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Oklahoma HC Project

Osage County, OK
Large Scale Oil & Gas
Development Opportunity

NYSE: HK

Legal Disclaimer / Forward Looking Statements


All statements, charts and graphs made in this PowerPoint other than purely historical information are forwardlooking statements within the meaning of federal securities laws. These statements reflect expectations and
are based on currently available information. Forward-looking statements include statements regarding future
plans and objectives, future exploration and development expenditures, number and location of planned wells,
as well as statements regarding the quality of our properties, potential reserves, and production levels. These
statements may be preceded or followed by or otherwise include the words believes, expects, anticipates,
intends, continues, plans, estimates, projects or similar expressions or statements that events will,
should, could, might or may occur. Except as otherwise specifically indicated, these statements assume
that no significant changes will occur in the operating environment for oil and that there will be no material
acquisitions or divestitures except as otherwise described.

The price of oil is subject to change. We may also make material acquisitions or divestitures or enter into
financing transactions. None of these events can be predicted with certainty and are not taken into
consideration in the forward-looking statements. Actual results may vary materially from the forward-looking
statements, and we cannot assure you that the assumptions used are necessarily the most likely. We will not
update any forward-looking statements to reflect events or circumstances occurring after the date the
statement is made except as may be required by applicable securities laws.
Please note that this webinar/PowerPoint is an interest seeking presentation only. The investments and
strategies mentioned in the presentation may not be appropriate for everyone; other options not mentioned
may be more suitable for your specific circumstances. Past performance is no guarantee of future results.
Projected or discussed rates of return (ROI) on an investment discussed herein is not a guarantee that this rate
of return will be achieved. While every effort is made to maintain accurate, current information, the possibility
of errors and/or updates always exists. No guarantee is made that all information is current and accurate.
Investor agrees to perform their own due diligence and take full responsibility in satisfying themselves as to
the accuracy. Any projections, opinions, assumptions, or estimates used are for example only and may not
represent the current or future performance of the project.

The Executive Management Team

Rick Coody
President
Ron Clark
Vice President

Oil Field Operations


Reworking Old Wells
Drilling New Ones
Business Strategy

Marketing Communications
Business Strategy
Investor Relations
IT
Internet
Website Design
Computer Technology

Wanda Sanders
CFO
Handles the Financial and Administrative Side of the Business

Ron Herzfeld
Vice President
Geologist
Drilling Strategy
Business Strategy

Our Formula for Success


People +

Process +

Our Unique Business Model

Product

= Success

+ the numbers must make sense!


It takes experienced credible people with the knowledge and
required skills to deliver results and get the job done.

Rick Coody
"Field General" in charge of Oil Field Operations.

Handles drilling new wells, reworking old ones, and oil & gas lease acquisitions.
Has lived and worked in the OK/KS area his entire life.
25+ years oil & gas industry experience (14 years at Schlumberger).
Much of his career in the oil & gas industry has been in Management in the
Well Service area or as an Owner of Technology Companies.

Hired as a consultant by oil & gas companies in OK and KS to direct and manage
new well drilling and field development programs.
Manages and works closely with geologists and drilling contractors,
as well as with cementing and frac companies.
Responsible for executing each step of the drilling program through
completion and putting the wells into production.
Involved as a consultant in over 200 oil & gas wells from 2008 to 2013.
Oil production ranged from 3 to 20 barrels of oil per day.
New wells and reworked older wells.

Some involved a waterflood program designed to pressurize a formation and drive


oil up to the earths surface through producing wells.

President

Ron Herzfeld
Supports "Field General with Geology, Business Strategy, and Business Development.
Studies and analyzes oil & gas formations and then develops a drilling strategy.
B.A. degree from University of Texas / Captain in United States Marine Corps.
30+ years oil & gas industry experience.
Expertise and experience:
Oil field exploration and drilling oil & gas wells at depths from 500 to 18,000 feet.

Geologist

Waterflood, gas gathering, pipeline operations, gas compression and refining operations.

Active member of the Society of Petroleum Engineers (SPE); American Association of Petroleum
Geologists (AAPG); Geological Society of America (GSA); and New York Academy of Sciences (NYAS).
His work with magnetic geophysical exploration has led to the discovery of
major hydrocarbon reserves in the U.S., Canada, and Australia.
He has been widely published in the oil & gas industry . . . in publications such as
the Oil and Gas Journal and World Oil.

