AMITY OIL LIMITED - Antares · PDF fileAmity Oil Limited Level 2, 18 ... stimulation...
Transcript of AMITY OIL LIMITED - Antares · PDF fileAmity Oil Limited Level 2, 18 ... stimulation...
Amity Oil Limited Level 2, 18 Richardson Street West Perth WA 6005
PO Box 690 West Perth WA 6872 Telephone: (08) 9324 2177 Facsimile: (08) 9324 1224 Email: [email protected] Website: www.amityoil.com.au
AAMMIITTYY OOIILL LLIIMMIITTEEDD
Our Ref: 2004-11-23ASXSYD7570DR AGM PRESENTATIONS
23 November 2004
The Manager Companies Announcements Office Australian Stock Exchange Ltd 10th Floor, 20 Bond Street SYDNEY NSW 2000 Dear Madam,
ANNUAL GENERAL MEETING PRESENTATIONS
Please find attached the Chairman's Speech delivered by Mr. Richard Elliott and the slide presentation given by Amity's Managing Director, Mr. Howard McLaughlin at the Company's Annual General Meeting on Tuesday, 23 November 2004. A full size version of the slide presentation is available on Amity's website at www.amityoil.com.au. Yours faithfully, AMITY OIL LIMITED
DAVID RICH Company Secretary
A.C.N. 009 230 835
AMITY OIL LIMITED ANNUAL GENERAL MEETING
23 NOVEMBER 2004
CHAIRMAN’S ADDRESS Last year your directors outlined the year ahead. There were four main goals for Amity which were:
1. Bring the Adatepe and Cayirdere discoveries into production – at that point only Gocerler was producing;
2. Continue exploring in the Thrace basin in Turkey;
3. Determine if the Whicher Range gas field could be commercialised using the latest technology and be ready in time for the identified market opportunity; and,
4. Investigate new areas for exploration outside Turkey and establish an additional source of production & cash flow.
Although it seems like the last year has been a flat one for Amity, upon reflection a lot has been achieved in a short time. A review of the four strategic aims of a year ago is as follows:
1. Bring all Turkish discoveries into production.
Since the last AGM we have:
a) brought both the Adatepe and Cayirdere fields into production in record time;
b) drilled seven out of seven successful appraisal wells in the Thrace Joint Venture area;
c) completed a 12.5km pipeline from Adatepe to Cerkezkoy;
d) installed a 10 MMcf/d compressor at Gocerler to arrest the drop in production due to pressure decline.
This effort has resulted in increasing and stabilising production for the year and hence created strong cashflows from the Turkish production assets.
2. Continue exploring in the Thrace basin in Turkey.
Following the unsuccessful exploration drilling in Southern Turkey, the exploration strategy was focussed on the Thrace area in European Turkey where Amity held eight licences. Alpullu 1 and 2 exploration wells were drilled and although gas was present, these were not deemed commercial. Amity has since exited two of its Thrace licences and now holds six. Amity withdrew from all Turkish acreage outside Thrace.
Over the past few months permit wide 3D seismic has been acquired over the joint venture area in Thrace and this is currently being processed and interpreted. At this time Amity envisions limiting its drilling in Turkey to the Joint Venture Area.
3. Determine the commerciality of the Whicher Range gas field
As has been highly publicised, Amity and partners proceeded to test the Whicher Range gas field, south of Perth. The Whicher Range-5 well was drilled, using air drilling technology through the Sue Group formation to eliminate the possibility of formation damage due to water. The unusual rock stresses caused difficulty in achieving the well objectives, but persistence finally resulted in the well being completed, albeit the bottom 300 metres were drilled with low water-loss fluid rather than air.
The air drilling did not generate the gas flows that had been hoped for and after researching similar fields in the US, Amity and partners decided to try the latest in
fracturing technology to see if a commercial flow could be generated from the field. Again the high rock stresses caused difficulties in effectively completing the fracture stimulation operations. The five-zone programme was only partly completed. This was disappointing, however Amity and partners feel that enough information was gathered from the completed fracs to determine that current fracture stimulation technology will not produce a commercial gas flow.
Operations are being wrapped up and Amity is contemplating its strategy for exiting the field.
4. Investigate new areas and establish an additional source of production & cash flow.
The announcement of the reserve reduction at Gocerler late last year, coupled with the exploration disappointment in the Adana and Iskenderun basins, convinced Amity’s Board and management that the Company needed to look further than Turkey in order to grow. Management made a global assessment, which identified the U.S.A. as presenting the appropriate mix of available opportunities and relatively low risk.
