For personal use only Petsec Energy Ltd (ASX: PSA / OTC ADR: PSJEY) - - PDF document

A A N N N N O O U U N N C C E E M M E E N N T T

PETSEC ENERGY LTD

ACN 000 602 700

22 May 2013

Petsec Energy Ltd 2013 AGM Presentation

Petsec Energy Ltd (ASX: PSA / OTC ADR: PSJEY) Attached is a copy of the presentation to be delivered today by Petsec Energy Ltd’s Chairman and Managing Director Mr. Terry Fern at the 2013 Annual General Meeting

• f members of Petsec Energy Ltd, held at the Museum of Sydney, corner Bridge and

Phillip Streets, Sydney. Key Highlights

• Marathon gas/condensate Field estimated reserves now in excess of 200 Bcfe.
• Petsec Energy net daily production from the Company’s fields in the Gulf of

Mexico and Gulf Coast, USA, increased from an average of 5.7 MMcfepd for the first nine months of 2012 year to 12 MMcfepd by end 2012. Current production is approximately 13.5 MMcfepd.

• 2013 full year production and revenues expected to be in excess of 3.0 Bcfe and

US$12 million.

• Net reserves (2P) at 31 December 2012 of 11.1 Bcfe; PV10 US$31.8 million,

expected to increase from Marathon performance through this year.

• Cash at 31 March 2013: US$25.9 million.
• Shale Oil: JV with shale experts established, 3 major shale basin studies
• completed. , Leases acquired in Alberta, Canada, where one vertical science well

and one horizontal well drilled and hydraulically fractured for production. Rock quality and oil potential has been determined. Completion quality now to be determined.

• Gulf of Mexico: Preparations to drill high impact prospects in early 2014.

A copy of the presentation will also be made available on the Company’s website, www.petsec.com.au. For further information, please contact: Paul Gahdmar Company Secretary & Group Financial Controller Petsec Energy Ltd Tel: 612 9247 4605 Fax: 612 9251 2410

Petsec Energy Ltd is an independent oil and gas exploration and production company listed on the Australian Stock Exchange. It has operations in the shallow waters of the Gulf of Mexico and state waters

• f the Louisiana Gulf Coast region of the USA, and exploration activities in Shale Oil projects in Canada

and the USA.

Level 13, Gold Fields House, 1 Alfred Street, Sydney NSW 2000, Australia PO Box R204, Royal Exchange NSW 1225, Australia Telephone (61 2) 9247 4605 Facsimile (61 2) 9251 2410 Company information is available on: petsec.com.au

For personal use only

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

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Forward Looking Statement Disclaimer

This presentation contains predictions, estimates and other forward looking statements that are subject to risk factors associated with the

• il and gas industry. Although the company believes that the

expectations reflected in these statements are reasonable, it can give no assurance that its expectations and goals will be achieved. Important factors that could cause actual results to differ materially from those included in the forward looking statements include, but are not limited to, commodity prices for oil and gas, currency fluctuations, the need to develop and replace reserves, environmental risks, drilling and operating risks, risks related to exploration and development, uncertainties about reserve estimates, competition, loss of market, government regulation, economic and financial conditions in various countries, political risks, project delay or advancement, and approvals and cost estimates. All references to dollars in this presentation are to US currency, unless

• therwise stated.

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

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CONTENTS

 Petsec Energy Corporate Profile  Petsec Energy Oil & Gas Assets

• Conventional: Production/Exploration
• Unconventional: Shale Oil – Exploration

 2012: Key Achievements

• Operations
• Financials

 Strategy for Growth: 2011-2013 Plan

• Progress of 2011 - 2013 Plan
• Strategy for Growth 2013 - 2014

 2013 Exploration & Development Programme

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

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CORPORATE PROFILE

Petsec Energy is an independent oil and gas exploration and production company operating in the shallow waters of the Gulf of Mexico (“GoM”) and Gulf Coast region of the USA for conventional

• il and gas, and in Canada and the USA for Shale Oil.

