Address Level 17, 500 Collins Street, Melbourne, VIC, 3000 Tel+ 61 3 9614 0600 Fax+61 3 9614 0550 Email[email protected]Webwww.challengerenergy.com.au ACN123 591 382 29 th August 2011 Manager Announcements Company Announcements Office Australian Securities Exchange 10th Floor, 20 Bond Street SYDNEY NSW 2000 Investor Presentation Attached herewith is a copy of the Investor Presentation of Challenger Energy Ltd. For further information please contact: Mr Paul Bilston Managing Director P: 0402 060 405 About Challenger Challenger Energy Limited is a public company listed on the Australian Stock Exchange (ASX:CEL) with a growing portfolio of exciting Oil and Gas exploration opportunities in South Africa and the USA. Challenger’s strategy is to utilise its network of global contacts to identify and acquire material upstream oil and gas exploration opportunities at a low entry cost which enables it to focus its exploration expenditure on drilling wells and other direct expenditure. Challenger is targeting opportunities where it can act as operator, and which have significant scale and materiality (more than 1 TCF of gas or 10 Million bbl of Oil). The scale of these opportunities provides potentially significant upside for the company. For personal use only
27
Embed
Investor Presentation - Home - Australian Securities ... · Attached herewith is a copy of the Investor Presentation of Challenger Energy Ltd. ... Chevron–Atlas ... experience with
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
29th August 2011 Manager Announcements Company Announcements Office Australian Securities Exchange 10th Floor, 20 Bond Street SYDNEY NSW 2000
Investor Presentation Attached herewith is a copy of the Investor Presentation of Challenger Energy Ltd. For further information please contact: Mr Paul Bilston Managing Director P: 0402 060 405 About Challenger Challenger Energy Limited is a public company listed on the Australian Stock Exchange (ASX:CEL) with a growing portfolio of exciting Oil and Gas exploration opportunities in South Africa and the USA. Challenger’s strategy is to utilise its network of global contacts to identify and acquire material upstream oil and gas exploration opportunities at a low entry cost which enables it to focus its exploration expenditure on drilling wells and other direct expenditure. Challenger is targeting opportunities where it can act as operator, and which have significant scale and materiality (more than 1 TCF of gas or 10 Million bbl of Oil). The scale of these opportunities provides potentially significant upside for the company.
For
per
sona
l use
onl
y
1
Investor Presentation
August 2011
For
per
sona
l use
onl
y
Disclaimer
This announcement contains “forward-looking statements”. Such forward-looking statements include, without limitation: estimates of future earnings, the sensitivity of earnings to oil & gas prices and foreign exchange rate movements; estimates of future oil & gas production and sales; estimates of future cash flows, the sensitivity of cash flows to oil & gas prices and foreign exchange rate movements; statements regarding future debt repayments; estimates of future capital expenditures; estimates of reserves and statements regarding future exploration results and the replacement of reserves; and where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to oil and gas price volatility, currency fluctuations, increased production costs and variances in reserves or recovery rates from those assumed in the company’s plans, as well as political and operational risks in the countries and states in which we operate or sell product to, and governmental regulation and judicial outcomes. For a more detailed discussion of such risks and other factors, see the Company’s Annual Reports, as well as the Company’s other filings. The Company does not undertake any obligation to release publicly any revisions to any “forward looking statement” to reflect events or circumstances after the date of this release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.
2
For
per
sona
l use
onl
y
Corporate Overview
3
Non Executive Chairman - Michael FryMichael holds a Bachelor of Commerce degree from the University of Western Australia, is a Fellow of Financial Services Institute of Australasia, and is a past member of the ASX. Michael has extensive experience in capital markets and corporate treasury management specialising in the identification of commodity, currency and interest rate risk and the implementation of risk management strategies.
Managing Director - Paul BilstonPaul Bilston has a Bachelor of Mechanical engineering and a PhD in Structural engineering, with 15 yrs experience in all aspects of the oil & gas sector. He has worked in a number of senior technical, commercial and management roles for companies including Worley, GHD, AGL Energy and AJ Lucas. In recent years his focus has been on the unconventional hydrocarbon space in Australia and overseas, and most recently managed the Gloucester Gas project in NSW which was sold in December 2008 for $370M by AJL & MPO.
Executive Director - David PrenticeDavid Prentice’s career includes 21 years experience in commercial management and business development within the natural resources sector, working for some of Australia’s leading resource companies. This has included high-level commercial and operational roles with a number of listed and unlisted resource companies.
