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PRESENTATION SYNOPSIS

Gabriel
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PRESENTATION SYNOPSIS

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    1. PRESENTATION SYNOPSIS INTRODUCING NDEP. THE ND GROUP HUMBLE START UP CONCEPT EXPERIENCES OF an Ind Co. PART A: THE BEGININIG PART B: RAISING CAPITAL CHALLENGES LESSONS LEARNT OUR FIELD DEVELOPMENT EFFORTS Transforming into a SVP SUMMARY & HIGHLIGHTS OF THE 1ST FIELD DEVELOPMENT PROJECT. COMMITING TO LOCAL CAPACITY UTILIZATION & DEVELOPMENT PARTNERING WITH THE HOST COMMUNITIES A 1ST NEW APPROACH MONETIZING OUR GAS RESOURCES OUR SCORE CARD TODATE CONCLUSION SECURING & ADVANCING INTO THE FUTURE WHAT ND WILL BE THE IMPACT OF NDEPS ACHEIVMENTS 1

    4. INTRODUCING NDEP PLC

    5. 5 THE ND GROUP

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    7. OUR HUMBLE BEGINNINGS:- A START-UP CONCEPT There was a Growing realization that numerous small oilfields found by the majors were not being developed and that Nigerians were not sufficiently involved in its Oil & Gas industry. 1989 saw the culmination of the above factors into a consolidated push for effective Nigerian participation in the upstream sector. Today's NDEP is a modestly run, successful, fully indigenous and Independent Junior Oil Company. ..pioneering the development of Nigerias smaller oil fields 7

    8. EXPERIENCES

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    10. Part A: The Beginning Background There was little or no opportunity for participation in the Nigerian upstream industry. Nigerians recognize the need for Indigenous oil companies There was heightened uncertainty about attracting funds for new ideas. State involvement in all aspects of economic life, Political uncertainty and low oil prices. The Start Up of The ND Idea: To raise money to invest in Nigerian upstream Oil and Gas projects. To nurture an investment vehicle for ordinary Nigerians. That will identify a VIABLE E&P opportunity and then raise the necessary funding to pursue same. Realization that a technical partner was not necessary, since operating the field on our own, would mean a substantial amount of money being saved. 10

    11. Pursuit Of An Asset: Approached Chevron Nigeria Ltd (CNL), the operator of the NNPC/CNL J.V a company familiar with the concept of Farm-In & Farm-Out concepts. Chevron had at that time taken over all of (Gulf Oil) assets in Nigeria (Ogbele field included), and was also more sympathetic to indigenous participation and local capacity building than any of the other established multinationals operating in Nigeria at that time. CNL also had an innovative CEO (Bill Edman) who sought for profit out of not producing oil Bill & His Senior Nigerian Management Team Shared the belief that Nigeria must create and grow its own indigenous oil industry. 11

    12. Result Of The Pursuit Chevron agreed in principle to negotiating a Farm Out Agreement in 1993, with an initial offer to consider 12 candidate Marginal Fields. ND + CHEVRON by 1996 had initiated a FOA on 2 Field In 1999 Government granted consent for the Farm-Out of the two fields (Ogbele and Omerelu fields) to ND. In 2000, a Farm-Out Agreement was signed with the NNPC/ CNL JV. Hand over of Assets (2 Suspended Wells and a disused Road) The terms of the Farm Out agreement between NDPR and the NNPC/CNL JV included: An ORRI of 5.25% payable in Kind to the NNPC/Chevron JV NDPR to fund 100% of Field development costs Chevron will offer no further support to NDPR towards obtaining all requisite regulatory and statutory approvals 12

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    14. Part B: Raising Capital for the 1st Field Development 1. SHARE SUBSCRIPTION: Shares initially sold by word of mouth Shares were further sold through Private Placement in Nigeria. The amount raised was insignificant compared to the required capital needed to develop the field. The company therefore embarked on an IPO. 2. IPO: In 2001 the company embarked on an IPO. Looked to raise $5.920 million (NGN710,399,974) The offer was not underwritten Raised 40% of cash required 14

