1. business and industrial
2. energy
3. natural gas

Innovative Sustainable Responsible
INNOVATIVE
SUSTAINABLE
Energy Recovery with
the potential to produce
more than 3.095 Tcf.
RESPONSIBLE
Production process
in known gas rich
jurisdictions.
Today’s answer
to economic gas
recovery.
Disclaimer
Certain statements included in this presentation constitute forward looking statements or forward looking information under applicable securities
legislation. Such forward looking statements or information are provided for the purpose of providing information about management’s current
expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other
purposes, such as making investment decisions. Forward looking statements or information typically contain statements with words such as
“anticipate”, “believe”, “expect”, “plan”, “intend”, “estimate”, “propose”, “projected” or similar words suggesting future outcomes or statements
regarding an outlook. Forward looking statements or information in this presentation include, but are not limited to statements or information
with respect to: business strategy and objectives; development plan; capital expenditures; net revenue; cash flow; debt levels; operating and
other costs; and taxes.
Forward looking statements or information are based on a number of factors and assumptions which have been used to develop such
statements and information but which may prove to be incorrect. Although Metgas Industries Ltd. (the “Company”) believes that the
expectations reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward
looking statements because the Company can give no assurance that such expectations will prove to be correct. In addition to other factors and
assumptions which may be identified in this presentation, assumptions have been made regarding, among other things: the impact of increasing
competition; the general stability of the economic environment in which the Company operates; the timely receipt of any services in a timely and
cost efficient manner; and the ability of the Company to obtain financing on acceptable terms. Readers are cautioned that the foregoing list is
not exhaustive of all factors and assumptions which have been used.
Forward looking statements or information are based on current expectations, estimates and projections that involve a number of risks and
uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the forward looking
statements or information. These risks and uncertainties which may cause actual results to differ materially from the forward looking statements
or information include, among other things: the ability of management to execute its business plan; general economic and business conditions;
fluctuations in oil and natural gas prices, foreign currency exchange rates and interest rates; credit risk; health, safety and environmental risks;
and uncertainties as to the availability and cost of financing. Readers are cautioned that the foregoing list is not exhaustive of all possible risks
and uncertainties.
The forward looking statements or information contained in this presentation are made as of the date hereof and the Company undertakes no
obligation to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or
otherwise unless required by applicable securities laws. The forward looking statements or information contained in this presentation are
expressly qualified by this cautionary statement.
Any financial outlook or future oriented financial information in this presentation, as defined by applicable securities legislation, has been
approved by management of the Company. Such financial outlook or future oriented financial information is provided for the purpose of
providing information about management’s current expectations and plans relating to the future. Readers are cautioned that reliance on such
information may not be appropriate for other purposes.
2
Table Of Contents
Opportunity
Pg. 04-06
Technology
Pg. 07-16
Numbers
Pg. 17-22
Lease Holdings
Pg. 23-29
Summary
Pg. 30-37
The Opportunity
Bringing to North America an innovative natural
gas extraction technology and developing long term, low cost gas
production.
•
•
•
•
•
•
•
An established method for dissolved gas extraction.
Moving to commercial production in basins with market demand
and access to infrastructure.
Total estimated natural gas resources 3.095 Tcf.
Low drilling and production costs.
Cash flow positive in 60 – 90 days / production site upon
completion of drilling.
Capex payback in ~ 3 years.
Estimated well life 30 years +.
4
The Opportunity
DISRUPTIVE TECHNOLOGY + PRODUCTION
=
PROFITS
L
Metgas has exclusive
license to a proprietary
natural gas production
process which is
environmentally
friendly & offers
compelling financials.
Moving to commercial
production in known
basins with market
demand and access to
infrastructure.
Metgas will be cash
flow positive in 60-90
days per production site.
5
The Opportunity
LICENSE OUT
TECHNOLOGY
FARM IN
AGREEMENT
WITH
PRODUCERS
BUILD OUR OWN
PRODUCTION
PROFILE
ACCESS TO
EXISTING
PIPELINES =
CONDUIT TO
STORAGE &
MARKETS
OUR GAS
RECOVERY
TECHNOLOGY
OPPORTUNITIES
6
Technology Risk Mitigation
INTERNATIONAL CASE STUDY: Japan
There is a global natural gas production facility
utilizing a process similar to Metgas’ technology
which has been in production for over 50 years.
Decades of research underpin this patent
holding proprietary technology.
