For personal use only N N Petsec Energy Ltd 2015 AGM Presentation - - PDF document

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

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

14 May 2015

Petsec Energy Ltd 2015 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 2015 Annual General Meeting (“AGM”) of members of Petsec Energy Ltd, held at the Museum of Sydney, corner Bridge and Phillip Streets, Sydney. 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

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Petsec Energy Ltd

Annual General Meeting 2015

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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 oil 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 otherwise stated. The reserves assessment follows guidelines set forth by the Society of Petroleum Engineers – Petroleum Resource Management System (SPE-PRMS). The estimates of USA oil and gas reserves provided within this presentation are based on the information contained within the Financial Statements given to the ASX on 24 February 2015 and reproduced in the 2014 Annual Report. The Company confirms that it is not aware of any new information or data that materially affects the information included within the Financial Statements and the Annual Report, and that all the material assumptions and technical parameters underpinning the estimates therein continue to apply and have not materially changed.

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Contents

 Petsec Energy’s Corporate Objective and Strategy  Petsec Energy Corporate Profile

• Operations
• Capital Structure
• Board of Directors
• USA & MENA Management

 Petsec Energy Oil & Gas Assets

• USA Production/Exploration – Onshore Louisiana and shallow waters of the Gulf of Mexico
• MENA Operations – Block 7, Al Barqa Permit in the Republic of Yemen

 2014 Key Achievements

• Corporate
• Operations – Production, Exploration, Acquisitions
• Financials

 2015 Exploration & Development Programme

• USA – Onshore Louisiana and shallow waters of the Gulf of Mexico
• Yemen – Block 7, Al Barqa Permit

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Petsec Energy’s Corporate Objective and Strategy

Petsec Energy’s corporate objective is to increase shareholder value through

successful oil and gas exploration, development and production, and acquisitions, thereby building Petsec Energy into a significant mid-tier oil and gas exploration and production company, respected in the industry for its technical skills, timely and cost effective delivery

• f projects, and the integrity with which it conducts its business.

The Company’s strategy is to maximise the value of its current reserves, pursue

participation in high quality, high impact exploration drilling opportunities in the Gulf Coast

• nshore and bay areas of Texas and Louisiana, USA, and to acquire onshore leases, with

undeveloped or producing oil and gas reserves, which hold significant development, low risk exploitation and high exploration potential. The geographical focus is predominantly in the USA in Texas and Louisiana, and increasingly in the Republic of Yemen.

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Petsec Energy Corporate Profile For personal use only

Petsec Energy Corporate Profile – Operations

Petsec Energy is an independent oil and gas exploration and production company listed on the

Australian Stock Exchange with operations in the shallow waters of the Gulf of Mexico and onshore Texas and Louisiana, USA, and onshore in the Republic of Yemen. USA

• Operated in USA Gulf of Mexico and Louisiana since 1991
• Drilling success: 102 wells / 79 successful / 77% success – net production 213.8 Bcfe, US$568 MM

EBITDAX

• Current producing 2P Reserves as of 1/1/15: 1.9 Bcfe* / PV10 US$1.4MM
• Net cash @ 31/3/15: US$28.9 MM
• Remaining 2015 drilling programme: Six wells; US$7.8 MM net DHC; success case net development

cost US$21.1 MM; targeting 1.76 MMbo & 14.5 Bcfg net to Petsec

• Five wells to be spud/drilled May/June 2015

Yemen

• Acquired 63.75% P.I. interest and operatorship in Block 7 – subject to approvals
• Undeveloped Al Meashar oil discovery (target 11 MMbo gross, 7 MMbo net @ 63.75%)
• High potential oil prospects in large lease area (5000 sq. km)
• Eight prospects / leads: target sizes 2 to 900 MMbo gross

* Calculated using deterministic method and conversion to Bcfe was calculated using ratio of six thousand cubic feet of natural gas to one barrel of oil

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Petsec Energy Corporate Profile – Capital Structure

Capital Structure at 21 April 2015

Capital Structure

Market Listing ASX: PSA / OTC ADR: PSJEY Shares / Options on issue 231.2 MM / 30,000 Market capitalisation at 8/5/15 A$26.7 MM Cash at 31/3/15 US$28.9 MM Net oil & gas reserves (2P) as of 1/1/15 1.9 Bcfe PV10 reserves (2P) as of 1/1/15 US$1.4 MM

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

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Alan Baden, Non-Executive Director

 Over 35 years experience in the U.S. oil & gas industry  Juris Doctor Degree from Case Western Reserve University, and a Bachelor of Science (Economics) Degree from the University of Pennsylvania  Ex Partner at Vinson & Elkins  Current Senior Commercial Lawyer with Thompson & Knight

Mark Lober, Non-Executive Director

 Over 35 years experience in the U.S. oil & gas industry  Master of Science (Geophysics) Degree from the Boston College, and a Bachelor of Science (Geology) Degree from the State

• f New York at Brockport

 Ex Senior Geophysicist, Exploration Manager and New Ventures Manager with a number of U.S. entities including Amoco Production Company, Standard Oil Production Company, Amerada Hess Corporation.

