John McCrae, Senex Energy: From conventional to unconventional – Senex’s Cooper Basin gas and oil projects

Building an

energy company

Mining South

Australia

John McRae

Commercial Manager

Whyalla

26-27 November 2013

Important notice and disclaimer

Important information

This presentation has been prepared by Senex Energy Limited (Senex). It is current as at the date of this presentation. It contains information in a

summary form and should be read in conjunction with Senex’s other periodic and continuous disclosure announcements to the Australian Securities

Exchange (ASX) available at: www.asx.com.au.

Risk and assumptions - An investment in Senex shares is subject to known and unknown risks, many of which are beyond the control of Senex. In

considering an investment in Senex shares, investors should have regard to (amongst other things) the risks outlined in this presentation and in other

disclosures and announcements made by Senex to the ASX.

This presentation contains statements, opinions, projections, forecasts and other material, based on various assumptions. Those assumptions may or

may not prove to be correct.

No investment advice - The information contained in this presentation does not take into account the investment objectives, financial situation or

particular needs of any recipient and is not financial advice or financial product advice. Before making an investment decision, recipients of this

presentation should consider their own needs and situation, satisfy themselves as to the accuracy of all information contained herein and, if necessary,

seek independent professional advice.

Disclaimer - To the extent permitted by law, Senex, its directors, officers, employees, agents, advisers and any person named in this presentation:

give no warranty, representation or guarantee as to the accuracy or likelihood of fulfilment of any assumptions upon which any part of this presentation is

based or the accuracy, completeness or reliability of the information contained in this presentation; and

accept no responsibility for any loss, claim, damages, costs or expenses arising out of, or in connection with, the information contained in this

presentation.

Reserve and resource estimates

Unless otherwise indicated, the statements contained in this presentation about Senex’s reserve and resource estimates have been compiled by

Mr James Crowley BSc (Hons), who is General Manager – Exploration, a full time employee of Senex, in accordance with the definitions and guidelines in

the 2007 Petroleum Resources Management System approved by the Society of Petroleum Engineers (SPE PRMS).

Mr Crowley consents to the inclusion of the estimates in the form and context in which they appear. Senex’s reserves and resources are consistent with

the SPE PRMS.

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A significant presence in the Cooper Basin

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65 permits, 38 joint ventures, more

than 70,000km2 net acreage

Oil

• 16 operated fields

• 1.25 mmbbls production in 2012/13

• 10.8 mmbbls 2P oil reserves

• >300% reserves replacement ratio

Gas

• Initial drilling confirms

unconventional gas potential

• Hornet conventional gas discovery

• 366 mmboe total 2C resources

• CSG assets in Queensland

A clear strategy that delivers

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• Majority equity and

operatorship is key

• Massive land position with

prime acreage in the Cooper-

Eromanga Basin

• Strong balance sheet and

cash flows

• Track record of low cost

strategic acquisitions

• Strong management team that

is agile, fresh and focused

Senex doubled its acreage position in 2011

with the acquisition of Stuart Petroleum

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2010 2013 2011 2012

New management

team appointed

$26 million raised

via placement

Oil permits

acquired

(PELs 182,100, 88)

HQ moved

to Brisbane

Operatorship of

Don Juan CSG

Name change to

Senex (ASX: SXY)

Surat Basin CSG

reserves upgrade

Vintage Crop oil

discovery

Oil production

resumes

Farmin to

PEL 514

Successful

appraisal drilling

Stuart takeover

completed in less

than 3 months

Major oil reserves

upgrade

Growler-Moomba

and Snatcher-

Charo pipelines

Entitlement issue

oversubscribed

Interest increased

in PEL 115

Unconventional

gas campaign

begins in Cooper

Basin permits

Port Bonython

Fuels Project

sold to Mitsubishi

Gas reserves

up by 75%

Another major oil

reserves upgrade

Oil discoveries at

Spitfire and

Mustang Further appraisal

success

Oil production

tops 600,000 bbls

by 30 June 2012

Entitlement issue

oversubscribed

Hornet gas field

discovered

Contingent gas

resource of 5.5 Tcf

Record oil sales

revenue and profit

Oil reserves up

Cuisinier sold

Interest gained in

PEL 105

2P oil reserves

Up 575% Oil production

Up 793% NPAT up to

$61 million

Phenomenal growth over three years…

… but planning for the long term

• Understanding the risks of

building a long-term, profitable

energy business

• Strong focus on collaboration

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The 15 year tenure security

agreement is a great example:

• A win:win for Senex and

South Australia

• Exploration dollars directed

according to prospectivity

• Operational flexibility

• Investment security

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Senex’s

growing gas

business

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North American gas supply – conventional gas to

shale: Australia 10 years behind

• Conventional gas substitution from coal seam gas and tight gas sands initially

• Tight gas sands include conventional stratigraphic traps and basin centred gas, both

present in material quantities in the Cooper Basin

• Traditional gas supply has been eclipsed by the rise of shale gas (and latterly liquids

rich shale gas), now accounting for more than 30% of supply

Source: Wood Mackenzie

LNG 1,720PJ

Domestic 630PJ

2017 (2,350 PJ/a)

CSG 1,590PJ

Otway and other

115PJ

Gippsland 260PJ

Cooper 105PJ

Forecast shortfall

and required

third party supply 280PJ

Market opportunity provides gas supply catalyst

Power 210PJ

Major Industrial

110PJ Utility 400PJ

2012 (720 PJ/a)

Demand

CSG 270PJ

Cooper 94PJ

Otway 105PJ

Gippsland 258PJ

Other 4PJ

Supply

Source: EnergyQuest

Domestic

Material new conventional

gas discovery

• Opportunity to

commercialise into east

coast gas market with

material supply shortfall

forecast

Next steps:

• Introduce the right

partner at the right time

• Progress field appraisal

and development plan

• Numerous commercial

opportunities under

consideration

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10

Huge gas potential in the north and south

SA Cooper Basin

Early success with Hornet gas discovery

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Early success delivers 2.4 Tcf 1 Hornet gas field

1 3C contingent resource

Record resources

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Continued growth in 2P and 3P reserves in

Queensland’s Surat Basin

Hornet gas discovery • Net reserves:

– 2P reserves 156.6 PJ

– 3P reserves 357.7 PJ

– 598 PJ of reserves and

resources (~102.8 mmboe)

• Exploration and appraisal to

build 2P reserves and enhance

resource definition

• Field development planning and

future pilot production programs

• Well located for CSG to LNG

projects that will require

additional third party gas supplies

Record resources

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Continuing value add in CSG in 2013/14

Hornet gas discovery • 4-well program underway on

western permits

• Targeting reserves additions,

wells to be plugged and

abandoned upon completion

of testing

• 7-well program planned

across eastern permits

7.5 13.2

23.1 26.2

14.9

41.7

52.5

59.8

-

10

20

30

40

50

60

70

80

30 Jun 10 30 Jun 11 30 Jun 12 30 Jun 13

Net 2P Reserves

Net 3P Reserves

Net 2C Resources

Net 3C Resources

Major new

contingent

resource in the

Cooper Basin

Continued

growth in

Surat Basin

coal seam gas

reserves

325.0

914.0

200

300

400

500

600

700

800

900

1000

Million barrels of oil equivalent (mmboe)

Where to next? Commercialising gas reserves and resources

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15

High margin,

high growth

oil business

Cooper Basin oil production at a 20 year high

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• Basin wide exploration effort mirrors the

Cooper Basin Liquids Project from the 1980s

• Early 2013/14 exploration success with

nine of eleven wells cased and suspended

for future oil production

• Burruna oil discovery has commenced extended

production test with flow rates up to 3,600 bopd

• Dunlop-1 oil discovery with 1,200 bopd free flow

• Appraisal and development opportunities near

existing assets

Burruna-2 oil discovery

0

2

4

6

8

10

12Cooper Basin oil production (mmbbls)

Source: APPEA and DMITRE (South Australia)

Senex oil production ramping up

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A solid start to the new year:

• First quarter production of 0.3 million barrels

• Production expected to increase with new discoveries

and work overs

• 2013/14 production guidance of 1.4 million to

1.6 million barrels, up from 1.25 million barrels in

2012/13

Q1

1 To mid-point of 2013/14 guidance

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Net oil reserves upgraded:

