ASX Announcementasx.com.au/asxpdf/20130716/pdf/42h23g3xnxd8sj.pdf• targeting very competitive...
Transcript of ASX Announcementasx.com.au/asxpdf/20130716/pdf/42h23g3xnxd8sj.pdf• targeting very competitive...
16 July 2013
ASX Announcement
Strike Energy Limited ABN 59 078 012 745 P: +61 2 8261 1000 L9, 71 Walker Street, North Sydney NSW 2060 www.strikeenergy.com.au
The Company Announcement Officer ASX Ltd via electronic lodgement
SOUTHERN COOPER BASIN GAS PROJECT
INVESTOR PRESENTATION In conjunction with today’s gas supply agreement announcement, Strike Energy Limited (“Strike” ASX:STX) is pleased to provide shareholders with a comprehensive presentation on the company’s Southern Cooper Basin Gas Project. Managing Director, David Wrench said:
“The Company has made substantial progress with our Southern Cooper Basin Gas Project and is now well positioned to accelerate evaluation activities. The potential value inherent in this project is rapidly being acknowledged by an expanding number of industry stakeholders.” Yours faithfully
DAVID WRENCH Managing Director
Further information: Strike Energy Limited David Wrench – Managing Director T: +61 2 8261 1000 E: [email protected]
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STRIKE ENERGY LIMITED THE SOUTHERN COOPER BASIN GAS PROJECTInvestor Presentation July 2013
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2 Strike Energy Limited - The Southern Cooper Basin Gas Project | Investor Presentation
Executive Summary
• resource target is gas saturated Southern Cooper coals
•Strike’s prospective resource between 6.3 and 16.4 Tcf
• favourable market dynamics
• rapid appraisal time
• low appraisal capital to mature resource
• foundation customer contribution to appraisal and initial development expenditure
• characteristics of coals demonstrate potential for a compelling resource play
• shallower coal seam targets differ significantly from basin centred gas and shale plays in deeper part of basin
• targeting very competitive position on supply cost curve (target ex-field cost ~$3.00/GJ excluding royalties)
•binding term sheet for up to 150PJ of gas (20 year supply) signed with foundation customer (Orica)
• ideal project location with access to pipelines connected to east coast gas network
•potential for much larger development with tremendous economic value
Significant gas resource
Potentially favourable economics
Rapid appraisal and development
Commercialisation pathway
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North America has experienced an unconventional gas revolution over the past decade. The global focus on unconventional is the supply response to both higher gas demand and higher prices.
Overview
Adapted from: DMITRE, SA, 2012; US Energy Information Administration (EIA, 2011b).
The success of the North American gas revolution was supported by favourable economics and operators targeting the primary source rocks of hydrocarbon basins
US Australia
Driver Unconventional gas supplies developed mainly for domestic market
Unconventional gas supplies developed to capitalise on Asian market demand.
Demand levels ~ 25,000 PJ domestic demand (2012)
Current east coast demand ~750 PJ rising to 2,800 PJ/annum.
Price A high product price environment (initially) encouraged innovation driven response
Prices historically low but rising as domestic and export prices ‘converge’
Land Access Favourable land access conditions Land use conflict - Australian East Coast - clash with urban/agriculture
Infrastructure Well-developed pipeline network and readily accessible markets
Much less infrastructure - Cooper Basin best connected unconventional supply area.
Hydrocarbon Source
Operators targeted primary source rocks of prolific hydrocarbon basins (predominantly marine shales)
Cooper Basin ‘coals’ are the source rocks of the Basin
LNG to export markets
Cooper Basin emerging as premier location for evaluation of unconventional resources
Strike’s unconventional acreage in the Cooper Basin and the Eagle Ford Shale (US)
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*Approximations only of target zone depth and permit areas
Cooper Basin Gas Supply Opportunities
The Cooper Basin is known as Australia’s most prolific onshore hydrocarbon basin. Appraisal expenditures in excess of $500 million are delineating the unconventional resource potential including, gas composition, flow rates and ultimately the commerciality of these resourses.
