PETSEC ENERGY LTD ACN PETSEC ENERGY PRESENTATION AT THE EXCELLENCE IN OIL AND GAS CONFERENCE SYDNEY

Transcription

1 A N N O U N C E M E N T 19 April 2010 PETSEC ENERGY LTD ACN PETSEC ENERGY PRESENTATION AT THE EXCELLENCE IN OIL AND GAS CONFERENCE SYDNEY Attached is a copy of presentation to be delivered today by Petsec Energy Ltd s (ASX: PSA) CEO Mr. Terry Fern at the Excellence in Oil and Gas Conference, held at the Hilton Hotel in Sydney. A copy of the presentation will also be made available on the company s website, Paul Gahdmar Company Secretary and Group Financial Controller Petsec Energy Ltd Ph: (02) Level 13, Gold Fields House, 1 Alfred Street, Sydney NSW 2000, Australia PO Box R204, Royal Exchange NSW 1225, Australia Telephone (61 2) Facsimile (61 2) Company information is available on: petsec.com.au

2 EXCELLENCE IN OIL & GAS PETSEC ENERGY LTD April April

3 PETSEC ENERGY LTD FORWARD LOOKING STATEMENT DISCLAIMER This presentation contains predictions, estimates and other forward looking statements that are subject to risk factors associated with the oil and gas industry. Although the company believes that the expectations reflected in these statements are reasonable, it can give no assurance that its expectations and goals will be achieved. Important factors that could cause actual results to differ materially from those included in the forward looking statements include, but are not limited to, commodity prices for oil and gas, currency fluctuations, the need to develop and replace reserves, environmental risks, drilling and operating risks, risks related to exploration and development, uncertainties about reserve estimates, competition, loss of market, government regulation, economic and financial conditions in various countries, political risks, project delay or advancement, and approvals and cost estimates. All references to dollars in this presentation are to US currency, unless otherwise stated. 2

4 PETSEC ENERGY CORPORATE PROFILE Petsec Energy is an independent exploration & production company with operations in the Gulf of Mexico, USA and in the Beibu Gulf, China MARKET CAPITALISATION $64.8 million Share price: 28 cents (15 Apr 2010) Shares on issue: 231.3m; Options on issue: 6.7m CURRENT ESTIMATED NET ASSET VALUE $123.8 million 54 cents/share LISTING Australia. ASX: Ticker PSA US. OTC Pink Sheets: Ticker PSJEY.PK CAPITAL (31 Mar 2010) Cash: US$29.4 million (incl. restricted cash of US$1.1 million to support LC) Debt: US$29.3 million (due over 2011) Estimated 2010 revenues/cashflow: US$30 million/us$11 million USA OPERATIONS Reserves, developed (1 Jan 2010): 18 Bcfe (Ryder Scott) PV10 ~ US$57.7 million Estimated 2010 production: 4.4 Bcfe Prospect inventory: 16 prospects, potential reserves: Bcfe Net potential reserves: Bcfe (@ 30% W.I. / 24% N.R.I.) PV10 ~ US$350 US$650m CHINA OPERATIONS 3 Reserves, undeveloped: 5-15 MMbbl PV10 ~ US$ million Reserves 6.12/6.12S/12.8W, developing 2010/2012: MMbbl PV10 ~ US$ million Prospect inventory: MMbbl. PV10 ~ US$300 million

5 CORPORATE OBJECTIVES/STRATEGY INCREASE NET ASSET VALUE: Four fold to US$500m in 3 years GROWTH OF OIL AND GAS RESERVES: Exploration, acquisition and development in Gulf of Mexico, USA and Beibu Gulf, China USA GROWTH: Gulf of Mexico shelf; < 300 feet water; > 12,000 feet geologic section Drill prospects: Bcfe; oil and gas with high condensate Test existing prospects: Bcfe gross; Bcfe net CHINA GROWTH: Development of existing 5 oil fields: 5 15 MMbbls net Exploration of 8 prospects 100 MMbbls gross; MMbbls net 4

6 WHY INVEST IN PETSEC ENERGY LTD? Experienced, successful Board & Management team Strong past performance in Gulf of Mexico, USA; and Beibu Gulf, China Substantial growth potential in current assets Active 2010 exploration and development programme Current deep discount of share price to net asset value of current assets 5