The production from oil & gas wells Mr. Herzfeld drilled, reworked, and
operated over the past 17 years is 648,281 Barrels of Oil* and 4,072,174,000
Cubic Feet of Gas*. Thats around $50,000,000 at today's prices.
He has also made 10 new oil & gas field discoveries.
*Numbers based on Railroad Commission of Texas Records RRC ID #681459

New Oil & Gas Fields Discovered by Ron Herzfeld


New Oil & Gas Field and Reservoir Discoveries Attributed to Ron Herzfeld
(production from non-discoveries not listed)
County
Atascosa, TX
Brazos, TX
Frio, TX
Frio, TX
Frio, TX
Frio, TX
Kleberg, TX
Waller, TX
Waller, TX
Waller, TX
Young, TX
Zavala, TX
Zavala, TX

Well
Lawson West #1
Burkhart Lease (4 wells)
Brown #1
Hitzfelder #5
Hitzfelder #3 & #8
Hitzfelder A
Salazar Unit #1
Stowe #1
Stowe #2
Stowe #3
Shanafelt #1A
Jennings #1
Jennings #2

Field
Lawson West (Reef)
Kurten (Buda)
Big Foot, N. (Olmos)
Pure Ranch (Serpentine)
Pure Ranch (Anacacho)
Pure Ranch (A Sand)
Heep (Baffin)
Brookshire Dome
Brookshire Dome
Brookshire Dome
Shanafelt (Miss)
Jennings 300 (Anacacho)
Jennings 300 (Anacacho)

First
Production

Last
Production

Oil
(Barrels)

Gas
(MCF)

Nov 2006
Jan 1987
Feb 1999
Mar 1998
Aug 1997
Aug 1998
Jun 2000
Oct 2001
Jan 2002
Nov 2001
Mar 1976
Nov 2009
Mar 2012

Current
Feb 2000
Jan 2002
Current
Current
Current
Aug 2003
Nov 2002
May 2002
Dec 2014
Current
Jan 2013
Current

8,845
254,517
124,449
247,408
6,297
41,362
64,822
64,917
-

156,038
91,285
511,248
111,435
31,872
2,328,948
314,734
27,837
268
79,647
108,763
52,160

812,617

3,814,235

Depth
(Feet)
3,921
8,220
3,346
3,000
3,000
2,550
9,618
1,180
980
2,700
4,979
1,746
1,800

Ron Clark
Supports "Field General" with Business Strategy and Business Development.
Handles Marketing Communications, Investor Relations,
and IT/Internet/Website/Computer Technology.
B.S. degree in Aerospace Engineering from Penn State University.
Worked in Aerospace industry for six years at NASA and McDonnell Douglas.

Vice President

Transitioned from engineering to sales and marketing when joining Hewlett Packard (HP)
working for four years with business and engineering computer systems as a
systems analyst, an instructor, and in sales/marketing.
Worked in a sales/marketing capacity with Computervision for eight years and was a key
contributor in pioneering and defining the CAD/CAM marketplace. Wrote the first CAD/CAM
paper that defined the central database concept that would eventually automate the design,
engineering and manufacturing side of companies similar to what IBM had done to automate
the business side of companies. Responsible for millions of dollars in sales of CAD/CAM
systems to Fortune 500 companies, such as General Dynamics, Martin Marietta, Hughes,
Rockwell International, Beckman Instruments, Solar Industries, Rohr Industries, Garett Air
Research, and Bertea.
Became an entrepreneur working with start-up companies in various capacities from V.P. of
Sales & Marketing to President and CEO . Wrote business plans for them, "packaged
them", helped them raise venture capital, developed their marketing materials,
applied for patents, developed international markets/business, and much more.

Wanda Sanders
Handles the Financial and Administrative side of the business.
M.B.A. from Golden Gate University in San Francisco, CA.
Bachelor of Science in Business Administration in Finance.
Held executive-level positions at Hewlett Packard,
Verizon Communications and Alere.
Senior-level business leader with a successful track record producing
tangible results in three diverse industries: high tech, telecommunications
and medical devices/biotech.
In her spare time she has served as a member of several Philanthropy Boards
administering an annual budget of $66M designing and implementing Scholar
Programs for students throughout the USA. Recently, she was nominated and
featured in the annual issue of the Minority MBA magazine listing her as one
of the Next Generation of Business Leaders to watch based on her proven,
outstanding Leadership Qualities in her field. She has excellent administrative,
financial, project management, leadership and communication skills.