 Conventional: Gas/Condensate; Oil

• Operated in USA Gulf of Mexico since 1991
• Drilling success: 98 wells / 77 successful / 79% success
• Discovered reserves: > 500 Bcfe
• Producing Reserves (2P) 31.12.2012: 5 fields/ 11.1 Bcfe/ PV10 US$31.8 million.
• Exploration prospect inventory: 10 large, deep prospects, mapped potential 400 - 750 Bcfe.
• 2013 estimated production: > 3 Bcfe from existing producing fields
• 2010 – Refocused exploration to State waters Gulf Coast and onshore due to GoM moratorium
• 2010/11/12 – Major discovery, drilling and development of Marathon Field - 200 Bcfe+
• 2012 – Significant growth in oil and gas production – 5.7 MMcfepd to 12 MMcfepd.
• 2013 – Further development drilling and projected growth in production.

 Unconventional: Shale Oil

• 2011 – Commenced studies & technical evaluation of exploratory shale oil projects USA & Canada
• 2012 – Continued studies and entered into 2 JVs in Canada
• 2012 – Canada: Acquired leases - net 6,434 acres. Drilled 2 science wells; 1 vertical and 1 horizontal
• 2012/2013 – Commenced extensive testing of wells; testing is ongoing

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

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Capital Structure & Share Price Performance

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Capital Structure (20 May 2013)

Market Listing ASX: PSA, OTC ADR: PSJEY Shares/Options on issue 237.7 million / 0.9 million Market capitalisation A$33.3 million Cash at 31 Mar 2013 US$25.9 million Oil & gas reserves (2P) – 31.12.12 11.1 Bcfe PV10 reserves (2P) – 31.12.12 US$31.8 million

PSA Share Price vs. S&P/ASX200 Energy Index (XEJ)

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Board of Directors

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Terry Fern, Chairman & CEO

• Over 35 years experience in petroleum & minerals exploration, development

and financing

• Bachelor of Science Degree, University of Sydney

David Mortimer AO, Non-Executive Director

• Over 35 years experience in corporate finance
• Bachelor of Economics Degree (First Class Honours), University of Sydney
• Ex CEO of TNT Limited Group and Chairman of Leighton Holdings. Current

Chairman of Australia Post Michael Harvey, Non-Executive Director

• Over 30 years experience in the establishment and successful growth of E&P

companies in South East Asia and the Gulf of Mexico, USA

• Bachelor of Business Administration in Finance Degree, Texas A&M
• Ex Shell, Huffington, CEO Gryphon Exploration Inc. Current Chairman and CEO
• f Stonegate Production Company, which was an early entrant to the Eagle Ford

shale oil play in Texas.

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Management Team

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Ross Keogh President of Petsec Energy Inc. & Group Chief Financial Officer

• Over 30 years of experience in the oil & gas industry
• Bachelor of Economics Degree, Macquarie University
• Ex Total Oil Company & Bridge Oil Limited

Ron Krenzke Executive Vice President Exploration of Petsec Energy Inc.

• Over 35 years of experience in the oil & gas industry
• Bachelor of Science Degree, Texas A&M University
• Ex Mobil, Amerada Hess, VP Exploration Gryphon Exploration Company.

Paul Gahdmar Company Secretary & Group Financial Controller

• Over 20 years of experience in the oil & gas industry
• Master of Business and Technology Degree, University of New South Wales;

Diploma in Investor Relations, Australasian Investor Relations Association

• Ex Australian Oil and Gas Corporation

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PETSEC OIL & GAS ASSETS Conventional: GoM & Gulf Coast

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

PSA: 5 oil / gas fields; 2P Reserves: 11.1 Bcfe (31.12.12); 10 exploration prospects 400-750 Bcfe mapped potential.

