A Te c h n o l o g y L e d E n e r g y C o m p a n y

Project Eden - Investment Proposal

February 2018
 Lateral’s Vision and Focus

Jordan Kurdistan
Lateral’s Vision ▪ Risha Gas Field ▪ Experience of Kurdistan
Within 5 years be a Company ▪ Risha Deep assets
▪ Other Jordan Ordovician
worth > $500 mm in the eMEA
▪ Mudawarra Unconventional
region that makes a material
difference to the energy needs of
host countries Whilst Lateral is currently
focused on the Risha field in
Jordan, management believes Pakistan
there are several other
opportunities in the region ▪ Experience and knowledge
▪ Miano / Kadanwari
▪ Bhit
Lateral’s Focus ▪ Bhadra
Tunisia
Stranded gas & gas to power ▪ Lateral has undertaken
preliminary work in Tunisia:
▪ Nawara Area
Assets where we have a particular Oman
▪ Miskar
geological understanding ▪ Hasdrubal
▪ Lateral has good links
Assets where we can work with an ▪ Tight gas
experienced technical & Algeria
commercial team
▪ Geological fit
▪ Experience and knowledge of Current Focus
assets Other Opportunities

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 Jordan Opportunity: Executive Summary
Overview Key Economics
▪ Risha Gas Field ▪ Low risk, robust economics, strong returns
Constrained Unconstrained
o Overlooked, tight-gas field in Eastern Jordan
FDP Volume1 bcf 340 890
o Potential > 1 tcf recoverable, multi-tcf upside
Production mmcfpd 40 – 50 c. 150
o Currently produces to under-used, onsite power plant
NPV10 $ mm 200 570
▪ Due Diligence in-hand, new technologies identified MOIC 5 years >5 c. 9
o Exclusivity secured until end April 2018 Project IRR2 % 41 87
Note: (1) Gross (2) i.e. assumes no exit
o Lateral to unlock field potential with
‐ A new, predictive W-E depositional model developed
▪ Seeking $110 million commitment for a phased investment:
o Initial – Proof of Concept
‐ New long horizontal, fracc’d wells modelled
⁻ 3 wells & technical work, lean operation $60 million
o Infrastructure audited, cost base understood
o Case 1 – Constrained Field Development Plan
▪ Jordan Focus ⁻ Development costs $210 mm, $200 mm from cashflow
o Growing demand for domestic power ⁻ Max exposure in year 3 of $100 million
o Jordan keen to avoid dependence on Israeli gas o Case 2 - Unconstrained Field Development Plan
o Good business environment, controlled security ⁻ Further c. 550 bcf from additional fans
▪ Lateral reviewing other opportunities in MENA ⁻ Increased plant and offtake capacity

o Pakistan, Oman, Tunisia o Identified accessible deeper & shallower targets

o Similar model of assets known to the Team ▪ Failure case investment repayment scheme

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 Lateral Resources: The Company

▪ A new technology led energy company focused on MENA opportunities

o Experienced team with excellent technical & commercial track records

o Strong local & regional expertise, understanding of our principal geographical area of interest

▪ Excellent understanding of industry drivers and changes

o Lateral has experienced strong government interest in gas & gas to power to meet growing demand

o Flexible, low overhead – fast to react

▪ Technology led approach

o Preference for producing gas fields where Lateral’s technologies transform project economics

o Strong technology, academic and training partnerships with access to required specialisms

▪ Genuine commitment to the host country

o Knowledge transfer to help develop the local sector

o Help train local partners and use their capabilities to support operations

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 Lateral Resources: The Team
Senior Management
Chairman – Tony Renton Chief Executive Officer – Mike Azancot
Petroleum Engineer with 40 years’ experience, 30 years with Petroleum Engineer with 40 years’ experience, including Chief
BP, including as Commercial Director responsible for Middle Operations Engineer in China for Occidental, GM North Sea for
East business development. Co-founded White Rose Energy, an Lasmo, SVP for Petrokazahstan, CEO for Sterling Resources.
African explorer, funded by First Reserve & Riverstone. Mike has created value for UK, Canadian & US listed
Chairman & CEO of Sub-Salt Solutions, a JV with Imperial companies in challenging conditions, working closely with
College. stakeholders.