CFO

Asset Acquisition in Dec 2014


HALCON Resources: Public company with a prime oil & gas
rich 6,800 acre lease in Osage County, OK.
Spent over $50M on infrastructure and development.
Their plan: Develop the lease by drilling horizontal wells.
Recent large drop in oil prices combined with their flawed
development plan forced them to unload this asset.
Created an opportunity for us to acquire it.
A high quality oil & gas asset like this rarely becomes available in this
area of Oklahoma. Rick Coody has lived and worked in the oil & gas
industry in Oklahoma all his life. He has never seen an oil & gas asset
of this quality become available because they are usually scooped
up by large companies before they even hit the market.

Lets look at the


acquired HALCON
$50M+ infrastructure.

Pumping Equipment
Submersible Pump

Pump Jack
Extracts fluids (oil, gas, and salt
water) from an underground
formation reservoir. Fluids then
go into a separator.

Tank Batteries

Tanks store oil and salt water.


3 oil storage tanks store oil prior to it being
picked up by the oil purchasing company.

Horizontal & Vertical Separators


Vertical Separator

Horizontal Separators

A separator is a large vessel designed to


separate production fluids into their
constituent components of oil, gas and water.

Fiberglass Salt Water Storage Tanks

Underground salt water


brought to the earths surface
when drilling a well goes into
a fiberglass storage tank.

Salt Water Disposal Wells

These are heavy duty


salt water disposal wells.

Underground salt water


brought to the earths
surface when drilling a well
goes into a fiberglass water
storage tank and then is put
back into the ground using a
salt water disposal well.

Electrical and Tank Controls

Gas Sales Meter

Gas sales meter with electronic measuring system

Lets look at
Oil & gas Production
from Existing Wells

Its a Revenue Producing Asset


7 Producing wells (3 Horizontal and 4 Vertical)
6 SWD (Salt Water Disposal) wells
Production Revenue from Oklahoma HC Project's Acquired HALCON Asset
February to June 2014 (5 months)
Well Name

Gross Gas
MMBTU

Gas WI Net
Revenue

Gross Oil
Barrels

Oil WI Net
Revenue

Monthly
Total

Rock Creek 4-9H

6,144

$14,956

341

$27,882

$42,838

Surber 1-26

20,211

62,635

209

15,688

$78,323

Surber 2T

5,390

16,706

70

5,229

$21,935

Ricketts 2-35

3,594

11,136

105

7,966

$19,102

Ricketts 3-26

14,721

48,720

70

5,229

$53,949

Ricketts 4-35H

8,646

26,467

70

5,653

$32,120

Strike AXE 5-36H

39,388

120,556

1,390

111,951

$232,507

Total

98,094

$301,176

2,255

$179,598

$480,774

Monthly Average

19,619

$60,235

451

$35,920

$96,155

2015 Oil & Gas Production


7 Producing wells (3 Horizontal and 4 Vertical)
6 SWD (Salt Water Disposal) wells

Oklahoma HC Project Production


Q1 2015
Barrels of Oil
Cubic Feet of Gas
Barrels of Oil Equivalent (BOE)
BOE/Day

Jan

Feb

Mar

110

281

448

7,692,000

9,369,000

14,462,000

1,436

1,896

2,941

46

68

95

February to June 2014 (5 months) monthly average for Barrels of Oil produced was 441. In
March of 2015 the oil production for the month was 448 barrels. The reason why January and
February of 2015 are lower is that this area of the U.S. experienced the worst winter weather
in 50 years, with temperatures frequently dipping down to 5 F to 20 F. Anytime the temperature
gets down under 20 F for a sustained period of time, oil & gas wells have to be shut-in (turned off)
because freezing water can damage the well and tank battery hardware. So the wells had many
days with no production in January and February of 2015 because they were shut-in.

