For personal use only producer and explorer - ASX · For personal use only producer and explorer . ... YTD 2014 performance already exceeding FYE 2013 results ... Northern Wet Gas

3-6 DECEMBER 2013

ASIAN ROAD SHOW PRESENTATION

A pure Cooper Basin producer and explorer

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IAN BUCKNELL CHIEF FINANCIAL OFFICER

BRAD LINGO MANAGING DIRECTOR

General Overview

The Plan

The Projects

Appendices

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Investment Highlights

• Pure Cooper Basin focus highly leveraged to key equity investment themes

• Focused strategy delivering consistent strong reserve and production growth leveraged to oil and NGL production

• Continuing strong growth pipeline supported by extensive conventional exploration, appraisal and development drilling inventory

• Growing gas supplier with proven access to infrastructure and markets

• Material unconventional exploration and appraisal program with LNG export market exposure

• Near term catalysts driven by strong conventional production cash flow and growth combined with proving up multi-TCF unconventional resources

• Fully funded projected work programs from internal cash flow through 2016

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Corporate Profile

Financial

ASX Ticker ASX: DLS

S&P/ASX Index ASX 200

Market Cap (A$m) 547

Shares on Issue (m) 432

Share Price (2 December 2013) (A$/sh) 1.265

Cash (30 September 2013) (A$m) 25

Total Debt (30 September 2013) (A$m) 140

FY 2013 Earnings (A$m) 45.1

FY 2013 EPS (A$/sh) 0.135

Operational

Reserves-2P (mmboe) ~30.0

Resources-2C (mmboe) 14.8

Production (Sept Quarter 2013) (boepd) ~9,200

FY 2014 Forecast Production (mmboe) 2.3-2.5

Share Price Performance (Since 1 Jun 2011)

Institutions, 38%

Brokers, 8%

Private, 26%

Corporate, 14%

Employees etc., 3%

Unanalysed, 10%

Shareholder Structure

75%

125%

175%

225%

275%

325%

375%

01 Jul 11 18 Nov 11 06 Apr 12 24 Aug 12 16 Jan 13 12 Jun 13 30 Oct 13

DLS.ASX XEJ.ASX

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Drillsearch – A material Cooper Basin player

Drillsearch is the only pure Cooper Basin focused company

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A year of record results – and we’re in the black

Change on 2012

Reserves* 28.5 mmboe 157%

Production 1.1 mmboe 173%

Revenue $102.2 million 356%

Reported NPAT $45.1 million 351%

Operating cash flow $21.4 million 110%

New Debt $104.3 million 100%

Drillsearch is focused on growing Reserves, production and cash flow

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1.4 1.3

8.5 11.1

28.5

2009 2010 2011 2012 2013

mm

boe

Proven Probable

A year of record results

10.0 6.1 14.4

22.4

102.2

2009 2010 2011 2012 2013

$Mil

lio

ns

Oil Gas

2P Reserves up 157%

• Western Flank Oil exploration success

• New Wet Gas discoveries in Western Wet Gas

• Successful commercialisation of Western Wet Gas discoveries

Net Production up 173% Sales Revenue up 356%

• Start-up of Bauer-to-Lycium Oil Export Pipeline

• New Middleton-Brownlow Wet Gas GSA delivers increased production

• Significant increase in oil production

• New firm GSA with SACBJV

• Strong oil and NGL prices

Drillsearch included in the S&P / ASX 200 Index

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1.0

(1.7)

2.6 8.1

58.9

90.592

83 93

111 116 118

2009 2010 2011 2012 2013 YTD 2014

Gross ProfitRealised oil price ($/bbl) Gross prof it ($Millions)

10.0 6.1 14.4

22.4

102.2

122.20

2009 2010 2011 2012 2013 YTD 2014

$Mill

ions

Sales Revenue

FY 2014 – How are we doing so far?

