Investor Presentation For personal use only setting new ...
Transcript of Investor Presentation For personal use only setting new ...
Investor Presentation
1
JULY 2013
Investor Presentation
Focused on setting new records.
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2 Drillsearch Energy Cooper Basin Oil and Gas Explorer and Producer
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Source: Market Data as at 29-Jun-2013 *on a fully diluted basis assuming exercise of in the money options ** Reserves and Resources as at 31-Dec-2012. Updated year end Reserves and Resources to be released mid-August 2013
Key Data Share Price (29 July 2013) (A$/sh) 1.255 Shares on Issue (m) 427 Market cap (A$m) 543* Cash (30 Jun 2013) (A$m) 36 Total Debt (30 Jun 2013) (A$m) 129
Reserves** and Production (DLS)
2P Reserves (mmboe) 18.7 2C Resources (mmboe) 23.9
FYE 2013 exit production rate (boepd) ~9,250
Oil (bopd) ~7,500 NGLs (boepd) ~600 Gas (boepd) ~1,150
Three business units: • Oil – Production, development and exploration
• Wet Gas – Production, development and exploration
• Unconventional – Exploration
Material Acreage Position • 22 permits / 14 operated
• Net acreage = 19,100 km2 / 4.7m acres
Share Price Performance (Since 1 Jan 2011)
Key Management Brad Lingo
Managing Director with more than 25 years of oil and gas experience
Ian Bucknell
Chief Financial Officer with more than 15 years upstream oil and gas accounting and finance experience
John Whaley
Chief Operating Officer with more than 20 years upstream, midstream and downstream oil and gas commercial, operational and project development experience
David Evans
Chief Technical Officer with more than 25 years of upstream oil and gas exploration & development experience
Peter Fox Chief Commercial Officer with over 20 years of experience in the oil and gas industry, with a particular focus on the upstream and infrastructure sectors of the gas industry
65%
115%
165%
215%
265%
31 Dec 10 20 May 11 07 Oct 11 24 Feb 12 13 Jul 12 30 Nov 12 30 Apr 13
DLS.ASX XEJ.ASX
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3 June Quarter 2013 Highlights
Record production growth increases over 170% • Record quarterly production = 0.6 mmboe / Record annual production = 1.1 mmboe
• Quarterly oil production increases by 141% to 0.4 mmbbls
• Quarterly wet gas production increases to 0.1 mmboe following new GSA with SACBJV
Record sales growth increases over 340% • Record quarterly sales = $50.7 million
• Record annual sales = $99.0 million
Exploration success continues driving reserves growth • 3 new Western Flank oil discoveries
• 2 new wet gas discoveries deliver continued reserves growth
Ongoing development and new JV drives production growth • Completion and commissioning of the Bauer-to-Lycium pipeline delivers production security
• Canunda Wet Gas Field commissioned to Middleton Gas Plant bringing new production online
• JV with Santos accelerates Western Cooper Wet Gas development and commercialisation
Successful financings • Successful completion of US$125 million long-term convertible bond raising
• Additional liquidity secured with A$50 million credit facility with CBA
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4 Key factors driving investor interest in Cooper Basin
Three key factors are changing the Cooper Basin and driving investor interest:
1. Growth in Oil Production –Oil exploration success in the Western Flank drives
Cooper Basin as bigger oil producer than Gippsland Basin and NW Shelf
2. Growth in Conventional Gas Demand – Rapid growth in Eastern Australian gas
demand and complexity of developing CSG projects is resulting in strong demand for
Cooper Basin Conventional Gas and driving increasing gas prices
3. Emergence of Unconventional – Significant unconventional shale, tight and basin-
centred gas resources have been identified with encouraging early production results
emerging
Drillsearch is the only pure Cooper Basin focused company and is well positioned to capture these opportunities
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5 The Cooper Basin Consists of Four Key Participants
Metric Santos Beach Energy Senex
Market Metrics
Market Cap (A$m) 546 13,432 1,760 790
Total Debt (A$m) 1371 3,704 117 -
Cash (A$m) 362 2,151 3143 127
Reserves & Resources**
2P (mmboe) 18.7 1,406 93 37
2P + 2C (mmboe) 42.7 3,371 559 362
Unconventional Prospective Resource (tcf)
13-32 tcf Recoverable
10-83 tcf Recoverable
300 tcf+ In-place
100 tcf+ In-place
Production (Annual)
FY12A (mboe) 390 52,100 (CY12) 7,500 601
