Disclaimer
FORWARD LOOKING INFORMATION:
This presentation contains certain forward-looking statements relating, but not limited, to DEEP Earth Energy Production Corp.’s
expectations, intentions, plans and beliefs. Forward-looking information can often be identified by forward looking words such as
“anticipate”, “believe”, “expect”, “goal”, “plan”, “intent”, “estimate”, “may” and “will” or similar words suggesting future outcomes or
other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Forward-looking
information may include reserve and resource estimates, estimates of future production, costs of capital projects and timing of
commencement of operations, and is based on current expectations that involve a number of business risks and uncertainties. Factors that
could cause actual results to differ materially from any forward-looking statement include, but are not limited to, failure to establish
estimated resources and reserves, the recovery of resources varying from estimates, capital and operating costs varying significantly from
estimates, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, inflation, changes in
exchange rates, fluctuations in commodity prices, delays in the development of projects and other factors. Forward-looking statements
are subject to risks, uncertainties and other factors that could cause actual results to differ materially from expected results.
Shareholders and prospective investors should be aware that these statements are subject to known and unknown risks, uncertainties and
other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. Shareholders are
cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous
assumptions, inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts,
projections and various future events will not occur. DEEP Earth Energy Production Corp. undertakes no obligation to update publicly or
otherwise revise any forward-looking information whether as a result of new information, future events or other such factors which affect
this information, except as required by law.
This caution is provided in accordance with the requirements of Parts 4A and 4B of National Instrument 51-102 Continuous Disclosure
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of these rights or consult with a legal advisor.
DEEP Earth Energy Production Corp.
While traditional non-renewable energy resources are finite,
and traditional renewable resources have inconsistent
power outputs,
Geothermal resources produce in perpetuity with
constant base load power
3
Highlights
 Low risk geology:
- vast sedimentary reservoir over 100s of square miles
- Initial temperature and porosity/permeability data already
available from existing well data
 Small repeatable 4-5 MW projects in and area with the potential for
100s of MW of baseload electrical production
 Extremely environmentally friendly – no carbon emmissions, silent,
small surface footprint, inexhaustibe heat resource
 “Off the shelf” turbine and drilling technology – mature and reliable
 Profitable under SaskPower’s current Green Options Partners Program
pricing – project selected in SaskPower’s 2011 lottery
4
DEEP Earth Energy Production Corp.
Financings:
1. Current - Up to $1.5 million @ $0.20/share
 Proceeds used for further exploration on our project (drill
hole optimization, land acquisitions, and Project Manager
hire, and general corporate expenses)
2. October – Up to $10M
 A Second financing to be completed this fall in
conjunction with a public listing
 Proceeds for completing 2 wells to a depth of ~3000
metres in the Williston Basin , additional land acquisitions
and general corporate expenses
5
Mission, Vision and Strategy:
Mission:
Developing geothermal resources to meet increasing
energy needs with secure, clean and renewable energy
Vision:
To be the first Saskatchewan geothermal power producer
by understanding that geothermal energy is:
1. Sustainable- a perpetual natural energy source
2. GREEN - zero carbon-based fuel consumption
3. Profitable - Can be the lowest cost of alternative power
generation
Strategy:
Develop a portfolio of projects to reduce drilling risk and
high front-end capital risk
6
Geothermal Worldwide
Mature technology
Global installed
geothermal power is
10,700 MW, in 24
countries, supplying 60
million people with
renewable energy
Overall potential global
geothermal power
capacity is 190,000 MW
Source: Islandbanki United States Geothermal Energy Market Report
7
Geothermal Power
• Heat is recovered from water recycling through the
system and converted to electricity
• Continuous heat supply means that with proper
engineering geothermal systems can run indefinitely
• The ultimate renewable resource!
8
Geothermal advantages
• Geothermal power plants provide constant, baseload power
as compared to wind or solar alternatives
• Silent
• Small project footprint - almost invisible on the prairie
landscape
• Low CO2 emissions
9
Geothermal v s. Other Renewables
Geothermal runs almost all the time!!
