European Business Update On Track

Transcription

1 Brisbane (Registered Office) T F Level 11, Waterfront Place, 1 Eagle Street, Brisbane Qld 4000 GPO Box 3120, Brisbane Qld 4001, Australia Singapore (Head Office) T F Beach Road, #19-01/04 The Gateway East Singapore ASX CODE DTE ABN dartenergy.com.au 2 May 2012 European Business Update On Track Dart Energy International Pte Ltd ( Dart International ), the international operating arm of Dart Energy Limited - ASX: DTE), provides the following update on a number of key developments in its European operations, being: Completion of BG licence restructure Completion of Greenpark Energy acquisition Exercise of option to acquire 2 CBM and shale prospects in Germany Ongoing PEDL133 progress towards production and development Appointment of Mr Mark Lappin as European General Manager Commenting on these developments, Dart International Chief Executive Officer, John McGoldrick, said: Europe is a key area of focus for Dart Energy International and we continue to make great strides in terms of progressing our business in Europe, including successfully finalising a number of transactions and initiatives previously announced. Our flagship project, PEDL 133 in Scotland, is progressing well, and we hope to begin generating first gasto-electricity revenues from that project in the coming months, with full field development to enable GSA sales expected to commence in the first half of Dart International has now successfully executed a European entry and consolidation strategy, emerging as a leading European CBM / shale gas business with one of the largest onshore licence holdings in the U.K. These markets represent a strong opportunity for unconventional gas producers, given that they are characterised by large gas deficits and thus a reliance on imported gas, gas prices which are currently amongst the highest in the world, stable regulatory regimes, and extensive and accessible infrastructure. In summary, Dart International s European business now comprises: a large acreage position in the U.K. and across Europe, prospective for CBM and shale gas; a substantial resource base, including a significant prospective and 2C resource position, and initial 2P and 3P reserves (all independently certified); several projects with short lead times to commercial development, including in particular PEDL 133 project in Airth, Scotland and thereafter Greenpark s PEDL 159 project in Canonbie, Scotland; and Gas Sales Agreements and other monetisation options in place, with more expected to follow over the next months. Further details are provided on the following pages. An updated summary of Dart International s portfolio, inclusive of the above developments, is attached as Annexure A.

2 1. COMPLETION OF BG LICENCE RESTRUCTURE In December 2011, Dart and BG Group Limited ( BG ) agreed to restructure their European business arrangements, including in particular: BG agreed to transfer to Dart its 50% interest in 14 onshore CBM licence areas in the United Kingdom, thereby increasing Dart s interest in each of these UK licences to 100% (Dart is already operator of these licences); Consideration payable by Dart for these transfers is Dart assuming the remaining exploration drilling obligations on these licence areas (being in aggregate up to 11 wells in the period to June 2014); and BG and Dart are currently negotiating a Gas Sales Agreement for the future sale to BG of gas developed from the various licence areas transferred from BG to Dart. All conditions precedent to this reorganisation have been satisfied, including in particular approval of all licence transfers by the UK Department of Energy and Climate Change and the transaction has now been completed. As a result, Dart is now 100% owner of all of the UK CBM Licenses formerly held jointly with BG, adding in excess of 1.25 Tcf of 2C contingent gas to the portfolio. PEDL 133 remains unchanged, with Dart holding 100% of the CBM and shale resource in the Black Metal Shale layer, and 49% of the shale resource in the Lothian (Broxburn) Shale layer. Dart and BG are currently in the process of documenting the full and binding terms of the proposed Gas Sales Agreement, and it is expected that this process will be concluded within two months. 2. EXERCISE OF OPTION TO ACQUIRE TWO LICENCES IN GERMANY As part of the restructure referred to above, BG also offered Dart an exclusive option to take a 100% interest in two licence areas held in Germany, Saxon I West and Saxon II, as shown in the following map: Saxon I and Saxon 2 Location Map