FY13A (mboe) 1,100 53-57,000 (CY13) 8,100-8,500* 1,240
FY14E (mboe) (Guidance) TBA - 29 Aug 2013 n/d n/d 1,400-1,600
Financials
FY13A Revenue (A$m) 99 3,365 703* 138
Corporate
Strategic Shareholders BG – 8.5% Beach – 4.9% - - Sentient Group
– 16.5%
Farm-in
Unconventional JV Partners BG (60%) Chevron (60%) Source: Market Data for Drillsearch as at 29-Jul-2013 and as at 16-Jul-2013 for BPT, STO and SXY. 1 US$125m convertible bond, converted to A$ as at 16-Jul-2013 includes A$10 million currently outstanding under CBA Credit Facility. 2 As at 30-Jun. 3 31-Mar balance, pro forma for Chevron farm-in Stage 1 payment (US$95m), and payment to Icon (US$18m). * Estimated production. ** Reserves and Resources as at 31-Dec-2012. Updated year end Reserves and Resources to be released mid-August 2013
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6 Growth Platform and Strategy
Western and Northern Wet Gas Project Areas • Expand exploration and development through new Santos JV • Increase production from development of existing discoveries • Deliver additional production growth from multiple satellites • Prove up Reserves through expanded exploration
Central and Western Unconventional Fairways
• Explore, appraise & delineate unconventional resource
potential • Continuing Joint Venture interest from major international
petroleum companies
Western Flank and Inland-Cook Oil Fairways
• Develop new oil discoveries
• Accelerate 3D seismic-based exploration
• Expand production capabilities NEA
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7 Complementary Businesses Deliver Production Cashflow and Exploration Upside
Oil Wet Gas Unconventional
Status Production
Development Exploration
Production Development Exploration
Exploration
Project areas Western Flank Oil
Eastern Margin Inland-Cook Oil
Western Wet Gas Northern Wet Gas
Central Unconventional Western Unconventional
Products Oil Gas & Liquids Unconventional Gas
2P Reserves* Oil (mmbbls) 7.8 - -
NGLs (mmboe) - 4.5 -
Gas (mmboe) - 6.4 -
2C Resources* (mmboe) 1.9 22.0 -
Prospective Resources 33 mmbbls 88 mmboe 13-32 TCF
FY2013 exit production rate ~7,500 bopd 1,750 boepd (34% liquids) -
* Reserves and Resources as at 31-Dec-2012. Updated year end Reserves and Resources to be released mid-August 2013
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8 Performance Scorecard
Reserves, Production and Revenue*
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
Reserves (2P)**
Oil (mmbbls) 1.1 0.9 0.9 3.7 7.8
Gas (mmboe) 0.0 0.1 7.6 7.6 10.9
Total (mmboe) 1.1 1.0 8.5 11.3 18.7
Production (Annual) (Annual) (Annual) (Annual) (Annual)
Oil (kbbls) 193.0 158.9 123.0 85.1 775.3
NGL (kboe) - - - 80.6 79.1
Gas (kboe) - - - 224.2 211.2
Total (kboe) 193.0 158.9 123.0 389.9 1,065.7
Total boepd 528.7 435.0 536.0 1,068.0 2,920.0
Revenue 10.0m 6.1m 14.4m 22.4m 99.0m
* All estimates provided are based on information as known today. The financial information presented in this table is unaudited and yet to be finalised. The Company will release formal production guidance for FY 2014 on 29 August 2013. * *Reserves and Resources as at 31-Dec-2012. Updated year end Reserves and Resources to be released mid-August 2013
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9
Permit DLS % Operator
2013 2014 2015 Total Sept
Q Dec Q
Mar Q
Jun Q
Sept Q
Dec Q
Mar Q
Jun Q
Oil
Western Flank 60 BPT 15
Eastern Margin 40 STO 18
Wet Gas
Western 40-50 DLS/BPT 4
Northern 100 DLS 1
Unconventional
BG Shale & Tight Gas 40 DLS 6
Active drilling program focused on delivering continuing success 9
Oil Well Wet gas well Unconventional
Active Drilling campaign across all business segments
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10 Oil Business
Key Data
FY2013 Production: 775,374 bbls
Reserves (2P): 7.8 mmbbls
Contingent Resources (2C): 1.9 mmbbls
Prospective Resources (mean): 33 mmbbls
Background
• High profit oil (~$85/bbl operating net back)
• Low development and well cost (~$3.3m)
• Low operating cost (~$25/bbl)
• High success rates – over 50% on 3D seismic
• Short cycle times from discovery to first oil
Note: Reserves and Contingent Resources independently reviewed by RISC Pty Ltd as of 31 December 2012. Updated year end Reserves and Resources to be released mid-August 2013. Prospective Resources reflect operator’s (Beach PEL 91 & Senex PEL 182) current estimate of cumulative unrisked mean. All costs quoted on a 100% JV gross basis. Operating costs are field plus transportation costs. Net back before royalty and assuming A$105 oil price. Based upon Western Flank oil production.
