covenants associated with our our financial agreement so we're very good shape. Charge being able move our program forward. -- -- kind of hit on on where we are in the exciting part of the company. It is as I said he Gulf Coast oriented company. About -- in three fields covering about a 100000 acres. In red. You see -- fields that have significant exploratory upside. If you some all the outside that that we can see in these fields. On a -- and Andris basis it's about it TCF for reserves for. Significant upside available to us -- we're going to be looking at trying to go after over the next few years. Keeping the engines running of course is our is our production profile. Now we are about 50% oil. And and probably equals today and that kind of range as we move into 2009. When we. Put the company together basically in the second quarter of last year. After raising about 500 million dollars and in notes and and the preferred. For the purchase of the of the gold -- assets. We came back from the summer last year and start making a major investment -- properties. -- production went up into the -- -- A date in the third quarter up and -- the -- -- into the mid thirties. For the fourth quarter. Fell back a bit in the first quarter as we had brought many fields on. Significantly increase of production in some of the old fields. And in the first quarter of the year we fell back a bit mainly due to. Facilities issues was that within some of these field -- we had to slow down a bit in. And put the program back together which -- -- it and -- production back up and second quarter. Third quarter we have the funding gains of life impacting house and and moving back -- -- in the fourth quarter. So. You this year we're gonna average a little over thirty million a day and should be able to to be moving map as as we move in into next year. I -- just. Can you -- an overview of the fields that we have. And and then -- get a couple highlights on them. As I mentioned most of these fields are -- -- -- films we tend to control between ten and 20000 acres around these fields we have a 100% working interest. We operate everything that we do within these fields. Our game plan is to keep the exploitation efforts. Within our own control. And or close partnerships and continue to exploit. The lower hanging fruit in the lower risk opportunities forward near term production growth. Some of the high. Higher risk opportunities in around some of these fields we'll look towards farm out. And then we're looking particularly in some of the sub -- opportunities. At putting together several joint ventures. With other companies as we move forward. Is very much in the way that that we build my previous company -- -- Remington oil and gas we start out with. A number of ideas. When you're 30% working in person brown other companies into the project found a disproportionate basis to. To build up our asset base here we have a 100% of the reserves are a 100% of properties. We're not gonna spend the money to develop them on a 100% -- will be bringing other people and to be able to to do that. Most of the fields that we have. Over. Controlled by. Large companies. -- it Texaco. Golf AMOCO and others during the eighties and and into the ninety's. And when they made the decision to move out of the south Louisiana area. Properties were sold to financial investors there's been very little investment in these fields over the last few years. And really very very little. Deep drilling down on these fields which is the excitement is as -- -- Guard now -- -- it's our largest field very south and the Marlins. And it's a large salt -- would control about 161000 acres. We have recently. Acquired some new and and reprocessed seismic data and are working on -- -- On the depth migration of the deep Gator for the sub -- opportunity. About a 140 -- of shallow opportunities these are low risk opportunities in about fifteen different areas around the dome. We've been drawing some of these at the end of -- -- and -- highlight in that in a minute. We've got about thirty wells are producing six million a day we just -- on a new well there are -- banks. 912. About two million a day and three to four -- -- today. That's currently producing the 915 well we just ran tight bond and and hopefully we'll have that producing. Sometime in December we're moving to the 914 well after that. Basically we'll continue this kind of drilling program going into. Going into 2009. This is kind of the engine number production. Scenario offer for looking at 2009. This just give you an overview of of the field a large salt dome. Many radio -- surrounded you can see it on the bottom left and -- 3-D view. And there's about forty different different Reza boards -- a -- been defined and almost no growing below 151000 feet. Looking at the next slide shows a number of opportunities in and around garden on Monday. Say there's about a 140 -- Of opportunities it will be looking at -- over the next couple years around this field most of these error. Five to 8000 -- well they're three to five million dollar wells about million dollars of completion and onto it. The facilities have been worked on and operated to to a degree to be able to accommodate added. Added production as we as we move forward with in the field. This is if you're -- highlight of the of the -- -- -- drilled in the upper left is the is a 912 well that's one that's flowing down a little over two million a day and and about 300 barrels to compensate. 