ASX Spotlight Conference Presentation London & New York David Casey, Managing Director February 2014 1
Petrel Energy s Diversified Global Portfolio PETREL ENERGY S OBJECTIVE IS TO CREATE SHAREHOLDER WEALTH THROUGH THE ACQUISITION, EXPLORATION AND APPRAISAL OF A DIVERSIFIED PORTFOLIO OF SUBSTANTIAL OIL AND GAS PROJECTS Norte Basin Uruguay Cordobes Shale and Cerrezeulo and La Paloma SS Targeting unconventional and conventional oil targets in Piedra Sola & Salto Concessions (3.5M acres) Betic Alps Spain Aljibe Formation Targeting conventional sandstone gas reservoirs in 94,000 acres in Southern Spain. Lochend Cardium Alberta, Canada Targeting tight oil in lower siltstone and sandstone in 6,400 acres. Conventional and unconventional oil & gas project diversity 2
Investment Highlights Diversified Asset Portfolio Experienced Management Team Defined Asset Strategy Regional Technical Advisors Geographic Operating Experience Capital Markets Success Big Company Aspirations Focus on the development of a diversified portfolio of conventional and unconventional energy assets balanced by risk, scale and geographic region. Leadership team with extensive experience in asset identification, exploration through to appraisal, development, permitting, construction and off-take deals. Acquisition strategy based on staged investment, contingent on asset level performance. Experienced regional technical advisors engaged with extensive networks to identify, review and secure undervalued exploration and development stage assets. Management team with extensive technical and commercial experience in Australia, Asia, North America & Africa. Board of Directors with extensive capital markets experience: raised in excess of $350 million from 2007 to 2011 from Australian and North American equity markets delivered over $1 billion growth in share market valuation. Board and major shareholders committed to building a major diversified energy company. 3
Corporate Profile Capital Structure Cash: $10.1m (December 2013) Issued Cap: 443.1m Shares Market Cap: $100m (at $0.225) Debt: $0 ASX Code: PRL Board & Management Stephen Mitchell* Chairman David Casey* Managing Director & CEO Alexander Sundich* Non-Executive Director David Hobday Non-Executive Director Ian Kirkham Company Secretary Uruguay & Spain Acquired Coring Programme commenced Shareholders David Casey* 8.7% Stephen Mitchell* 7.3% Alexander Sundich* 5.0% Cameron Richard Pty Ltd 6.6% Smithley Super Pty Ltd 4.8% Linwierik Super 3.9% Top 20 55.0% Share price has increased 4 times since Uruguay and Spain assets acquired 4
Share Performance $0.225 ResourceInvest - AOGR Report - 1 February 2014 Petrel best performing ASX oil & gas company by share price for 2013 5
URUGUAY 6
Uruguay Background Stable democracy, population 3 million and ranked among the least corrupt countries in the world Increasing international attention turning to Uruguay after recent successful offshore licencing round with companies such as BP, BG and Total acquiring extensive offshore and more recently onshore permits 75kms Total joins Argentina s YPF and independents Schuepbach Energy and Petrel Energy. Total was granted two onshore shale blocks in the Norte Basin in late 2013 7
Uruguay Ideal Operating Environment Ready local market for oil and gas at international prices Uruguay currently imports 40,000 bopd into La Teja Refinery in Montevideo Attractive PSC terms. ANCAP (Energy Ministry) involved in upstream and downstream activities Ideal operating conditions with ready access to equipment in neighbouring Brazil and Argentina 2 Coreholes drilled by local contractors, seismic planning underway "By the way, Uruguay is booming. Full employment, construction everywhere, and everyone seems happy." US Economist John Mauldin remarked in Montevideo recently Politically stable democracy with excellent fiscal terms and proactive business environment 8
