Excellence in Oil and Gas 2008 26-27 May 2008 Forward Statement - - PowerPoint PPT Presentation

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Excellence in Oil and Gas 2008 26-27 May 2008 Forward Statement - - PowerPoint PPT Presentation

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Excellence in Oil and Gas 2008 26-27 May 2008 Forward Statement Disclaimer The information presented herein contains predictions, estimates and other forward looking statements that are subject to risk factors that are associated with the oil

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SLIDE 1

Excellence in Oil and Gas 2008 26-27 May 2008

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SLIDE 2

The information presented herein contains predictions, estimates and

  • ther forward looking statements that are subject to risk factors that are

associated with the oil and gas business. Although the company believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those included in the forward-looking statements include the timing and extent of changes in commodity prices for oil and gas, the need to develop and replace reserves, environmental risks, drilling and operating risks, risks related to exploration and development, uncertainties about the estimates of reserves, competition, government regulation and the ability of the company to meet its stated business goals. All references to dollars in this presentation are to US currency, unless

  • therwise stated.

Forward Statement Disclaimer

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SLIDE 3

Petsec Energy

  • Operations in Gulf of Mexico / Gulf Coast, USA and Beibu Gulf, CHINA
  • USA
  • Estimated 2008 Production:

~15 Bcfe gas

  • Estimated 2008 cashflow:

~US$85 million ($5.70/Mcfe margin)

  • Estimated reserves:

~48 Bcfe gas (proved & probable,1/1/08)

  • CHINA
  • Estimated 2P reserves:

14-16.5 MMbbl oil (7-8 MMbbl if CNOOC back-in for 51%)

  • Developing:

7-9 MMbbl oil

(3.4-4.5 MMbbl if CNOOC back-in for 51%)

  • Production:

Early 2010

A growth exploration & production company

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SLIDE 4

Location of Operations

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SLIDE 5

Market Information

  • Australian Stock Exchange listed:

Symbol: PSA

  • Shares on Issue

154.2 million

  • Share Price

A$1.18 per share (22 May 2008)

  • 52 week high

A$1.97 per share

  • 104 week high

A$3.46 per share

  • Market capitalisation

A$182 million

  • Enterprise value

A$232 million

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SLIDE 6

Market Capitalisation A$182 million Share Price A$1.18 (22/05/08)

M ay-05 Aug-05 Nov-05 Feb-06 M ay-06 Aug-06 Nov-06 Feb-07 M ay-07 Aug-07 Nov-07 Feb-08 M ay-08 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 A$

Main Pass 19 #1 success Main Pass 19 #2&3 wells success Hurricanes Katrina & Rita Vermilion production resumes 6.12 South Oil Discovery Main Pass 19 commences Main Pass 19 G-7, G-4, G-5 success Main Pass 18 G-6 success Vermilion 257 Dry Hole Placement 15 million shares @ $2 Mobile Bay 6 Successes Placement 11.5 million shares @ $2.40

ASX Symbol: PSA OTC Symbol: PSJEY.PK 1 ADR: 5 Ordinary Shares

Issued shares: 154.2 million

52 week High $1.97 Low $0.64

Mobile Bay Production commences US Acquisition Settles Drilling Success Moonshine

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SLIDE 7

Senior Management

Terry Fern – Chairman & CEO Over 30 years in international petroleum & minerals exploration, development & financing

  • Bachelor of Science degree
  • Exploration Geophysics & Natural Resource Investment experience
  • Director of OceanaGold Corporation

Ross Keogh – President 25 years experience in the oil & gas industry Bachelor of Economics degree Michael Radabaugh – Vice President of Business Development and Planning 25+ years experience in petroleum exploration and production Bachelor of Science in Civil Engineering (Team of 30 Oil and Gas Staff at offices in Lafayette, LA & Houston, TX) Fiona Robertson – CFO Over 25 yrs experience in resource finance & banking Craig Jones – GM Corporate & Company Secretary Over 25 yrs corporate finance experience, FCPA

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SLIDE 8

Shareholder Base

PSA Directors & Mgt, 17% Australian Institutions, 12% International Institutions, 13% Brokers & Custodians, 5% Retail, 53% PSA Directors & Mgt Australian Institutions International Institutions Brokers & Custodians Retail

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SLIDE 9

Objectives and Strategy

Objectives:

  • Consistent Growth in Profitable Reserves
  • Build a significant mid-tier E&P company
  • Funded principally by internally generated cashflow

Strategy: US Gulf of Mexico / Gulf Coast - Gas, water depths up to 1200 ft

  • Exploration: Low to moderate risk, high profit margin, high success rate, rapid

development, early return of capital

  • Acquisition:

Producing reserves with exploration potential China / South East Asia - Oil

  • Exploration: Moderate risk close to existing reserves, reasonable infrastructure
  • Acquisition:

Developed & undeveloped reserves, large licence areas with high exploration potential

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SLIDE 10

Financial Performance 2003 – 2007

8.1 8.2

2 4 6 8 10

2003 2004 2005 2006 2007

Production Bcfe

59.2 64 15 30 45 60 75 2003 2004 2005 2006 2007

Net Revenue US$ Million 45.3 46 10 20 30 40 50 2003 2004 2005 2006 2007

EBITDAX US$ Million

2007 4 Yr CAGR

  • Production

8.1 Bcfe 16%

  • Revenue

US$64 million 26%

  • EBITDAX

US$46 million 23%

  • Underlying

Earnings US$17 million

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SLIDE 11

Operating Margins

/Mcf 2007

  • Gas Price Received:

US$7.93

  • Total Operating Cost:

US$2.28

  • Cash Operating Margins:

US$5.69 Margin = 72% March 2008 Quarter

  • Gas Price Received:

US$8.77

  • Total Operating Costs:

US$1.43

  • Cash Operating Margins:

US$7.34 Margin = 84%

US$7.93 0.00 2.00 4.00 6.00 8.00 2003 2004 2005 2006 2007

Average Gas Equivalent Price Received per Mcfe

Total Operating Expense (LOE & GG&A) per Mcfe

US$0.87 US$2.22 US$1.35 0.00 0.50 1.00 1.50 2.00 2.50 3.00 2003 2004 2005 2006 2007

US$/Mcfe LOE GG&A

Cash Operating Margins

US$5.75 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 2003 2004 2005 2006 2007

US$/Mcfe

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SLIDE 12

2003 – 2007 CAPEX, F&D Costs

  • EBITDAX

US$170 million

  • Exploration

US$98 million

  • Development US$86 million
  • Acquisitions

US$121 million

  • F&D 3yr average $4.10/Mcfe

Exploration, Development & Acquisition Expenditure

US$22m US$20m US$104m 20 40 60 80 100 120 140 160 2003 2004 2005 2006 2007 US$ Million

Exploration Development Acquisition

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 2003 2004 2005 2006 2007

US$/Mcfe

Finding & Development Costs 3 yr Average on Petsec 2P Reserves

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SLIDE 13

Consistent Growth of Reserves 2002 – 2007 CAGR 31%

  • USA

25 successes from 32 drilled - 78% success

  • CHINA

3 (+2 sidetracks) successes from 5 wells drilled - 60% success

  • 2007 Year End Reserves 69.6 Bcfe**

48.1 Bcfe Gas, USA 3.5 Mmbbl Oil, China** (assuming CNOOC back-in for 51%)

  • Reserve additions of 103 Bcfe **

** excludes 3.5-4.5MMbbl of recoverable oil discoveries from 6.12 upside, 12.8 East, 12.2,12.3 in China, not yet formally booked to reserves. (Assuming CNOOC back-in 51% interest)

Wells Drilled/Successful

2 4 6 8 10 12

2002 2003 2004 2005 2006 2007 Number of wells

Successful Unsuccessful

Proved and Probable Reserves - Year End 69.6 20 40 60 80 2002 2003 2004 2005 2006 2007

10 20 30 40 50 60 70 80 2002 2003 2004 2005 2006 2007 Bcfe

Proved and Probable Reserves*

Bcfe

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SLIDE 14

US Exploration Potential

Portfolio of

  • 61 Gulf of Mexico Leases (~300,000 acres)

18 held by production 39 undrilled leases

  • 6 Onshore Areas & 4 Onshore fields
  • >40 Prospects/Leads
  • Reserves potential ~300 Bcfe net to Petsec
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SLIDE 15