YTD FY 2014* FYE 2013 Total Production (mmboe) 1.14 1.06

Sales Revenue ($M) 122.2 102.2

EBITDAX ($M) 76.8 32.9

Gross Profit ($M) 90.5 58.9 *Unaudited results through 31 October 2013

1.8

(6.4) (1.1)

7.6

32.9

76.8

2009 2010 2011 2012 2013 YTD 2014

$Mill

ions

EBITDAX

0.2 0.2 0.1 0.4

1.1

2.3 - 2.5

1.1

2009 2010 2011 2012 2013 2014 Guidance

YTD 2014

mm

boe

Net ProductionOil Gas

*YTD includes 1 July to 31 October 2013 and is unaudited

YTD 2014 performance already exceeding FYE 2013 results

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General Overview

The Plan

The Projects

Appendices

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• Focused use of all of our human and financial capital

• Target our numerous, high return oil exploration prospects

• Commercialise our substantial portfolio of wet gas discoveries

• Prove the unconventional gas potential of our acreage

Deliver strong growth in reserves, production and cash flow

Our strategy remains unchanged F

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Three factors are driving the Cooper Basin and investor interest: • Growth in Oil Production - Dramatic growth in oil exploration success with the

emergence of the Western Flank as a prolific oil fairway

• Growth in Conventional Gas Demand – Rapid growth in Eastern Australian gas demand driven by complexity of CSG-to-LNG projects

• Emergence of Unconventional Play Potential – Significant unconventional gas resources identified and encouraging early exploration results are emerging

Drillsearch is the only pure Cooper focused company and is well positioned to capture these opportunities

Why the Cooper Basin? F

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Cooper Basin Social License to Operate

• Long history of successful oil and gas operations

• Few landholders but all experienced in successfully co-existing with oil and gas operations

• No prime arable land, primarily desert with agricultural use limited to seasonal cattle grazing

• Shale gas area stakeholders limited to a single land owner - Santos

ATP 940P, October 2011

Aerial photo of the Cooper Basin, October 2011

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The Australian – US interests growing

11 October 2013

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East Coast Gas – Once-in-a-generation opportunity

Cooper Basin is the best placed oil and gas province to supply east coast gas demand and Drillsearch is well positioned to capitalise of this opportunity…

Substantial Wet Gas Reserves and Resources

Established access to the Cooper Basin infrastructure

Commercialisation partnerships in place with Santos and BG

Leadership with proven ability to deliver on strategy and execute

Drillsearch offers the purest leverage to the east coast gas market thematic

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Drillsearch’s capacity to supply gas is increasing while both LNG and uncontracted domestic gas demand is emerging from 2012-17

Poised to capitalise on East Coast gas demand F

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CIF Price $15.00

Shipping of $1.00 Fuel shrink3 of $0.25

Transport to terminal of $1.30 Processing of $4.25 Plant losses of2 of $0.25 Upstream netback of $7.95


Transport of $1.00 Fuel shrink3 of $0.50

Transport of $0.75 Fuel shrink3 of $0.20


LNG Project Capital Cost (US$/mmtpa) Gladstone Kitimat Sabine Pass

Project type Australia greenfield

British Columbia greenfield

Gulf of Mexico brownfield1

Pipeline cost $250 $280 N/A

Downstream cost

$1,200 $1,000 $550

Total cost $1,450 $1,280 $550

Sour

ce:

Woo

dmac

, Che

nier

com

pany

rele

ases

& p

rese

ntat

ions

; JP

Mor

gan

& b

roke

r rep

orts

1: Building off brownfield infrastructure where facilities are already in place for regassification 2: Based on 7.5% of estimated local gas market price 3: Based on $0.05/mmbtu per 1,000nmi

Cooper Basin gas prices will be robust F

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General Overview

The Plan

The Projects

Appendices

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Oil Business - Highlights

Key Data

Net Acreage: ~12,000 km²

FY2013 Production: 775,374 bbls

FY2013 Revenues: A$91.3m

Q1 2014 Production (BOPD) 7,624 bbls

Q1 2014 Production: 701,419 bbls

Q1 2014 Revenues: A$80.2m

Reserves (2P): 9.6 mmbbls

Contingent Resources (2C): 5.1 mmbbls

3D Seismic Coverage 2,458km²

Discoveries 32

Fields in production 13

FY 2014 – Exploration wells 7

FY 2014 – Development wells 15 For

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Oil – Driving near-term growth