Chief Operating Officer – John Pothecary Legal and Commercial – Tony Peart
Geoscientist with 40 years’ experience in the UK, South Attorney with 35 years’ experience throughout the EMEA
America, Indonesia, Pakistan & Middle East. Worked for area. Held senior positions at several British independents. He
Amoco & Lasmo before building a successful international was General Counsel & Company Secretary at Petrokazakhstan
consultancy as CEO of RPS Energy. Extensive experience of during their successful acquisition by CNPC, Legal &
exploration and development and of working with NOCs and Commercial Director for African Arabian Petroleum and Gulf
Governments. Keystone Petroleum.

Wider Team

Adrian Southworth Ian Carter Norrie Stanley Roger Davis Mike Roddy MBE Ribhi Rayyan
Petroleum / Geology & Geoscience Gas Contracts and Regional Finance, Risk Management Country Relations
Reservoir Engineering Commercial Advisor Business Development Advisor Advisor
Indicates prior experience with the Risha field and Jordan through previous employment with BP

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 The Risha Field: An Overview

▪ Location
o Risha lies in the extreme east of Jordan in relatively flat desert
o 300 km from Amman near Iraq border but Jordan’s military bases provide security
o 40 km north of recent Saudi Aramco success, based on similar new depositional model

▪ Concession
o Concession area of 7,500 km2
o Concession awarded to NPC following early appraisal by NRA
o Terms are hybrid between a PSC and a concession agreement

▪ Field
o Field covers 1,500 km2, two producing areas 40 km apart (13 wells in North & 3 South)
o Areas connected by 16” pipeline with on-site gas to power plant in the Northern Area
o All production is from Late Ordovician Risha Formation sandstones, c. 2,500 m
o Peak rate in 2003 was 36 mmcfpd, currently 10 mmcfpd, declining 10% p.a.
o Field decline was managed by drilling 1-2 wells p.a., but NPC lacked budget recently
S. Risha

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 The Risha Field: A Brief History

Timeline 1980 -1983 1984 – 1996 1996 – 2010 2010 – 2014 2014 to date H2 2017
Company
NRA NRA
Active
Exploration Appraisal & Development of the Risha Field to supply domestic Target deeper Umm Sahm Maintain existing production Redevelop field to unlock
Key Objective gas needs thought to be 20+ tcf untapped potential
NRA exploration of Jordan Risha Field defined for development, 30 wells drilled. Installed BP become Risha concession NPC sole operator* – Lateral in exclusive
process capacity of 50mmscfd & electricity generation plant / operator. Spent > $250 mm, production declines to c. 10 discussions with NPC and
Risha Field and concession
transmission lines; gas sold to power co, transmission to acquired 5,000 km2 of 3D mmcfpd. Some modest well Jordanian Government for
defined for development
Amman seismic & drilled 2 wells work farm-in
Focus on deep gas play – not Capital constrained and
NPC formed in 1996 to hold concession and operate. Develop Proof of Concept
successful but not fully tested lacking technical expertise
Field Activity Additional appraisal & development, linked South & North
areas via 40Km 16” line; 10 wells + 4 s/tracks drilled, BP handback concession to Develop Full Field Potential
production peaks at 36 mmscfd in 2004. Unsuccessful appraisal NPC as distracted by
of Dubeidib formation Macondo and Oman gas Opportunity to target
shallower & deeper
potential within the
concession

Depositional
None Drilled on structural highs & natural fractures S–N S–N W–E
Model
35 vertical wells and 6 short horizontal wells. 10 wells hydraulic 2 vertical wells, 1 in Risha Currently drilling 2nd sidetrack
Wells One vertical well (RH-3)
stimulation – 2 successful formation, 1 in Umm Sahm of RH-28
To drill long horizontal wells

$4/mcf Negotiations ongoing

Gas Price $1.425/mcf $1.425/mcf
BP expectation >$6 mscf
$4/mcf
$6 - $8 mscf (as per NEPCO)
*NPC entered into an agreement with IPG International in 2016 to redevelop the field. The contract was subsequently terminated before any work was started due to lack of funding.