Petsec Energy Value

Range of Broker values

– US Reserves A$1.40 - A$1.57 (A$216 - A$242 million) – China Reserves A$0.32 - A$0.73 (A$ 49 - A$112 million) – Exploration / Other A$0.03 - A$1.32 (A$ 4 - A$203 million) – Less Net Debt A$0.50 - A$0.55 (A$ 76 - A$ 84 million) Total A$1.25 - A$3.07 (A$193 - A$473 million) Average of A$2.01

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SLIDE 16

USA - Gulf of Mexico Interests

61 Offshore Leases, 6 Onshore Areas Reserves 48 Bcfe (1/1/08), Prospect/Lead Inventory ~300 Bcfe

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SLIDE 17

Recent Lease Sale Results

  • Emphasis on larger prospects
  • OCS Sale 205 – October 2007

– 5 Blocks won and awarded

  • OCS Sale 206 – March 2008

– 3 Blocks won, two awarded to date

Lead Net Potential Bcfe Type Eugene Island 394 (54%) 8 - 12 Stratagraphic Amplitudes in 388’ Water Depth Vioska Knoll 27/Mobile 955 (35%) 2 - 5 Small Shallow Amplitudes near existing Mobile Area Production Vermilion 353 (54%) 10 - 15 Amplitude Play in 230’ Water Depth Green Canyon 21 (54%) 20 - 30 Oil Play offsetting nearby production in 771’ Water Depth East Cameron 102 (35%) 8 - 12 Amplitudes in Shallow Water West Cameron 631/636 (100) 30 - 40 Larger deeper play in 330’ Water Depth

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SLIDE 18

US Exploration Potential

Portfolio of

  • 61 Gulf of Mexico Leases (~300,000 acres)

18 held by production 39 undrilled leases

  • 4 Onshore fields
  • >40 Prospects/Leads
  • Reserves potential ~300 Bcfe net to Petsec
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SLIDE 19

2008 Production

  • Estimated 2008 Production: ~15 Bcfe (up from 8.1 Bcfe in 2007)
  • Estimated 2008 operating cashflow: ~US$85 million @ US$5.70/Mcfe margin
  • Producing fields - Vermilion 258/244
  • Main Pass 18/19/20/270
  • Mobile Bay 873/950/951/952/993/994
  • Chandeleur 31/32
  • Four Onshore Fields

Vermilion 258 Main Pass 19 Mobile Bay 952A

NEW ORLEANS NEW ORLEANS

EI/SS Area EI 110 VR / SMI Area VR 272/SMI 102 VR 171/SMI 15 MP / CA Area MP 20 CA 31 MP 270 Onshore Humphreys South Sunrise South Thornwell Lapeyrouse

NEW ORLEANS NEW ORLEANS

Onshore Humphreys South Sunrise South Thornwell Lapeyrouse

Main Pass 20 Main Pass 270 Chandeleur 31 4 Onshore Fields

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SLIDE 20

Production Profile

Production Profile - from existing Reserves

2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2003 2004 2005 2006 2007 2008 2009 2010 M M cfe

Ship Shoal 184/191 West Cameron 343/352 Vermilion 258 Main Pass 19/18 Mobile Bay Area Main Pass 270 Chandeleur 31/31 Main Pass 20 Humphries Lapeyrouse South Sunrise South Thornwell China - 22/12 Wei 6-12S China - 22/12 Wei 12-8W from Exploration - assuming capital/ success

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SLIDE 21

US Gas Prices

  • US Gas prices in an upward trend during 1st Half 2008
  • Seasonal cold weather and lower storage inventories
  • Spot price US$11.65 (23 May)
  • 12, 24 & 36 month forward strips all above US$11.00/Mcf

Natural Gas Prices US$/MMBtu (Nymex: Near Month Henry Hub) (1 MMBtu = ~1 Mcf)

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SLIDE 22

Hedging

8.44 9,371,100 2,916,950 Total swaps Total puts (*not expected to be exercised) 17% 9.12 1,057,200 Swaps 2010 8% 6.33 844,000 Puts * 41% 8.46 4,335,100 Swaps 2009 27% 6.37 2,072,950 Puts * 30% 8.57 2,269,800 Swaps Jul-Dec 2008 73% 7.81 1,709,000 Swaps May & June 2008

% of forecast production

(2)

Weighted average USD Price

(1)

Total MMBtu volume Hedge type Production period

(1)Put floor price shown net of premium. (2)Based on forecast production from currently proved producing properties.