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11 Wet Gas Business
Key Data
FY2013 Production Gas 147,320 boe NGLs 76,710 boe
Reserves (2P): 10.9 mmboe
Contingent Resources (2C): 22.0 mmboe
Prospective Resources (Mean): 86.0 mmboe
Background
• 19 existing wet gas discoveries
• 4 wet gas fields in production
• Low completed well cost (~$4.5m)
• NGL production delivers economics similar to oil
• New Santos JV drives wet gas commercialization
Note: Reserves and Contingent Resources independently reviewed by DeGoyler & MacNaughton as of 31 December 2012. Updated year end Reserves and Resources to be released mid-August 2013. Prospective Resources reflect operator’s (Drillsearch PEL 106/513 & Senex PEL 182) current estimate of cumulative unrisked mean.
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12 Unconventional Business
Key Data Production: Nil
Reserves (2P): Nil
Contingent Resources (2C): Under evaluation
Mean Recoverable Prospective Resources*
Shale Gas = ~24 TCF* Tight Gas = ~8 TCF* Deep CSG = Under evaluation
Background
• Significant leverage to Shale & Tight Gas plays
• Strategic alliance with BG Group
• Interest from Majors in uncommitted unconventional assets
• New JV with Santos also covers unconventional wet gas plays
• Significant potential for liquids-rich gas * Source: DeGoyler & McNaughton Independent Technical Experts Report on Drillsearch’s Cooper Basin Unconventional Resources as of 31 December 2012 Does not include unconventional resources (tight oil or tight gas) associated with the newly acquired Acer Energy permits contained in the Northern Cooper Wet Gas Project.
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13 Outlook and Work Program FY 2013
Further Reserve and Resources growth expected from independent audit due September quarter 2014
Bring new discoveries into production
Development drilling targeting further upgrades in Reserves
Completed oil pipeline to improve production reliability
Significant growth in reserves, production and cash flow
Accelerating Western Flank Oil exploration in 3D seismic areas
Forming Inland-Cook Joint Ventures to continue 3D seismic acquisition and drilling
Expanding footprint and activity in Eastern Margin
Expand and extend Wet Gas Pilot Project
Complete and test Wet Gas discoveries
Expand Wet Gas exploration and development through new Santos Joint Venture
Prove up existing Wet Gas 2C Resources to 2P Reserves by delivering additional wet gas discoveries in Northern and Western Cooper project areas
Accelerating appraisal and development activities in Drillsearch 100% owned Northern Cooper Wet Gas project area
Case and test Western Cooper unconventional targets in Wet Gas drilling program
Central Cooper shale gas 3D seismic program
• Drill, core, test and complete first Central Cooper shale and tight gas wells
• Commence production testing • Book unconventional
Resources and Reserves
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14 Disclaimer and Important Notice
This presentation does not constitute investment advice. Neither this presentation nor the information contained in it constitutes an offer, invitation, solicitation or recommendation in relation to the purchase or sale of shares in any jurisdiction.
Shareholders should not rely on this presentation. This presentation does not take into account any person's particular investment objectives, financial resources or other relevant circumstances and the opinions and recommendations in this presentation are not intended to represent recommendations of particular investments to particular persons. All securities transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments.
The information set out in this presentation does not purport to be all inclusive or to contain all the information which its recipients may require in order to make an informed assessment of Drillsearch. You should conduct your own investigations and perform your own analysis in order to satisfy yourself as to the accuracy and completeness of the information, statements and opinions contained in this presentation.
To the fullest extent permitted by law, the Company does not make any representation or warranty, express or implied, as to the accuracy or completeness of any information, statements, opinions, estimates, forecasts or other representations contained in this presentation. No responsibility for any errors or omissions from this presentation arising out of negligence or otherwise is accepted.
This presentation may include forward looking statements. Forward looking statements are only predictions and are subject to risks, uncertainties and assumptions which are outside the control of Drillsearch. These risks, uncertainties and assumptions include commodity prices, currency fluctuations, economic and financial market conditions in various countries and regions, environmental risks and legislative, fiscal or regulatory developments, political risks, project delay or advancement, approvals and cost estimates. Actual values, results or events may be materially different to those expressed or implied in this presentation. Given these uncertainties, readers are cautioned not to place reliance on forward looking statements.
Any forward looking statements in this presentation speak only at the date of issue of this presentation. Subject to any continuing obligations under applicable law and the ASX Listing Rules, Drillsearch does not undertake any obligation to update or revise any information or any of the forward looking statements in this presentation or any changes in events, conditions or circumstances on which any such forward looking statement is based.
The Reserves and Resources assessment follows guidelines set forth by the Society of Petroleum Engineers - Petroleum Resource Management System (SPE-PRMS). The Reserves estimates used in this presentation were compiled by Mr David Evans, Chief Technical Officer of Drillsearch Energy Ltd, who is a qualified person as defined under ASX Listing Rule 5.11 and has consented to the use of the Reserves figures in the form and context in which they appear in this presentation.
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