We have developed a new ventures team centred in Dallas, and while they are currently working on new US ventures, it is our intention they will seek additional international opportunities once there is a sustainable business created in the USA.
The decision to invest in this new ventures programme is extremely important to your Company. It marks a substantial departure with the past. We have chosen to recognise this change by rebadging the Company. We will keep the Amity name in Turkey where it is well recognised, but we have asked the shareholders to consider changing the name of the parent to Antares Energy Limited. We are already operating in the U.S.A. under the Antares name, and we want the investing community to recognise that we have changed direction and are focussed on the future.
AMITY OIL LIMITEDAMITY OIL LIMITED
Annual General MeetingAnnual General Meeting23 November 200423 November 2004
Managing Director ReviewManaging Director Review
Presented by: Howard McLaughlinManaging Director
Year at a glanceYear at a glanceAppraised, developed and began production at Adatepe Appraised, developed and began production at Adatepe and Cayirdere and Cayirdere Drilled 12 wells, 8 appraisal and 4 exploration (fin. Year)Drilled 12 wells, 8 appraisal and 4 exploration (fin. Year)Installed and commissioned a compressor unit at GocerlerInstalled and commissioned a compressor unit at GocerlerMajor 3D seismic survey acquired in TurkeyMajor 3D seismic survey acquired in TurkeyDrilled and fractured Whicher Range determining a Drilled and fractured Whicher Range determining a definitive outcomedefinitive outcomeDeveloped an international new ventures programDeveloped an international new ventures programDrilled our two first wells in the USA Drilled our two first wells in the USA
Gross Gas Production - Turkey
0
100
200
300
400
500
600
700
800
31-Jan-0231-M
ar-0231-M
ay-0231-Jul-0230-Sep-0230-N
ov-0231-Jan-0331-M
ar-0331-M
ay-0331-Jul-0330-Sep-0330-N
ov-0331-Jan-0431-M
ar-0431-M
ay-0431-Jul-0431 Sept 04
MM
cf/M
onth
0
2000
4000
6000
8000
10000
12000
14000
MM
cf
Gas Production Cummulative
Gas Production
Adatepe Gas PlantAdatepe Gas Plant
Cayirdere Cayirdere Gas PlantGas Plant
FY 2004 OperationsFY 2004 Operations
June July Aug Sept Oct Nov Dec Jan Feb Mar April May June July Aug Sept Oct Nov
TurkeyDrilling
Seismic
A4
2003/2004 Financial Year
2D/3D
C2
Processing Interpret
Al2
DA2
Milestones
G6
C3
2D/3D Processing Interpret
USADrilling
El-1 El-2
AustraliaWhicher Range
GocerlerCompressionCommissioned
Frac WR5
Area “A”
Area “B”
Area “A”
Area “B”
Whicher Range 5
Cayirdere inproduction
Adatepe inproduction
Al1A3A2
YukYesiltepe
DA1
Land AcquisitionBegins in Oklahoma
Ellis-1Spuds
Whicher-5Spuds
76.19%76.19%5516162121OverallOverall
92.31%92.31%1112121313Appraisal wellsAppraisal wells
50.00%50.00%444488Exploration wellsExploration wells
% success% successFailedFailedSuccessfulSuccessfulAttemptedAttempted
Turkey Drilling Results
57%
19%24%
DiscoveryAppraisalDry
84.21%84.21%3316161919OverallOverall
92.30%92.30%1112121313Appraisal wellsAppraisal wells
66.67%66.67%224466Exploration wellsExploration wells
% success% successFailedFailedSuccessfulSuccessfulAttemptedAttempted
Thrace BasinDrilling Results
63%
21%
16%
DiscoveryAppraisalDry
3648
3792
3589
Gocerler 3D Acquired 2002
332 sqkms
Gocerler West 3D Acquired 2004 152sqkms
Completed June 04
Cerkezkoy 3D Acquired Aug 04
300 sqkms
Cayirdere 3D In Progress 170 sqkms
Gocerler 3D Seismic ProgramApprox. 450 Sq kms acquired in 2004
Gocerler
Adatepe
Cayirdere
Combination2D & 3D
Why a name change?Why a name change?Amity Oil becomes Antares EnergyAmity Oil becomes Antares Energy
Amity Oil Ltd is now a very different company than it was 12 months ago:
•New strategy and disciplined operating philosophy
•New management structure
•Changes to the Board and major share holders
