Attached files
| file | filename |
|---|---|
| 8-K - 8-K - TRANS ENERGY INC | d400685d8k.htm |
| EX-99.2 - EX-99.2 - TRANS ENERGY INC | d400685dex992.htm |
 THE
THE
OIL
OIL
&
&
GAS
GAS
CONFERENCE
CONFERENCE
August 2012
Exhibit 99.1 |
 This
presentation
contains
“forward-looking
statements”
within
the
meaning
of
section
21E
of
the
United
States
Securities
Exchange
Act
of
1934, as amended (the “Exchange Act”) which represent our expectations or
beliefs about future events. These statements can be identified
generally
by
forward-looking
words
such
as
“expect”,
“believe”,
“anticipate”,
“plan”,
“intend”,
“estimate”,
“may”,
“will”
or
similar
words.
Forward-looking statements are statements about the future and are inherently
uncertain, and our actual achievements or other future events or conditions
may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and
other
factors,
including,
without
limitation,
those
described
in
Item
1A
of
the
company’s
annual
report
on
form
10-K
for
the
year
ended
December 31, 2011 under the heading, “Risk Factors”, and elsewhere in the
annual report and our filings with the Securities and Exchange Commission.
These risks and uncertainties include, but are not limited to: 1. The risks
of the oil and gas industry, such as operational risks in exploring for, developing and producing crude oil and natural gas; 2.
market demand; 3. risks and uncertainties involving geology of oil and gas
deposits; 4. the uncertainty of reserves estimates and reserves life;
5.
the
uncertainty
of
estimates
and
projections
relating
to
production,
costs
and
expenses;
potential
delays
or
changes
in
plans
with
respect to exploration or development projects or capital expenditures; 6.
fluctuations in oil and gas prices, foreign currency exchange rates
and
interest
rates;
7.
health,
safety
and
environmental
risks;
8.
uncertainties
as
to
the
availability
and
cost
of
financing;
9.
the
possibility
that
government
policies
or
laws
may
change
or
governmental
approvals
may
be
delayed
or
withheld;
10.
other
sections
of
this
presentation
may
include additional factors that could adversely affect our business and financial
performance. Moreover, we operate in a very competitive and
rapidly
changing
environment.
New
risk
factors
emerge
from
time
to
time
and
it
is
not
possible
for
our
management
to
predict
all
risk
factors, nor can we assess the impact of all factors on our business or the extent
to which any factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking statements.
Our
forward-looking
statements
contained
in
this
presentation
are
made
as
of
the
respective
dates
set
forth
in
this
presentation.
Such
forward-looking statements are based on the beliefs, expectations and opinions
of management as of the date the statements are made. We do not intend to
update these forward-looking statements. For the reasons set forth above, investors should not place undue reliance on
forward-looking statements.
Readers are encouraged to read our December 31, 2011 Annual Report on Form 10-K
and any and all of our other documents filed with the SEC regarding
information about Trans Energy, Inc. for meaningful cautionary language in respect of the forward-looking statements
herein.
Interested
persons
are
able
to
obtain
copies
of
filings
containing
information
about
Trans
Energy,
Inc.,
without
charge,
at
the
SEC’s
internet site (http://www.sec.gov).