• Prolific oil and gas producing region
• 1,094 fields / 34.5 billion barrels / 437 trillion cubic feet gas (Source: BOEMRE)
• High industry drilling success – 53% successful; 41,892 wells drilled with 22,322

productive

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PETSEC OIL & GAS ASSETS Conventional: GoM & Gulf Coast

 Five Producing fields:

• Net reserves (2P):

11.1 Bcfe (31/12/12) PV10: US$31.8m

• Net daily production:

~ 13 MMcf gas & 80 bbls oil per day

• 2013 production (net): > 3.0 Bcfe Revenue > US$12m

 GoM prospect inventory:

• 10 mapped prospects with gross potential: 400 to 750 Bcfe
• Individual gross target sizes: 20 – 200 Bcfe

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Main Pass 270 Main Pass 18/19 Chandeleur 31/32 Marathon

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PETSEC OIL & GAS ASSETS Marathon Field

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

 Petsec share: WI 8%, NRI 5.84%  Discovered Oct 2010, Atchafalaya Bay, Louisiana  8 feet water depth; > 18,000 feet drill depth  Four wells drilled: 1 in 2010, 1 in 2011, 2 in 2012  Production facilities 2012/2013 to deliver capacity of ~ 200 MMcfpd  Current field production: > 150 MMcfpd + 550 bopd  5th well spud May 2013  In-house estimated reserves (2P): > 200 Bcfe (PSA share: >12 Bcfe)

Major Gas/Condensate Discovery

Marathon rig & production facilities

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PETSEC OIL & GAS ASSETS Marathon Field

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Atchafalaya Bay Leases

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PETSEC OIL & GAS ASSETS Marathon Field

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Atchafalaya Bay

Gas Gas Gas Gas

 Discovered 2010  Petsec’s largest producing field  4 separate proven gas and condensate reservoirs identified below 17,000’ subsea drilling depths  4 wells drilled and producing at gross rates > 150 MMcfpd + 550 bopd  5th well drilling and expected to be producing in 4th quarter 2013  Reserves potential > 200 Bcfe

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PETSEC OIL & GAS ASSETS Main Pass 270

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

 Petsec: 22.5% WI, 18.75% NRI.  Discovered 2001  3 producing wells  215 feet water depth  ~ 11,500 feet reservoir depth  Current production: > 11 MMcfpd + 250 bopd  Field reserves 31.12.2012: > 14.3 Bcf + 373 Mbbl

Gulf of Mexico

Main Pass 270 & Hercules jack-up rig

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PETSEC OIL & GAS ASSETS Main Pass 270

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Main Pass 270 Field – Logs and amplitude outlines

3D seismic amplitude outlines

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Gulf of Mexico Exploration Prospects

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

 Mapped potential: 400 to 750 Bcfe

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Gulf of Mexico Exploration Prospects

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Bonanza Prospects - Breton Sound Blocks 39 & 42  Objectives are Tex “W” B sands adjacent to the Breton Sound Block 41 field which has produced 30 Bcfg + 900 Mbc  3 identified structural fault traps on

• ur leased acreage

 Combined P-mean reserves potential

• f 3 prospects is 41 Bcfg + 830 Mbc

 Combined P-10 upside reserves potential is 84 bcfg + 1.7 MMbc  Petsec owns a 56.25% WI in Breton Sound Block 39 and a 37.5% interest in Breton Sound Block 42. Petsec is the operator of BS block 39.  Leases expire in 2015

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Gulf of Mexico Exploration Prospects

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Gazelle Prospect – Main Pass 132

 Identified seismic amplitudes in a structural fault trap  Gross P-mean reserves potential of 28 Bcfg + 560 Mbc  Gross P-10 upside reserves potential of 61 bcf + 1.2 MMbc  Petsec owns a 75% working interest and is the operator of the prospect  Lease expires in 2015

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Gulf of Mexico Exploration Prospects

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Hummer Prospect – Main Pass Blocks  Identified seismic amplitudes in a structural fault trap  Gross P-mean reserves potential of 59 bcfg + 1.2 MMbc  Gross P-10 upside reserves potential of 183 Bcf + 3.7 MMbc  Petsec operates 2 leases and owns a 37.5% WI in each block  Leases expire in 2015

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Gulf of Mexico Exploration Prospects

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Ship Shoal Block 36  Objectives are Lower Big Hum and Cib Op sands  Identified seismic amplitudes in a structural fault trap at depths of 18,000’+  Gross P-mean reserves potential