    15. SPECIAL INSTRUMENTS. 3. IPI NOTES NDEP created a financial instrument - the Irredeemable Participating Investment Notes (IPIN), which allowed direct participation in revenue from the Field Development. $ Denominated Investment Notes (IPINs) were issued to securitize the participation rights of subscribers to the investment notes in the cost to be incurred and corresponding profits derived from the Ogbele field. 15

    16. PROJECT FINANCING. 4. PROJECT FINANCE Local Banks did not have much understanding of the Nigerian upstream oil & gas project funding and were not willing to give the company any credit facility. Offshore Banks with an understanding of the oil & gas industry were not willing to take a risk on a company in far away Nigeria. International multilateral agencies had little confidence in Nigeria. FINALLY: In June 2004 a local bank (Intercontinental Bank Plc) finally consented to Project Financing by granting a $6 million in a Project Finance lending in local currency-the Nigerian Naira equivalent. The company therefore opted to borrow $6 million equivalent at an interest rate of over 24.5%, with a 6 month moratorium and monthly re-payments starting with effect from commencement of oil production. Plus a further budget overspend of $2.o M (Naira Equivalent) 16

    17. CHALLENGES OF THE CAPITAL RAISING EXECISES Lack of understanding of the companys business proposition. Slow pace of sale of shares compared to the speed of the field development. The general public would rather buy shares in more established companies and not in an unknown start-up Oil Company. ND Shares were seen as Unquoted company stock, therefore Institutional Investors were not interested. Most investors decided on a wait & see approach. 17

    18. LESSONS LEARNT Selling the idea of being an indigenous oil producing company was extremely difficult for the Nigerian Investing Public. Little or no Long Term Capital within the Nigerian Financial Market Raising funds via the IPO route was difficult, as the shares did not sell as quickly as first thought. 18

    19. OUR 1st FIELD DEVELOPMENT EFFORTS Transforming into a Small Volume Producer. (SVP)

    20. OUR MISSION The optimal AND safe development of the Ogbele Marginal Field, the production of oil & gas, and the ultimate processing of the associated gas into higher value products 20

    21. SUMMARY & HIGHLIGHTS OF THE OGBELE FIELD DEVELOPMENT PROJECT 2004 -5 Rehabilitated Access Roads and Well-1 Location Re-entered and completed Well-1 (13,230ftah) Installed a 12,000 bopd capacity Flow station with a 20,000 bls on site storage facility + 8km of Flowlines and 6km of 6 export Pipeline Tested 1st oil August 28, 2005 Commenced oil production to Bonny Terminal via Tie-In to Shells Rumuekpe Manifold Station on the 30th October 2005. 1ST Crude export 27th November 2005. At a time when Oil price had climbed to $54/bbl 2006 Debt repayment year (full liquidation of debt in 12 installments) Total pay back of $13.4 million. Maintained production @ 3500 b/d 21

    26. Re-entered and completed Well-2 as a gas Producer. Drilled successfully Ogbele Wells #3, 4 and 5. Concurrent Drilling and Production operations. 3 years of steady (with occasional but minimal community related disruptions) to Oil Production Operations Flow Station Capacity expansion. Enhancement to 20k b/d facility. Procured a 1000 b/d Topping Plant to be operational by 4th Qtr 2009. Currently producing 5000 b/d with an expectation of 7500 b/d by 06/09 26

    30. COMMITMENT TO LOCAL CAPACITY DEVELOPMENT SERVICE PROVIDERS 75% of Ogbele Field expenditure disbursed to indigenous service provider companies. Most companies engaged had near 100% indigenous 3rd party vendors & suppliers. In certain cases actual contracts were given to communities & or land owning families for economic empowerment at the host community level. 30