Baseload power generation
Power Availability (%)
Base-Load
Ocean - Wave
Wind - Offshore
Wind - Onshore
Solar - PV
Solar - Parabolic Trough
Solar - Concentrating PV
Hydro - Small Scale
Geothermal - Binary Steam
Geothermal - Dual Flash
Biomass - Gasification
Biomass - Combustion
Biomass - AD
0%
20%
Sources: (1) Net Capacity Factor (%) averages for selected renewables, Glitnir Research
Source: Islandbanki United States Geothermal Energy Market Report
40%
60%
80%
100%
10
Geothermal v s. Other Renewables
• Small surface foot print – housed in typical farm sized sheds
• Virtually silent
Land Use
In acres/ 1 billion kWh
Solar PV
Solar
concentrating
Coal
Geothermal
Wind
0
1,000
2,000
3,000
4,000
5,000
Source: (1) NREL, AWEA and Glitnir Research. For biomass, the land use is tremendous and particular critical as it can be of influence to the food sector. It also has to be mentioned, that Solar PV could use space
on roofs and walls and therefore not be a huge limitation. (2) Navigant Consulting, Presentation, at: http://www1.eere.energy.gov/femp/pdfs/rewg_navigant.pdf
Source: Islandbanki United States Geothermal Energy Market Report
11
Land Acquisition
1. DEEP has received a Lease of Space agreement from
the Saskatchewan Ministry of Energy and Resources on
an initial project area on approximately 9 sections of
land near Estevan, Saskatchewan. The project area is
located in Southeast Saskatchewan, west of Estevan,
and totals 2,395.74 hectares (5,920 acres).
2. Pursuing partnerships with existing Petroleum and
Natural Gas lease holders which can provide access to
substantial reserves, possibly improving drill rig
availability, and possible cost savings
3. Freehold rights agreements/consents are being pursued
which may also include agreements on possible oil and
gas discoveries
12
Land Acquisition
13
Positive Resource Report
• Borealis Geopower Inc. prepared an independent technical
report to ascertain the geologic and economic possibility of
developing the geothermal resource for heat and electricity
production in DEEP’s project area
• The document was prepared in accordance with the
Canadian Geothermal Code for Public Reporting, produced
by the Canadian Geothermal Energy Association
 Conclusion: “… the analysis suggests that small geothermal
(<5MW) power plants are economically viable.”
 This project can be repeated over many fields
14
Positive Resource Report
 Net power production of ~1.25 MW/well
 5 MW field design
 Scalable and repeatable over many fields
Capital Costs for 5 MW Field:
•
•
•
•
Exploration/Well Re-Entry Program: $1.0 million
Production Drilling Cost: $8.4 million
Binary Turbine Power Facility: 5.0MW @ 1.8million/MW = $9.0 million
Piping & Fluid transport 5.0 MW @ $0.3 million/MW = $1.5 million
Generic Costs:
•
•
Project Management: ~10% of above total = $2.0 Million
Power House/Building = ~$400,000
 Total Capital Costs: $22.3 Million
 Installed Capital Costs / MW = ~$4.5 Million
15
Geothermal v s. Other Renewables
Our project costs are similar to other North American
geothermal projects
Installed Cost for Electricity Generation¹
Cost of Electricity Generation²
cents/ kWh:
‘000 USD/ MW:
Current
Prices
Median
Wind - Utility
Wind - Class 5
Solar - PV
Solar - PV
Solar - Parabolic Trough
Solar - Parabolic Trough
Solar - Concentrating PV
Solar - Concentrating PV
Hydro - Small Scale
Hydro - Small Scale
Geothermal - Binary Steam
Geothermal - Binary Steam
Geothermal - Dual Flash
Geothermal - Dual Flash
Biomass - Gasification
Biomass - Gasification
Biomass - Combustion
Biomass - Combustion
Biomass - AD
Biomass - AD
0
2,000
4,000
6,000
8,000 10,000
0
5.0
10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0
Sources: (1) California Energy Commission (Draft Staff Report) June 2007; (2) Selected renewables; averages for Biomass, Solar & Fuel Cells; In-Service Year = 2007 (Nominal 2007$), California Energy Commission
(Draft Staff Report) June 2007; Navigant Consulting “Levelized Cost of Generation Model...”, at: http://westcarb.org/2007_energypolicy/documents/2007-06-12_workshop/presentations/2007-0612_NAVIGANT_CONSULTING.PDF
Source: Islandbanki United States Geothermal Energy Market Report
16
Saskatchewan Energy Demands
• SaskPower is facing an unprecedented demand from
customers – 6.7% increase in the next 10 years
• Environmental regulations will influence SaskPower’s
choice of electrical generation options
– Coal-fired generation may not continue as it has in the past…
• Current capacity is 3,600 MW ( incl. 469 MW purchased)
• SaskPower will have to rebuild, replace or acquire
4,100 MW of electricity by 2030 – no medium to long
term plan for the “gap”
• What will fill this gap????