2
Disclaimer |
 COMPANY OVERVIEW
COMPANY OVERVIEW |
 About Trans Energy
6/30/2012
LTM Revenue
$ 14.6 million
Net Debt (as of 6/30/2012)
$34.5 million
Recent Stock Price (TENG)
$ 1.60
Shares Outstanding (8/10/2012)
13.2 million
Market Capitalization
$21.1 million
Enterprise Value
$55.6 million
Trans Energy: (OTCBB: TENG)
Pure Play Marcellus Shale
Proved Reserves: 35.5 Bcfe
Recent Daily Production: 4,565 Mcfe
52-Week Range: $1.26 -
$3.20
3-Month
Average
Daily
Volume
–
841
Shares
Shares Outstanding: 13.2 Million
Market Capitalization: $21.1 million
Experienced Management Team
Selected Financial Information
4
Trans Energy’
Areas of Operation
Trans Energy’
Corporate Office
s
s
Company Overview
Area of Operation |
 Why
Invest in Trans Energy? 5
Marcellus Shale Pure Play
62,000 gross acres in core of the Marcellus Shale
Upper Utica Shale potential
Upper Devonian upside potential
High-BTU, liquid-rich focus
$1.50 per MMBtu breakeven gas price
Extensive Organic Drilling Inventory
400 + potential drilling locations (111 ready to drill today)
3+ Tcfe upside potential
Significant portion of acreage HBP
Off-take agreements totaling up to 45,000 MMBtu per day
Improved Financials
$50 million credit facility funding near term drilling program
Experienced Management w/ Technical Expertise
More than 200 years combined management experience
Well-funded joint development partner has geologic /
engineering team
Marcellus Shale pure play
Predictable and repeatable inventory
Prominent land position with strong
upside potential
Trades at a significant discount to
NAV
Experienced Management Team |
 Corporate Strategy
Consolidate acreage surrounding legacy positions in the core
of the Marcellus
Marshall, Wetzel, Marion and Tyler counties
Building
upon
local
presence
–
West
Virginia
company
Drill to turn highly prospective acreage into 3P reserves
Secure and maintain land position via production rights
Grow production and reserves / monetize assets
6 |
 Current Marcellus Acreage
Significant Marcellus acreage that
is held by shallow well production
Approximately [350] horizontal well
locations from HBP acreage alone
Primary term leased acreage can
generally be held by production
from shallow vertical or Marcellus
horizontal wells
Current drilling program
supplemented with selective
shallow drilling will HBP all strategic
acreage with near term lease
expirations over the next two years
Significant amount of acreage is
also prospective for the Utica shale
7
Acreage Breakdown –
23,226 Net acres
7,621 acres
14,800 acres
805 acres
Held by Production
Leased -
Term
Mineral Right -
Purchased |
 Resource and Reserves
Trans Energy has exposure to more than 3 Tcfe of Marcellus resource potential
More than 400 potential drilling locations (111 ready to drill today)
EUR per well of 1.2 –
2.0 Bcfe /1000’
of lateral
To date, less than 5% of resource has been booked as proved reserves
8
6/30/12 SEC Reserve Summary
(1)
(1)
Based on Proved Reserve Bcfe values for ASD from the 6/30/2012 SEC reserve report
prepared by independent reserve engineer Wright & Company, Inc.
Trans Energy has 3.25 Bcfe of PDP reserves associated with shallow assets that are
not included in the above figures.
Proved Reserve Mix
(1)
Proved Reserve Category Mix
(1)
($ in millions)
Oil
(MMbbl)
Gas
(Bcf)
NGL
(MMbbl)
Total
(Bcfe)
% of total
Total
PV10%
PDP
0.0084
14.330
0.533
17.5784
49.5%
$65.1
$26.3
PDNP
0.0000
6.479
0.287
8.201
23.1%
$29.9
$14.2
PUD
0.0044
7.690
0.342
9.7684
27.5%
$ 28.0
$8.9
Total Proved
0.0128
28.499
1.162
35.5478
$123.0
$49.4
Oil
-
0.2%
Gas
-
80.0%
NGL
-
18.8%
PUD
-
27.5%
PDP/PDNP
-
72.5% |
 Experienced Management Team
9
Steve Lucado
Chairman of the Board
Director since 2011
More than 18 years professional financial experience, including E&P CFO experience
Bachelor of Arts Degree Harvard University, MBA, University of Chicago
John Corp
President & Director
Served as a Director since 2005 and is currently acting President
More than 25 years drilling, production and operations experience
Received a Bachelor of Science Degree in Petroleum Engineering from Marietta
College
John Tumis
Chief Financial Officer
Chief Financial Officer of Trans Energy since April 2011
More than 25 years experience in financial and strategic business planning in the oil
and natural gas industry
Received a Bachelor of Science Degree from Ohio Northern University and is a
certified public accountant
Leslie Gearhart
Vice President of Operations
& General Secretary
Acting Vice President of Operations and General Secretary
Has more than 25 years of experience in the oil and gas industry
in the Appalachian
Basin
Graduated with a Bachelor of Science Degree in Petroleum Engineering from
Marietta College |
 Joint Development Partner: Republic Energy
Republic is a privately held Dallas-based E&P company
Technical team has 200+ years combined industry
experience
Former VP Geology and Head of Completion Operations for North Texas
from Mitchell Energy Corporation
Mitchell
was
the
cutting
edge
Barnett
player
–
wrote
the
book
on
shale
fracing
Focused on assets in the JV with Trans Energy
Equity financing from Energy Trust Partners (an affiliate of
Energy Spectrum) and Wells Fargo
10 |
 Competitive Market Position
11
TENG
TENG
TENG
TENG
Groves #1H
Lateral:
5,300 ft.