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 Lateral’s New Geological Work Unlocks Potential
▪ Risha Fm Overview Risha Spectral Decomposition RGB 2080ms

o The Risha Fm is a relatively complex Ordovician glacio-marine sandstone

o Global understanding of these formations has improved only in last few years

▪ Previous Technical Work

o NPC targeted structural highs without a depositional model resulting in some ineffective
wells
o BP shot 5,000 km2 of 3D seismic, developed a S-N depositional system model and drilled 2
wells but did not prove strategic reserves & withdrew before fully integrating data

▪ New Technical Work by Lateral Mitigates Drilling Risk

o Lateral & Partners, have developed new Risha depositional model, which revises the
overall setting and images geobodies & depositional systems within the reservoir
o W-E depositional system model developed using modern spectral decomposition
techniques
o Explains results of the existing wells & allows targeting of better reservoir development
o Recent success by Saudi Aramco c. 40 km south, based on a similar understanding
31.9°N

▪ Deeper Ordovician Reservoir Potential Location of

recent Saudi
Aramco work 31.8°N

o BP downdip test of M. Ordovician Umm Sahm Fm disproved 20+ tcf but c. 3 tcf potential
remains 0 (km) 20
31.7°N

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 Locating Productive Wells: A New Depositional Model
Risha South
▪ Risha Fm Overview
Risha North
o Risha Sandstones deposited into restricted epeirogenic sag basin

o Input from mapped, sub-ice tunnel valleys in the west

o Basin sides steeper in North than South due to basement structure

Splay
o Mapped proglacial systems & major erosional events affect deposition

▪ Previous Wells
o NPC targeted structural highs without a depositional model Fan

o BP twinned existing wells, RH-23 in South and RH-03 in North

o Many drilled in poor locations, demonstrated by Lateral technical work Key

Unsuccessful Wells

▪ New Well Locations Fan

Successful Wells

New Well Locations

o Lateral has developed a predictive model for the Risha sand-bodies
PoC Well Locations

o Relies on seismic amplitudes, spectral decomposition & seismic character Sub-ice Valleys
Fan
Pro-glacial Valleys
Fan
Fan Erosional Scour

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 Drilling Out Sand-bodies: Long Horizontal Wells

▪ Target and De-risk Using Revised Depositional Model

o New depositional model explains existing well results

o Identification of sediment input points

o Previously unseen channel & fan morphology

o Sweet spots depend on channel/ fan behaviour, grain size

o Sand-body aspect ratios for drill out

o Rapid facies variations, with complex erosional events

▪ Long horizontal wells combined with modern fraccing techniques

o Of 47 total wells to date, only 6 horizontal wells and all have been short
(< 250 m)

o Lateral to drill long horizontals (c. 1,000 m) to link conventional reservoir

& provide mechanism to produce from unconventional reservoir

o Use of modern fraccing techniques for first time on Risha

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 Lateral’s Assumptions
▪ Conventional & Unconventional Reservoir
o Rate sustainability & decline driven by contacted volume of conventional reservoir

o Demonstrable pressure support from unconventional reservoir

o Hydraulic stimulation effective in improving initial rates & improving recovery

▪ Reservoir Modelling
o Reservoir modelling gives GIIP estimates in conventional / unconventional
intervals
Volume (Bscf)
o Material Balance shows GIIP of 15 – 50 bcf per well & GIIP of 200 – 300 bcf per fan 0 10 20 30 40 50 60

RH-3
o Volumetrics on imaged sand bodies suggest GIIP of c. 300 bcf per fan

Production Wells
RH-6
Cum Production
RH-8
o Well behavior, evidence of high recovery factor (80%+) / high EUR’s (up to 40 bcf) RH-16V
EUR

RH-18 GIIP
▪ Future Well Parameters RH-20

RH-25
o Rates for vertical wells 2 – 15 mmcfpd, rates for horizontal wells up to 20mmscfd RH-26

RH-32
o Achievable well EUR’s up to 30 – 40 bcf RH-34

2017 Well Volume Summary

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 Risha Volumes & Production Assumptions