As at May 2008

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SLIDE 23

Budget 2008

  • Production

15 Bcfe

  • Operating cashflow

~US$85 million

  • Drilling Planned

7-10 wells

  • Committed Development

US$9 million

  • Exploration Budget

US$30 million

  • Debt Repayment

US$40-50 million

  • Cash (1 Jan 08)

US$27 million

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SLIDE 24

2008 Gulf of Mexico Exploration

West Cameron 379 8 Bcfe target (P&A uneconomic) High Island 252 15 Bcfe Viosca Knoll 740 13 MMbbl

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SLIDE 25

Vioska Knoll 740 - 10,100’ Sand

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SLIDE 26

Vioska Knoll 740 - 10,800’ Sand

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SLIDE 27

Gulf Coast - Moonshine Exploration

  • West bank of Mississippi River,

50 miles west of New Orleans

  • 94 square mile area, only 25%

cover with 2D seismic, no previous 3D seismic

  • Known productive area

340 Bcfe gas, 7.3 MMbbl oil

  • 3D seismic programme

completed in August 2005

  • First well April 2007
  • Second well Feb 2008 - Dickel

gas/condensate/discovery

  • Third well to spud June 2008

Crown Royal

36 - 37.5% NRI Petsec Operated

* *

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SLIDE 28

Moonshine Status

  • Seismic reprocessed
  • AVO analysis completed
  • Prospects remapped

Prospect Net Potential Bcfe Status George Dickel 1 - 2 Well Drilled and Completed. Waiting

  • n Facilities

Crown Royal 5 - 7 Contracting Rig. Well targeting multiple sands T’ Clet 8 - 12 Finalizing well design to optimize multiple targets. Mooney 2 - 5 Low risk opportunity Commander 8 - 12 Echols Sand prospect dependent on Echols Sand success in Crown Royal.

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SLIDE 29

Moonshine – Dickel Prospect

  • Drilled Feb/March 2008

gas/condensate discovery

  • Restricted production test

recorded 3 MMcfd gas and 70 Bblpd

  • Estimated net reserves 1-2 Bcfe
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SLIDE 30

Moonshine Drilling

  • Bowie Lumber #1 (Skywagon Prospect) well (Apr 07)

encountered tight gas and not completed

  • Well suspended, seismic reprocessed
  • Crown Royal & Commander prospects defined
  • Crown Royal – drilling June 2008

5-7 Bcfe net to Petsec

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SLIDE 31

A A’

Terrebonne Parish – Hollywood AVO Prospects

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SLIDE 32

A A’

Terrebonne Parish – Triple Play prospect

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SLIDE 33

Triple Play cross section

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SLIDE 34

Triple Play

  • Triple Play Current Status

− Drilled Q3 2007 − Well temporarily abandoned ready for re-entry − Petsec has been named operator − Confirmed well did not reach H2 Sand Target − Re-entry AFE prepared and permitting underway − Planned spud in June − 20-25 Bcfe gross potential 10-12 Bcfe net to Petsec

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SLIDE 35

CHINA Beibu Gulf, Block 22/12

  • Six oil field discoveries:

MMbbl Oil Oil in Place: 300-400 Recoverable oil: 56-66 Petsec Energy oil: 14-16.5

  • Development 2008/2009

6-12/6-12 South/12-8 West: 29-37 Petsec Energy: 7-9

(Should CNOOC require 51% 3.5-4.5)

  • Exploration 2008

Wells: 6.12W / 6.12E / 12.2.2

  • Exploration Potential

~100 Mbbls

25% working interest *(12.25% NRI, if CNOOC backs in for 51%)

Petsec Energy 25% working interest

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SLIDE 36

CHINA 6-12 South Oil Discovery

  • 270 feet net oil, 50 feet net gas
  • Discovery well and 2 side-tracks
  • Oil extends downdip beyond structural closure
  • Appraisal flow-test 5,750 boe/day
  • Estimated reserves 6-12/6-12 South oil fields:

19-27 MMbbl

  • Petsec net oil: 4.7-6.7 MMbbl

(2.3-3.3 MMbbl if CNOOC back-in 51%)