3 Details of the Saxon 1 West and Saxon 2 licences are as follows: The licences are currently held by BG Group Each licence is subject to a five year exploration period, commencing: Saxon 1 West - March 2009 and Saxon 2 November 2008, with largely discretionary work commitments Licence areas are 1,890 km 2 in aggregate, comprising 1,500 km 2 (Saxon 1 West) and 390 Km 2 (Saxon 2) These licences are believed to be prospective for both CBM (carboniferous) and shale (lower carboniferous) with a multi-tcf gas in place potential in aggregate Dart International has decided to exercise the option to acquire Saxon 1 and Saxon 2. No consideration is payable by Dart International to acquire these licence areas. Completion of the transfer is subject to regulatory approvals, and is expected to take 3-4 weeks to finalise. Dart presently intends to undertake desk-top studies on the licence areas and, if appropriate, drill 1 exploration core well in 2013 / As a first step, an independent assessment of the gas in place and resource potential is presently underway, and is expected to be available by June. COMPLETION OF GREENPARK ENERGY ACQUISITION In December 2011, Dart agreed to acquire all of the unconventional gas assets (excluding those with respect to coal mine methane) of Greenpark Energy Limited ( Greenpark ) in the U.K. Consideration is a total of $42 million was agreed to be paid in two tranches, and made up of a mixture of cash and shares in Dart Energy Limited shares (first tranche) and cash and shares in the intended to be listed Dart International vehicle (second tranche). All conditions precedent to this transaction have been satisfied, including in particular approval in respect of licence transfers and the relinquishment of five non-prospective licences by the UK Department of Energy and Climate Change. Consequently, the transaction completed on 26 April The first tranche consideration has been paid, comprising of US$6 million cash and US$10m in newly issued Dart Energy Limited shares (31,354,118 shares in aggregate, which post issue will represent approximately 4.1% of the total issued share capital of Dart Energy Limited). A further US$5 million has been placed in a retention account and will be released progressively over the coming 6 months subject to their being no claims. All shares in Dart Energy Limited that have been issued are subject to escrow and may not be traded until 31 December In completing the Greenpark acquisition, Dart International has now secured ownership of a portfolio of U.K. licence assets that are complementary to the existing Dart acreage position in the U.K., with a similar footprint, similar CBM and shale potential, a sizeable certified 2C resource base in excess of 1.7 Tcf, initial 3P reserves, an early stage development option at PEDL 159 (the Canonbie project), and 100% working interest and operatorship of most licences. As part of the transaction, Dart International also secured an exclusive option over interests in licences prospective for CBM and shale gas in Poland and Spain, held by Greenpark. This option is exercisable within 3 months of completion. Dart International is presently carrying out a review of these option assets and will advise the market accordingly should a decision to add these assets to the portfolio be made.

4 U.K. MAP: COMBINED DART INTERNATIONAL AND GREENPARK HYDROCARBON FOOTPRINT

5 PEDL 133 GENERAL UPDATE Progress continues to be made on all fronts operational, commercial and financial - at Dart International s flagship project, the Airth project (PEDL 133) in Scotland. Dart International s objective is to secure first gasto-electricity revenues from that project in the coming months, with full field development to commence in the first half of 2013 so as to enable delivery into the Gas Sales Agreement in place. Operational: The first pilot well has been drilled and completed. The well was drilled as a multilateral well intersecting a vertical production well in four coal seams. In total the well connects to approximately 1,900m of net coal, far exceeding previous drilling operations on PEDL133. This increased length has been drilled to enhance the production potential of the well. The well has been online since January Since mid-april, stable gas production has been observed, with significant additional dewatering to occur before peak production is achieved. In parallel with the pilot well production activities, Dart International has been undertaking the work required to enable a pilot-to-power project, which will utilise pilot well gas to generate electricity and provide that electricity to the local grid, thereby generating first revenues from the field. The generator has now been installed on-site, and first electricity sales are expected in the coming months. A Field Development Plan and Front End Engineering Design study for the full development of the project has been completed. Initial work on the Environmental Impact Study has commenced and a consultation period with the local communities will soon start. Once completed, formal development application processes can commence, expected to be around mid-2012, and subject to relevant approvals being obtained, drilling and construction works can commence, so as to enable first delivery of gas into the Gas Sales Agreement referred to below. Drilling Activity Airth Project, PEDL 133, Scotland