Constrained at 40 – 50 mmcfpd

▪ Multiple new fans and channels expected ▪ 1 new fan body and existing area
o 340 bcf recovered from 1 fan body and
▪ Volumes by fan bodies are key existing area
o Volumetrics of existing fans calculated by o 13 wells total, 11 horizontal (including sub-
material balance and modelling optimum wells)
o Areal size of new fans similar to existing fans o EUR 26 bcf (conservative case) per well
underpinning volumes
o Each new fan c. 200 – 300 bcf recoverable
based on imaging of sand bodies
Unconstrained at 150 mmcfpd
o 7 wells estimated for each fan, max EUR 40
bcf ▪ 4 new fan bodies (conservative case)
o 890 bcf rec from 4 fan bodies
▪ Existing production data shows pressure
support & additional volume from o 34 wells total, 32 horizontal (including sub-
surrounding unconventional reservoir optimum wells)
o EUR 26 bcf (conservative case) per well

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 Risha Gas Utilisation Overview
Current Situation: Power Generation Expanded Offtake up to The current Jordanian energy situation is critical. Power from Risha is
40 – 50 mmcfpd inlet 150 mmcfpd inlet taken to Amman and also used by major military bases in the east of
Jordan.
▪ Power Generation – 3.5Km from Risha ▪ Power Generation – expand current Additional power demand for Amman 2, a new technology hub city
Gas Plant facility for 2.5 million people 30 km east of Amman, associated infrastructure
o 5 x 30 MW OC Frame 6 generators, capacity o Installation of new Frame 7 open cycle units, is already in progress.
150 MW = inlet of 50 mmcfpd raise output to 450 MW
o Possible to generate up to 180 MW under o Or install 2 of 450 / 540 MW power units
winter conditions providing 100% backup
o 1 unit retired, 2 temporarily mothballed ▪ Electrical Transmission upgrade
o Currently operate 2 units, 60 MW output, o 320 km 450 kV OH line with new towers
limited by production of 10mmscfd along side existing 132 kV OH line
o Frequently asked by NEPCO for c. 120 MW (2 o Adequate capacity for Risha & possible PV of
units run on distillate) c. 100 MW (6hrs only)
o All equipment audited by BP in 2014 ▪ Pipeline Potential for Expanded
▪ Electrical Transmission Volumes c. 1 tcf
o 132 kV double circuit line on steel lattice o 320 km Pipeline, feed into Jordanian gas
towers, 320 km along road network, booster compressor at 160 km
o Existing rating per circuit 75 MW giving max o 20”, X60 material operating at average 1000
transmission 150 MW psig
o During winter conditions it is possible to o Trenched and coated, no provision for hard
transmit up to 180 MW rock trenching, Quoted at c. $225 mm

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 Jordan: Country Overview
Security & Politics Gas & Energy
▪ Political Framework ▪ No material indigenous gas other than Risha

o A constitutional monarchy (King Abdullah II) with an independent judiciary ▪ LNG FSRU at Aqaba supplying gas at $8/mcf including regas / pipe cost

o Jordan is liberal and is ranked 3rd most liberal Arab country and 1st for ▪ Plan to import 225 mmcfpd Israeli gas from, at c.$6.40/mcf plus pipeline
democratic reform out of 15 Arab countries construction costs, facing strong popular resentment

▪ Business framework ▪ Gas from Egypt was at similar price but no recent deliveries due to security

o Friendly towards foreign investment ▪ 20 year energy plan calls for gas, renewable & perhaps nuclear1
6,000
o Jordan ranked 55th out of 175 countries in the Corruption Perceptions Index Energy Domestic

Energy Supply & Demand

5,000 Energy Imported
(CPI) in 2014
4,000 Peak Demand

Long Term
▪

(MW)
Security Framework 3,000 61%

2,000 75%
97%
o Jordan’s security forces are effective, working closely with international 1,000 39%
agencies to remain secure despite neighbouring instability 3% 25%
0
2013 2015 2020 2025
o Strong Jordanian military presence next to the border guarantees security in
?1 Imported Electricity
Risha concession 16% Nuclear
35% 48% Renewable
61% 35% Shale Oil
82% Natural Gas
Oil Products