Key deliveries in FY 2013

Major Reserves upgrades through Bauer Oil Field appraisal program

Expansion of Bauer production plant to 33,000 BOFPD

Completion of 10,000 BOPD Bauer-to-Lycium Oil Export Pipeline

Major new oil discovery at Pennington-1

New oil discoveries at Kalledeina, Congony and Sceale extend oil fairway

New Western Flank Oil Fairway 3D delivers high quality prospect portfolio

Western Flank prospect seriatim now exceeds over 100 potential targets – many 3D controlled

PEL 91 - Bauer Central Production Facility

PEL 91 – Construction of Bauer-to-Lycium Oil Pipeline

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Oil – The road ahead

How do we deliver the plan…. Robust portfolio of 10 existing discoveries in

Western Flank Oil Fairway

Current production levels coming from 3 fields only – Bauer, Chiton and Hanson – with other fields awaiting connection

Current Western Flank prospect seriatim now exceeds over 100 potential targets and aggregate gross unrisked prospective oil potential of 44 mmbbls – many 3D controlled

Large undrilled oil prospects in Inland-Cook Oil Fairway emerging as potential next big frontier

Large undeveloped oil 2C Contingent Resources already defined in Eastern Margin

PEL 91 – Western Flank Oil Fairway Bauer focus

Inland-Cook Oil Fairway, Hurron Prospect focus

Full development of existing discoveries and only moderate small scale exploration success required beyond 3-years to

maintain current production levels

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Wet Gas Business - Highlights

Key Data

Net Acreage: ~4,200km²

FY 2013 Production: Gas: 147,320 boe NGLs: 76,710 boe

FY 2013 Revenues A$10.9m

Q1 2014 Production (BOEP) 1,608 boe

Q1 2014 Production: Gas: 59,550 boe NGLs: 88,354 boe

Q1 2014 Revenues A$6.5m

Reserves (2P): 20.4 mmboe

Contingent Resources (2C): 14.7 mmboe

3D Seismic Coverage; 1,927 km²

Discoveries 23

Fields in production 3


FY 2014 – Development wells 3

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Wet Gas – Positioned for growth


New long-term sale agreement with SACBJV delivers strong gas sales

Canunda discovery tie-in to Middleton Gas Plant delivers ultra-liquids rich production

DLS-operated Western Cooper Wet Gas exploration delivers 2 new discoveries

Secured new Wet Gas JV with Santos accelerating development of multiple wet gas discoveries

Commence successful Northern Cooper Wet Gas Project appraisal program with major field extension with Flax South-1 discovery

New 3D seismic programs generate robust prospect seriatim in Northern and Western Wet Gas project areas

PRL 14 – Flax Gas Plant

PEL 106B – Middleton Production Facility

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Wet Gas – The road ahead

How do we deliver the plan…. Existing Middleton-Brownlow Wet Gas Project and step-out discoveries can

maintain existing production levels for over 10 years

Drillsearch has over 15 existing wet gas discoveries in the Western and Northern Wet Gas Project areas awaiting appraisal and development

These existing wet gas discoveries may support another 2-3 Wet Gas production satellites similar in scale to the Middleton-Brownlow Wet Gas Project

Western Wet Gas Fairway

Northern Wet Gas Fairway

If achieved the Wet Gas business will be generating up to $100m per annum based on

current gas sale arrangements

Drillsearch has also identified a likely new wet gas discovery within its SW Queensland acreage ready for appraisal to support an additional Wet Gas production satellite

Drillsearch is targeting net production of 10-15 mmscf/day of raw gas and liquids from these multiple Wet Gas production satellites

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Unconventional Business - Highlights

Key data

Net acreage ~3,160km²

Mean Recoverable Prospective Resources

Shale Gas: ~24 TCF

Basin Centred Gas: ~8 TCF

3D Seismic Coverage ~2,790km²


FY 2014 – Development wells nil

Current unconventional exploration, appraisal and testing program designed to deliver 2-4 TCF contingent resources and funded from operating cash flow through FY 2016