915 we just -- logged in and fight in the upper right hand corner should be on production in December the other -- -- -- our are there. Couple of these wells have some -- reserves associated with them. And and some upside. Associated with it in -- in the 145 -- it's -- in the previous slide. Almost none of that is booked at this point -- -- it'll be classified as exploratory. The deeper potential underneath garden island day is is some salt. We have done and are working on depth migration on this. We see through or -- deep -- so prospect. Where she can put any numbers that you want on the upside -- -- can be anything from. A hundred to 200 BC after each we are working a a partnership in this field. And will be bringing another company and two to help on me. Putting together the -- idea and the marketing of it and we're looking to hopefully being able to drones deep -- -- -- base sometime late next year. Do and we'll probably have when he -- a 40% interest in it. As it goes forward it'll probably be -- twelve -- thirteen million dollar well when Leo when we move forward but. Pretty exciting definition under the -- and pretty exciting opportunity as we look forward. -- provide you field -- -- a field we drove it well last year brought it on for about four remain today and 400 barrels of content take the reading thirty. We -- working with our partners to -- -- about it should be ready to Guerrero. Some -- in the first part of 2009. The well also go deeper and test a somewhat deeper -- -- media -- the reading thirty is producing out of and that we also have a good acreage position and are working the 3-D data for some added deeper opportunities with in the area. -- field is another salt dome field has a lot of similarity to to garden island day. Multiple Reza boards and and deep potential available within it. We can't. Work keep up manage and paper drilling on all of the opportunities on every one of these fields. So -- bill we have a partnership. With a private company. They basically are uneasy drove -- scenario on developing the shallow part of this action they drove about four wells during this summer. We didn't put up any capital for that we're close to a million a -- A production in the fourth quarter of the year out of that we end up with basically -- -- percent here. We have the opportunity to participate -- larger numbers if we want. That program will be continuing in -- bill. As we as we also look at trying to go after the deep section the deep we have a 100% of very very similar garden island day we have not put a new 3-D survey together yet for room. For evaluating the the data underneath the overhang but same technology same approach is what we what we have a -- By -- -- field. -- a great deal similarity to the garden on day again. This is an 111500. Acre in -- -- -- -- -- -- -- A a much larger company that doesn't like public information stated about -- -- -- -- there -- So the slides on this will be will be very simplistic. I'm not allowed to tell you who our partner on this field is the the well we intend to drill at the beginning of the year. Will be the ExxonMobil -- five wells so. I didn't tell you who the partner was that you may be able -- figured out. They have a significant acreage position around this with us we're jointly working with them. On the depth migration of the 3-D data they typically don't participate in any of the show growing. That that goes forward. We have one project that we took on last year in in Wyoming -- stretching our -- a little bit sweet -- county Wyoming. Channel play called the Delaware deep unit. We get into it because of 3-D data in the and the definition of it. It was very similar to what we were seeing and in some of the Gulf Coast opportunities. We drill the well did you assured the thirteen thousand feet over we stop for almost half a year. And we're preparing to to go forward and practiced well should be about beginning in December. We have a 30% interest -- it could -- Nader can -- associated with it. Pretty neat looking prospect but not not really -- in the in the total picture of what we're doing. Basically that if you a very highlight overview of what we're doing. Are now -- -- we've got the opportunity to -- about fifteen wells who -- Significant exposure -- near term production additions. And the deeper prospect shall retain a thirty to 50% working interest fighting -- but kind of the same story. We'll probably -- -- alone a prospect which is on the south flank of the dome but not a sub -- opportunity. Sometime in the first half of 2009. Again will reduce our interest in that chart that by you we expect to be drilling. In the first half of 2009. -- -- we'll continue this thing program. Otherwise we watch over all our other fields we do some exploited drilling a number work overs we typically have 45 work -- going