• f 63 Bcfg + 1.9 MMbc

 Gross P-10 upside reserves potential of 121 Bcf + 3.7 MMbc  Petsec owns a 75% working interest and is the operator  Lease expires in 2015

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Gulf of Mexico Exploration Prospects

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Ship Shoal Block 74  Objectives are Lower Big Hum and Cib Op sands  Identified seismic amplitudes in a very large structural closure at depths of 17,000’+  Gross P-mean reserves potential

• f 78 Bcfg + 2.7 MMbc

 Gross P-10 upside reserves potential of 166 Bcf + 5.8 MMbc  Petsec owns a 75% working interest and is the operator  Lease expires in 2015

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North American Shale Plays Areas Studied by Petsec

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Western Canada Sedimentary Basin San Joaquin Basin Permian Basin Fort Worth Basin

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North American Shale Plays Areas Studied by Petsec

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Western Canada Sedimentary Basin



The project area lies on the western border of the Cretaceous Interior Seaway



The basin has produced over 13.7 billion barrels of oil and 47 trillion cubic feet of gas since



Petsec project area covers over 3 MM acres



Frequent periods of bottom water anoxia caused enhanced preservation of kerogen



Effects of clastic input from the Cordillera to the west are visible in the mineralogy

For personal use only

PETSEC OIL & GAS ASSETS Unconventional: Alberta, Canada

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Western Canada Sedimentary Basin

Key Considerations

 Located within Alberta oil and gas infrastructure

corridor

 Demonstrated oil productivity from hundreds of

vertical wells

 Light gravity oil  Multiple business entries via lease purchase and

farm-ins

 Predominantly year round access

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PETSEC OIL & GAS ASSETS Unconventional: Alberta, Canada

 Participation in 2 joint venture projects located in Western Canadian Sedimentary Basin (“WCSB”) with experienced shale oil partners  Partners are private equity companies funded between US$200 and US$ 400 million  The WCSB accounts for 90% of the oil and gas produced in Canada

• Production to date has exceeded 13.7

billion barrels of oil and 47 trillion cubic feet of natural gas  Joint venture project areas cover 26,080 gross lease acres  Two wells drilled: 1 vertical well and 1 horizontal  Net lease position of 6,434 acres holds potential for 10 to 15 million barrels of oil recoverable

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Alberta, Canada – Unconventional Shale Oil Projects

Horizontal drilling for shale oil, Canada

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2012 KEY ACHIEVEMENTS

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

 Marathon: Production increase from 10 to current 150

• MMcfepd. Reserves increase to > 200Bcfe

 Main Pass 270 A-3 well: Restored production to 7 MMcfepd  Petsec production: Increased from 5.7 MMcfepd in first 3

quarters to 12 MMcfepd in 4th quarter. Current production ~ 13.5 MMcfepd.

 Shale Oil:

• Completed 3 major shale basin studies; Canada and US
• Acquired leases in Alberta Canada, drilled one vertical

and one horizontal science wells

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Natural Gas Prices Stabilise

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

 Natural gas prices rose from a low of US$1.80/Mcf in April 2012 to US$3.80/Mcf at year end  Refocus of industry to oil and reduction in shale gas drilling has reduced level of oversupply  NYMEX 1 & 3 year forward strip prices at 13 May 13 – US $4.10/MMBtu & US $4.20/MMBtu  U.S. working gas in storage at 10 May 13 was down 26.1% and 4.1%, respectively on the year over year and 5-Year average (EIA)

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2012 KEY ACHIEVEMENTS

Marathon - Increased Production & Reserves

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

 2 wells drilled in 2012  Expanded facilities to accommodate additional wells and production growth  2012 field production (4 wells) increased from 10 MMcfpd to current > 150 MMcfpd + 550 bopd  5th well spud May 2013  Additional facilities expansion in 2013 to accommodate ~ 200 MMcfpd  In-house estimated reserves (2P) increased from 150-200Bcfe to >200 Bcfe (PSA share: ~ 12 Bcfe)

Marathon Field – Major Gas/Condensate Discovery

Marathon rig & production facilities

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2012 KEY ACHIEVEMENTS MP270 – Increased Production