EUR:
1.37
Bcfe/1000
ft.
Whipkey #1H
Lateral:
2,100 ft.
EUR:
1.68
Bcfe/1000
ft.
Whipkey #2H
Lateral:
3,600 ft.
EUR:
1.83
Bcfe/1000
ft.
Whipkey #3H
Lateral:
3,600 ft.
EUR:
1.87
Bcfe/1000
ft.
Stout #2H
Lateral:
4,000 ft.
EUR:
1.99
Bcfe/1000
ft.
Keaton #1H
Lateral:
4,700 ft.
EUR:
2.03
Bcfe/1000
ft.
Lucey #1H
Lateral:
3,000 ft.
EUR:
1.22
Bcfe/1000
ft.
Lucey #2H
Lateral:
2,700 ft.
EUR:
1.37
Bcfe/1000
ft.
Goshorn #1H
Lateral:
4,300 ft.
EUR:
1.22
Bcfe/1000
ft.
Goshorn #2H
Lateral: 4763 ft.
EUR:
1.30
Bcfe/1000
ft.
Hart #28H
Lateral:
2,200 ft
EUR: 1.52 Bcfe/1000’
ft. |
 Marcellus Overview
Majority of Company acreage
located in wet gas window
NGL yields in the 1.4 –
1.9 gallons per mcf
range
Ft. Beeler processing plants provide 320
MMcf/day throughput capacity
Condensate and NGLs provide
$1.50 -
$2.00 pricing uplift
vs. dry gas
$1.50 per MMBtu breakeven
natural gas price (at current NGL
price and yield)
Low-cost, highly predictable and
repeatable play
In Trans Energy’s area of
operation, the Marcellus shale is
approximately 50 –
100 feet thick
12
Dry Gas
Wet Gas
Trans Energy Area of
Operation |
 Marshall County: Drilled & Completed
10 Marcellus wells drilled and fraced
Average 30-day IP of 4.2 MMcfe/d
20% Oil/NGLs
4,000’
Average lateral length
Average EUR / 1000’
lateral
of 1.68 Bcfe
4.5 Frac Stages/1000' lateral
Drill/time of 35 days spud
to rig release
47 remaining liquid-rich
locations in these units
13 |
 14
Wetzel County: Drilled and Completed
JV has 28,659 gross acres
of leased and owned
minerals.
Number of horizontal wells
drilled: 5
4.5 Frac Stages/1000'
lateral
Drill/time of 35 days spud to
rig release
35 ready to drill locations
61 additional potential
locations |
 Marshall and Wetzel County Well Performance
(1)
Based on realized prices of $90 per barrel Oil, realized NGL prices of $45 per
barrel and $3.00 natural gas price.
(2)
Realized $90 per barrel oil and realized NGL prices of $45 per barrel held
constant. Years
Projected Horizontal Well Results
Reserves per well: 7.6 Bcfe
30 Day IP Rates: 5.7 MMcfe/d
Percent Liquids: 20%
Gross cost per well: $7.0MM
Average Lateral Length: 4000'
IRR
(1)
: 25%
Breakeven Gas Price
(2)
: $1.50 per MMBtu |
 Marshall and Wetzel County Well Performance
Natural Gas Price ($ per MMBtu)
Projected
Horizontal
Well
Reserves per well: 7.6 Bcfe
30 Day IP Rates: 5.7 MMcfe/d
Percent Liquids: 20% |
 The
Next Step: Tyler & Marion Counties JV has 20,302 gross acres of
leased and owned minerals
8 Well drilling program
4 wells Marion county
4 wells Tyler county
Total number of wells capable
of being drilled today: 39
Total number of potential
wells: 132
17
Marion County
Tyler County |
 Wet
Gas Provides Positive Economics $2.50 NYMEX Equals $3.73/mcf Wellhead
Price •
$2.50 / MMBTU NYMEX Henry Hub
•
$85 NYMEX WTI
18
Natural Gas
Natural Gas Liquids
Condensate
Production Breakdown
.9 mcf
1.6 gallons/mcf
.00212 bbls/mcf
Gross Realized Price by Product
$2.51 net
(1)(2)
$1.09 net
(3)(4)(5)
$0.13 net
(6)
Total Realized Price per 1 mcf
$3.73/mcf
Gathering, Transportation and
Processing
($0.75/mcf)
Net Realized Price per 1 mcf
$2.98/mcf
1.