Chief Operating Officer – David WoodleyDavid Woodley holds a Bachelor of Chemical Engineering degree, with over 22 years experience in the oil and gas sector gained in Australia, North America, UK and Europe. He has considerable experience in drilling and completion, field development planning and asset management and evaluation.
Company Secretary – Adrien WingMr Adrien Wing is CPA qualified. He practised in the audit and corporate divisions of a chartered accounting firm before working with a number of public companies listed on the Australian Stock Exchange as a corporate/accounting consultant and company secretary.
Shares on Issue: 214,021,000Listed Options 105,222,171 1
Unlisted Options: 11,500,000Share Price: 0.12 as of 25/08/2011
Identify, acquire and appraise material upstream oil and gas exploration opportunities:
Utilising network of global contactsPrimarily unconventional hydrocarbons, CBM, Shale Gas, Shale Oil.Low cost of entry, with primary expenditure on the drill bitHigh materiality (> 1 TCF Gas, or >10 Million bbl Oil)Projects where Challenger will act as operator
Evaluate and high grade exploration projects to ensure efficient expenditure of shareholders funds
Implement staged and cost effect exploration and appraisal programs to evaluate projects with an eye on the best development or exit strategy
4
For
per
sona
l use
onl
y
Why Unconventional Gas?
5
Deal Location Date Net Acres Value
BHP - Petrohawk Eagleford (SA) July 11 1,000,000 US$12.0b
BHP-Chesapeake Fayettteville (USA) Feb 11 487,000 US$4.75b
PetroChina - Encana Cut Ridge (Canada) Feb 11 317,500 C$5.4 b
Talisman-Sasol Montney (Canada) Dec 10 25,500 C$1.05 b
Ev EP/Enervest Barnett (USA) Nov 10 20,200 Gross US$967M
Chevron–Atlas Marcellus (USA) Nov 10 1,209,000 US$3.2 b
Mitsui-Anardarko Marcellus (USA) Feb 10 100,000 US$1.4 b
Total-Chesapeake Barnett (USA) Jan 10 270,000 US$2.5 b
ExxonMobil-XTO Energy Various (USA) Dec 09 US $41 b
Can test large play concepts cheaply
Attractive acquisition targets for major Oil & Gas Companies
Historical transactions for unconventional fields indicate
LAND: Typical range is $9,500 to $15,000 per acre, though some much higher.
RESOURCE:$0.4/mcf to $0.6/mcf
For
per
sona
l use
onl
y
Asset Portfolio
Mercury Stetson Shale Gas ProspectBarnett ShaleWoodford Shale
Triple CrownHybrid Gas PlayEllenburger
South AfricaFort Brown Shales
6
For
per
sona
l use
onl
y
Mercury StetsonTwo proven shale formations – Barnett and Woodford
Large prospect area –
potentially up to 55,000 acres (86 sq miles)
Properties consistent with core areas of current shale plays.
Significant contiguous lease position
~ 26,000 acres
target ~ 35,000 acres (55 sq miles)
Massive OGIP estimated at 360 BCF/sq mile
Potentially > 1.5 TCF net resource to CEL
Close to existing infrastructure & services
Recent Barnett (only) transaction (EV Energy Partners) paid $47,700/acre for Core area
7
Prospect
Oklahoma
Arkoma Basin
Ft. Worth Basin
Hollis Basin
Anadarko Basin
Republic of Mexico
G o M
Newark Field Core Barnett
Woodford
Prospect offers an entry position into proven shales with HUGE UPSIDE POTENTIAL F
or p
erso
nal u
se o
nly
Expected Stratigraphy & Thickness
8
Note: TOC results are from cuttings – Actual TOC expected to be ~ 100% higher based on experience with analysis of results in the Barnett shale.F
or p
erso
nal u
se o
nly
Elements of successful shale play
9
Element Mercury Stetson Prospect
Kerogen Type - Target: Amorphous Kerogen Amorphous Kerogen
Organic Richness (TOC) - Target: 2% to 6% Range: 2% to 5% Avg: Barnett 3.2%, Woodford 3.1%
Gas in Place - Target: >100 BCF/Section (sq Mile) 360 BCF+ estimate
Thermal Maturity - Target: 1.0 – 1.8% Ro 1.5% Barnett (dry gas window)1.5% Woodford (dry gas window)
Uplift = Free Gas - Target 5,000’ to 10,000’ 5,000’ to 7,000’ of uplift
Fracturing Evidence of fractured Sycamore between shales (“considerable LCM”)
For
per
sona
l use
onl
y
Proven Shales
10
Much lower risk than shale plays in frontier areas.