Strike Energy’s primary gas target is the saturated Southern Cooper Coals - primary source rocks of Cooper Basin
COMPANY PRIMARY ‘UNCONVENTIONAL’ HYDROCARBON TARGETS AND PERMIT AREAS
Surface
Primary Target Gas saturated coals
Primary Target Shale gas and basin centred gas
Primary Target Tight gas sands
Primary Target Shale gas and basin centred gas
Primary Target Shale gas and basin centred gas
PEL 516PEL 115
SACB JV
ATP94OP
PEL 218ATP855P
TARGET ZONE - DEPTH
- 1,500m
- 4,000m
- 3,000m
PEL 96PEL 95 PEL 94
Southern Cooper Basin
Strike Energy*
Drillsearch* BG
Senex*
SACB JV*
Beach* Chevron
Nappamerri Trough
South North
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Strike’s Southern Cooper Basin Gas Project: Value Drivers
Strike is targeting shallower coal seams in the Southern part of the Cooper Basin, a play which differs considerably from the basin centred and shale gas plays in the deeper parts of the basin. Significant discoveries were made in Strike’s permit areas, through drilling activity in 2012, which increased the prospective resource by 400%.
Strike is executing a rapid appraisal plan to unlock the tremendous project potential
FavourableLocation
ResourceScale
ResourceCharacteristics
Resource Productivity(favourable economics)
Appraisal Plan (Target ex-field cost
~$3/GJ excluding royalties)
Services /Infrastructure
Path to Market
Project Value Drivers
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Strike’s Southern Cooper Basin Gas Project: Favourable Location
Favourable land access characteristics exist across the permit areas. The terrain occupied by PEL 94, PEL 95 and PEL 96 is desert with low sand dunes and there is limited agricultural activity.
South Australia has a stable regulatory regime for petroleum development and is an active supporter of unconventional gas development activity
Permit area is principally desert, with limited to no agricultural activity
PEL 96
PEL 95
PEL 94
Moomba
Gladstone
Brisbane
SydneyAdelaide
Melbourne
Hobart
Mount Isa
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Strike’s Southern Cooper Basin Gas Project: Resource Scale
Strike’s Southern Cooper Basin Gas Project has access to a significant prospective resource of between 6.3 and 16.4 Tcf* (net to Strike) in the primary coal source rock of the Cooper Basin.
~ 5 Tcf*
Total Gas supplied out of Cooper Basin over 40
years
4 - 5 Tcf
Equivalent to 20yr supply for one 4 million tonne per annum LNG train
6.3 - 16.4 Tcf
Strike’s share of recoverable sales gas in relation to the coals
in PEL 94, PEL 95 and PEL 96
< 1 Tcf
Combined east coast Australia gas demand
per annum for industrial, generation and
commercial / residential
Strike’s prospective resource is between 6.3 and 16.4 Tcf (net to Strike)
*Tcf = Trillion cubic feet = 1,000 Bcf1 Bcf = 1.05 PJ
PEL 96
PEL 95PEL 94
*Government of South Australia Energy Resource Division August 2012F
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Strike’s Southern Cooper Basin Gas Project: Resource Characteristics
Strike is targeting the coals in the Southern part of the basin. These coals are the primary hydrocarbon source rocks of the basin. Analysis of the coals in Strike’s permit areas indicates that they are at the optimal depth and maturity for thermal gas generation. Subject to commerciality being confirmed, it is likely that Strike can develop the coal sourced and hosted resources relatively quickly in its permit areas (compared to shale plays and basin centred gas plays elsewhere in the basin) – wells will be drilled and completed at shallower depths and require less stimulation than a shale or basin centred gas in the middle of the basin.
Characteristics of the coals in Strike’s permit areas demonstrate the existence of a compelling resource play
Gas maturity Coals in the Cooper Basin tend to be inertinite rich (up to 90%) – inertinite matures much earlier than vitrinite
In the Souther Cooper Basin the coals have a vitrinite (Ro) between 0.5-1.0% which is right in the peak gas generation window for inertinite
Southern Cooper Basin Coals
Key Characteristics of Coals - permit areas
MaturityCoals in Strike’s acreage are at the optimal depth and maturity for gas generation
SaturationGas adsorption and desorption data indicates the coals are fully saturated
WaterCoals in the Cooper Basin have extremely low water content
Shallower Resources
The gas resources in Strike’s permit areas are comparatively shallow, contributing to simpler and lower cost of drilling and completion
CO2 Content
CO2 levels in nearby fields are in range of 5-10%
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Strike’s Southern Cooper Basin Gas Project: Resource Productivity
Strike’s appraisal and initial development plan (Phase One Area) is to focus on its PEL 96 permit area (STX 66.67% and operator) and establish a new, sustained, scalable and profitable gas resource to supply the Eastern Australia gas market.