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Completed DLS-operated Winnie 1,054km2 3D seismic program – largest, highest specification 3D acquired onshore Australia

Picked initial 4 unconventional well drilling locations targeting REM shale and Permian Basin-centered gas targets with multiple additional drilling locations identified

Commenced Weatherford 826 drilling rig upgrade program to make it the only HPHT drilling rig in Australia

Targeting 2C Continent Resource booking of 1-2 TCF by 2014 year end

ATP 940P – Weatherford 826 rig spudding Anakin-1 shale gas well

ATP 940P – Winnie 3D Seismic Acquisition

Unconventional – Transformational potential F

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Unconventional – The road ahead

How do we deliver the plan…. Four well initial exploration/delineation drilling and fraccing

program already underway

Program designed to deliver 1-2 TCF 2C Contingent Resources (gross) by CYE 2014

Program aimed at delivering a further 1-2 TCF 2C Contingent Resources (gross) by mid-CY 2015

JV already planning further six appraisal and delineation pilot production wells following completion of four well drilling and fraccing program

Drillsearch contemplates six additional appraisal and delineation wells will form backbone of initial unconventional production pilot

Production pilot aimed at demonstrating potentially commercially viable unconventional production rates

ATP 940P – Central Unconventional Fairway

Multiple plays require extensive stimulation programs

Delivering up to 6 TCF of 2C Contingent Resources (gross) and commence initial production pilots demonstrating

potentially commercially viable unconventional gas

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Current ATP 940P Work Plan

Activity 2013 2014 2015

Sept Q

Dec Q

Mar Q

Jun Q

Sept Q

Dec Q

Mar Q

Jun Q

Sept Q

Dec Q

Drilling

Top-hole x 3

Wells completed x 4

Evaluation Period

Fracc and Production Test

Activity

Sept Q

Dec Q

Mar Q

Jun Q

Sept Q

Dec Q

Mar Q

Jun Q

Sept Q

Dec Q

2013 2014 2015

QGC spend $90 million

Book 2C Resource (2 wells)

DLS at 40% funding

Book 2C Resource (4 wells tested)

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The road ahead

Drillsearch is focused on delivering over the next 3 years…

Oil – Fully developing its large pool of oil discoveries, executing expanded 3D-based exploration programs and delivering production increases, Reserve replacement and Reserve growth

Wet Gas - Delivering additional wet gas production satellites from existing discoveries increasing Wet Gas production to over 50 mmscf/d of raw gas and liquids

Unconventional – Delivering up to 6 TCF of 2C Contingent Resources (gross) and commence initial production pilots demonstrating potentially commercially viable unconventional gas

Financial – Significantly increase conventional production and executing this strategy from internal cash flows flowing from these production increases

Drillsearch is targeting not only growing conventional Reserves but also significantly increasing production

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Active drilling in all businesses

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 60-43 BPT/SXY 15

Eastern Margin 40 STO 18

Wet Gas

Western 50 BPT 4

Western 40 STO 10

Northern 80-100 DLS 7

Unconventional

Central Cooper 40 DLS/BG 10

Oil Wet Gas Unconventional

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Delivering for shareholders – Near-term catalysts

Wet Gas Commercialisation

STO commences Western Cooper

development program

December Q 2013

Unconventional Drilling Program

First unconventional exploration wells reach target pay

zones

March Q 2014

Oil Exploration Drilling Program Western Flank Oil

exploration, appraisal and development drilling resumes

March Q 2014

Wet Gas Commercialisation

Northern Cooper Wet Gas Project

production testing begins and Western

Cooper Wet Gas exploration begins

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• Focused strategy delivering consistent, strong reserve, production and cash flow growth

• Continuing strong growth pipeline supported by extensive conventional exploration, appraisal and development drilling inventory

• Growing gas supplier with proven access to infrastructure and markets and long-term gas sale arrangements is place

• Material unconventional exploration and appraisal program with LNG export market exposure

• Near-term catalysts driven by strong conventional production and cash flow growth, combined with proving up multi-TCF unconventional resources