7 PETSEC ENERGY BOARD OF DIRECTORS Terry Fern, Chairman & CEO Over 30 years experience in petroleum & minerals exploration, development and financing Bachelor of Science Degree, University of Sydney David Mortimer AO, Non-Executive Director Over 35 years experience in corporate finance Bachelor of Economics Degree (First Class Honours), University of Sydney Ex CEO of TNT Limited Group. Current Chairman of Leighton Holdings and Australia Post Dr Peter Power, Non-Executive Director Over 45 years experience in petroleum exploration worldwide Bachelor of Science Degree, University of Sydney, Doctorate at the University of Colorado Ex CEO of Ampolex Ltd, President Australian Geoscience Council, Chairman of APPEA. Michael Harvey, Non-Executive Director Over 30 years experience in the establishment and successful growth of E&P companies in South East Asia and the Gulf of Mexico, USA Bachelor of Business Administration in Finance Degree, Texas A&M Ex Shell, Huffington, CEO Gryphon Exploration Inc. Current CEO of Stonegate Production Company. 6

8 PETSEC ENERGY MANAGEMENT TEAM USA Ross Keogh President of Petsec Energy Inc. Over 35 years of experience in the oil & gas industry Bachelor of Commerce Degree, Macquarie University Ex Total Oil Company & Bridge Oil Limited Ron Krenzke Executive Vice President Exploration Over 35 years of experience in the oil & gas industry Bachelor of Science Degree, Texas A&M University Ex Mobil, Amerada Hess, VP Exploration Gryphon Exploration Company. Nick Repar Exploration Manager Over 29 years of experience in the oil & gas industry Bachelor of Applied Geophysics, Michigan Technological University Ex Tenneco & Stone Energy Denis Swords General Counsel & Secretary Over 25 years of experience in the oil & gas industry Master of Science Degree, University of New Orleans. Juris Doctor Degree, Paul M. Herbert Law Centre. Ex Gordon, Arata, McCollam, Duplantis & Eagan, LLP, Sanderfer Oil Company & Tenneco Frank Steele Vice President Land 31 years of experience in the oil & gas industry Bachelor of Arts Degree, Tulane University Ex Shell Oil Company, Meridian Resource Corporation & LLOG Exploration Company, LLC. AUSTRALIA Fiona Robertson Chief Financial Officer Over 30 years of corporate finance experience Master of Arts Degree, Oxford University Ex Chase Manhattan Bank & Delta Gold Ltd. Current director Drill Search Energy Paul Gahdmar Company Secretary & Group Financial Controller Over 15 years of experience working in corporate accounting and finance in the oil & gas industry Master of Business and Technology Degree, University of New South Wales Ex Australian Oil and Gas Corporation & Rothmans of Pall Mall 7

9 STRONG PAST HISTORICAL OPERATIONAL PERFORMANCE Wells successful/drilled high USA Success rate 81% Gas/Oil fields discovered/acquired from 58 wells Net 2P reserves discovered /acquired Cumulative production Cumulative EBITDAX Average price realised >400 Bcfe 148 Bcfe US$262 million US$2.33/Mcfe USA CHINA Wells successful/drilled 26 from 35 wells 3 from 7 wells Success rate 74% 43% Gas/Oil fields discovered/acquired 14 5 Net 2P reserves discovered/acquired 71 Bcfe 5-15 MMbbl Cumulative production 52 Bcfe Initial production 3 fields in ,300 bopd net Cumulative EBITDAX US$280 million n/a Average price realised US$5.36/Mcfe n/a Drill prospect portfolio Bcfe gross Bcfe net 100 MMbbl gross MMbbl net 8

10 GULF OF MEXICO, USA LOCATION OF PETSEC ENERGY LEASES (includes high bids) Texas, USA Louisiana, USA Mississippi, USA South Thornwell East Cameron 102 Lafaye.e Ship Shoal 36 Moonshine South Sunrise New Orleans Main Pass 91 Main Pass 18, 19, 20, 103 Mobile 950, 951, Mobile 953 Mobile , 994 Viosca Knoll 26 Breton Sound 39, 42 Chandeleur 31, 32 Main Pass 132 Viosca Knoll 739, 740 Main Pass 270,273,274 Ship Shoal 74 West Cameron 462 Vermilion 353 West Cameron North Padre Island Gulf of Mexico 9

11 GULF OF MEXICO SHELF (<300FT WATER), USA A WORLD CLASS OIL & GAS REGION Highly Productive: 1,094 fields Cumulative production: 34.5 billion bbls oil and 437 Tcf gas High Drilling Success Rate: 53% 41,892 wells drilled/22,322 productive Success Rate >3,650m (12,000ft): 58% 10 12,504 drilled/7,310 productive High Availability of Leases 5,012 total, 2,900 available - 5,000 acre leases, 5 year term Extensive and Available Infrastructure: 42,650 miles of sales pipelines 68 rigs/27 under contract 40% rig utilisation Short Development Cycle Approximately 6 months discovery to production Rapid Payback of Capital: Generally less than 12 months High gas/oil prices Generally highest in US NYMEX gas and WTI Oil Financial and Administration Regime Stable, Simple, Efficient