Strike has a targeted appraisal plan to efficiently assess the project fundamentals and economics
Key Appraisal Goals
Confirm gas content, composition and saturation of coals
Assess porosity of coals
Assess potential completion technology
Assess permeability/productivity of target coals
Pre-production to test flow rates and commerciality
FID
Features of Appraisal Program
Rapid appraisal time
Low appraisal capital required to mature resource
Foundation customer contribution to appraisal and development expenditure
3 w
ell p
rogr
am
Phas
e 1
Area
Cooper BasinPEL 95
PEL 96
PEL 94
Coal TroughsPEL 96 Phase One Area - 400-800 PJ resource
Strike Permits Gas PipelineOil Pipeline
Analogous WellsProposed WellsOffset WellsF
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Strike’s Southern Cooper Basin Gas Project: Services / Infrastructure
The Southern Cooper Basin Gas Project will have direct access to pipelines, roads, service support companies and processing facilities if required.
The Southern part of the Cooper basin is ideally located given its proximity to adjacent infrastructure
Key features of ‘in-place’ services/infrastructure
Accessibility to major pipelines, roads and other support services
Readily available route to market
Contributes to lower capital cost
PEL 94 and PEL 96 are traversed by QIC Global Infrastructure’s Moomba to Adelaide gas pipeline which is ‘open access’ and has spare capacity.
Alternative cost effective access to Moomba to Sydney pipeline.
In-field gas processing provides an opportunity for Strike to become a new independent Cooper Basin gas supplier
Moomba
Gladstone
Brisbane
SydneyAdelaide
Melbourne
Hobart
Mount Isa
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Strike’s Southern Cooper Basin Gas Project: Path to Market
Existing infrastructure together with funding/offtake commitment from foundation customer provides clear commercialisation pathway
Activity 2013 2014 2015 2016 2017 2018 2019 2020
Appraisal
Pre-production wells
Completion and production testing
Project Infrastructure
Production drilling
Gas supply to foundation customer
Other customers
Potential future supply options
Additional domestic supply
Third party LNG
Brownfield LNG
Greenfield LNG
PEL
96 (S
TX O
pera
tor)
- Ph
ase
One
Area
PEL
94 /
95 /
96 Industrial, Generation and Commercial/Residential
Confirmation
Successful production testing
FID
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Strike’s Southern Cooper Basin Gas Project: Path to Value
Appraisal and development success with Phase One will prove out the concept for a much larger development with tremendous economic value
Initial Development (Phase One Area) 400 - 800 PJ resource can progress to a much larger development with >> 1,000’s PJ (net to Strike) resource across full permit areas
PEL 96
PEL 95PEL 94
PEL 96
Initial Development (Phase One Area)
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Project Highlights
Significant prospective resource in place
Attractive market dynamics
Potentially favourable economics
Commercialisation pathway
Rapid appraisal
Low appraisal capital
Minimal land access and community risks
Project located in favourable jurisdiction
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Important Notice
This presentation does not constitute an offer, invitation or recommendation to subscribe for, or purchase any security and neither this presentation nor anything contained in it shall form the basis of any contract or commitment.
Reliance should not be placed on the placed on the information or opinions contained in this presentation. This presentation does not take into consideration the investment objectives, financial situation or particular needs of any particular investor. Any decision to purchase or subscribe for any shares in Strike Energy Limited should only be made after making independent enquiries and seeking appropriate financial advice.
No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, Strike Energy Limited and its affiliates and related bodies corporate, and their respective officers, directors, employees and agents disclaim liability (including without limitation, any liability arising from fault or negligence) for any loss arising from any use of or reliance on this presentation or its contents or otherwise arising in connection with it.
Statements contained in this presentation, including but not limited to those regarding the possible or assumed future costs, performance, dividends, returns, production levels or rates, oil and gas prices, reserves, potential growth of Strike Energy Limited, industry growth or other projections and any estimated company earnings are or may be forward looking statements.
Such statements relate to future events and expectations and as such involve known and unknown risk and uncertainties, many of which are outside the control of Strike Energy Limited. Actual results, actions and developments may differ materially from those expressed or implied by the statements in this presentation.
Subject to any continuing obligations under applicable law and the Listing Rules of ASX Limited, Strike Energy Limited does not undertake any obligation to publicly update or revise any of the forward looking statements in this presentation or any changes in events, conditions or circumstances on which any such statement is based.
COMPETENT PERSONS STATEMENT
The reported resource and or reserves in this presentation are based on information compiled by Mr C Thompson. Mr. Thompson is the General Manager of Strike’s Cooper Basin Project and has consented to the inclusion of the resource and or reserves information in this report.
Mr. Thompson holds a Graduate Diploma in Reservoir Evaluation and Management and Bachelor of Science Degree in Geology. He is a member of the Society of Petroleum Engineers and has worked in the petroleum industry as a practicing reservoir engineer for over 20 years.
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