    31. THE HOST COMMUNITY & ENVIRONMENTAL DEVELOPMENT TRUST. PARTNERING WITH OUR HOST COMMUNITIES NDPR has set up the 1st ever Host Community & Environmental Development Trust in the history of oil exploration and production in Nigeria. The Trust is financed by 5% of the Net Profits of the Ogbele Field revenues. Funds in excess of $3.5 M has accrued to-date to the Trust for the exclusive use of the Host Communities. ( 5 Nos within our Operating Area) A % of the funds is being invested for the future returns and benefits of generations in the Host Communities through a Portfolio of investments being managed by a Board of Trustees. The balance of the net Profits + the income from investments are used to finance Host Community self development and Economic empowering projects proposed and cleared through the Board of Trustees by the Host Communities themselves. 31

    32. SUSTAINABLE DEVELOPMENT COMMUNITY PROGRAMME 2008 ACTUAL Provision of a sum of N1m for the refurbishment of a bus each for National Union of Ekpeye students and Ekpeye Youth Congress Provision of two brand new Toyota Hiace buses at a cost of N9.02m for Otari Community. Plans are ongoing under the community and Environmental Development Trust program to supply electricity to the first of five host communities. Community to complete distribution implementation. Bursary awards to all fee paying students in Post Primary & Tertiary institutions from Ogbele/ Otari/ Obumeze Communities at a cost of N15m as fees and subsistence allowances. Security information networking in Otari community and environs amounted to cost N1.243m 2009 PROPOSED Temporary reconstruction of Okoma-11 bridge in Oshiugbokor Community valued at N 9.142m Ultra modern Town Hall for Otari Community at cost of N54,864,880. Grading of Obumeze Access road valued at N7,926,400 Rehabilitation of a road within Otari community at a cost of N3m. Bursary awards to students from our hosts communities in Post Primary and Tertiary institutions. Empowerment for women and the girl-child in all our host communities. Completion of Ogbele community road project costing N189,465,121.76

    33. MONITIZING OUR GAS RESOURCES & COMPLYING WITH GAS FLARE-OUT. The Gas Monetization Program ND has committed to monetizing its Gas Resources & to fully comply with the Gas Flare-Out Policy of the Federal Government. The design, fabrication and installation of a 100MMSCF/D Gas Scrubbing Plant. Installation of a 20km 12 Gas Pipeline to NLNG Rumuji Manifold. Production of LPG (initial 7900kg/day) with dedicated storage and loading bay facilities. Commit to domestic gas supply obligations and LPG, Propane & NGL sales to domestic market. Commit to Tail Gas supply to NLNG Train 6 via a GSA with the (NNPC/SPDC JV) with a Start-up off take of 35mm scf/d.

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    35. CONCLUSION

    36. SECURING & ADVANCING OUR FUTURE NDEPs future development plans will see it grow to a Company with a capital base in the region of US$500 million over the next 3-5 years. NDEP expects to capitalize on the following opportunities that have been identified as the foundation and main drivers of NDEPs attainment of its objectives: The full development of a 2nd Field The Omerelu Marginal Field (OML 53) The development of New and nearby stranded production or Mothballed Field Assets. The Acquisition of existing producing, (Matured) Land and Swamp based assets of the NNPC/Multinational Joint Ventures. New Exploration Assets within The Niger Delta and the Sub-Saharan African Region International Non - African Producing Assets. 36

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    39. THE IMPACT OF NDEPS ACHEIVEMENTS The Economic Development of its Host Communities. Contribution to Nigerias productive sector of the Petroleum Industry. Indigenous Capacity Building. Pioneered the acceptance of Naira settlement for Oil Field Services. The maximization of local content and the development of Nigerian capacity. The infusion of a strict commercial orientation into all aspects of our operations which in turn has fostering an enabling business environment with minimal political interference. 39

    40. THANK YOU 40

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