12 PETSEC ENERGY CURRENT USA ASSETS Developed Reserves: 18 Bcfe (Ryder Scott 1 Jan 10) Four Main Producing Fields: Chandeleur 31/32 Main Pass 18/19 Main Pass 270 Mobile Bay 952A 2010 Production: 4.4 Bcfe, est. Revenue ~ US$30 m, est. Cashflow ~ US$11 m Leases: high bids awaiting grant Prospect inventory: 16 ranging in size ~ 20 to 100 Bcfe Gross reserves potential: 500 to 950 Bcfe. 11

13 PETSEC ENERGY FUTURE GROWTH USA DRILLING PROSPECTS PORTFOLIO 16 Prospects Bcfe in <75m (250 ) WD Located in prolific producing areas with extensive infrastructure Gross Reserve Potential High initial production rates High condensate yields 500 (Pmean) 950 Bcfe (P10) > 20 MMcpd gas bbl/mmcf Typical Target Depths 3,650 5,500m (12,000 18,000 ) Industry success rates >3650m (12,000 ft): 58% 12,504 wells/7,310 productive Modeled Probability of success: > 50% Current Working Interest/Net Revenue Interest: % / 20 82% Target Working Interest/Dry hole exposure Target Net Reserves exposure/well 30% / US$3 million 5 25 Bcfe 12

14 PETSEC ENERGY: MAIN PASS AREA PROSPECT LOCATION Main Pass Block 20 #4 Jenny Lake Drilling Location Yellowstone Prospect MP 6 Field MMBOE CA 29 Field 24.9 MMBOE Wind River Prospect Petsec Producing Fields Main Pass Blocks 18 & 19 Petsec Producing Fields Chandeleur Blocks 31 & 32 Manna Prospect CA 40 Field 13.2 MMBOE Brooks Lake Prospect MP 103 Field 18.9 MMBOE MP 107 Field 21.5 MMBOE MP 108 Field 25.2 MMBOE Bonanza Complex Prospects Snake River Prospect BS 41 Field 7.7 MMBOE MP 127 Field 27.4 MMBOE MP 41 Field MMBOE Gazelle Prospect MP 133 Field 49.3 MMBOE Petsec Producing Field Main Pass Block 270 Hummer Prospect 13

15 PETSEC ENERGY: MAIN PASS AREA Multiple Drilling Targets in Close Proximity Brooks Lake S. Yellowstone Wind River Jenny Lake Big Hum Drilling Targets 14 Snake River

16 GULF OF MEXICO SHELF 2010 A GOOD TIME TO DRILL Drill rig prices back to 2003\2004 levels $120, $14.00 $100, Gas prices vs. 200 ft water drill rig prices $12.00 RIG DAY RATE (RigZone) Quarterly Average for $80, $60, $40, $20, $10.00 $8.00 $6.00 $4.00 $2.00 GAS PRICES (NYMEX) Quarterly Average for $ QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR QTR 2010 $- Quarterly Average Rig Day Rates Quarterly Average Gas Price 15

17 GULF OF MEXICO SHELF: ECONOMICS 2010 PETSEC ENERGY DRILLING Typical well economics Petsec Energy 2010 drilling program US$2.81/Mcfe net present value PV10/Mcfe Water Depth 10 m (35 ) Well Depth 4,087 m (13,200 ) Target Gross Reserves 20 Bcfe (Pmean) 50 Bcfe (P10) Petsec Net Reserves BCFE (farm-down to avg 30% W.I. / 24% N.R.I.) Drilling Costs per Well (Gross/Net) US$10.5 MM/US$3.2 MM Completion Costs per Well (Gross/Net) US$6.9 MM/US$2.1 MM Production Facility Costs (Gross/Net) US$9 MM/US$2.7 MM Petsec Net 30% WI US$8 MM Finding and Development Costs US$ US$1.11/Mcfe Petsec PV 10 per prospect US$ US$36.6 MM PV 10/Mcf US$ US$3.05 Note: Assumes LOE of $0.33/Mcfe and average gas price of $5.50/Mcfe over the life of the project The benefits of promotes from third parties are not included in this analysis Drilling and completion of 2 wells are assumed for the higher reserve case 16