Barnett Shale
First recognised shale gas project in US with more than 14,000 wells now drilled
Wells in core area recovering ~ 3 BCF
Producing 1.8 TCF/yr
Woodford Shale
More recently developed
Wells in core area recovering ~ 4 BCF
Over 1,000 wells drilled
Producing 240 BCF/yr
For
per
sona
l use
onl
y
Mercury Stetson - Go Forward Plan
11
BOOK GAS
RESOURCE
First vertical
Well
PROOF OF
CONCEPT
Drill 2HZ wells
Delineation Wells
Drill additionalVertical or
HZ Delineation
Wells
Core Analysis
BOOK GAS
RESERVES
Target 600 BCF 3P
(100%)
2nd Vertical Well
&Seismic Program
BOOK GAS
RESERVES
Target 3 TCF 3P (100%)
BOOK GAS
RESERVES
Target 3 TCF 3P (100%)
20122011 2013 and beyond
Land Acquisition & Lease Management
For
per
sona
l use
onl
y
Triple Crown Prospect
12
Dallas
San Antonio
Houston
Existing Canyon Sands Fields
Existing Ellenburger Fields
HP PipelineHP Pipeline
Triple CrownTriple Crown
50 km50 km
Development
Edwards CountyEdwards County
For
per
sona
l use
onl
y
Triple Crown Prospect- Texas
45,000 Acres in Edwards County Texas
Options over ~ 6,500 acres acquired
Challenger has 80% WI (100% before payout)
Two Targets
Ellenburger
Hybrid (Sand/Unconventional)
First appraisal well successfully drilled Dec/Jan
2011.
Strong gas shows whilst drilling over a number
of zones. A total of 2,300 ft of gas charged
zones were intersected
13
Well
For
per
sona
l use
onl
y
Ellenburger
14
Drilling results confirmed a significant gas charged structure – potentially multi TCF gas in place
Fractures and high porosity intersected at the top of the Ellenburger, however zone cemented during setting of casing, which likely limited gas production
Upper zone at the top of formation is the initial target for horizontal well
Original Gas in Place (OGIP) 1.6 TCF
Fracture and high porosity zone
For
per
sona
l use
onl
y
Triple Crown – Canyon Hybrid Play
15
Very strong gas shows over an 1150 ft
Challenger believe this to be a hybrid play that
consists of a number of sands interbedded within
a large unconventional gas zone
Preliminary analysis suggests this play has a very
large gas in place, with analysis of known wells
suggesting Original Gas in place (OGIP)
equivalent to 7.4 TCF over existing acreage
As expected by the depositional environment,
analysis of logs of previously drilled wells in the
area suggest the potential for this play improves
moving down dip off structure
Sand
Sand
Sand/Siltstone
Unconventional Zone with interbedded sand stringers
1,150 FTGas Column
Strong Gas Shows
2.5 - 10%
For
per
sona
l use
onl
y
Triple Crown - Go Forward Plan
16
BOOK GAS
RESOURCE
Stimulate &
production test
PROOF OF
CONCEPT
Pilot production
testing
Core Analysis
BOOK GAS
RESERVES
Drill Delineation
Wells GAS
SALES
Core & Petro-
physical Analysis
as well as regional mapping
Drilling expected to commence shortly to side track into the Ellenburger with a short (500 ft) Horizontal well. Unless the Ellenburger is completed as a producer, a fracture stimulation of the Hybrid will be completed as a “Proof of Concept”
Land Acquisition
20122011 2013
For
per
sona
l use
onl
y
Karoo Basin – International gas focus
17
Shale Gas within the Karoo Basin is now a major focus for international E&P companies seeking to put their foot on new resourcesFollowing initial 12 month Technical Co-Operation permits, both Shell and Falcon have moved to the next step of formally applying for Exploration Permits
Shell
Falcon
Sasol/Statoil/Cheasapeake
Challenger(Bundu)
Challenger permit of ~ 800,000 acres centred on only well (CR 1/68) within the basin to flow significant gas to surfaceVery well positioned having already reached agreement with Black Empowerment Partners (BEE), and first company to submit its applicationEMP submitted in September 2010 – awaiting approval.Currently a fraccing moratorium in place until March 2012.
For
per
sona
l use
onl
y
Cranemere Well (CR 1/68)Located in the centre of the Application AreaDrilled 1968Well blowout at around 8,300 ftPeak flow of 16 mmcfd during DST Fort Brown Shales
dark grey to black and carbonaceous with occasional siltstone stringers. Strong gas shows in a number of intervals across the 5,000 ft section.