Uruguay Concessions Piedra Sola and Salto concessions total 14,000 km2 (~3.5 million acres) Magnetotelluric (MT) programme completed confirming existence of rift basin with Devonian and Permian sediments Two coreholes have confirmed the existence of oil producing source and reservoir rocks across the Piedra Sola Block Multiple unconventional and conventional reservoir targets. Oil Can be trucked or piped to Uruguay River & barged to La Teja Refinery Oil can be transported to La Teja Refinery via truck, rail or pipeline Uruguay represents a rare company transforming first mover opportunity for Petrel 9
Uruguay Corehole Success Cardozo Chico E-1 corehole confirmed Total Organic Carbon content s (TOC) averaging 3.32% with a maximum of 11.6% and amorphous (oil prone) kerogen ranging from 40-70%. Uruguay core hole ACHAR E-1 Cerro Padilla E-1 corehole is yet to be completed but preliminary results are very encouraging with intersection of 30m of Permian Shale with TOC s up to 4.2% with high amorphous kerogen Multiple mature source rocks identified Excellent porosity and permeability measured from core samples by Weatherford. Porosities commonly greater than 20% with some measured permeability s in excess of 1 Darcy (1000md)and higher in some samples Excellent Conventional Reservoir Potential Oil leaching from Devonian sandstones just below Cordobes Shales (306 315m) Corehole results confirm existence of an active petroleum system 10
Uruguay 2014 Seismic Programme Seismic scouting has been completed Permitting of the seismic has started with presentations to the various local councils and key stakeholders. Seismic (blue lines) will be largely conducted on public roads Proposed seismic programme (blue) and existing MT lines (green) Seismic will define reservoir and resource extent in mid-2014 11
Uruguay How Does Norte Basin Compare? Bakken Analogue Currently producing more than 500,000 bopd and anticipated to increase to more than 1-2 MM bopd by 2020 USGS estimates 7.4 billion bbls recoverable oil potential Current areal extent of US producing play area 28,000km 2 Vaca Muerta Analogue First shale oil discovered Nov 2010 by YPF, partnered with Exxon / EOG / Total / Shell, current production 16,000 bopd US EIA estimates total recoverable hydrocarbons to be 16.2 billion bbls and 308 TCF Current areal extent of play area 30,000km2 Similarities Same Devonian-age shales Similar geological environments Both have condensed organic rich sections Kerogens are mainly amorphous and hydrogen rich more oil and liquids prone Comparable Bakken analogue is largest US oil development in decades 12
Uruguay How Does Norte Basin Compare? Energy gurus Wood Mackenzie recently called Argentina s shales the best in the world www.oilandgas-investments.com February 2014 U.S. oil company Chevron Corp signed an agreement with Argentina s YPF to invest $1.24 billion in the Vaca Muerta shale oil and gas formation, thought to be one of the biggest reserves in the Western Hemisphere Reuters, 16 July 2013 Uruguay Argentina USA (ND) USA (PA - NY) Cordobes San Gregorio Mangrullo Vaca Muerta Bakken Marcellus Hydrocarbon Type Oil Oil Oil Oil Oil Gas Depth, feet 1000' - 10,000' 1500' - 8000' 2500' - 7000' 5500' - 10,000' 4000' - 11,000' 4800' - 8500' Net (Shale) Pay 300' 70' 270' 325' 10-60' 50-250' TOC 1% - 4%* 1% - 11.5% 1% - 4.5%* 3% - 14% 10% - 15% 3% - 11% Ro% 0.67-0.85 0.75-0.8 0.73-0.8 0.45-0.6 0.8-3.0 Recoverable Oil bbbls Unknown Unknown Unknown 16 7 1 Recoverable Gas TCF 308 6 84 * Preliminary results from limited sampling The Vaca Muerta is proof that very large shale plays are being found outside the USA 13
SPAIN 14
Spain Background Two contiguous license areas total 38,000ha (94,000 acres), Cadiz province, southern Spain License contains 1956 Almarchal-1, which flowed gas from stacked porous & permeable conventional sandstones at shallow depths Thinly populated rural area, good relationship with local authorities & land owners Access to 40 gas pipeline with excess capacity 3km from well ~USD14 spot gas price Known gas accumulation with ready access to high priced European gas markets 15