Projected work programs are fully funded from internal cash flow through 2016

Outlook highlights

Our vision is to become a leading Australian mid-tier oil and gas exploration and production company

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The Plan

The Projects

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Reserves and Resources

Net Reserves and Contingent Resources as at 30 June 2013*

Business Segment Reserves 1P mmboe

2P mmboe

3P mmboe

Western Flank Oil 5.05 7.58 11.30

Western Cooper Wet Gas – Middleton Gas Project 6.10 15.87 27.69

Western Cooper Wet Gas – PEL 106A Gas Project 1.48 4.46 12.43

Northern Cooper Wet Gas 0.03 0.05 0.05

Eastern Cooper Oil 0.32 1.83 4.57

Total Reserves 12.99 29.79 56.04

Business Segment Reserves 1C mmboe

2C mmboe

3C mmboe

Western Flank Oil 0.17 0.39 0.64

Western Cooper Wet Gas – Middleton Gas Project 0.44 3.29 9.95

Western Cooper Wet Gas – PEL 106A Gas Project 0.00 0.00 0.00

Northern Cooper Wet Gas 4.68 10.41 25.24

Eastern Cooper Oil 0.04 2.51 6.76

Total Contingent Resources 5.32 16.60 42.59

* Reserves and Resources as at 30 June 2013 as released to the ASX on 15 August 2013 and including the additional 29% interest in Tintaburra.

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Strong Management Team and Board

Brad Lingo Managing Director

Brad has more than 25 years of oil and gas

experience.

John Whaley Chief Operating Officer

John has extensive experience across

upstream and downstream sectors of the oil and gas

industry.

David Evans Chief Technical Officer

David has over 25 years of upstream oil and gas

exploration experience including over 15 years in

Australia.

Ian Bucknell Chief Financial Officer

Ian is a Certified Practicing Accountant with over 15

years upstream oil and gas accounting experience.

Peter Fox Chief Commercial Officer Peter has over 20 years of experience in the oil and gas industry with a focus

on the upstream and infrastructure sectors.

Jim McKerlie Chairman

Jim has extensive experience as a

Director and Chairman of private

and public companies.

Fiona Robertson Non-Executive

Director Fiona has more than 30 years experience

in the corporate finance and

resources sectors.

Ross Wecker Non-Executive

Director Ross has more than 35 years experience

in the oil and gas industry.

Jean Moore Company Secretary Jean has extensive

experience in corporate law and

corporate governance.

Philip Bainbridge Non-Executive

Director Philip has more than 25 years experience

in the oil and gas industry.

Teik Seng (TS) Cheah Non-Executive

Director TS is a finance and banking executive

based in Singapore with over 25 years

experience working for leading financial

institutions.

Margaret Fittler General Manager – People Margaret has over 15 years

of Australian and International experience as

an Human Resources professional.

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WET GAS Thargomindah Primary School P&C fund raiser

• HSE – no lost time injuries

• Prioritize importance of corporate social responsibility

• Corporate governance upheld to highest standards

Committed to HSE and good corporate citizenship F

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• This presentation contains forward looking statements that are subject to risk factors associated with the Oil and

gas business. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions, political risks, project delay and advancement, approvals and cost estimates.

• All references to dollars, cents or $ in this presentation are to AUD, unless otherwise stated.

• References to “Drillsearch” may be references to Drillsearch Energy Limited or its applicable subsidiaries.

• 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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HEAD OFFICE LEVEL 16

55 CLARENCE STREET

SYDNEY NSW 2000

PH: +61 2 9249 9615

FX: + 61 2 9249 9630

E: [email protected]

W: WWW.DRILLSEARCH.COM.AU BRAD LINGO – MANAGING DIRECTOR

IAN BUCKNELL – CHIEF FINANCIAL OFFICER

DAVID EVANS – CHIEF TECHNICAL OFFICER

JOHN WHALEY – CHIEF OPERATIONS OFFICER

PETER FOX – CHIEF COMMERCIAL OFFICER

Contact Information F

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For personal use only producer and explorer - ASX · For personal use only producer and explorer . ... YTD 2014 performance already exceeding FYE 2013 results ... Northern Wet Gas

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