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PRESENTATION TO THE BOARD OF YJ CIMA GBC 2015

PRESENTATION TO THE BOARD OF YJ CIMA GBC 2015. Prioritisation. 1 . 3/4 Licensing Applications Won. 2. Militant Threat & Safety Compromise (DrillT). 3. Sustainability & YJ’s Long-term Future. 4. Farm out Offer from Liquid Gold (LG). Priority Meter. Urgency. Impact.

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PRESENTATION TO THE BOARD OF YJ CIMA GBC 2015

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  1. PRESENTATION TO THE BOARD OF YJ CIMA GBC 2015

  2. Prioritisation 1. 3/4 Licensing Applications Won 2. Militant Threat & Safety Compromise (DrillT) 3. Sustainability & YJ’s Long-term Future 4. Farm out Offer from Liquid Gold (LG) Priority Meter Urgency Impact

  3. Priority 13/4 Licensing Applications Won Presented by : Raymond Miiro “Co-ordinator”

  4. J & S model Priority 1: 3/4 Licensing Applications Won Evaluation of Opportunity   ?

  5. Priority 1: 3/4 Licensing Applications Won Feasibility - Money $69.84m 2015 cash forecast $54.4m after working capital Balance in cash budget for T/D, Head hunting, etc. Gearing up 4.4% but still within optimal zone Cheaper form of finance but more risky But tax saving per MM theory Pecking Order Theory Costliest but least risky form of financing Reduces gearing but has subscription risk –never done since IPO!

  6. Priority 1: 3/4 Licensing Applications Won Feasibility – Managerial Capacity Head hunting Time effective But costly – provision in cash budget Training & Development Cost effective but Time consuming & risk of loss –budgetary provision made! Outsourcing the Management of Drilling Time effective but Bad idea to outsource your core competency / strength of managing outsourcers

  7. Priority 1: 3/4 Licensing Applications Won Recommendation Ethics What? Accept all three licenses Why? This opportunity is Suitable, Acceptable and solutions were found to make it Feasible. How? • Raise finance through cash and debt –cheaper and within optimal capital structure zone! • T & D should be undertaken in combination with head hunting. • Use provision made in cash budget to finance the above.

  8. Priority 2Militant Threat & Safety Compromise (DrillT) Presented by : Tshenolo Ramawela “Specialist”

  9. Priority 2: Militant Threat & Safety Compromise (DrillT) Assessment of Threat

  10. Priority 2: Militant Threat & Safety Compromise (DrillT) Options Based on 4Ts of Risk Management

  11. Priority 2: Militant Threat & Safety Compromise (DrillT) Recommendation Militant/Security threat • Lee Wang to instruct YJ’s contracted international security company to deploy more security in the AAA field. (Treat) • Jason Oldman request government to strengthen security (Transfer) Immediate safety danger • Interim Engineer to be redeployed from Asian field until incumbent arrives. (Treat)

  12. Priority 3Sustainability & YJ’s Long Term Future Presented by : Tshegofatso Makhene “Team Leader - Finisher”

  13. Priority 3: Sustainability & YJ’s Long – Term Future Analysis of Opportunity Oil is a finite fossil fuel, YJ 7 years of reserves – going concern Exit or Diversify into Renewable Energy Sources Sustainability

  14. Priority 3: Sustainability & YJ’s Long – Term Future Shortages long-term T&D required Buyers Oil Refineries Future Buyers Solar = Construction Bio energy = Agriculture Solar/wind Extraction outsourced too? Solar/wind Storage & Transport how? Capital Intensive Risk vs. Return Green Investors required

  15. Priority 3: Sustainability & YJ’s Long – Term Future Recommendation What ? Diversify into renewable energy sources Why? • Exit E&P market could unsettle investors and damage shareholder value • It’s a far less disruptive change in core competencies than entering new industry. How? • The board should set up a sustainability committee - Sustainability/Change Management Plan • Rollout Plan to be communicated widely – reposition YJ in relation to Greenbies Protest

  16. Priority 4Farm out Offer from LG Presented by : Raymond Miiro “Co-ordinator”

  17. Priority 4: Farm Out Offer From LG Evaluation of Opportunity   Modified ERM Framework   Source: U.S. Energy Information Administration

  18. Priority 4: Farm Out Offer From LG Recommendation What? YJ should not accept the farm out offer Why? Although it alleviates the operational challenges, strategically and financially it is unsound and the compliance terms can be negotiated but too onerous. How? • Jason Oldman to draft letter to LG declining offer, but clarify that they will reconsider it in the futures. • Orit Mynde should take steps to upgrade YJ from AIM to main board listing to broaden its investor base. • Take steps to attract better farm-out offers e.g. expression of interest.

  19. Ethical Considerations Presented by : Justice Tshabalala “Team worker”

  20. Ethical Considerations Corporate Governance PIPCO

  21. Ethical Considerations Underlying Ethical Issue

  22. Ethical Considerations Advice

  23. Thank you Questions ?

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