Spain Highlights Prospective Resource of up to 3TCF certified by Netherland, Sewell & Associates, Inc. (NSAI) Almarchal-1 well location selected on basis of field geology and gravimetry, not seismic Detailed formation evaluation suggests upwards of 500m of net pay with gas columns in excess of 400m Exhaustive data compilation and analysis confirms excessive formation damage likely due to heavy fresh water drilling fluids Petrel and advisers Challenge Energy continue to appraise farmout opportunities for the Tesorillo prospect with a number of high quality companies having submitted expressions of interest by the due date. Prospective Resource may be conservative if drilling confirms more extensive oil water contact than assumed in certification 16
Spain Almarchal1 well Drilled 1956/57 by Valdebro, 12 months to drill, many hole problems due to swelling shales, 4 sidetracks, gas flared from leaky surface casing for most of well duration 39 DST s, most recovered small amounts of gas (max 93% CH4), little to no water Almarchal-1 Miocene Aljibe SS Gross interval 1180m (1030-2210m) Net reservoir >500m DST13: flowed 7Mscf/d Gas 61 cores, 41 good quality porosity and permeability measurements by IFP (Paris), good reservoir quality indicated Despite reservoirs very likely damaged by fresh water drilling fluids reacting with swelling shales in combination with heavy mud weights in excess of 11ppg - gas flowed to the surface on multiple occasions. Twin of Almarchal-1 to be drilled & tested with inhibited mud system to protect reservoirs & ensure optimal gas rates DST5: rec 793m gas & mud DST6: rec 1055m gas & mud DST7: rec gas cut mud DST8: rec gas cut mud & fm water DST14, 19: swabbed mud & fm water DST21: rec 114m slightly gas cut mud DST12: rec 366m gas cut mud DST23: rec 274m gas cut mud DST27: rec 76m gas cut mud DST36: flowed 5Mscf/d Gas Recent petrographic studies support notion of excessive reservoir damage from swelling clays 17
CANADA 18
Canada Background In March 2013 Petrel acquired a 40% interest of up to 5,888 gross acres in Lochend Cardium immediately west of Calgary for $2.8m The Cardium is a late Cretaceous age formation comprised primarily of sandstone & shale and represents one of the most prolific hydrocarbon producing zones in North America It is an unconventional tight oil play targeting siltstone and sandstone reservoir Renewed focus in the area came with the development of horizontal wells and multi-stage fraccing Multiple operators achieving success in the area IP s range from 100-1,000 boe/d - 38 API (Lochend 100-350 boe/d) Estimated 100-150 Mboe per well Ground floor, no promote, entry to low risk light oil play 19
Canada Cardium Production Potential Well 16-19-25-3W5M at Lochend yielded a 30 day initial production (IP 30) rate of 150 boed. Joint venture is currently seeking to permit new well(s) for drilling Continue to identify and appraise improvements in drilling technologies and reducing costs Additional acreage being considered Recent successful Cardium transactions provides Petrel with the option to monetise its Cardium assets to fund its potentially larger scale projects in Uruguay and Spain The Cardium play provides Petrel with near term growth & monetisation optionality 20
Canada Nearby Successful Operators TRIOIL 140 (gross) sections of land 2012 production 2,130boe/d Est. 2013 Avg. production 4,100 boe/d IP30 for 6 (Eastern) wells 180boe/d (90% oil) IP30 for 13 (Central West) wells 331boe/d (85% oil) PKN Orlen bought TriOil for C$240m in Sept 2013 $58,000/boe/d, $12/2P boe and 4.4x EV/EBITDA LIGHTSTREAM RESOURCES (PetroBakken) 275 (net) sections of land 2012 production 46,000boed Est 2013 Avg. production 49,000boed 2013 drilling programme 67 (net) wells Development trend Recent TriOil transaction & well permitting confirm play development and acreage acquisition is heading south 21
Looking forward...the year ahead Strategic Continue to underpin value by realising large upside in existing projects with tailored appraisal programmes Consolidate Cardium acreage if cost effective opportunity arises to maximise reserves & pursue monetisation options URUGUAY Detailed core analysis & geological modelling Increased interest to 51% (Spain 43.3%) Seismic mid 2014 to enable resource delineation with possible follow up corehole programme SPAIN Progress well permitting & approvals Continue farmout process seeking well and possible seismic commitment Permit MT programme to assist with pre-drilling appraisal CANADA Review recent advances in drilling & completion technology applicable to Cardium Permit several new wells, drill 1 potentially 2 wells 22
