Attached files
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| 8-K - FORM 8-K - TRANS ENERGY INC | d453666d8k.htm |
 Whipkey Drilling Pad, Marshall County, West Virginia
Exhibit 99.1 |
 Disclaimer
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 |
 About
Trans
Energy
Company
Overview
9/30/2012
LTM Revenue
$9.9 million
Net Debt (as of 9/30/2012)
$41.4 million
Recent Stock Price (TENG)
$2.15
Shares Outstanding (11/9/2012)
13.2 million
Market Capitalization
$28.3 million
Enterprise Value
$69.7 million
Trans Energy: (OTCBB: TENG)
Pure Play Marcellus Shale
Proved Reserves: 49.5 Bcfe
(9/20/2012 Wright & Co. -
Marcellus only)
Recent Daily Production: 12,790 Mcfe
52-Week
Range:
$1.26
-
$3.00
3-Month
Avg.
Daily
Volume
–
2,100
Shares
Shares Outstanding: 13.2 Million
Market Capitalization: $28.3 million
Experienced Management Team
Selected
Financial
Information
3
Area
of
Operation |
 Why
Invest
in
Trans
Energy?
4
Marcellus Shale Pure Play
63,500 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 gas price
Extensive Organic Drilling Inventory
400 + potential drilling locations (178 ready to drill today)
3+ Tcfe gross upside potential (including JV & royalty partners)
Significant portion of acreage HBP (approx. 2/3)
Off-take agreements totaling up to 45,000 MMBtu per day
Improved Financials
$50 million credit facility funded 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 -
Prove Acreage / Add Drillable Locations
Consolidate acreage surrounding legacy positions in the core
of the Marcellus
Marshall, Wetzel, Marion and Tyler counties
Building upon local presence –
a West Virginia company
Drill to turn highly prospective acreage into 3P reserves
Secure and maintain land position via leasehold rights
Grow production and reserves / monetize assets
5 |
 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
$1.00 -
$2.00 pricing uplift
vs. dry gas
$1.50 per MMBtu breakeven
natural gas price (with NGLs @
50% WTI price)
Low-cost, highly predictable and
repeatable play
In Trans Energy’s area of
operation, the Marcellus shale is
approximately 50 –
100 feet thick
6
Trans Energy Area
of Operation
Dry
Gas
Wet
Gas |
 Competitive
Market
Position
7
Marcellus Well
Permits
(thru Sept 20, 2012*)
Marion:
60
Marshall: 139
Tyler:
22
Wetzel: 150
*Permit
data acquired from WV Geologic Survey |
 Current Marcellus Acreage
Significant Marcellus acreage that
is held by shallow well production
Approximately 350 horizontal well
locations from HBP acreage alone
Primary term leased acreage can
generally be held by production
from shallow vertical or Marcellus
horizontal wells
Current drilling program
supplemented with selective
shallow drilling will HBP all strategic
acreage with near term lease
expirations over the next two years
Significant amount of acreage is
also prospective for the Utica shale
8
Acreage
Breakdown
–
23,407
Net
acres |
 Reserves and Resources
Trans Energy has exposure to more than 3 Tcfe of Marcellus resource potential
More than 400 potential drilling locations (178 ready to drill today)
EUR
per
well
of
1.2
–
2.0
Bcfe
/1000’
of
lateral
9
9/20/12 SEC Reserve Summary
(1)
(1)
Based on Proved Reserve Bcfe values for ASD from the 09/20/2012 SEC reserve report
prepared by independent reserve engineer Wright & Company, Inc.
Trans Energy has 2.53 Bcfe of PDP reserves associated with shallow assets that are
not included in the above figures.