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

 A-3 well gravel pack failed in April 2011  A-3 produced at 6 – 7 MMcfepd prior to failure  Major work-over required a large jack- up rig to remove and replace the damaged gravel pack  Work-over commenced in Sep 2012  Production restored to prior rates in Nov 2012: ~ 7 MMcfepd  Current field production: > 11 MMcfpd + 250 bopd

Gulf of Mexico – Main Pass 270 A-3 Well

Main Pass 270 & Hercules jack-up rig

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2012 OPERATIONS Conventional: GoM

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

 Net Reserves (Ryder Scott 31/12/12)

• 11.1 Bcfe; PV10 US$31.8m

 2012 Production: 2.4 Bcfe

• Marathon gas/condensate field

drilling (2 wells) and new production facilities increases rate from 10 MMcfepd to > 120 MMcfepd. Four wells currently producing; 5th well drilling

• Main Pass 270 A-3 well work-over

restored production to previous rate

• f ~ 7 MMcfepd
• Main Pass 18/19 well recompletions

maintained production levels

• Production Doubled. Petsec net

daily production rates increased from 5.7 MMcfepd to 12 MMcfepd by end 2012  Abandonment

• South Sunrise and Mobile Bay fields

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2012 OPERATIONS Unconventional: Shale Oil

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

 Continued evaluation of new shale oil opportunities in various North American basins  Established additional relationships with companies with shale oil expertise  Entered into two joint venture areas in Alberta, Canada in area of high oil potential ( > 30 MMbbl/section), in good brittle rocks with past vertical production.  Acquired drilling options on 26,080 gross acres (6,434 net acres)  Drilled 1 vertical science well and 1 horizontal well  Various fracturing techniques are being applied to each of the wells to determine capacity for commercial development  Testing in each of the wells is continuing  Evaluation and execution of Petsec’s shale oil initiative has taken longer than expected because of the extensive laboratory work and well testing necessary to help avoid costly mistakes in the early horizontal drilling completions in proof of concept in an emerging play. Petsec currently has limited capital to expose to shale oil and thus is cautious

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North American Shale Plays Areas Studied by Petsec

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Western Canada Sedimentary Basin San Joaquin Basin Permian Basin Fort Worth Basin

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North American Shale Plays Areas Studied by Petsec

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Fort Worth Basin - Texas



NuTech generated opportunity



NuTech petrophysical analyses - 159 wells in 11 counties



NuLook - porosity, permeability, Total Organic Carbon (TOC), lithology, fractures, clay %, pay identification, hydrocarbon and water saturations, Oil In Place (OIP), statistics



NuStim – geo-mechanical logs for brittleness and fracturing propagation



NuView – stochastic mapping of key reservoir attributes



Stock Tank Oil In Place (OIP): up to 40 MMbo/section

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PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Fort Worth Basin - Texas



Early stage oil resource play



Twelve month extensive study of area covering 5 million acres conducted by NuTech



Shallow, rich, oil-prone rocks which have already produced

• ver 300 million barrels of oil



Extensive technical work has identified a number of “sweet spot” areas with the greatest potential



High potential area of up to 500,000 acres within a trend of > 5 MM acres



Low lease costs ($100 - $300/acre)



STATUS: Seeking JV partners

North American Shale Plays Areas Studied by Petsec

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North American Shale Plays Areas Studied by Petsec

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Permian Basin – West Texas/New Mexico



Includes several sub-basins: Delaware, Midland, Val Verde plus intra-basin platform areas



The area has produced over 29 billion barrels of oil plus 75 trillion cubic feet of gas



Large geographic extent



Oil rich, stacked reservoirs and source rock intervals



Extensive producing infrastructure

For personal use only

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

Permian Basin – West Texas/New Mexico



Source and reservoir rocks range in age from Ordovician through Permian



Some of the major conventional producing intervals include the following: Ellenberger, Fusselman, Atoka, Strawn, Canyon, Cisco, Wolfcamp, Sprayberry, San Andres



Some of the developing unconventional plays include: Mississippian Lime, Woodford shale, Cline, Bone Springs, Wolfberry, Wolfcamp