Pilot test well complete: POSITIVE GAS FLOW
RESULT SEEN IN 2013.
7
2013 Pilot Test Well
Test for Dissolved Gas at the Gill 19x well
December 2012: Gill 19X gas was recompleted.
9th of January, 2013 at 12:45 pm the pump was started.
10th of January, 2013 at 12:00 pm test was complete.
Results prove our technology works: 10 Billion cubic feet
of dissolved gas can be recovered from approx. 1,000 ft.
of water sands present between 3000 to 5000 ft. below
ground in each 160 acre parcel.
8
Pilot Test Well Results
Total time pumped
1395 Minutes
23 Hours 15 Minutes
Total Water Produced
2382.3 Barrels
100,056.6 Gallons
Rate Water Produced
1.7077
bbls. / min
71.725 gallons / min
Total Gas Produced
40 Mcf
( 41.3 Mcf / day )
Gas/Water Ratio (GWR)
17.34 cu. Ft. per barrel of
water*
Daily Gas Production at 500 gpm
287.9 Mcf
* Metgas management had predicted a GWR of 17 cu. ft.
per barrel from 3,400’ below ground level.
9
Pilot Test Well Results
10
An International Case Study
GODO SHIGEN CO., Ltd.
A Japanese firm has
commercially produced and
sold natural gas from saline
aquifers consistently for over
50 years.
Initial reserves were calculated at
3.5 Tcf decades ago. Reserve
calculations are still reported at 3.2
Tcf.
The aquifer has recharged with
gas over decades, a self
replenishing resource…
11
Production Growth Profile
Gill Ranch Lease
First phase development potential
of 24 wells.
Expected annual production of
4,502,640 Mcf.
Second phase development
potential of a further 24 wells.
12
Production Growth Profile
Alaska Lease
Multi horizon resource target of
2.94 Tcf (internal calculation).
Single horizon development
potential of 47 production sites and
282 wells.
Annual production of 52,906,020
Mcf @ 282 wells.
Future expansion into two additional
horizons, for total potential of 846
wells.
13
Production Risk Mitigation
•
No seismic work necessary.
•
Targets are within established basins
with decades of hydro-carbon
production.
•
Locations chosen based on existing drill
data.
•
Published data acknowledges total
dissolved gas resources in North
American sandstone aquifers has the
potential to be up to 200 times greater
than that of conventional gas
resources…We are advancing a
massive resource opportunity!
14
Process
How Dissolved Gas
Recovery Works
15
Self-Replenishing Reservoir
Why the Resource Self-replenishes
Continuous water movement through porous sandstone units forces
gas migration from coal seams over widely disseminated areas.
Water is recharged with gas over time.
16
Capex Assumptions
•
•
•
•
•
•
•
•
Estimated cost: $9.5 million per site.
Each site includes 6 production wells, 2 re-injection wells, surface
processing facilities:
o 1 million / well
o 1.5 million for surface equipment / process facilities
Proprietary process facilities use off-the-shelf equipment from
recognized manufacturers.
Drilling to depths approx. 3,500 – 6,500 feet.
Leases are close to pipeline infrastructure.
Low exploration costs for determining targets.
Positive cash flow in 60-90 days upon completion of drilling,
Capex paid out in 3.5 years.
Further refinements and yields expected with continued
R & D.
17
Opex Assumptions
• Low power consumption.
• Gas transmission hook up in close proximity
• No fresh water transportation costs.
• Low produced water disposal costs.
• Long term production without reworking wells.
• Estimated cost: $0.71 - $1.15 mcf.*
*Assumptions vary dependent on gas lift/pump, gas/ electric
power compression, weather extremes.