• 2P reserves of 10.8 mmbbls, up 3.9 mmbbls

• 3P reserves of 21.4 mmbbls, up 8.6 mmbbls

• 2P reserves growth guidance of 4 million to

6 million barrels in 2013/14, a reserves

replacement ratio of 333%1

• High quality 3D seismic improving

exploration success

Drilling underway:

• More than 30 exploration, appraisal and

development targets to be drilled in 2013/14

• Low-risk, high-return targets near existing

fields, and greenfield exploration plays

• Program will soon move to the western flank

and 3D seismic targets

Successful exploration delivers record oil reserves

1 Before production and divestments, to the mid point of guidance

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Oil discoveries span the western flank fairway

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Massive new oil resource already proven...

The Cooper Basin is significantly

underexplored compared with mature

North American hydrocarbon provinces:

Permian Basin Cooper Basin

Well density 69 / 100 km2 2.3 / 100 km2

2012 2006

Legend

Senex

Beach

Others

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...with near field, high return targets in the south

Well Permit Type Results

Worrior-8 PPL 207 Development Up to 18 metres net pay

Worrior-9 PPL 207 Exploration Plugged and abandoned

Burruna-2 PEL 115 Exploration 5.3 metres net pay, >750 bopd DST

Ventura-2 PPL 214 Development 13.4 metres net pay

Kobari-2 PEL 516 Exploration Oil shows over 22 metres

Dunlop-1 PEL 113 Exploration 3 metres net pay, 1,200 bopd DST

We are already seeing the benefits

Success in the southern Cooper

• Previously considered fully explored

• Senex targeting low-risk, high upside

prospects near existing oil fields

• Material contribution to production expected

Burruna-2

• Oil flow rate recorded at >3,600 bopd on 40/64”

choke during testing

• Online and producing at ~1,000 bopd

• Approximately 400,000 barrels recoverable oil

from 5.3 metres net pay in Namur Sandstone

Dunlop-1

• Free-flowed during DST at 1,200 bopd

• Approximately 3 metres net pay in McKinlay

Member

• On production this quarter

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Ensign Rig 48 drilling Burruna-2

The focus has moved to execution excellence

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Discovery Define well parameters

Design equipment

Approval Procure Construct Online

Discovery Confirm

standard design and approvals

Construct Online

From around 90 days

To around 45 days

Exploration discovery-to-production

How?

• Standardised design and equipment

• Streamlined approval process

• Inventory management

• Exploration success!

Becoming a first class operator

• Operationally nimble,

dynamic and striving for

continuous improvement

• Learning from mistakes

(ours and others)

• Learning from those who

do it best (eg Aera Energy)

• Exploration discovery-to-

connection times already

halved to around 45 days

• Driving down operating costs

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Trials of larger, electric-drive beam pumps

Senex procurement and supply chain

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• Senex supports DMITRE

roundtable principals of sourcing

from local suppliers and businesses

• Currently around 400 local and

global suppliers

• Moving toward ‘standardisation’

and ‘fit for purpose’

• A difficult logistical and operational

environment – unsealed roads

• Safety, planning and quality are

critical

• New suppliers should contact:

[email protected]

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What does it mean for the future?

Continued oil production and reserves growth:

• 2013/14 production guidance of 1.4 million to

1.6 million barrels, up from 1.25 million barrels in

2012/131

• 2013/14 2P reserves growth of 4 million to

6 million barrels (reserves replacement ratio

of 333%)1,2

Early commercialisation of gas assets

• Hornet gas discovery

• Cooper Basin unconventional gas asset

• Surat Basin coal seam gas assets

Zero debt, $125 million cash3

• $120 million to $140 million capital expenditure

guidance for 2013/14

1 Before production and divestments 2 At midpoint of production and 2P oil reserves growth guidance 3 As at 30 September 2013, including approximately $20 million expected from the sale of interests in Cuisinier oil field and associated permits

Registered Office

Level 14, 144 Edward Street

GPO Box 2233

Brisbane Queensland 4000 Australia

Telephone

+61 7 3837 9900

Email

[email protected]

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