$0.02 premium to NYMEX Henry Hub
2.
1.116 MMBTU/mcf residue BTU factor
3.
40% NYMEX WTI per NGLs
4.
42 gal/bbl conversion factor
5.
90% NGLs
6.
$26.00 less WTI for Appalachian Light Sweet
One mcf Natural Gas via Wellhead Production |
 Horizontal Marcellus Production History
19 |
 Williams Partners Off-Take Agreement
20-year gas gathering agreement
with Williams for up to 45,000
MMBTU / day
90,000 MMBTU / day including
Republic capacity
Williams committed to provide off-
take for all wells to be drilled
Access to the TETCO, Columbia and
Dominion lines
Williams providing off-take for all
existing horizontal wells
Marshall County wells feed into TETCO
Hart well feeds into the Dominion line
Ft. Beeler cryogenic processing
facility started up in Q2 2011
NGL
yields
up
to
1.4
–
1.9
gal/mcf
Second facility just started
Recently purchased from Caiman
Energy for $2.5 billion
20 |
 Near Term Drilling Program
Four (4) wells in Wetzel
county drilled and
awaiting tie-in
Three (3) wells drilled in
Marshall waiting on Frac
With capital provided by
the new credit facility and
cash flow from
operations, the Company
plans to bring seven (7)
horizontal wells on line
before year end
Wells to be drilled in 2013
primarily in Marion, Tyler
and Marshall Counties to
define acreage potential
and prevent lease
expirations
21 |
 Net
Asset Value 22
Trading at significant discount to net asset value (NAV)
Trans Energy
(1)
Sum-of-Parts NAV
6/30/2012 Proved Reserves (PDP and PDNP)
25.78
Bcfe
1.00
$4.00
$25,779,400
$103,117,600
$1.96
$7.84
54 Current drilling location from existing pads
(2,
3)
170
Bcfe
$1.00
$4.00
$170,017,639
$680,070,556
$12.92
$51.68
70 Current drilling location from new pads
(2,
3)
178
Bcfe
$0.25
$0.75
$44,500,000
$133,500,000
$3.38
$10.15
Undeveloped Acreage:
Marcellus
14,000
Net acres
$1,000
$5,000
$14,000,000
$70,000,000
$1.06
$5.32
Utica
20,000
Net acres
$0
$0
$0
$0
$0.00
$0.00
Upper Devonian
20,000
Net acres
$0
$0
$0
$0
$0.00
$0.00
Less:
Net debt
($34,451,602)
($34,451,602)
($2.62)
($2.62)
Total (pre ASD warrants)
$230,443,746
$984,031,481
$16.70
$72.37
Total (post ASD warrants)
$190,644,296
$797,282,422
$13.44
$58.26
Shares outstanding
(4)
13,158,578
13,158,578
Notes
(1)
Figures below only the assets in Trans Energy's 100% wholly-owned subsidiary,
ASD; Figures do not reflect shallow well assets. (2)
Assumes
an
average
EUR
of
7.8
Bcfe
per
well
and
an
average
NRI
of
40%.
(3)
Current drilling locations defined as wells where:
(a)
ASD
currently
controls
100%
of
the
acreage
required
to
drill
each
well
(b) The average lateral length on each pad site is at least 3,000 feet,
(c) Each well is on a pad site from which ASD can currently drill at least two such
wells, and (d) Each pad site has been fully surveyed in the field, and a
judgment has been made that the topography will support the pad site (4)
Does not reflect potenital dilution due to outstanding options.