•Aggressive entry into the USA gas business
ANTARES
ENERGY
ANTARES
ENERGY
Global Activities
OngoingExploration
Three fields in Production
Head OfficePerth
Oklahoma & TexasOnshore Gas Exploration
Dallas Office
- Active areas
USA Exploration & ProductionUSA Exploration & Production
What the USA offers Amity Oil:What the USA offers Amity Oil:–– High gas prices & net backs to producersHigh gas prices & net backs to producers–– Low political & commercial riskLow political & commercial risk–– Abundant Infrastructure Abundant Infrastructure –– Quick revenue potentialQuick revenue potential–– Low cost environmentLow cost environment–– Multiple independent opportunitiesMultiple independent opportunities–– Attractive fiscal regimeAttractive fiscal regime–– Material reserve additions possibleMaterial reserve additions possible
►Gas Demand is Growing particularly for electricity
►Gas storage capacity is static – declining withdrawal efficiency
►US nationwide gas production capacity is declining
►US gas reserve base is declining
►Drilling and completions have not replaced production
►Average well/field productivity is declining
►Depletion rates for new wells are steadily increasing (< 24 months)
►Import capacity from Canada is near plateau and not likely to increase
►LNG is the only long term solution
Fundamental Properties of the US gas Industry
Gas Prices – Driven by Supply shortageHenry Hub Gas PricesHenry Hub Gas Prices
Oklahoma State Gas Production
0
500000
1000000
1500000
2000000
2500000
1905
1911
1917
1923
1929
1935
1941
1947
1953
1959
1965
1971
1977
1983
1989
1995
2001
MM
cf/y
ear
State Gas Production
OklahomaAnnual Production down
to 1967 levels of 1.67 TCF/year
31% drop from 1991
17% 17% 16% 18% 19% 19% 20% 21% 23% 23% 25% 24% 27% 28% 29%
0
10
20
30
40
50
60
Production Decline Rate of Base:
Bcf
/d
1990
2004E2003E2002E2001E20001999199819971996199519941993199219911990Pre-1990
Drilling Year:
U.S. Natural Gas Production HistoryIndicates 29% 2004 Decline Rate
Utilizes Data Supplied by IHS Energy; Copyright 1990-2004 IHS EnergyChart Prepared by and Property of EOG Resources, Inc.; Copyright 2002-2004
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001E 2002E 2003E 2004E
15
16
17
18
19
20
21
22
23
24
1990 1992 1994 1996 1998 2000 2002 2004
Trill
ion
Cub
ic F
eet
Natural Gas Consumption
Pipe & Lease
7%
Resid.21%
Elec.24%
Comm.14%
Ind.34%
Demand Shares
Proj.History
Growth in USA gas demand expected in 2004.Growth in USA gas demand expected in 2004.Still below preStill below pre--recession 2000 peak.recession 2000 peak.
0500
1000150020002500300035004000
19701972
19741976
19781980
19821984
19861988
19901992
19941996
19982000
20022004
Historical Drilling Rig Count
US Rig Count
400
600
800
1000
1200
1400
1 11 21 31 41 51
Num
ber o
f act
ive
rigs
2001 2002 2003 2004
J F M A M J J A S O N D
1997 – 2004 Range
Source: Baker Hughes
Gas Transportation
Areas of Interest
Why hasn’t this gas been found already?Why hasn’t this gas been found already?
Many wells intersected gas zones during the 50’s Many wells intersected gas zones during the 50’s –– early 90’s early 90’s that were ignored due to very weak gas pricesthat were ignored due to very weak gas prices
Many of these wells indicating byMany of these wells indicating by--passed gas pay are not passed gas pay are not being rebeing re--drilled because the leases are held by “stripper wells” drilled because the leases are held by “stripper wells” (very low productive wells from other zones)(very low productive wells from other zones)
Detailed regional geoDetailed regional geo--technical work is generally not being technical work is generally not being pursued and new plays are not being recognised. Focus is on pursued and new plays are not being recognised. Focus is on down spacing and infill drilling of producing fields.down spacing and infill drilling of producing fields.