18
Annual Revenue Potential
California Lease – Net Interest
Starting
• ** production the focus is in California, with the potential of 48 wells
Wells
Sites
Annual Production
$4.00 per Mcf
$5.00 per Mcf
$7.00 per Mcf
12
2
2,251,320 Mcf
$5,325,497
$7,036,500
$10,458,507
24
4
4,502,640 Mcf
$10,650,996
$14,073,001
$20,917,014
48
8
9,005,280 Mcf
$21,301,989
$28,146,002
$41,834,028
California Annual Average Natural Gas Industrial Price (Dollars per Mcf)
2010
2011
2012
2013
7.02
7.04
5.77
6.54*
*11 month average
19
Annual Revenue Potential
Alaska Lease – Net Interest
Alaska offers tremendous upside with 282 wells
Wells
Sites
Annual Production
$4.00 per Mcf
$5.00 per Mcf
$7.00 per Mcf
48
8
9,005,280 Mcf
$23,868,494
$31,354,133
$46,239,861
96
16
18,010,560 Mcf
$47,736,989
$62,708,267
$92,479,722
192
32
36,021,120 Mcf
$95,473,978
$125,416,534
$184,959,445
282
47
52,906,020 Mcf
$140,227,406
$184,205,535
$271,659,186
Alaska Annual Average Natural Gas Industrial Price (Dollars per Mcf)
2010
2011
2012
2013
4.23
3.84
5.11
7.67|*
*7 month average
20
Operational Capex
Return vs. Gas Pricing Gas Powered Gas Lift
Payback Per Production Site – California (Gas generated Gas Lift)
Gas Price
$4.00
$5.00
$7.00
Annual Gross Revenue
$4,502,640
$5,628,300
$7,879,620
Net Interest
$3,602,112
$4,502,640
$6,303,696
Net Interest Cash Flow
$2,662,748
$3,518,250
$5,229,253
CapEx.
$9,500,000
$9,500,000
$9,500,000
43 months
32 Months
22 months
Return on Investment
21
Operational Capex
Return vs. Gas Pricing Gas Powered Gas Lift
Payback Per Production Site – Alaska (Gas generated Gas Lift)
Gas Price
$4.00
$5.00
$7.00
Annual Gross Revenue
$4,502,640
$5,628,300
$7,879,620
Net Interest
$3,939,810
$4,924,762
$6,894,762
Net Interest Cash Flow
$2,983,561
$3,300,435
$4,867,353
CapEx.
$9,500,000
$9,500,000
$9,500,000
38 months
29 Months
20 months
Return on Investment
22
Initial Focus
CALIFORNIA
Excellent available
infrastructure
Industry active for
100 years.
CA is a net importer
of 90% of it’s natural
gas requirements.
ALASKA
Significant long term energy
demand.
Major gas supply shortage
for is consistent
international exportation.
ConocoPhillips’ Kenai LNG
plant has 90 Bcf capacity. In
April 2014, ConocoPhillips
Local fracking
opposition is a perfect received a license to export
40 Bcf over two years.
opportunity for
Metgas.
23
California Lease Holdings
•
•
•
•
•
1,120 acre lease in San
Joaquin valley.
Permitted – Division of Oil
& Gas Geothermal
Resources (DOGGR).
Multi horizon development
plan: Garzas, Santa
Margarita formations
Capacity: 48 wells.
Resource target: 60.9 Bcf
(internal calculation).
24
California – Gill Ranch
Target Formations
Santa Margarita / Zilch
Formations
Average Depth
3,200 feet
Average Thickness
500 feet
Average Porosity
30%
Gas:Water Ratio (GWR)
18
Garzas Formation
Average Depth
4,800 feet
Average Thickness
315 feet
Average Porosity
35%
Gas:Water Ratio (GWR)
20
Stratigraphic columns for the northern, central, and southern San Joaquin Basin
25
Gill Ranch, California
Local Infrastructure
26
Gill Ranch, California
Well Site Locations
27
Alaska Mental Health Trust (MHT)
Lease
•
•
•
•
•
•
Knik Arm, Cook Inlet Region
22,600 net acres.
Resource target:
2.94 Tcf.
Initial well design is for: 282 wells @ 80
acre spacing.
Potential for 846 wells in total (three
horizons).
Proposed pipeline in AK is adjacent to
our lease, substantially increasing our
access to the export market.
28
Alaska Target Formations
3 Target Zones:
• Sterling – Depth dependent
• Tyonek – Depth dependent
- Priority Beluga Formation
Average Depth
4,500 feet
Average Thickness
1950 feet
Average Porosity
32%
Gas:Water Ratio (GWR)
25
29
Share Structure
Share Structure
Issued & Outstanding
Options (reserved)
Debt
Management Holdings
51,253,272
5,100,000
$0
49%
30
Summary
WHY HAS THE
INDUSTRY MISSED
THIS?
• The focus is on unconventional shale.
• Industry views produced water as a
problem.
The Metgas difference:
• Metgas’ innovation uses water as the
vehicle to deliver gas.
• Metgas’ dissolved gas process returns
water to the same aquifer to flush and
mobilize continuous gas migration.
THE PROCESS IS A SOLUTION FOR LONG TERM,
RENEWABLE GAS PRODUCTION THROUGHOUT
NORTH AMERICA.