Source: Jordanian MEMR, Middle East Institute, NEPCO, Jordan Electricity Reg Commission, GMF. 2015, 2020 & 2025 predicted figures. 2015
& 2020 energy mix shown here have been adjusted for 2014/15 shale oil & renewables actuals. 2013 Natural Gas includes coal and coke.
Note: (1) Nuclear is unlikely to make a material difference in the short term for Jordan, as no agreements are currently in place

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 Commercial Overview
Status of Negotiations Latest Fiscal Terms
▪ The basis for the proposed NPC-LR legal agreements are those used by NPC and BP in
previous joint ventures with modifications introduced by LR
▪ Exclusivity period runs until 30 April 2018
Production Sharing Agreement
o NPC transfers to LR a 42.5% production share above existing NPC production
o LR to invest in proof of concept

Share Transfer / Implementation

o LR commits $30 million with 2 firm wells and 1 contingent well
o Contractor share of profit gas split 85%:15% in favour of LR

Operating Agreements
o NPC operates current area during PoC phase with LR drilling wells. LR becomes field
operator for FDP
o Potential use of NPC technical capability and Jerash Rig

Gas Sales Agreements

o LR benefits from existing agreements
o Trend towards market rates with $6.25/mcf expected *NPC assumed to receive 100% of profit gas from current production until first gas from PoC wells. The 85%:15% split is based
on the current status of negotiations and may be subject to change, and is after deduction for NPC base production levels.

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 Risha Development Schedule
Ongoing 2Q 2018 4Q 2019 2020+ Further Development
Timeframe

Development Data Proof of Constrained Full Unconstrained Full Deeper &

Stage Assessment Concept Field Development Field Development Shallower Targets

$10 mm $40 mm
Equity Commitment
$60 mm (incremental to PoC) (incremental to Constrained)

• Drill 3 wells
• Data analysis, seismic • 2 vertical to test new • Drill 21 horizontal wells
reprocessing and re- northern fan systems • Drill 10 horizontal wells
(incremental to • Drill ILX target
interpretation and southern (incremental to PoC)
constrained)
channel sequences
• Updip Umm Sahm
Operations • Modelling of • 1 horizontal to test • Frac Stimulation
• Upgrade facilities /
horizontals and fracs horizontal well
pipeline • Mudawarra
effectiveness • Upgrade facilities to
• Production improvement unconventionals
• Negotiate Contracts ensure 50 mmcfpd
assessment • Ensure 150 mmcfpd
and Licenses
• Review field operations

• Identify new fans

systems and channel • Prove commerciality of base
FDP • Fill upgraded plant to
sequences based on • Fill current plant to at • > 10 tcf reserves
2040
W-E depositional least 40 mmcfpd to 2040
model • Introduce potential upside • Pipeline to Amman /
Outcome • Finalise PoC drilling • Best methodology for
• Pipeline to Amman /
Amman 2 new city
Amman 2 new city
locations targeting or exploiting conventional /
new fans and unconventional resources • Pipeline to LNG
channels • New transmission line
• Recover costs
• Agreed fiscal terms

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 Sources and Uses
Proof of Concept Constrained FDP (40 mmcfpd) Incremental to PoC Unconstrained FDP (150 mmcfpd): Incremental to PoC
Equity requirement: $60 mm in 2018 Equity requirement: $7 mm in 2020 Equity requirement: $50 mm in 2021
Sources $ million Sources $ million Sources $ million
Equity 60 Equity 7 Equity 46
Total Sources 60 Cashflow 382 Cashflow 754
Total Sources 389 Debt Financing 198
Uses $ million Total Sources 998
Uses $ million
2 Vertical wells 22
10 Horizontal wells 127
1 Horizontal well 15 Uses $ million
Seismic 3
Well Log/Test / Complete 5
Workovers 8 31 Horizontal wells 398
Civil works 1
Well Log/Test/Complete/ Stimulation 44 Seismic 3
Intra-Field Pipelines 6
Rig Mob/ Demob 5 Workovers 8
Rig Mob/Demob 3
Civil works 3 Well Log/Test/ Complete/Stimulation 132
Total Capex 50
Intra-Field Pipelines 17 Rig Mob / Demob 6
Opex 8
Plant 5
Contingency 2 Civil works 10
Total Capex 212
Total Uses 60 Intra-Field Pipelines 52
Opex 177
Proof of Concept – Recovery of Cost Case Plant and Infrastructure 200
Total Uses 389
Sources $ million Total Capex 809
Equity (includes PoC Equity) 60 Opex 189
Cashflow 30* Finance Cost 109
Total Sources 90 Total Uses 998
*3 NPC rig wells over 3 years to improve cost recovery over expected contract agreement
minimum spend of $30mm

