Falcon Next Limited

Falcon Next Trading Business Units As part of the ten year vision of the group, Falcon Next trading also has a mandate to develop the following businesses within the downstream area;

• >> Establish three 50,000 metric tonnes storage facilities, in at least three regions within Nigeria, in order to facilitate our product distribution efforts. These storage facilities will further ensure adequate penetration of various markets, from the southern region of the country, all the way to the North. Talks have commenced internally, towards the fulfillment of the first facility (50,000 MT) within the south East region, with a target to commission the project by Q3, 2018
• >> Setting up of a modular refinery (10,000-25,000 bpd) Focus on serving the Nigerian market and neighboring countries.
• >> Develop and roll-out a fully functional lube plant
• >> Set up a trading company offshore (in Geneva). Within the Falcon Next Trading division, focused on physical and paper trades of various refined petroleum products.
• >> Establish at least 185 filling stations (5 in each state) in Nigeria, within the next 10 years.

In Nigeria, the industry is gradually making a shift in a new direction. Industry experts project that the importation of petroleum products would be cut by 50%, by 2019. Falcon Next Trading is positioned to exploit this gap with a focus on commissioning a mid–sized modular petrochemical/oil refinery by 2018. We are positioned to exploit this gap by making a strategic investment in a joint venture effort to establish modular refineries in Nigeria with a 10,000bpd refining capacity, our strategic objective in this direction is to commence the feasibility for this project with the intention of attaining financial closure by Q3, 2017. Consequently, we do envisage that ground breaking for the refinery will commence by Q2, 2018. When fully operational, it is intended that the refiner, in Nigeria, will be the first of a string of modular refineries to be established across Africa, with particular focus on the sub-sahara. Our strategic plan is to establish multiple sources of petroleum products, to make energy solution readily available for Africa through our trading activities.

Falcon Next Logistics Division

(Onshore Transportation & Logistics Division) Falcon Next Logistic is a division within The Company, earmarked for land and marine transportation and logistical support of Falcon Next Trading in the areas of onshore and marine distribution of refined products via third party engagements and collaboration. Falcon Next Logistics operates via two divisions: Onshore/marine transportation and logistics divisions. As the former connotes, our onshore logistics division is focused on providing logistical support to Falcon Next Trading in the distribution (via trucking) of our refined products to our various clients across Nigeria.

Falcon Next Gas Division

Falcon Next Gas is a division of Falcon Next which focuses on the processing, supply and delivery of gas products to consumers. Falcon Next Gas operates in the downstream and midstream sectors of the Nigerian Oil and Gas industry. Gas initiatives: Falcon Next Gas is currently putting measures in place, to drive an LNG and CNG Solution initiative. Falcon Next Gas will drive a virtual pipeline solution, modeled after harnessing gas from a gas source (gas processing plant or pipeline from a gas field), which will then be liquefied/compressed into LNG and CNG and trucked in specialized cascade containers. The rollout plan will commence with the site build of a Liquefaction Plant, to convert processed gas to LNG, which will then be gasified at the consumer’s end. The LNG rollout will promptly be followed by a CNG model to cover areas with shorter distances (from the gas source). The overarching objective is to utilize both models in delivering our strategic Gas-to-Power goals. Falcon Next Logistics Division (Marine Transportation and Logistics Division) We are soon to commence acquisition of small to mid-sized barges to support our product trading activities – STS Transshipment and Marine Deliverables. Within the Marine Transportation & Logistical Division of Falcon Next Logistics, we strive to provide bridging and transportation support, which is marine focused. In this regard, Falcon Next Logistics is being primed to focus on STS Transshipments and the Marine supply/delivery of products to marine storage locations and platforms. Falcon Next Logistics is also currently exploring a marine logistics business model, which entails the movement of containers, equipment and machinery as well as personnel for clients. When fully functional, Falcon Next Logistics activities will also explore provision of Container Port Feeder services, within Nigeria and neighbouring West African countries.