Oil & Gas Production from Strike Axe Well


Daily Gauge Sheet March 2015
Strike Axe
March
2015
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
12th
13th
14th
15th
16th
17th
18th
19th
20th
21st
22nd
23rd
24th
25th
26th
27th
28th
29th
30th
31st
Total

Gas

Oil

(MCF)

(Barrels)

250
244
251
253
257
261
263
263
263
262
261
251
261
260
259
259
266
264
265
263
264
261
262
259
253
245
239
238
237
235
231
7,900

5.43
4.18
5.43
6.26
1.67
6.68
5.01
8.35
5.43
9.6
5.85
7.52
8.35
9.6
8.35
8.35
10.44
10.44
10.44
14.2
9.6
10.44
7.93
12.11
10.44
13.36
12.53
10.86
12.94
11.27
8.35
271.41

Lets look at the


Opportunity

Current Investment Opportunity


HC-5A Project
5 Well Drilling Program
4 Months to complete
Heavily structured in favor of the investors
Low Risk / High Potential Return

HC-5A Project Highlights

Type of Project from a Financial Perspective: Turnkey


Lease Acquisition: HALCON owned leases and infrastructure
Location: Osage County, OK
Drill: 5 New Wells
Type of Wells: Vertical
Depth of Wells/Formations: 1,800 to 2,300 ft.
Acreage: 6,800 Acres
Primary Formations: Skinner Sand, Bartlesville Sand, Burgess, Mississippi Chat/Lime
Operator: Oklahoma HC Project LLC
Production: Oil & Gas
Purchaser of Oil Production: Coffeyville Resources Energy Marketing
Purchaser of Gas Production: Copano
Rights: Surface to Deep
Working Interest (WI): 100%
Net Income Interest (NI): 100%
Royalty Interest (RI): 20%

10 reasons why the HC-5A Project is so attractive


Projects foundation: 6,800 acre oil & gas property with extensive infrastructure.
Geology/Engineering Library: 3D seismic maps that are the road map to oil.

5 vertical wells being drilled are not complicated, costly, or risky to drill.
Oil & gas formations are shallow (1,800 to 2,300 ft.) and easy to access.
Targeting 4 primary formations with proven oil & gas reserves.
Low risk, high potential return venture.
Investor friendly venture where investors are treated like partners.
Investors have a significant amount of control and full transparency.
Investors receive 86% of the net income. (very high in the oil & gas industry)

Solid management team with over 50 years of experience in all aspects of the industry .

Extensive 3D Seismic Data came with the HALCON Acquisition

This is one of
many 3D
Seismic Maps
obtained from
HALCON
Resources
that will be
used to help
define the
best locations
to drill the 5
vertical wells.

Geology Summary

OK HC Project is located in the 26,500 sq. mi. Cherokee Platform Province in SE KS & NE OK.
This oil & gas Province has been highly prolific, since its first oil discovery in 1873.
Since then over 200,000 wells drilled and 431 new oil & gas fields discovered.
5.3 Billion Barrels of Oil and 4.3 Trillion Cubic Feet of Gas produced by 1990 in this Province.

Primary Formations

From 1979 to
1996 the
Bartlesville
Sand produced
90,277,717
Barrels of Oil

Formation Depth Range: 1,800 to 2,300 feet

Lets look at
how we do Business.

Business Model
Increasing Production = Increase in Cash Flow = Increase in Asset Value
Investor
Participation
$s

Short Term Exit Strategy

Sell Asset at
a Nice
Profit

Our Industry Knowhow/Expertise


Our Due Diligence

Cutting Edge Technology

New Oil & Gas


Project

Oil & Gas Production

Longer Term Exit Strategy

Cash Flow $s

Cash Flow $s

Investors decide to take


a short or longer term
exit strategy.

Its all about increasing the ASSET


VALUE of a project by increasing
the oil & gas production.

We Manage
the Project

Our Project Plan includes Operating with Integrity.

A New
Oil & Gas Project

We find the oil & gas property.


We do the due diligence.
We do all the legal work.
We acquire the lease(s)/asset.
We structure a new project.

Lets look at some


concerns you may have
and risk factors.

Lets Talk about the Price of Oil.


Does the price of oil matter? Of course it does
because we all make more money the higher the price.
The Key Questions are:

Can we make a good profit today with oil at $50 per barrel? Answer: Absolutely
Is there large oil reserves where we will be drilling? Answer: Absolutely
Is oil a good long term play? Answer: Absolutely
The oil market is cyclical . . .
The long term trend for the price of oil is up.
The world runs on oil and that is not going to change any time soon.
We are in it for the long term. We know that the price of oil
will go back up. It is just a matter of how soon and how much.