Note: All costs in real 2018 terms

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 Full Field Economics (includes PoC)
Capex / Equity Gross Gross
NPV10 IRR MOIC
Opex1 Exposure EUR2 Revenue Unconstrained FDP: Base Case Cashflow
($ mm) ($ mm) (bcf) ($ bn) ($ mm) (%) (x)
180 2700
Constrained Full Field Development: 40 mmcfpd

Cumulative Cashflow ($mm)

150 2250
Base
$6.25/mcf; 85%/15% (LR:NPC Split) 262/185 67 340 2.1 197 41 5.3
Case 120 1800
80%/20% (LR:NPC Split) 262/185 68 340 2.1 183 39 4.9
90 1350
Sensitivities

70%/30% (LR:NPC Split) 262/185 69 340 2.1 157 36 4.3

Annual Cashflow ($mm)

60 900
Gas price $5.5/mcf 262/185 77 340 1.9 157 32 4.0
30 450
Capex +25% 328/185 103 340 2.1 170 30 3.4
0 0
Production -25% 262/185 91 254 1.6 111 33 2.8

2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
Unconstrained Full Field Development3: 150 mmcfpd -30 -450

Base -60 -900

$6.25/mcf; 85%/15% (LR:NPC Split) 859/197 110 890 5.5 567 87 8.7
Case
-90 -1350
80%/20% (LR:NPC Split) 859/197 118 890 5.5 528 81 7.7
-120 -1800
Sensitivities

70%/30% (LR:NPC Split) 859/197 148 890 5.5 450 64 5.6

Gas price $5.5/mcf 859/197 157 890 4.9 463 56 5.5 -150 -2250

Capex +25% 1074/197 254 890 5.5 481 37 4.0 -180 -2700
Annual Undiscounted Cashflow
Cumulative Undiscounted Cashflow
Production -25% 859/197 177 668 4.2 377 41 4.4 -210 -3150

Note: (1) Costs in real 2018 terms. (2) Gross EUR numbers include existing NPC production. (3) Unconstrained full field development economics assume Debt Financing of c.$200 mm in place.
Note: Cashflow graph excludes any debt financing
Assumed interest rate of 7%.

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 Opportunities & Upsides
Multiple fan / channels Upside Potential
Development Options • BP twinned existing unsuccessful wells, but did
not identify targets
• Reinterpretation of glacial history provides other
potential for other sandbodies at different levels
• >1 tcf additional potential

Risha Fm - Constrained Risha Fm – Unconstrained Large Risha Development

• PoC Successful • Additional fans and sand bodies • Deeper & shallower potential
• Two Fans • Production 150 mmcfpd • Multi-tcf resource Deep Upside Potential
• Production 40 mmcfpd • NPV > $500 mm • Production > 150mscfd
• Max spend $110 mm • NPV > $800 mm • BP twinned an existing well (03) to test the L
• NPV $200 mm Ordovician Umm Sahm
• Well disappointing but some 250 m downdip of
crest & 40 km to south
NPV10 in 2023 = $285mm NPV10 in 2023 = >$1bn • 2.8 tcf additional potential

Stable Cashflow Generator Producer With Scale Strategic Producer Shallower Upside Potential
• BP model of restricted anoxic basin for
• Yields c. $50 mm p.a. • > 1 tcf asset • Multi-tcf asset Mudawarra incorrect
• No further Capex • Further generation opportunity • Pipeline opportunity
• HST downlapping hot shale in good location for
max TOC, as Shale Gas indicator
• Multi-tcf additional potential

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