For personal use only. Drillsearch Energy. Takeover offer for Acer Energy. 4 October 2012

Transcription

1 Drillsearch Energy Takeover offer for Acer Energy 4 October 2012

2 Agenda 2 1. Overview of the Offer 2. Why Acer shareholders should accept the offer 3. Transaction rationale 4. Combined group 5. Funding 6. Summary Appendix

3 1. Overview of the Offer 3 For personal use only

4 Offer overview 4 Transaction overview Drillsearch today announced an all cash offer to acquire Acer Energy Limited (ASX:ACN) (Acer) Terms 25.5 cash per share, implying a value for Acer of $118 million The Offer Price represents a 53% premium to the three-month volume weighted-average price (VWAP) (1) and a 31% premium to Acer s last closing price Drillsearch s relevant interest in Acer Funding Conditions Republic Investment Management (Republic) has sold a 19.90% relevant interest in Acer to Drillsearch, making Drillsearch the largest shareholder in Acer Republic still holds a 18.82% relevant interest in Acer, and has indicated it intends to accept the Offer (2) The Offer is fully funded through existing Drillsearch cash balances and a debt facility with Commonwealth Bank of Australia The Offer is unconditional other than Prescribed Occurrences Other Drillsearch intends to immediately acquire Acer Shares on-market Accelerated payment terms Acer shareholders will receive payment within 5 business days of the later of the date the Offer is freed from Prescribed Occurrences and Drillsearch receiving the acceptance (1) Based on Acer s last close price as at 3 October 2012 of 19.5, and Acer's three-month volume weighted average price up to and including 3 October 2012 of (2) Republic has advised Drillsearch that it intends to accept the Offer in respect of Republic s remaining 18.82% shareholding in Acer on the earlier of (i) 21 days from the Announcement Date; and (ii) Drillsearch obtaining a relevant interest in Acer Shares representing 35% of all Acer Shares, subject to there being no superior announced offer at that time.

5 5 2. Why Acer shareholders should accept the offer

6 Why Acer shareholders should accept the offer 6 The Offer represents a significant premium to recent trading prices of Acer Shares 53% premium to the three-month VWAP (1) 31% premium to Acer s last closing price Acer s shares have not traded at or above the offer price for more than 3 years The offer price represents a full and fair price, 100% cash and certainty of value Republic sold a 19.90% interest in Acer to Drillsearch, making Drillsearch Acer s largest shareholder Republic, Acer s 2 nd largest shareholder, has indicated support for the Offer and intends to accept the Offer for its remaining 18.82% interest (2) The Offer is unconditional other than Prescribed Occurrences Accelerated payment terms Drillsearch intends to acquire Acer Shares on-market immediately (1) Closing price, VWAP and three year trading range of Acer Shares over the relevant period up to and including 3 October (2) Republic intends to accept on the earlier of 21 days from announcement of the Offer and Drillsearch obtaining a 35% Relevant Interest in Acer Shares, subject to there being no superior announced offer at that time.

7 3. Transaction rationale 7 For personal use only

8 Drillsearch s strategy 8 NEAR TERM Rapidly develop new oil discoveries and accelerate 3D seismic-based exploration in prospect-rich Western Flank and emerging Inland-Cook Oil Fairways MID TERM For personal use only Expand development and production of liquids-rich Wet Gas from existing discoveries and prove up significant Wet Gas Reserves through expanded exploration throughout Wet Gas play fairway LONG TERM Explore, appraise and delineate unconventional potential in Central, Western and Southern Cooper project areas to prove up a world-class resource with clear access to premium gas markets

9 Acer an acquisition that fits 9 For personal use only NEAR TERM Western Flank Oil PEL 91 Inland-Cook Oil Western Corridor PEL 182 Patchawarra PEL 100 MID TERM Western Cooper Wet Gas Pilots Patchawarra PEL 101 Wet Gas Ginko, Crocus GMI Ridge PEL 103 Wet Gas, Yarrow LONG TERM Central Cooper Shale/Tight Gas Western Cooper Shale/Tight Gas GMI Ridge PEL 103 Tight Oil, Flax / Juniper

10 Transaction rationale 10 Enhanced scale Post acquisition, the combined group will hold the largest discovered, uncommitted conventional gas resource in the Cooper Basin outside of the Cooper Basin Joint Venture partners Combined group will have a 2P+2C resource base of 38.7 mmboe Leverage capabilities Drillsearch is the only independent to commercialise Cooper Basin gas discoveries Drillsearch uniquely positioned to develop and commercialise Acer s assets Enhanced market position Scale of expanded conventional gas resource base enhances position to exploit supply shortages Well funded Drillsearch is well positioned to fund exploration and development of expanded asset portfolio Strong near-term cash flow from Western Flank oil discoveries and wet gas production

11 4. Combined group 11 For personal use only

12 The combined footprint in the Cooper Basin 12 UNCONVENTIONAL WET GAS Short, medium and long-term growth opportunities

13 For personal use only A Robust Combined Reserve & Resource Base Estimated Combined Cooper Basin Reserves and Resources Gas NGL Oil Acquisition contributes ~15.7 MMBOE 2C Contingent Resources 11.2 mmboe Drillsearch combined 2P + 2C = 22.9 mmboe P 2C 2C DLS Reserves DLS Resources ACN Resources Source: Drillsearch GCA Independent Reserves Report as at 31 July 2012, RISC Independent Technical Specialist s report: Innamincka Petroleum dated January 2011 and Eagle Bay Resources Pty Ltd (with respect to PEL 182) and Acer ASX announcements. Acer s reserves and resources are adjusted from the RISC Independent Technical Specialist s Report to reflect Acer s current interests in PRL 14, 17 & 18 and PEL 100, 101 & 103. The combined group will represent a significant portfolio of contingent gas resources, leveraging Drillsearch s proven ability to commercialise gas in the Cooper Basin