Value Per Share
Total Value
Unit Value
Category
High
Low
Low
High
Low
High |
 Why
Invest in Trans Energy? 23
Marcellus Shale Pure Play
62,688 gross acres in core of the Marcellus Shale
Utica Shale potential
Upper Devonian upside potential
High-BTU, liquid-rich focus
$1.50 per MMBtu breakeven natural gas price
Extensive Organic Drilling
Inventory
w/ Large Acreage
Position
400 + potential drilling locations
3+ Tcfe upside potential
Significant portion of acreage HBP (over 2/3)
Off-take agreements totaling up to 45,000 MMBtu per day
Improved Financials
$50 million credit facility funding near term drilling program
Experienced Management w/
Technical Expertise
More than 200 years combined management experience
Well-funded joint development partner has geologic / engineering team
|
 APPENDIX
APPENDIX |
 Overview of Recent Corporate Reorganization
The new credit facility involves a reorganization of the operating
subsidiaries and assets of Trans Energy
Below summarizes the movement of significant assets in the corporate
reorganization:
25
Trans Energy will continue to perform all accounting
and processing of mineral owner royalty payments
for Prima / shallow wells
Notes
Trans Energy, Inc. and Subsidiaries
21,739 net Marcellus acres
112 active shallow wells
Interest in 14 Marcellus wells
Office equipment and Corporate Functions
Trans Energy, Inc. and Wholly Owned Subsidiaries:
Office equipment and Corporate Functions
Wells
112 active shallow wells
Acreage rights to drill shallow (not leases)
25,683 net acres
American Shale Development, Inc. (“ASD”):
Acreage Leases (All zones below the top of the
Rhinestreet Formation)
21,739 net acres
Interest in 14 producing Marcellus wells
Before Reorganization
After Reorganization |
 Marcellus BTU Content By County
Marshall, Wetzel, and Tyler counties have high BTU content with significant
liquids potential
Marion County is dry gas
26
Well
Well Type
BTU/SCF (Dry)
BTU/SCF (Saturated)
Marshall County
Lucey #2H
Horizontal
1,228
1,208
Lucey #1H
Horizontal
1,246
1,225
Keaton #1H
Horizontal
1,238
1,216
Groves #1H
Horizontal
1,218
1,198
Stout #2H
Horizontal
1,186
1,165
Whipkey #2H
Horizontal
1,219
1,198
Whipkey #1H
Horizontal
1,225
1,204
Goshorn #1H
Horizontal
1,211
1,191
Goshorn #2H
Horizontal
1,204
1,184
Whipkey #3H
Horizontal
1,196
1,176
Wetzel County
Hart #28H
Horizontal
1,197
1,177
Dewhurst #50
Vertical
1,119
1,100
Hart #20
Vertical
1,115
1,072
Dewhurst #73
Vertical
1,090
Marion
County Blackshere #101
Vertical
1,073
1,020
@14.73 (PSIA) |
 Shrink and Gallons/MCF Correlation |
 Overview of ASD Entity
28
(1) Upon execution of its warrants, Lender will own 19.5% of ASD
3.AJDA
4.JOA
5.
Contract
Operator
Agreement
7.Overhead
Support
1.Credit
Agreement
2.Warrant
(1)
6.Administrative
Services
Republic
Energy
Ventures,
LLC
Trans
Energy,
Inc.
(OTCBB:
TENG)
Lender
Parent
Lender
Subsidiary
American
Shale
Development,
Inc.
(ASD)
Republic
Energy
Operating,
LLC
(REO) |
 AJDA Summary
Trans Energy entered into an AJDA with Republic Energy during 2007 to
develop its Marcellus acreage
29
36-50%
(3)
Contract Operator to REO
50-64%
100%
(1)
Technical Expertise & Admin
Services
Public & Management
Shareholders
Trans
Energy,
Inc.
Shallow
Conventional
Acreage
Rights
American
Shale
Development
Utica
(~26,000
net
acres)
Marcellus
&
Other
Upper
Devonian
(2)
(4,897
acres
not
in
AJDA)
AJDA Marcellus & Other Upper
Devonian Assets
43,342 Gross Acres in AMI
4 Vertical Marcellus Wells
10 Hz Marcellus Wells
4 Hz Marcellus Wells (awaiting completion)
Republic Energy Ventures &
Affiliates
Republic Energy Operating
Republic
Management
&
Energy
Trust
Partners
(1)
Reflects Trans Energy’s ownership of American Shale Development (“ASD”) prior
to potential dilution that could occur upon the exercise of the lenders’ option for 19.5% of the stock of ASD.
(2)
Includes acreage in Doddridge County that is outside of the AMI, plus approximately 4,500
acres in Wetzel County for which Republic has an option to obtain a 50% WI.
(3)
Reflects Trans Energy’s ownership of all assets within the AJDA, except for four
horizontal Marcellus wellbores in which Trans Energy owns 5% WI prior to payout, and 10% WI after payout,
per the terms of a farm out agreement with an unaffiliated third party. Trans Energy owns
between a 36% WI and a 50% WI in AJDA gross acres.
|