31
Summary
OTHER
CONSIDERATIONS
•
Water processing does not compromise
standard oil and gas technologies.
•
No competition with oil and gas
companies for the same target
structures.
•
The Metgas process complements
other development in the same basins.
METGAS MEETS THE DEMAND FOR LOW COST
GAS PRODUCTION WITH A REDUCED CARBON
FOOTPRINT
32
Corporate Team
GARY F PLAYER (AAPG, P. Geo.,) Chief Technical Officer
Mr. Player has led the research of Dissolved Gas Recovery for Metgas Industries. The culmination
of his research and studies led to a successful test well in January 2013 on our acreage at Gill
Ranch in the San Joaquin Valley of central California, USA. Mr. Player's experience includes:
• B. Sc. Geology, Stanford 1964; M.A. Geology UCLA 1966; A.A.P.G Certified Petroleum
Geologist, Professional Geologist (UT, ID,AZ,CA); Qualified Environmental Professional .
• Over 48 years of petroleum industry experience directly involved in the discovery of over 5
billion tons of coal, 1 Tcf of Natural Gas (Cook Inlet basin) and 20 billion barrels of oil (North
Slope, Alaska).
CHUCK OBORN Water treatment / Gas Separation
Mr. Oborn is responsible for designing the above ground separation technology utilized by
Metgas. He specializes in water treatment and since 1991 his systems have successfully
processed storm water and groundwater on hundreds of projects in many locations throughout
North America.
Mr. Oborn has designed and built numerous systems to comply with Federal and State regulations
addressing the Endangered Species Act, and The Clean Water Act. He was instrumental in the
development of an industry that bridged the divides between regulators, developers, and
Environmental Activists. His experience also includes Industrial Maintenance, troubleshooting of
electrical, plumbing, ventilation, HVAC, welding, fabrication of process equipment.
33
Corporate Team
RICHARD F MCNICHOL (AScT., Groundwater Geologist) Technical Advisor
Mr. McNichol has over 40 years of experience in water supply projects and industrial scale
project management. His expertise includes water supply and treatment, ground source
energy, pump projects and expansive irrigation projects. His work has led him throughout
North and South America, Africa and the Caribbean. Mr. McNichol has particularly special
competence in the following: Ground water supply studies, drilling and well design/completion.
Construction of de-watering and well rehabilitation systems.
GEORGE NICHOLSON, P. Geo., President/Director, Founding Director
UBC educated and a Registered member of the Association of Professional Engineers and
Geoscientists of British Columbia, and a Fellow of the Royal Geographical Society. Since
1983, he has been involved in all aspects of natural resource project research, syndicate
and public company financing and mineral exploration. Mr. Nicholson’s experience also
includes claim staking public company formation, structuring and financing, resource
development, and reclamation.
JASON LEIKAM, CEO/Director
Mr. Leikam is a founding director of Metgas. He has been involved in the natural resource
sector for over 15 years, with a focus in advancing new ventures from discovery to cash flow
stage. Mr. Leikam has experience in corporate development of both private and public
companies. From 2011 to present, his attention has been in launching private start up
companies in the natural resource sector.
34
Development Strategy
3 – 6 MONTHS
•
•
•
•
•
Drill, complete first production site for Garzas formation at Gill Ranch lease.
Cash flow 60-90 days after completion.
Establish sub license agreements for application in additional jurisdictions.
Initiate permitting at MHT lease.
Expand permitting at Gill Ranch.
6 – 9 MONTHS
•
•
•
Initiate development remaining three sites for Garzas formation at Gill
Ranch.
Secure additional acreage in San Joaquin Valley, California.
Continue R&D for production refinements.
9-12 MONTHS
•
•
Initiate first production site at MHT lease.
Engage local Alaskan stakeholders for production opportunities on
additional acreage.
35
How many requirements do you
need for a Natural Gas investment?
2 Quality land packages in established basins.
Environmentally friendly production.
Wells produce for 30+ years.
Exclusive technology access.
INVESTMENT
WORTHY?
Self-replenishing resources.
Proprietary gas extraction
technology.
Avg. $1 per mcf OPEX.
Multi Continent Opportunity.
Access to existing pipeline infrastructure.
Clean technology meets self-replenishing natural
gas production. Unlock the opportunity.
302 – 675 West Hastings St.
Vancouver BC, Canada V6B 1N2
T: 604.559.0505
F: 604.682.1816
[email protected]
www.metgasindustries.com
October 2014