US Energy Information Administration Report on Shale gas potential around the world identified the following:
Karoo Basin large potential“Risked Recoverable Resource” averaged across basin ~ 6.8 BCF / square mile.Equivalent to more than 7 TCF of Risked Recoverable Resource within Challengers Application Area
18
For
per
sona
l use
onl
y
SummaryChallenger Energy’s strategy is to identify, acquire and appraise material upstream oil and gas exploration opportunities
Mercury Stetson Prospect in North Texas, USTwo proven shale formations – Barnett and Woodford Massive potential gas in place with OGIP estimated at 360 BCF/sq mileLarge prospect area – potentially up to 55,000 acres (86 sq miles)Prospect is close to existing infrastructureContiguous land position of ~ 26,000 acres with a short term target of 35,000 acres.
Triple Crown Prospect in Texas, USSignificant acreage – 45,000 acres with options over a further 6,500 acres.Large gas charged zones, Ellenburger (dolomite) and an unconventional Hybrid play which is geologically analogous to Montney Hybrid Play in Western Canada with an estimated OGIP of 9 TCF.Testing to commence shortly on both the Ellenburger and Hyprid Play
Karoo Basin in South AfricaShale gas in Karoo Basin now a major focus for international E&P companies (eg Shell, Cheasapeake, Statoil and Sasol)Challenger Energy’s permit of approx. 800,000 acres centred on only well within basin to flow significant gas to surface to date, awaiting approval.Independent US Energy Information Agency report suggests Risked Recoverable Resource of more than 7 TCF in application area.
Attractive assets have exciting potential to grow significant shareholder value
19
For
per
sona
l use
onl
y
20
AppendicesSupporting Mercury Stetson Slides
August 2011
For
per
sona
l use
onl
y
Prospect ScopeProperty Range Average Risks
OGIP / Section (Square Mile) (BCF) 280 – 420 360 Based on analog data and comparison of shale properties to existing plays
Dependent on well type and frac stages, based on equivalent areas, vertical may be an effective option in this area.
Reserves per well (BCF) 2.5 – 6 3.0 HZ Barnett4.0 HZ Woodford
Based on equivalent areas
Cost per well (BCF) $2.5 – $5.0 $3.5 M HZ Drilling through the Oauchita Thrust may increase Costs
Drilling Locations ~ 875 each Barnett & Woodford
Based on 80 acre spacing
21
For
per
sona
l use
onl
y
Joint Venture Agreement
Governs relationship between the parties until no leases held by any party.
Provides for Challenger to earn 50% interest in Phase 1, by the following:Payment of up to $2.2 million as and when required for the renewal and extension of existing leases plus the acquisition of additional leasesDrill, fracture stimulate, complete and test TWO vertical wells. The parties anticipate that the first well will incorporated the re-entry and completion of the existing well on the property, however in the event that is unsuccessful, a new well will be drilled and the value of the seismic program adjusted to keep Challenger whole. Conduct a seismic program funded partially by revenue from first well to fully define the extend of the shales in the prospect areaConnect the two wells to the nearby sales pipelineChallenger is required to pay the balance of the $2.2 M if it does not drill and complete the first well.
Phase 2Subject to the terms of the agreement, provides for the parties to enter into a Phase 2 program including two horizontal wells in each of the Barnett and Woodford shales.Parties to fund their share, or in the absence of all parties agreeing to fund their share, a mechanism exists for the funding parties to earn additional interest
For
per
sona
l use
onl
y
Case Well IP Capex EUR NPV(10) @ US$/mscf Flat
MMSCFD US$M BCF $4.5 $6 $7.5
1 2.0 2.6 2.5 1.8 2.4 3.4
2 3.0 2.6 3.0 2.1 3.4 4.8
3 4.0 4.0 4.0 2.1 3.8 5.5
4 5.0 4.0 5.0 3.0 5.2 7.2
Scoping Economics
23
NotesBased on current operators in the sector, the Expected Ultimate recovery (EUR) Barnett Core ~ 3 BCF/well with well costs ~ $2.6 M/wellExpected Ultimate recovery (EUR) Woodford Core ~ 4 – 5 BCF/well with well costs ~ $ 4MThese Economics are conceptual and unrisked, and are calculated are based on a set of assumptions derived by comparison with existing Barnett and Woodford production
Single Well
For
per
sona
l use
onl
y
Map showing Barnett and Woodford remnant basins (purple) with 2000-2011 shale gas drilling areas (yellow circles)
Exploration for Barnett Shale (called Caney Shale in OK) and Woodford targets under the Quachita Thrust Sheet is now underway in Oklahoma