17
Power Costs and Purchase Rates
• SaskPower announced in July that DEEP’s application
for a 5.0 MW geothermal project located in Southeast
Saskatchewan was selected in SaskPower’s Green
Options Partners Program annual lottery
• The program streamlines power purchasing for small
and medium-sized “clean power” producers that sell
between 100 kilowatts (kW) and 10 megawatts (MW) of
electricity, by providing a fixed price for all power
produced under the contract.
• The energy tariff for 2012 is $98.02/MWh and increases
at rate of 2% per year over the term of the contract
18
Investment Analysis
Best case:
Model versions
CAPEX Subsidy
"WITH" Pricing Subsidy (on power)
Comments
20-year IRR Payback Years
$8 million
17.46%
7.51
$0.02
27.11%
5.71
Base case:
Model versions
CAPEX Subsidy
"WITH" Pricing Subsidy (on power)
Comments
20-year IRR Payback Years
$6 million
15.29%
8.17
$0.02
24.11%
6.16
Worst case:
Model versions
CAPEX Subsidy
"WITH" Pricing Subsidy (on power)
Comments
20-year IRR Payback Years
$4 million
13.27%
8.87
$0.02
18.39%
7.52
* This model does not include any potential debt financing.
* Assumes a turbine efficiency rate of 7%. Turbine manufacturers are now
claiming rates as high as 17%
19
Summary:
• Low risk geology – huge sedimentary aquifer
• No major exploration costs – public data from oil and
gas drilling exploration
• Low initial capital expenditure – Scalable and
Repeatable Projects
• 100s of megawatts potentially available - baseload
• No carbon emissions
• Silent and minimal environmental footprint
• Inexhaustible resource – heat from the earth’s core
• Mature and reliable technology
• Possible >20% IRR - in perpetuity
20
Additional Potential
What ifs…
•
•
•
•
•
•
•
•
Leveraged financing
More efficient turbines
Government funding – SRED, etc.
Resource is better than anticipated – hotter and better
flow rates
Oil and gas discovery
Lithium discovery
Industrial application or carbon sequestrian program
Improved power purchase agreement
21
Capital Structure
CURRENT CAPITAL STRUCTURE:
Shares (13.2% insider owned) 9,625,000
Options (10%) Issued:
675,000
Open:
(287,500)
Founders Warrants (9%)
Fully diluted
900,000
11,487,500
Net working capital (Q4)
Debt
~$600,000
nil
22
Directors & Management
•
Kirsten Marcia, P.Geo.: President, CEO & Director
Former Vice President of Exploration for Wescan Goldfields Inc., 13 years of mining exploration experience
•
Steve Halabura, P.Geo., F.E.C. (Hon.): Director & Non-Executive Board Chair
President and CEO, Concept Forge Inc., Partner HCF Mercantile Inc.
•
Al Zack: CFO, Director
Principal and COO of HCF Mercantile, former President and CEO PrimeWest Mortgage
•
Mark Andreas, EIT: COO
Geological Engineer, North Rim Exploration Ltd.
•
Rob Theoret, B.Comm., CIM: Director
Principal and President/CEO of HCF Mercantile Inc., Director and CFO of Admiralty Oils Ltd.
•
Jeffrey Green: Director
Managing Partner, Jovian Asset Management Inc.
•
Jamie McIntyre: Government and Environmental Technical Advisor
•
Tim Galbreath: Land Advisor
•
Legal Counsel:
William A. Nickel - McDougal Gauley LLP
Dan Anderson - MLT
20 years in the mining and nuclear energy business and former Cameco VP
26 years in Petroleum Land Management, currently Land Man to Equal Energy, and Director of Rallyemont
Energy Inc., Allstar Energy Ltd., and Admiralty Oils Ltd
23
Thank you!
1103 Tower at Midtown
201 - 1st Avenue South
Saskatoon, SK S7K 1J5
www.deepcorp.ca