STATUS: Numerous plays and projects are being reviewed for potential participation with NuTech and our Alberta JV partner

North American Shale Plays Areas Studied by Petsec

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North American Shale Plays Areas Studied by Petsec

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

San Joaquin Basin - California

 Nine month extensive study of shale oil potential of the San Joachim Basin led by

• ur Alberta shale JV partner (private

equity company - US$200 million funded)  Three plays types investigated:

• Production from mature source rock in

vertical (horizontal?) wells in over- pressured cells – Woodford Analog

• Production from “tight” sand or silt

sandwiched between mature source rocks in over-pressured cells –Bakken Analog

• Extension of oil charged, over-pressured

sand or silt reservoirs from mature kitchen into normally pressured

• verlying cells – Deep Basin Analog

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PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

San Joaquin Basin - California

 Tumey, Kreyenhagen, Domengine and Moreno studied  Developed a regional framework to correlate Temblor, Tumey, Kreyenhagen and Domengine Formations  Selected intervals of potential source rock and reservoirs to be sampled and analyzed for maturity, richness, mercury injection porosity Rock Eval and XRD  STATUS: Reviewing possible farm-in. Currently viewed as less attractive than Texas and Alberta opportunities

North American Shale Plays Areas Studied by Petsec

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2012 FINANCIAL RESULTS

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

 Cash at 31/12/12: US$28.4m  No Debt  2012 Production: 2.4 Bcfe  Net Revenue: US$8.6m  Average Sales Price: US$3.50/Mcfe

• Gas Prices: US$3.01/Mcf
• Oil/Condensate Prices:

US$106.76/bbl  EBITDAX: US$0.5m  Net Loss after Tax: US$5.9m

• Increased production

volumes offset by lower natural gas prices

• US$3.1m work-over expense

re: Main Pass 270 A-3 well

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FACTORS IMPACTING 2012 FINANCIAL RESULTS

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

 Increased Production: 2.4 Bcfe + 20% on forecast

• Petsec net production increased from 5.7 MMcfepd (first 9 months) to > 12

MMcfepd by year end

• Marathon production increased from 10 MMcfepd to > 120 MMcfepd as 2 new

wells brought online and construction of new pipelines and production facilities

• Main Pass 270 A-3 work-over well restored production to ~ 7 MMcfepd after 18

month shut-in  Lower US natural gas prices: Average gas price received: US$3.01 Mcf

• Average gas equivalent sales price received US$3.50/Mcfe vs. US$5.69/Mcfe for

2011

• Gas price low of US$1.80/Mcf (April) rising to US$3.90/Mcf in December.
• High activity levels in unconventional shale gas plays during 2010 and 2011 led to
• versupply and high levels of gas in storage.
• Weak U.S. Industrial demand.
• Modest gas price recovery during 2012 due to reduced activity in shale gas plays.
• Natural gas hedges expired on Petsec production at end 2011

For personal use only

Conventional: USA

Large oil & gas/condensate prospects (size 50-200 Bcfe) Target reserves - 100 Bcfe (2P)

Unconventional: USA/Canada

Shale oil. Early entry and proof of concept, exit prior to development stage, new emerging areas, high potential, shallow - low drilling and completion costs, low lease costs, large land positions available. JV with shale experts. Target resources - 100 MMbbl oil (4P)

STRATEGY FOR GROWTH 2011 – 2013

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

 ELIMINATE DEBT (US$29.4 million Lehman)  SELL NON CORE ASSETS TO FUND NEW BUSINESS PLAN ( China)

 NEW BUSINESS PLAN

• Focus operations in North America
• Change target commodity from gas to oil
• Move from the Gulf of Mexico to Gulf Coast and onshore USA and Canada
• Redirect exploration activity from small gas prospects to large oil and

gas/condensate prospects and unconventional shale oil plays

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WTI CRUDE OIL vs. NATURAL GAS

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

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Petsec Share Price Followed The Decline in U.S. Gas Prices

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

2003 – Mid 2008 Higher gas prices US$4/Mcf to US$18/Mcf Mid 2008 – Early 2012 Lower gas prices US$13/Mcf to US$1.80/Mcf