Lets Talk about Risk.


Can risk ever be zero? Realistically no

The Key Risks are:


People Do they have the skills, drive, motivation, and passion to successfully
complete this project? Are they trustworthy? Do they operate with
integrity and transparency?
Answer: Yes
Finding Oil Can they find oil?

Answer: Yes

HALCON leases have large untapped underground oil & gas reserves.
Oil and gas is being produced daily from the HALCON wells.

Seismic maps point to the best locations for drilling into large oil & gas reserves.
The 5 new wells will be drilled after analyzing all available geological data.
This is not Wildcat drilling where you drill a hole in the ground hoping to find oil and
its a hit or miss proposition. That type of oil exploration is highly risky.

Risk Continued
Over Promotion It is common for an oil & gas deal to be over promoted. This makes it
difficult for investors to get a decent return on their investment, or any
return at all in some cases. Is the HC-5A Project over promoted?
Answer: No

This HC-5A Project is actually under promoted because investors are getting an unusually
large piece of the pie. They are getting 86% of net revenue. This is very high!

Price of Oil & Profitability Can they be profitable through wild swings in oil prices?
Answer: Yes

Our cost to get a barrel of oil out of the ground is $25 to $30.
So we are in good shape with oil at $50 or $40/barrel.
Even at $35/barrel, we could run a lean and mean operation and turn a profit.
We are in it for the long term and in the long term oil prices are going
to go up based on all the data that is out there on the industry.

Bottom Line: This is not a zero risk investment. It is


a lower risk investment for the reasons stated above.

Do the Math
Our COST to produce a Barrel of Oil is
$25 to $30. Currently sells for around $60.
= Gross Profit Margin of around $30 to $35 per Barrel

Investing in Oil
Lets look at some of the
important facts.

A Barrel of Crude Oil

Here is Why Crude Oil is a


Good Investment
Classic supply and demand situation
Soaring demand and dwindling supply
World produces 74 million barrels of oil per day
World consumes 87.6 million!
That is a 13.6 million barrel shortfall per day!
When the demand for a commodity greatly
exceeds the supply the price is going to go up.

Global Demand for Oil


Oil is the most important
commodity in the world.
All major economies
depend on it.
Oil is also the most
important military
resource. With oil an
army can move and
fight. Without it, it cant.
Oil

Oil Price and


Balancing Budgets
What this means is that at
some point in the near
future OPEC will be highly
motivated to do what it
can to drive the price of
oil higher in order to keep
the economies of the
member countries from
falling apart.

Oklahoma
Next Exit

On Our Way To Find Oil

Producing Oil & Gas Wells in U.S. (includes offshore)

Oklahoma

Oklahoma

Oklahoma is the #5 Oil Producing State


#5 oil producer & #4 natural gas producer in U.S.
Over 120,000 active oil & gas wells.
Oil & gas production in 72 of its 77 counties. (IHS Energy)
Proven oil reserves of 1,019,000,000 barrels as of 2013.

Oklahoma was averaging 262,000 barrels of oil per day by the end of 2012.

Oklahoma Crude Oil Production in Osage County Jan - Jun 2012


Barrels of Oil
Jan
Feb
Mar
Apr
May
Jun
Total
398,902 397,103 361,209 353,935 86,137 338,282 1,935,567

Osage County
Next Exit

On Our Way To Find Oil

Oklahoma Counties

Oklahoma Oil Production 2012

Osage Indian Reservation

Osage Nation has


sovereign rights in
the United States
of America. It is
headquartered in
Pawhuska, OK
with jurisdiction in
Osage County. It
has 13,307
enrolled tribal
members.

Lets look at the


Oklahoma HC Project
website.

Oklahoma HC Project Website


This website is a powerful tool that was designed to keep
investors in the Project up to date on all aspects of it.

24 Hour
Temporary
Access

www.oklahomaHCproject.com
The website is private and can only be accessed by those investing in the Project.
They are given a Username and Password that enables them to logon to it.

Questions?
Need More Information?

Hope you have enjoyed the journey


to oil country in Osage County, OK