18 JENNY LAKE DRILLING PROSPECT APRIL 2010 Previously Productive Well Jenny Lake Prospect Currently Drilling Target: Bcfe Target Depth: 13,200ft 6 Metres (19 ) Gas Pay Target sand: 500ft thick Spud mid April; TD early June Petsec W.I./N.R.I. : 30%/24.5% Petsec DHC/Development: US$2.5 / US$3.2 million Success derisks 5 similar prospects close by 17

19 BLOCK 22/12 BEIBU GULF, CHINA Reserves 5 oil fields in two granted development areas covering 82.1 km 2 STOIIP of 185 to 262 MMbbl gross (P50-P10) Estimated gross recoverable oil of 43 to 124 MMbbl (P50-P10); P10 if achieve recoveries of 40-50% as CNOOC in nearby fields Prospects Petsec (25% W.I.) estimated recoverable oil 10.7 to 31 MMbbl (P50-P10); 5.2 to 15.2 MMbbl if CNOOC backs in for 51% and Petsec recovers past costs (currently US$28m) 8 undrilled prospects/leads > 100 MMbbl gross potential > MMbbl net after CNOOC back- in 18

20 6.12, 6.12S & 12.8W OIL FIELDS DEVELOPMENT /6.12S/12.8W: Reserves: MMbbl gross; MMbbl net Development: Processing platform (WZ 12.1 PUQB), 2 Wellhead Platforms (WZ 6.12, WZ 12.8W), 16 pipeline to Weizhou Island, storage & shipping Development capital: ODP US$288m gross; US$35m net CNOOC-approved ODP : 2 nd quarter 2010, start development mid-2010, first production, first half-2012 Initial production: 19,000 bopd, 2,300 bopd net First 12 months production ~ 7 MMbbl gross; 0.85 MMbbl net to Petsec, ~US $60m cashflow at current oil prices 6.12S/12.8 Platforms: Exploration drilling 2011; 20 MMbbl gross potential; 2.5 MMbbl net 12.8E/12.3.1: MMbbl gross; MMbbl net Feasibility Study: 2010/2011 Start of development : 2011/

21 2010 PLAN FOR GROWTH USA: 3 to 5 wells Target reserves: 20 to 50 Bcfe net CHINA: Start 2010/2012 development 6.12, 6.12S & 12.8W oil fields Reserves: MMbbl net PV 10 US$56 140m PV10 US$75-200m Wells Net Reserves USA (Bcfe) Gulf of Mexico Drilling Gulf of Mexico Development/ Production CHINA (MMbbl) 6-12/6-12S/ 12.8W FID/Development E/ Feasibility/FID st Qtr 2 nd Qtr 3 rd Qtr 4 th Qtr 1 st Qtr 2 nd Qtr 3 rd Qtr 4 th Qtr 20

22 INDICATIVE VALUATION % SUCCESS 5 WELLS Current assets: PV10 A$123.8 million $0.54/share Exploration success: PV10 A$153.0 million $0.66/share Total indicative asset value: PV10 A$276.8 million $1.20/share 2 Exchange rate of at 31 March Based on current number of shares outstanding of 231,283,622. The internally estimated indicative DCF net asset valuation of the Company based on Petsec Energy estimates of 2P reserves as at 1 January NPV 10 US$ A$ 2 A$/share 3 US Operations , 6.12S & 12.8W Net debt + interest (7.0) (7.6) (0.03) Corporate/Admin. 2 years (12.0) (13.1) (0.06) Exploration 100% Success: 5 wells 50 Bcfe net (PV10 of US$2.81/Mcfe) Total indicative net asset valuation US PV10 based on 26 January 2010 strip pricing plus hedging: China PV10 based on 12.25% US$70/bbl.

23 CONCLUSION WHY INVEST IN PETSEC ENERGY LTD? Experienced, successful Board and Management team Strong past performance in Gulf of Mexico, USA; and Beibu Gulf, China Added reserves 71 Bcfe USA; 5-15 MMbbl China. Cashflow US$280m Current deep discount of share price to net asset value of current assets $65m vs. PV10 $124m $0.28 vs. $0.54/share Substantial growth potential in current assets US prospect inventory: Bcfe net, PV10 US$ million* $ $3.06/share China: 5-15 MMbbl undeveloped reserves PV10 US$ million China prospects: MMbbl, PV10 US$300 million* $ $1.77/share $1.41/share Active 2010 exploration and development programme US drilling Bcfe, PV10 US$ million CHINA: Develop MMbbl, PV10 US$ million $ $0.66/share $ $0.94/share * US Gas US$2.81/Mcfe; China Oil US$25/bbl 22