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SLIDE 37

CHINA 6-12/6-12 South/12-8 West Oil Development

Development

  • Reserves 29-37 MMbbl oil
  • FPSO - production capacity 25,000 - 30,000 bopd
  • 2 well head platforms
  • Preliminary estimated capex US$200-250 million gross
  • Capacity to tie in 12-8E / 12-2 / 12-3 oil fields –

estimated further 27-29 MMbbl recoverable oil

Timing

  • Feasibility Study: 1st Quarter 2007
  • Overall Development Plan: mid 2008
  • Final Investment Decision: 3rd Quarter 2008
  • Development commencing: 2nd Half 2008
  • Production early 2010
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SLIDE 38

CHINA 6-12 South WHP/FPSO & 12-8 West WHP tie-back

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SLIDE 39

2008 Exploration and Development

USA

(Bcfe) Onshore Louisiana Exploration 3-4 14-33 Gulf of Mexico Exploration 2-3 18-30 GOM MP19 Development – Oil Storage

China

(MMbbl) 6.12/12.8W FID/Development 7-9* Exploration 2-3 2.7-4.9

Wells Net Potential Reserves 2007 2008

FEASIBILITY / FID DRILLING DEVELOPMENT PRODUCTION

  • CHINA:

Exploration: 2-3 wells to test 2.7-4.9 MMbbl net to Petsec Energy Development: 6.12 South Oil Field Overall Development Plan / FID

  • US:

Exploration: 3-4 wells onshore Louisiana (test 14-33 Bcfe net)

2-3 Gulf of Mexico (test 18-30 Bcfe net)

Development: Main Pass 19 oil storage platform and facilities

DRILLING DRILLING DRILLING DEVELOP

*3.5-4.5 if CNOOC back-in 51%

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SLIDE 40

Broker Valuation

Share Price A$1.18 (May 22, 2008) Broker Valuations:

  • Austock

BUY valuation A$1.25 (May 08)

  • Wilson HTM

BUY valuation A$1.30 (Apr 08)

  • Fosters

BUY valuation A$1.89 (Feb 08)

  • Tolhurst

HOLD valuation A$2.19 (Apr 08)

  • BBY

BUY valuation A$2.37 (Mar 08)

  • Commsec

BUY valuation A$3.07 (Feb 08)

  • Opportunity to buy at deep discount to broker

valuation

Share Price vs Broker Values 1 2 3 4

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SLIDE 41

Broker Valuations – segment values

  • Coverage by 6 brokers
  • Range of values

– US Reserves A$1.40 - A$1.57 (A$216 - A$242m) – China Reserves A$0.32 - A$0.73 (A$ 49 - A$112m) – Exploration / Other A$0.03 - A$1.32 (A$ 4 - A$203m) – Less Net Debt A$0.50 - A$0.55 (A$ 76 - A$ 84m) Total A$1.25 - A$3.07 (A$193 - A$473m) Average of A$2.01

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SLIDE 42

Impact of higher US gas prices

US Reserves (48.1 Bcfe at Dec 07) A$ million A$ per share

  • Broker Value range (6)

$216 –242m $1.40 -$1.57

  • Independent Valuation*

$234m $1.52 per share PV10 at US$6.50/Mcf gas price

  • Value (PV10) at US$8.00 gas

$298m $1.94 /share (+42c)

  • Value (PV10) at US$10.00 gas

$385m $2.50 /share (+99c) Current forward strip prices @ 22 May 2008: 12 mths US$12.00/Mcfe 24 mths US$11.48/Mcfe 36 mths US$11.15/Mcfe

  • Impact of higher gas prices not yet reflected in share price/ broker valuations

At May 2007, approximately 9.3 Bcfe of future production has been hedged using swaps at average price of US$8.44/Mcfe – refer earlier hedging slide) Above analysis is for US assets only excludes China assets & prospect inventory & net debt * Performed by Independent Petroleum Engineers as part of year-end Reserves Assessment

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SLIDE 43

Why invest in Petsec Energy?

  • Experienced management team with a track record of successful

exploration, development, production & acquisitions

  • Consistent growth in reserves/production/cash flow
  • High profit margin reserves, strong cashflow
  • Prospect inventory and acquisition capacity provide basis for

continuing growth

  • China Oil development – value from development imminent
  • Opportunity to buy Petsec Energy shares at current deep

discount to broker valuation