Proved Reserve Mix
(1)
Proved Reserve Category Mix
(1)
Oil
Gas
NGL
PUD
PDP/PDNP
($ in millions)
Oil
(MMbbl)
Gas
(Bcf)
NGL
(MMbbl)
Total
(Bcfe)
% of
total
Total
PV10%
PDP/PDNP
0.0079
20.792
0.816
25.733
51.9%
$91.5
$38.6
PUD
0.0091
18.705
0.831
23.747
48.1%
$64.5
$14.9
Total Proved
0.0171
39.499
1.657
49.545
$157.7
$54.2
PROBABLE
(2)
0.0648
220.743
7.699
267.329
$672.6
$83.4
-
0.22%
-
79.7%
-
20.1%
-
48.1%
-
51.9%
(2)
Approximately
1/3
of
the
Non-proved
Reserves
shown
above
have
been
designated
as
“Probable”
due
to
funding
limitations. |
 Net
Reserves
and
Resources
10
BCFE
3
rd
Party Engineered Probable
Reserves Disclosed for 1
st
Time
0.00
50.00
100.00
150.00
200.00
250.00
300.00
350.00
January 1, 2012
July 1, 2012
September 20, 2012
Probable
PUD
PDP/PDNP |
 Wet
Gas
Provides
Positive
Economics
$3.70 NYMEX Equals $4.78/MCF Wellhead Price
•
$3.70 / MMBTU NYMEX Henry Hub
•
$85 NYMEX WTI
11
Natural Gas
Natural Gas Liquids
Condensate
Production Breakdown
.84
MCF
1.6 Gallons/MCF
.00212 BBLS/MCF
Gross Realized Price by Product
$3.49 net
(1)(2)
$1.16 net
(3)(4)(5)
$0.13 net
(6)
Total Realized Price per 1 MCF
$4.78/MCF
Gathering, Transportation and
Processing
($0.75/MCF)
Net Realized Price per 1 MCF
$4.03/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.
WTI less $26.00 for Appalachian Light Sweet
One mcf Natural Gas via Wellhead Production |
 Experienced
Management
Team
12
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
Director since 2005 and President since June 2010
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
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
13 |
 Horizontal
Marcellus
Production
History
14 |
 Marshall
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. 15 |
 Marshall
County
Well
Performance
16
IRR
vs. Price of Gas |
 Marshall
County: Drilled Marcellus Wells
JV has 12,698 gross acres of leased and owned minerals
12 wells drilled & fraced, 1 well drilled waiting on frac
Average 30-day IP of 4.1 MMcfe/d
20% Oil/NGLs
4,500’
Average lateral length
Average EUR / 1000’
lateral
of 1.55 Bcfe
4.5 Frac Stages/1000' lateral
Drill time of 35 days spud
to rig release
44 remaining liquids-rich
locations in these units
17 |
 Wetzel County: Drilled Marcellus Wells
JV has 27,853 gross acres
of leased and owned
minerals
5 wells drilled & fraced
4.5 Frac Stages/1000’
lateral
Drill time of 35 days spud to rig
release
86 ready to drill locations
18 |
 IP
Rates
–
Recent
Marcellus
Completions
19
Goshorn 1H (4,829 ft lateral)
Turned On May 2012
1 30 day Production 3,596 MCFE/D
1
60 day Production 3,242 MCFE/D
1
90 day Production 3,039 MCFE/D
Goshorn 2H (4,763 ft lateral)
Turned On June 2012
1 30 Day Production 5,002 MCFE/D
1 60 Day Production 4.473 MCFE/D
1 90 day Production 4,128 MCFE/D
Dewhurst 110H (4,284 ft lateral)
Turned on September 2012
1 30 Day Production 7,173 MCFE/D
1 60 Day Production 6,359 MCFE/D
Dewhurst 111H (5,188 ft lateral)
Turned on September 2012
1 30 Day Production 8,637 MCFE/D
1 60 Day Production 7,607 MCFE/D
Anderson 5H (5,470 ft lateral)
Turned on October 2012
1 30 Day Production 9,637 MCFE/D
Anderson 7H (4,980 ft lateral)
Turned on October 2012
1 30 Day Production 7,095 MCFE/D
st
st
st
st
st
st
st
st
st
st
st
st |
 Drilling Program –
Recap
15 wells on line
2 Doman wells fraced
and go on line in Dec.