2003 – 2008 Discoveries – Engine of growth US reserve additions: 71 Bcfe

• Cum. EBITDAX: US$250M

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Capital Allocation 2011 – 2012

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

 CASH AT 30 JUNE 2011 50.5  CONVENTIONAL

• Marathon field drilling and development

(5.7)

• Work-overs & recompletions in Main Pass fields

(3.7)

• Abandonment of GoM facilities

(7.6) (17.0)  UNCONVENTIONAL

• Evaluation costs

(1.8)

• Land evaluation/acquisition

(1.9)

• Drilling costs

(2.5)

• Completion and testing operations

(1.4) (7.6)  REMAINING CASH AT 31 MARCH 2013 25.9

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CORPORATE:

• Eliminated US$29.4m debt (May 2011) – now debt free
• A$38m raised from disposition of China interests (Jun 2011)
• Funds available June 2011:US$50.5million

CONVENTIONAL: Oil & gas / condensate High potential prospects; deep section; drill-ready Target : 100 Bcfe (2P)

• 10 mapped prospects
• Gross potential: 400 - 750 Bcfe (67 - 125 MMboe); 20 - 200 Bcfe each
• No drilling 2011/2012 due to declining gas price
• Preparations to drill in 2014/2015 as gas price stabilises > US$4/Mcf
• Seek farm-in to similar prospects to Marathon – large , deep.
• Marathon gas/condensate field discovery > 18,000 ft
• Drilled one well 2011, two wells and production facilities 2012.
• Current production > 150 MMcfpd & 550 bopd from 4 wells.
• 2013: 5th well drilling ahead, new facilities to increase production to

~ 200 MMcfepd. Possible 6th well 2014.

• Estimated gross reserves (2P): > 200 Bcfe. PSA net > 12 Bcfe

UNCONVENTIONAL: Shale oil Target: 100 MMbbl resource (4P)

• JV’s established with experienced shale oil partners
• Regional studies – USA: Texas, California. Canada: Alberta
• Determination of “ Sweet Spots” in Texas and Alberta projects with

estimated potential > 2,000 bbl oil recoverable/acre

• Alberta: Leased 6,434 net acres (10-15 MMbbl resource potential),

drilled one vertical science well, one horizontal fractured well. Production testing continues.

Status of 2011 – 2013 Business Plan

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

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STRATEGY FOR GROWTH 2013 – 2014

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

CONVENTIONAL EXPLORATION / DEVELOPMENT

 Continue development and expansion of Marathon Field  Exploit existing GoM prospect inventory  Bring in partners to participate in drilling prospect inventory  Identify additional deep, high potential, liquid rich prospects in Gulf Coast region and shallow GoM similar to Marathon

UNCONVENTIONAL: SHALE OIL EXPLORATION

 Continue evaluation and careful testing of existing projects , secure farminees for Texas projects.  Reduce focus on frontier shale oil plays due to reduction in lease speculation and industry capital for farm-in.  Evaluate entry into proven shale oil plays as prices become attractive – softening of oil price, expiry of 2009/2010 leases, reduction of speculative lease costs, lack of industry capital to prosecute existing leases.

For personal use only

2013 EXPLORATION & DEVELOPMENT PROGRAMME

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

CONVENTIONAL EXPLORATION / DEVELOPMENT

 Drill fifth Marathon well:

• Spud 3rd May 2013 - TD 18,700 ft
• Est. 4 – 5 months to drill, log, complete and put
• n production

 Complete Marathon facilities expansion to capacity

• f ~ 200 MMcfpd

 Bring in partners and permit Petsec GoM inventory wells for 2014/2015 drilling  Identify third party Gulf Coast prospects for 2013/2014 drilling

UNCONVENTIONAL: SHALE OIL EXPLORATION

 Continue testing the Canada wells to determine commercial oil production potential  Farm-out & progress Texas projects  Evaluate non-op working interests in proven plays

For personal use only

PETSEC ENERGY LTD ANNUAL GENERAL MEETING 2013

For personal use only