14 Forward Work Program for Acer 14 Subject to Drillsearch undertaking a review of Acer's operations and assessing Acer's assets on an asset-by-asset basis following the close of the Offer, Drillsearch presently intends to conduct the following work program Indicative Multi-Year Work Program Sep Q 2012 Dec Q 2012 Mar Q 2013 Jun Q 2013 Sep Q 2013 Dec Q 2013 Mar Q 2014 Jun Q 2014 Tight Oil Flax Well Work Overs Drilling exploration (3-6 wells) Appraisal completion & testing (3-6 wells) Acer s recently announced work program Western Flank Oil PEL 182 Seismic 3D (250km 2 ) Proposed DLS Wet Gas Program PEL 103, 101 Exploration Development Wet Gas Pilot Projects Drillsearch s plan for Acer assets is focused 80% on development activities

15 Wet Gas - An Emerging Cash Flow Engine 15 In Drillsearch s hands, Acer s assets can contribute to this growth ACN BPT DLS

16 5. Funding 16 For personal use only

17 How is the proposed acquisition funded? 17 Sources of funds (A$m) Uses of funds (A$m) DLS cash requirement (1) 25 CBA debt facility 100 Share 25.5 cps Transaction costs 6.6 TOTAL 125 TOTAL 125 With emerging strong cash flows from Western Flank Oil and Wet Gas production, Drillsearch believes it can substantially amortise the acquisition financing and replace any remaining balance with long term debt financing (1) As at the Announcement Date, Drillsearch had cash reserves of approximately $70.4 million (this amount includes the funds that will be used to settle the acquisition of 19.90% of Acer from Republic).

18 Western Flank A Near-Term Production Engine BOPD For personal use only Western Flank Oil Production Estimates Sept Q 2012 Dec Q 2012 Mar Q 2013 June Q 2013 Sept Q 2013 Dec Q 2013 Oper PEL 91 Oct Forecast Gross RISC 1P Bauer Only Gross DLS PEL 91 June Forecast Net

19 6. Summary 19 For personal use only

20 Summary 20 The Offer provides Acer shareholders with certainty of value and a significant offer premium Compelling transaction rationale potential strong growth contributor to Drillsearch s Wet Gas Business Drillsearch has acquired 19.90% of Acer, making it the largest shareholder Republic, the second largest shareholder with 18.82%, intends to accept the Drillsearch Offer in the absence of a superior announced offer (1) Further information regarding the Offer is contained in the Bidder s Statement which has been lodged with ASX today (1) Republic has advised Drillsearch that it intends to accept the Offer in respect of Republic s remaining 18.82% shareholding in Acer on the earlier of (i) 21 days from the Announcement Date; and (ii) Drillsearch obtaining a relevant interest in Acer Shares representing 35% of all Acer Shares, subject to there being no superior announced offer at that time.

21 Appendix 21 For personal use only

22 Profile of Acer 22 Overview Permit Summary Acer is an ASX-listed energy company (ASX: ACN) with exploration and production assets primarily located in the onshore Cooper Eromanga Basin, the onshore Darling Basin and offshore in the Bass Basin between the mainland and Tasmania Acer has acreage of ~21,400km 2 comprising both production and exploration licences; the most advanced of these licences are located in the Cooper Basin where the company is targeting multiple play types Source: Acer investor presentation dated 19 July 2012.

23 Comparing Wet Gas to Western Flank Oil 23 Western Flank Oil Western Cooper Wet Gas Gross 2P Reserves 7.3 mmbbls Gross 2P Reserves 13.7 mmboe % Liquids 100% Gross 2P Liquids 5.4 mmboe Production current 800 bopd Production* current 1100 boepd Production YE bopd Production* YE boepd Oil price FY 2012 avg $114/bbl Liquids price FY 2012 $104/boe F&D Cost ($/bbl) OPEX ($/bbl) $9-12/bbl $12-18/bbl $84-93 Per bbl $65-69 Per bbl F&D Cost ($/boe)* OPEX ($/boe)* $11-15/boe $24/boe Net Margin ($/bbl) $84-93/bbl Net Margin ($/boe)* $65-69/boe All figures above are gross and DLS share is 60% All figures above are gross and DLS share is 50% *Adjusted to eliminate all gas volumes and revenues and assigned all exploration, development and OPEX costs to NGL volumes to calculate F&D and OPEX costs per boe and Net Margins Western Cooper Wet Gas simply as a liquids project has favourable economics through working cooperatively with the SACBJV

24 Disclaimer and Important Notice 24 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. This presentation does not contain all information that Acer Energy Limited shareholders may require in order to make a decision as to whether to accept the offer by Drillsearch. Acer Energy Limited shareholders should refer to the Bidder's Statement lodged with ASX on 4 October 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 for Drillsearch 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. The statements in this presentation about Acer s resource estimates have been extracted without material amendment (other than as explicitly noted in the presentation) from information prepared by or for Acer and included in public documents filed by Acer.