6 Commercial: In August 2011, Dart International and SSE Energy Supply Limited ( SSE ) entered into a Gas Sales Agreement whereby for 5 years commencing April 2013 (extendable by mutual agreement) Dart International is able to deliver gas to SSE from PEDL 133 s initial expected production, with no minimum delivery requirement. At full volume, this would result in Dart delivering all current PEDL 133 2P reserves during the term. The price payable for gas delivered under the GSA is linked to the prevailing prices at time of delivery in the European natural gas market. In March 2012, Dart International and SSE agreed an amendment to the existing GSA, introducing a second phase to the GSA, extending its term for up to five years and increasing the gas delivery volumes to SSE, on otherwise identical terms and conditions to the existing GSA. In aggregate, this could result in up to 60 Bcf of gas being sold over the extended term of the GSA. At the current prevailing European gas price of approximately US$9 /Mcf this would generate gross revenues of approximately US$540 million. Financial: On 10 April 2012, Dart International had entered into a mandate with HSBC Bank Plc ( HSBC ) to arrange a senior secured revolving borrowing base facility ( Facility ) up to US$100 million. The purpose of the Facility would be to provide development funding to Dart International s near term revenue projects, including in particular, PEDL 133. The Facility documentation and due diligence process is underway and Dart International will update the market accordingly once the Facility documentation is finalised. DETAILED MAP OF PEDL 133 AREA, INDICATING WELL SITES & PIPELINES

7 APPOINTMENT OF EUROPEAN GENERAL MANAGER We are pleased to announce the appointment of Mr Mark Lappin as our European General Manager, effective 10 April Mark has almost 30 years experience in upstream oil and gas business, working with ConocoPhillips and ExxonMobil. Originally a geologist, Mark worked in many basins around the world, from early exploration to mature production, in a series of technical and management roles. Recently, Mark acted as Germany Exploration Manager for ExxonMobil with a portfolio of unconventional gas acreage including CBM and shale gas. Mark holds a Bachelor of Science (Geology). ENDS For and on behalf of the Board Paul Marshall, Company Secretary For further information contact: Mr John McGoldrick Chief Executive Officer Tel: Mr Nathan Rayner Chief Operating Officer Tel: Mr Eytan Uliel Chief Commercial Officer Tel: Media Inquiries to: Ian Howarth Collins Street Media Tel: The reserve and resource estimates used in this announcement were, where indicated, compiled by Dan Paul Smith and John Hattner of Netherland, Sewell & Associated, Inc., and by Mr Doug Baranger of MHA Associates (MHA in respect of Liulin in China; NSAI in respect of all other assets) and are consistent with the definitions of proved, probable, and possible hydrocarbon reserves and resources that appear in the Australian Stock Exchange (ASX) Listing Rules. Mr Smith, Mr Hattner and Mr Barenger are qualified in accordance with the requirements of ASX listing rule 5.11 and have consented to the use of the resource figures in the form and context in which they appear in this announcement.

8 ANNEXURE A: DART INTERNATIONAL PORFOLIO SUMMARY Asset Country Location Interest Operator Gross area Net resource and reserves (BCF) (km 2 ) OGIP Prospective 2C 3C 2P 3P CBM Sangatta West PSC East Kalimantan 24% Company / Ephindo 1, Tanjung Enim PSC South Sumatra 45% Company Muralim PSC Central Sumatra 50% Company 983 1, Assam Block Assam 60% Company Satpura Block Madhya Pradesh 80% Company 714 1, Electrosteel JV (Coal Mine Methane project) Jharkhand 30% Company Liulin PSC Shanxi Province 25% 1 Company / Fortune Oil PEDL 133 Central Lowlands 100% Company 329 1, , PEDLs 161, 163 Central Lowlands 100% Company East Midlands Project East Midlands 100% 2 Company 708 3, , Wrexham / Chester Project 3 Wrexham/Chester 100% Company 400 2,060-1,099 2, Wales Project 4 Wales 100% Company 442 1, , PEDL 159 Canobie 100% Company Staffordshire Project 5 Staffordshire 100% Company 325 1, , York Project York 100% 6 Company Chelm Lublin Basin 100% Company 760 2, USCB Upper Silesia Basin 100% Company Milejow Lublin Basin 100% Company LRM (Joint venture) 7 Campine Basin 80% Company Saxon I and Saxon II North Rhine-Westphalia 100% Company 1, Total (CBM) 10,512 17,809 2,451 4,886 10, Shale PEDL 133 (Black Metal Shale) Midlands Valley 100% Company PEDL 133 (Lothian (Broxburn) Shale) Midlands Valley 49% Company 1, Milejow Lublin Basin 100% Company 372 9, Saxon I North Rhine-Westphalia 100% Company 1, Other licences Various 100% 8 Company 1, Total (Shale) 3, ,