Poor drilling technology in the past damaged many productive Poor drilling technology in the past damaged many productive zones that can be produced using modern mud systems and zones that can be produced using modern mud systems and better technologybetter technology
Ellis County OklahomaEllis County OklahomaHave completed two wells and more planned.Have completed two wells and more planned.Initial encouraging results seen in multiple zones.Initial encouraging results seen in multiple zones.Fracture stimulation programme ongoing.Fracture stimulation programme ongoing.
Ellis-1 & Ellis-2
9.8 BCF 3.2 BCF
3.6 BCF
4.1 BCF
3.1 BCF
35 36
31
6
1315
2 1
34
3
1.1 MMcf/dNot produced
4
9
14
10 11 12 7 8
16
33
2422 2321
2527 2628
5
1718
2019
1.6 BCF
2.4 MMcf/dNot produced
Ellis-1
Ellis-2
30
Texa
s
Ellis Area Ellis Area –– Oklahoma Oklahoma Cumulative production data to 2000Cumulative production data to 2000
Antares held acreage
Currently being captured
6 miles
6 miles
Township
Possible future locations
LocallyProductiveGasZonesin Western Oklahoma
Horizontal Wells
ConventionalWells
Advantages of Horizontal Drilling•Higher production rate•Larger recovery per well•Low cost
Horizontal Wells
Technology to Increase Productivity& Reduce costs
•Under balance drilling•Synthetic (oil based) mud & KCL gels•Deviated & Horizontal wells•Multiple completions•Coiled tubing•Wireless monitoring telemetry•N2/Co2 multi zone foam fracs•Multi lateral extensions
700 metres
Ellis-1 Fracture Stimulation - ongoing
Strategic IntentStrategic Intent
To grow Amity Oil’s market capitalisation to A$ 500 million on To grow Amity Oil’s market capitalisation to A$ 500 million on or before the end of CY 2007or before the end of CY 2007
Diversify revenue streams, capturing or developing at least Diversify revenue streams, capturing or developing at least two new independent revenue generating core areas.two new independent revenue generating core areas.
Develop a proactive, well balanced, diversified international Develop a proactive, well balanced, diversified international exploration program that delivers predictable results over the exploration program that delivers predictable results over the longer term.longer term.Continue to build a highly competent skill base and operating Continue to build a highly competent skill base and operating capability.capability.Ensure annual reserves replacement of >150%Ensure annual reserves replacement of >150%
Strategy for USA ExplorationStrategy for USA ExplorationLow risk Low risk –– proven gas playsproven gas playsRegional play developmentRegional play developmentStrategic partneringStrategic partneringBest technologyBest technologyProactive and aggressiveProactive and aggressiveMaterial reserve additionsMaterial reserve additions
Entry StrategyEntry Strategy
Low Risk/low costestablish cash flowbuild reserves and
production
Targeted asset & land acquisition
High productionlarge reservesacquisitions
Moderate riskmoderate cost
higher reserve and production impact
High impact plays
Higher riskpromoted
to reduce costs
Stage one Stage two Stage three
More wellsLarger targetsHigher reward
Increasing impact over time
•Conservative start to build cashflow•Introduce high impact wells over time
Growth curve
Oct Nov Dec Jan Feb Mar April May June July Aug Sept Oct Nov Dec
TurkeyDrilling
Seismic
2005 Calender Year
E1
Processing InterpretA5
Milestones
Processing Interpret
USADrilling Ell-1 Ell-2
PC1 W1
Y1 Y2 Y3 Y4 k1 K2 K3
Ell-3
Area “A”
Area “B”
Area “A”
Area “B”
USA prod starts
Ell-4 Ell-5 Ell-6 Ell-7 Ell-8
Operational ScheduleIndicative
k4 K5 K6
Our Strategy is ClearOur Strategy is Clear
Create Value for our ShareholdersCreate Value for our Shareholders–– Increase high margin productionIncrease high margin production–– Build reserve base through exploration/acquisitionBuild reserve base through exploration/acquisition–– Low opex & capex environmentsLow opex & capex environments
Stay Focused & DisciplinedStay Focused & Disciplined–– Small number of core areasSmall number of core areas–– Market demand drives gas explorationMarket demand drives gas exploration–– Opportunistic acquisitions (maintain readiness) Opportunistic acquisitions (maintain readiness)
The new Website
www.antaresenergy.com
AMITY OIL LTDAMITY OIL LTD
www.amityoil.com.au
ANTARES
ENERGY
ANTARES
ENERGY
www.antaresenergy.com
Future ASX Code: AZZ