at once. In -- in an effort to maintain production within these fields. Looking at the financial picture of the company. After all of all of the changes things are starting to level out -- bit see. -- little over. Three BC -- a quarter production. Revenue obviously -- very much to. To pricing of of oil and gas. Are all we -- total bases we've been working on very hard in front work to bring that number down from where was and we started the company and we're making some progress in that area. Field -- we was up a little bit more in the third quarter mainly having the impact of of fixing things from Hurricane -- we didn't have any. Major damage if you will -- from our -- which was fortunate. And anytime you have a surge of ten or twenty -- water pressure property you're gonna have some. Some damage that you have to after fixing -- in and put back together. Cash DNA is is basically coming down over time. A lot of the higher costs was associated with the with the merger in putting the two companies together. DD NA is moving forward or enters his body million dollars a quarter. On a normal pricing bases giving us to run rate of about -- million dollars of the -- quarter much higher in the media. In in the second quarter due -- pricing and -- in subsequent quarters but run rate of about eighteen or twenty million. A quarter -- needed. So basically our plans are our continued there are organic growth from our Gulf Coast fields. Get a good definition of the of the deeper potential within these fields we are putting together a number joint ventures for drawing them. Something as a higher risk opportunity or just out of our -- Out of our knowledge nature yeah we are willing to do farm -- on some of these properties because we want to see activity on them. And from time to time we're gonna have some new projects into it. As I look at 2009. I'm comfortable with our financial position I'm comfortable with. Our opportunities we have in front of us. Last year I came out in the beginning of the year with a a push for very large budget in and then kept scaling it back during the -- -- I'm gonna take a reverse approach this year and say. We're probably gonna manager about a fifteen million dollar budget which is well within our cash flow we've been on. On the 56 ago oil and six or seven dollars gas for -- scenario we do have pretty good downside protection from -- hedge position. For protecting our cash flow. That fifty million dollar capital. Should be able -- result in about a 10% growth and in our production. Over the 2008 levels next year. We have and an eight year ninety million dollars worth of opportunities. And we're gonna kind of manage to those as we as we go through the years. If we were able to go after all of those that could result in -- 120% production growth war. For the coming year so basically we're gonna management and our cash flow. In our availability with within our revolver. Our our structure of our notes and our preferred are fine. For the next several years we are not under any pressure associated with them. And -- see how the next few months go and and exactly what's happening to me. There's going to be a major change in the industry occur or overeating and see a return. Of some of the prices. We're gonna see a little bit of a change in the cost structure and -- or be seeing. Some of the cost issues. During Marines and and other things are. There are more agreeable today when you -- talk to the drilling contractors and they -- through four months ago. And that fact our our growing continued -- a garden island Bay Area. They keep saying you do want -- some more down to we can we can lower the price of outrage. And this fall everybody came -- -- -- -- we had to get -- for -- -- -- -- and I and the buying -- well we had to get it we have to pay for in October would never be able to get it. I do remind the guys of that right now I don't think I mean -- to for a -- like doctoral problem today. And -- -- that this is an industry changes and changes a lot very very quickly. And those of us who have the the amount of gray here that I do. I've been through one or two of these changes over time in -- they're tough. But they're also interesting -- -- Some opportunities that we don't know where they're currently does. And we've got to remain flexible but the most important thing is to have the assets in the people and the ability -- Trying to develop them and put together and that's basically where we are. We're looking towards. The next several years building the company to be able to. To restructure the balance sheet he ended 2012. And go to more of a typical reserve based borrowing base and and take a convertible preferred in and move them. -- and do -- -- capture or common equity position. So bottom line is we've got a large number of opportunities we're excited about the opportunities -- -- about. We got some cash to to work with. And we've been a lot of people who are interested in in helping us and some of these deeper tests in the field. So thank you very much for your tension -- everybody a very good day for the rest of the day.

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