Appendices List of Appendices 1. Board and Management Team 2. Office Locations & Research coverage 3. Simplified Fiscal Flowcharts 4. Fiscal Regime in Uruguay 5. Comparison of Fiscal terms 6. Disclaimer 23
1. Experienced Board and Management Team Stephen Mitchell David Casey Alex Sundich David Hobday Ian Kirkham Chairman Managing Director & CEO Non-Executive Director Non-Executive Director Company Secretary & CFO Stephen has a Masters Degree in International Economics and Foreign Policy from John Hopkins University in Washington DC. 10yrs as a natural resources specialist at investment banks and advisory firms in the US, Europe & Australia. From 1999-2011 Stephen was Managing Director of Molopo Energy Ltd, an ASX-listed oil and gas company holding assets in Australia, Canada, USA, China, India and South Africa. Under his stewardship, Molopo expanded its market capitalisation from $1 million to in excess of $400 million. David Casey graduated with an Honours degree in Geology from the University of Sydney. David has 20 years experience in the management and evaluation of all aspects of unconventional exploration and appraisal, from initial reservoir characterisation and fairway identification through to drilling, testing and production operations. Previously Managing Director of Eastern Star Gas Limited, the subject of a $924m takeover by Santos Limited valuing the Narrabri Project at $1.42b. Alex has over 20 years' experience in the financial services industry in M&A, capital markets and funds management working for investment banks in New York and Australia. Alex was previously a Non Executive Director of Eastern Star Gas Limited and Executive Director of Harvest Capital Partners, an investment firm that he co-founded in 2008. Alex is also a Director of Burleson Energy Ltd. David holds a PhD in Geology from Louisiana State University. David has gained experience in international oil and gas exploration in Argentina, Russia, Turkmenistan, Azerbaijan, China, India, Namibia, Angola and the Congo Basin. David has also worked in corporate finance and funds management and was a director of Molopo Energy. Ian is a Chartered Accountant with 20 years experience in CFO & CoSec roles; assisting listed companies to evaluate, finance and construct resource projects. Ian has experience in oil & gas, gold and copper projects. Most recently Ian was CFO & CoSec of Eastern Star Gas Limited, the subject of a $924m takeover by Santos Limited. Highly experienced management and technical team in place to achieve its strategic objectives 24
2. Offices Sydney Office: Level 3, 10 Bridge Street Sydney NSW 2000 Telephone: (02) 9254 9000 Melbourne Office: Level 6, 412 Collins Street Melbourne VIC 3000 Telephone: (03) 9642 2899 Recent research: Up to date information on Petrel Energy s research, recent investor presentations, regularly updated share price graphs and information on our projects can be found on our website: www.petrelenergy.com. 25
3. Simplified Fiscal Flowcharts 26
4. Fiscal Regime In Uruguay Production Sharing Contract Total SEI-PRL ANCAP * Gross Revenues 100 Royalties N/A Net Revenues 100 Cost Oil (max. 60%) 30 Profit Oil (min. 40%) 70 42 28 100% 60% 40% Income Tax N/A N/A N/A Net Oil Profit 70 42 28 100% 60% 40% *ANCAP is the National Oil Company of Uruguay. ANCAP has right to backin for 50% on heads-up basis. ANCAP has right to purchase hydrocarbons for domestic market at international prices. Uruguay has no royalties, production bonuses, surface rentals or provincial taxes. 27
5. Comparison of Fiscal Terms Source: Philippine Department of Energy Spain is considered the world s most competitive fiscal regime 28
6. Disclaimer 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 Petrel. 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 Petrel. 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, Petrel 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. 29
CONTACT Sydney Office: Level 3, 10 Bridge Street Sydney NSW 2000 Telephone: 02 9254 9000 Melbourne Office: Level 6, 412 Collins Street Melbourne VIC 3000 Telephone: 03 9642 2899 www.petrelenergy.com 30