Investing In Libya

Greater Greater Houston Houston Partnership Partnership Houston, Houston, Texas Texas June June 10, 10, 2004 2004
Presented Presented By: By: Matthew Matthew R. R. Simmons Simmons

Libya Is A Major Energy Player

Founding OPEC member. By 1970, Libya oil production was tied with Saudi Arabia at 3.5 million barrels per day. High percent of current economy still linked to oil exports. Natural gas era is just beginning.

For 30 years, Libya was a closed investment shop. In 2004, Libyas doors re-opened.
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Libyas Economy At Epicenter Of North Africa

Libyas population is > 5.5 million people. Other than oil, the rest of its economy is small. The economy sits at center of North Africa:
Egypt Algeria Tunisia Morocco

It also sits across Mediterranean from Southern Europe.

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Libya: The Center Of The Universe?

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Libyas Early Energy Days Were Great

Libyas exploration era lasted from 1959 to 1970. The great oilfields found ranked among worlds best. Several small independents grew to major size due to Libyas oil.
Occidental Conoco Marathon Amerada Hess

While current production is aging, its average SIMMONS & COMPANY crude quality is high (35o to 37o). INTERNATIONAL

Energy Investment Into Libya Should Be Substantial

Upstream E&P will lease 102 individual blocks (onshore and offshore).
8 will have data rooms open by end of June. Rehabilitation contracts for all existing fields will also be awarded.

Natural gas era is just beginning.

Half of current gas is associated gas. New pipeline to Italy doubles need for gas. LNG began in 1965. It could revive. Internal gas needs are insatiable.

Downstream/petrochemical/chemical investment SIMMONS & COMPANY needs are high. INTERNATIONAL

Libyas Investment Plans Seem Sound

New investment law passed in 1997:

Easy to read. Seemingly fair. Very transparent.

New leadership know they need outside help.

Management/training skills. Western energy technology. Investment to create sustainable and prosperous economy.

2004 energy investment: Few preconceived terms

We want this to work. We want to be model of 21st century transparency.
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Libya Is A Large Territory

Libya

Texas/ Louisiana

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Is This A Great Deal?

Past 3 decades have found marginal oil. Most explorers were marginal, too! Could Libya become a Texas or Oklahoma? Would this be good or bad?
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Libyas Drilling Activity Has Been Sporadic

Average Wells Per Year Drilled 1971-1982 1983-1995 1996-2003 1970 250 115 83 102

Wells Drilled

Current Rig Count: 10

Source: International Petroleum Encyclopedia.

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Number Of Rigs 10 15 20 25 30 35 0 Offshore Land 5

Libya Rotary Drill Rig Count

Ja n8 Ja 2 n8 Ja 3 n8 Ja 4 n8 Ja 5 n8 Ja 6 n8 Ja 7 n8 Ja 8 n8 Ja 9 n9 Ja 0 n9 Ja 1 n9 Ja 2 n9 Ja 3 n9 Ja 4 n9 Ja 5 n9 Ja 6 n9 Ja 7 n9 Ja 8 n9 Ja 9 n0 Ja 0 n0 Ja 1 n0 Ja 2 n0 Ja 3 n04

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The Drill Bit Has Barely Tested Libya

Sirte Basin covers 237 square kilometers. There have been 1,732 exploration wells drilled (15% were successful). Five other key basins covered 483 square kilometers. Total exploration wells are 563. 125 were successful (22%).

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Is Libyas Oil And Gas Glass Half Full?

Oil generates 95% of Libyas hard currency and 75% of its budget receipts. 1955 - 1968 concessions covered one-third of land area (137 concessions granted to 42 companies). Of 392 discoveries 68% have been in Sirte Basin. 70% of proven reserves were discovered in first 10 years.
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Is Glass Half Empty?

Exploration post-1970 has been disappointing. Inducement to find new oil was minimal. Interest in finding gas was zero. Explorationists in past 20 years were not household names. Has all the great oil been found? Only the drill bit knows!
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Libyas Natural Gas Challenge

Past energy focus has been oil-related. Future focus has to shift to natural gas. Hopefully, much will be discovered. Demand is clear:
Power Sector Steel And Cement Petrochemicals Gas Plant LNG Export To Italy Flaring Operations Total 2003 340 170 180 15 150 -200 550 1,605

Bcf Per Day Plan B 2010 2015 2015 776 776 1,738 234 234 234 180 180 180 80 80 80 250 250 250 900 900 900 100 100 100 550 200 200 3,070 2,720 3,682 SIMMONS & COMPANY
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Investment Opportunities Extend Beyond Oil And Gas

Power generation. Agricultural resources. Tourism. Oil services/petroleum equipment. Steel and cement. Consumer product to Southern Europe/ North Africa. Chemical industry plastics and other SIMMONS & COMPANY value-added end products. INTERNATIONAL

Libya: An Investment Hub?

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All Great Investment Challenges Have Risks

Libya is not immune to foreign investment risk. Gadhafi risk (unpredictable) is top of risk list.

Could Trust Me actually work? Houston should have a big future role in Libya.
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Has Libya Been Fully Explored?

137 concessions were grated to 42 companies between 1955 - 1968. 11 active concessions covered one-third of country. Over 400 discoveries have occurred. 68% were in Sirte Basin. Over 80% of proved reserves found in first decade of exploration.
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