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1 ASX Spotlight Conference Presentation London & New York February 2014 David Casey, Managing Director
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Petrel Energy Ltd

Feb 14, 2017

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Page 1: Petrel Energy Ltd

1

ASX Spotlight Conference Presentation

London & New York

February 2014

David Casey, Managing Director

Page 2: Petrel Energy Ltd

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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.

Page 3: Petrel Energy Ltd

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Petrel Energy’s Diversified Global Portfolio

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)

Lochend Cardium Alberta, Canada

Targeting “tight oil” in lower siltstone and sandstone in 6,400 acres.

Betic Alps Spain – Aljibe Formation Targeting conventional sandstone gas reservoirs in 94,000 acres in

Southern Spain.

Conventional and unconventional oil & gas project diversity

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

Page 4: Petrel Energy Ltd

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Corporate Profile

Share price has increased 4 times since Uruguay and Spain assets acquired

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

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%

Uruguay & Spain Acquired

Coring Programme commenced

Page 5: Petrel Energy Ltd

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Share Performance

Petrel best performing ASX oil & gas company by share price for 2013

ResourceInvest - AOGR Report - 1 February 2014

$0.225

Page 6: Petrel Energy Ltd

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URUGUAY

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Uruguay Background

Total was granted two onshore shale blocks in the Norte Basin in late 2013

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

“…Total joins Argentina’s YPF and independents Schuepbach Energy and Petrel Energy.”

75kms

Page 8: Petrel Energy Ltd

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Uruguay Ideal Operating Environment

Politically stable democracy with excellent fiscal terms and proactive business

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

Page 9: Petrel Energy Ltd

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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 transported to La

Teja Refinery via truck, rail or

pipeline

Oil Can be trucked or

piped to Uruguay River &

barged to La Teja Refinery

Uruguay represents a rare company transforming “first mover” opportunity for Petrel

Page 10: Petrel Energy Ltd

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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%.

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

Corehole results confirm existence of an active petroleum system

Uruguay core hole ACHAR E-1

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

Multiple mature source rocks identified

Oil leaching from Devonian

sandstones just below Cordobes

Shales (306 – 315m) Excellent Conventional Reservoir Potential

Page 11: Petrel Energy Ltd

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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

Seismic will define reservoir and resource extent in mid-2014

Proposed seismic programme (blue) and existing MT lines (green)

Page 12: Petrel Energy Ltd

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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 28,000km2

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

Page 13: Petrel Energy Ltd

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Uruguay How Does Norte Basin Compare?

The Vaca Muerta is proof that very large shale plays are being found outside the USA

* Preliminary results from limited sampling

“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

Page 14: Petrel Energy Ltd

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SPAIN

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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

Page 16: Petrel Energy Ltd

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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

Page 17: Petrel Energy Ltd

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Spain Almarchal1 well

DST13: flowed 7Mscf/d Gas

DST36: flowed 5Mscf/d Gas

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

Miocene Aljibe SS

Gross interval 1180m

(1030-2210m)

Net reservoir >500m

Almarchal-1 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

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

Recent petrographic studies support notion of excessive reservoir damage from

swelling clays

Page 18: Petrel Energy Ltd

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CANADA

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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

Page 20: Petrel Energy Ltd

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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

Page 21: Petrel Energy Ltd

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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

Recent TriOil transaction & well permitting confirm play development and acreage acquisition

is heading south

Development trend

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Looking forward ...the year ahead

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

Str

ate

gic

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

CANADA

Review recent advances in drilling & completion technology applicable to Cardium

Permit several new wells, drill 1 potentially 2 wells

SPAIN

Progress well permitting & approvals

Continue farmout process seeking well and possible seismic commitment

Permit MT programme to assist with pre-drilling appraisal

Page 23: Petrel Energy Ltd

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Thank you… www.petrelenergy.com