Upstream

In the upstream sector, Falcon Next is positioned to participate in joint venture exploration and production of crude oil and natural gas, acquisitions of marginal oil fields and the development of oil assets within the African region, under well-structured farm-in arrangements; through the Investment Arm- Falcon Next Exploration & Production and the Operational Arm – Falcon Next Conduit Exploration & Production. Falcon Next Exploration & Production Division Falcon Next Exploration & Production division serves as the E&P investment arm with a focus on exploring investment opportunities in the upstream sector of the Nigerian and African Oil and Gas industry for The Company. Hydrocarbon Petrochemical Limited, as a fast growing indigenous oil and gas company in the downstream and upstream sectors, utilizes the Falcon Next Exploration and Production vehicle to explore investment opportunities in production and exploration, farm-ins, as well as acquisition and development of oil fields. Falcon Next Conduit Exploration Production Division Falcon NextConduit Exploration (JV) Division was birthed to develop participation in the Exploration and Production sub-sector of the global economy. It is positioned to explore the upstream space and become a leading player in the oil and gas market, first, in Africa. With a solid team of seasoned professionals, holding a collective average experience of over 30 years in the oil and gas industry in areas of project management, exploration and production, community and government relations, technical consultancy services, and the sector, Falcon NextConduit is set to explore joint venture and collaborate projects locally and internationally. Falcon NextConduit is today, positioned to pursue the following E&P activities: Marginal Oil Field Acquisitions Nigerian Marginal Field Assets (MFA) Concessions: In keeping with the Nigerian Local Content Law, the local entity, Falcon NextConduit E&P is building the requisite technical and financial capacity that would ensure that it is poised to undertake operatorship of MFAs, within Nigeria.
Falcon Next Exploration & Production Division Falcon Next Exploration & Production division serves as the E&P investment arm with a focus on exploring investment opportunities in the upstream sector of the Nigerian and African Oil and Gas industry for The Company. Hydrocarbon Petrochemical Limited, as a fast growing indigenous oil and gas company in the downstream and upstream sectors, utilizes the Falcon Next Exploration and Production vehicle to explore investment opportunities in production and exploration, farm-ins, as well as acquisition and development of oil fields. Our objective here, as a local company, is to see that we provide the local knowhow; funding of the MFA signature bonus; funding of the bidding process and statutory fees; funding of the acquisition of the field data required for the field assessment; as well as a local technical manpower and logistics required. In collaboration with well-selected foreign technical partners, we intend to gradually build operating capacity (through technical transfer arrangements), within Falcon NextConduit, which would ensure that we are well aligned to independently operate fields, in the not so distant future. In addition, Falcon NextConduit is provided either via equity, Mezzanine financing, or a mix of both. Our strategy here is to provide a substancial portion (20% - 30%) of the initial equity cash calls (cash to emanate from other business activities within the group), for fields secured by Falcon NextConduit and then support this equity by leveraging on debt (Reserve Base Lending arrangements) with foreign investment banks/institutional lenders. Farm-Ins and Acquisitions of Nigerian MFAs and Foreign Oil Field Assets In the context of Nigeria, we would be looking acquire a substantial stake of an existing MFA, currently owned or operated by a local Nigerian company. In Nigeria today, such opportunities currently exist amongst marginal fields’ concession holders, who were awarded MFAs, in the last marginal fields Concession Round, carried out by the Nigerian government in year 2003

Falcon NextConduit is currently evaluating potential investments in a number of these MFAs. PSC Arrangements; Local and Foreign Assets Local Assets (PSC): It is often the practice, for IOCs to opt not to divest certain marginal fields within their asset portfolio and may instead; allow a local company to develop the field, under agreed PSC terms, whilst operatorship of the field is still retained by the IOC.

Upstream

Upstream In such a case, the Nigerian company may not carry the asset in its books, but will be 100% responsible for developing/producing the asset and will enjoy the upside of a revenue share (alongside the IOC) from proceeds from the sale of crude. FPConduit currently has a model and plan for exploring this option. Foreign Assets (PSC): Like in the case of the local assets, Falcon NextConduit is poised to collaborate with foreign local entities (within the Sub-Saharan region) in the capacity of Technical and/or Financial partner to such entities, in well-defined PSC arrangements. Our requirement would be for the local company to have considerable local knowledge of the industry and terrain, as well as strong business and network affiliations, within the country where the opportunity resides. Our preferred model would be to work closely as a collective to form of joint venture entity/ consortium with a carefully selected local entity, well placed within the target country to secure an asset(s). Typically, the responsibility of the local company would be handle the business development and logistical aspects of the bidding/ award process whilst providing local intelligence and know-how to the JV/consortium, on a continuous basis. We believe that such opportunities represent an excellent window for midsized E&P companies, such as ours. The case for collaboration with a local entity is often bolstered by the fact the government of the target country will often favor indigenous companies, which are able to demonstrate technical and financial partnership arrangements with reputable E&P players. We envisage that some of the benefits of partnering with a local partner may include:

• >> Waivers on CSR for the locals
• >> Waiver of Signature Bonus
• >> Goodwill in bid selection/award, as such bid rounds/awards, are often particularly tailored to favor the locals Possible tax exemption benefits.
• >> Vantage positioning for the subsequent concession rounds in the target country.

To recover our initial investment, Falcon Nextconduit would usually execute a PSC or TFSA (Technical and Financial Support Agreement) with the local Company geared towards the recovery of our investment from cost oil. This arrangement would also provide for the split ratio (between Falcon NextConduit and the Local Company) of Profit Oil. ...the overriding vision of Falcon NextConduit, within the Upstream E&P space, is to leverage on its strengths as a company and the right partnerships (WITH POTENTIAL FOREIGN TECHNICAL E&P players as well as indigenous local players in target countries), to build capacity within its operating arm (Falcon NextConduit) and its local partners in the Sub-Sahara. By this model, we plan to significantly expand our E&P activities, across the Sub-Sahara, with core focus on countries such as Nigeria, Ghana, Niger and Angola. Our particular leverage is our ability to raise equity within our group and to lean on the group’s various business activities, to access RBLs from finance institutions, for funding our E&P OPPORTUNITIES. Along with financing. We also bring to the table our extensive local and international knowledge of the industry. Falcon Next Ocean and Engineering Services Falcon NextOcean is a division of Falcon Next focused on upstream engineering services. With the establishment of the Nigerian Content Development Bill (NCD) and the Petroleum Industry Bill (PIB), Falcon NextOcean’s strategic objective is to gradually building capacity in the upstream services sector to offer services such as: Bleneson Group

• >> On-shore and offshore Asset Maintenance and management
• >> Deep offshore Rig services
• >> Drilling Engineering Services
• >> Well loging and wireline services
• >> EPC’s

Falcon Next Marine Division Falcon Next Marine is a division of Falcon Next, which was created to focus on Upstream/platform E&P support services, within the Nigerian oil and gas sector. When fully operational, our services will include:

• >> Vessel Transportation Services to and fro offshore platforms >> Loading and discharge cargo operations
• >> Ocean towing
• >> Emergency Response