Martinez well drilled
waiting on fracing
2013 Drilling Program
Marion
Tyler
20 |
 Marion & Tyler
Counties
21
…THE NEXT STEP… |
 Marion
County
JV has 18,179 gross acres of leased and
owned minerals
Total number of potential wells: 117
Total number of wells that could be
drilled today (pending permits): 19
2013 Drilling Program: 4 wells
22
Marion
County
Marion
County |
 Tyler
County
JV has 4,000 gross acres of leased
and owned minerals
Total number of potential wells: 47
Total number of wells that could be
drilled today (pend. permits): 36
2013 Drilling Program: 4 wells
23
Tyler
County
Tyler
County |
 Gas
Off-Take (Williams & Momentum 3) 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
Marshall and Wetzel County wells feed
into TETCO
Ft. Beeler cryogenic processing
facility started up in 2Q 2011
NGL yields up to 1.4 –
1.9 gal/mcf
Second facility just started
Moundsville fractionation plant online
November
12
Momentum 3 will provide
transportation in Marion County
24
th |
 Net
Asset Value 25
Trading at significant discount to net asset value (NAV)
Trans Energy (1)
Sum-of-Parts NAV
Category
Low
High
Low
High
Low
High
9/20/2012 Proved Reserves
49.55
Bcfe
$1.00
$3.00
$49,550,000
$148,650,000
$3.77
$11.30
45 Other Current drilling locations from existing pads (2, 3)
128
Bcfe
$1.00
$3.00
$128,250,000
$384,750,000
$9.75
$29.24
133 Current drilling locations from new pads (2, 3)
379
Bcfe
$0.25
$0.75
$94,762,500
$284,287,500
$7.20
$21.61
Undeveloped Acreage:
Marcellus
8,000
Net acres
$1,000
$5,000
$8,000,000
$40,000,000
$0.61
$3.04
Utica
14,000
Net acres
$0
$0
$0
$0
$0.00
$0.00
Upper Devonian
14,000
Net acres
$0
$0
$0
$0
$0.00
$0.00
Less:
Net debt as of 9/30/12
($41,449,700)
($41,449,700)
($3.15)
($3.15)
Total (pre ASD warrants)
$239,112,800
$816,237,800
$18.17
$62.04
Total (post ASD warrants)
$197,622,884
$662,208,509
$15.02
$50.33
Shares outstanding (4)
13,156,578
13,156,578
Notes
(1) Figures below include 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 7.6 Bcfe per well and an average NRI of 37.5%. (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 surveyed, and a judgment has been made that the topography
will support the pad site (4) Does not reflect potenital dilution due to outstanding
options. Unit Value
Total Value
Value Per Share |
 Why
Invest
in
Trans
Energy?
26
Marcellus Shale Pure Play
63,500 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 (including JV and royalty partners)
Significant portion of acreage HBP (approx. 2/3)
Off-take agreements totaling up to 45,000 MMBtu per day
Improved Financials
$50 million credit facility funded 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
|
 A
P
P
E
N
D
I
X
Doman Drilling Pad, Marshall County, West Virginia |
 Overview of Recent Corporate Reorganization
The new credit facility involved a reorganization of the operating
subsidiaries and assets of Trans Energy
Below summarizes the movement of significant assets in the corporate
reorganization:
28
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
25,683 net acres (shallow rights)
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
29
Well
Well Type
BTU/SCF (Dry)
BTU/SCF (Saturated)
Marshall County
Lucey Pad
Horizontal
1,237
1,216
Doman Pad
Horizontal
1,190
1,170
Keaton #1H
Horizontal
1,238
1,216
Groves #1H
Horizontal
1,218
1,198
Stout #2H
Horizontal
1,186
1,165
Whipkey Pad
Horizontal
1,212
1,193
Goshorn Pad
Horizontal
1,207
1,187
Wetzel County
Hart #20
Horizontal
1,197
1,177
Dewhurst #50
Vertical
1,119
1,100
Dewhurst 110 Pad
Vertical
1,181
1,163
Dewhurst #73
Horizontal
1,090
Marion County
Blackshere #101
Vertical
1,073
1,020
@14.73 (PSIA)
Anderson Pad
Horizontal
1,156
1,124
Vertical
Hart #28H
1,115
1,072 |
 Shrink
and
Gallons/MCF
Correlation
30 |
 Overview of ASD Entity
31
(1) Upon execution of its warrants, Lender will own 19.5% of ASD
|
 AJDA Summary
Trans Energy entered into an AJDA with Republic Energy during 2007 to
develop its Marcellus acreage
32 |