Terry Fern, Chairman & Managing Director

 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 40 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, Chairman of Australia Post  Current Chairman of Opera Australia, Crescent Capital Partners Limited, Buildcorp Advisory Board, University of Sydney Senate Investment and Commercialisation Committee, and MySale Group PLC  Current Director of Clayton Utz Foundation, the Grant Samuel Advisory Board and is on the CEDA’s Board of Governors

Petsec Energy Corporate Profile – Board of Directors

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Petsec Energy Corporate Profile – USA Management

Dick Smith Chief Executive Officer of Petsec Energy Inc.

 Over 35 years experience in the U.S. and international oil & gas industry  Master of Science (Geology) from the University of Tennessee, Knoxville, Tennessee and a Bachelor of Science (Geology) from SUNY at Brockport, Brockport, New York  Ex Amerada Hess Corporation, Amoco Production Company, Pedernales Production LLC, Houston Energy LLC, Prime Natural Resources (formerly F-W Oil Interests, Inc.), and F-W Oil Exploration LLC/F-W Oil Trinidad LLC

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.

 40 years of experience in the oil & gas industry  Bachelor of Science Degree (Geophysics), Texas A&M University  Ex Mobil, Amerada Hess, VP Exploration Gryphon Exploration Company

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Maki Petkovski Chief Executive Officer of Petsec Energy (Middle Eastern) Limited  Joined the Company in April 2015  Over 25 years’ experience in the international oil and gas industry  Bachelor of Science (Geology) Degree from the University of Technology, Sydney  Ex BP, Ampolex Limited and most recently with Oil Search Ltd where he was responsible for managing Oil Search’s MENA portfolio, focussing on Yemen and Tunisia

Operational expansion into the Middle Eastern & North African (“MENA”) region

The Company sought a leader to manage it’s interest in Block 7 which it acquired in 2014, and to grow a reserve base in the Middle Eastern and North African (“MENA”) region. Maki Petkovski joined Petsec Energy in April 2015, leaving Oil Search Ltd where he had been leader of

• perations in the Mena region and in Block 7 for the past 12 years.

His commercial knowledge, technical expertise, and proven relationships in Yemen and the MENA region will be brought to bear in establishing and growing a significant MENA business.

Petsec Energy Corporate Profile – MENA Management

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Petsec Energy Oil and Gas Assets For personal use only

Petsec Energy Oil & Gas Assets – USA Production

Onshore Louisiana and shallow waters of the Gulf of Mexico

 Sale of Marathon and Main Pass 270 production in July 2014 for US$17 MM  Two retained fields – 2P reserves: 1.9 Bcfe as of 1/1/15  Main Pass Block 19 Field discovered 2006 – near end

• f productive life

 Adeline Sugar Factory No. 4 (ASF #4) well in the Jeanerette Field discovered in May 2014 First conventional exploration well since the Marathon discovery 2010 (149 Bcfe gross, 8.7 Bcfe net)

N Cossinade

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Petsec Energy Asset Overview – USA Production

Onshore Louisiana and shallow waters of the Gulf of Mexico

 Divestiture of Marathon & Main Pass Block 270 interests in July 2014 (effective date 1 Jan 2015)

• US$17 MM cash consideration + option to participate in up to four separate prospects @12.5% W.I.
• Monetised assets at high point in oil & gas prices to provide funds for 2015 exploration programme

 Two producing fields retained – Jeanerette (ASF #4 well) & Main Pass Block 19

• Net reserves (2P) as of 1/1/15: 1.9 Bcfe; PV10: US$1.4 MM
• 2014 production (net):

1.6 Bcfe

• 2014 revenue (net):

US$8.2 MM

Main Pass Block 19

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Petsec Energy Oil & Gas Assets – USA Production

ASF #4 well in the Jeanerette Field – New Discovery made in May 2014

 Adeline Sugar Factory No.4 well  Located: Jeanerette Field, St. Mary Parish,

• nshore Louisiana

 Petsec share: 12.5% W.I. / 9.0% N.R.I.  Discovered: May 2014  Initial production: 30 June 2014  Cumulative field production to 1/1/15: 1.9 Bcfe gross (0.2 Bcfe, net to Petsec)  Remaining field 2P reserves at 1/1/15: 19.5 Bcfe gross (1.8 Bcfe, net to Petsec)  First conventional exploration well drilled since the Marathon discovery 2010 (149 Bcfe gross, 8.7 Bcfe net)

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Petsec Energy Oil & Gas Assets – USA Exploration

Onshore Louisiana and shallow waters of the Gulf of Mexico

 Remaining 2015 exploration: Six wells – net target 1.76 MMbo & 14.5 Bcfg  US$7.8 MM DHC (net); Success case development costs US$21.1 MM (net);

Lease / Prospect Inventory: Onshore Louisiana

• Northeast Starks
• English Bayou Deep
• North Cassinade
• Mystic Bayou
• Ouiski Bayou

Offshore GOM

• Hummer /

(Main Pass 270 / 273 / 274)

• Breton Sound 39 / 42
• Main Pass 132
• Ship Shoal 74

N Cossinade

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MENA Strategy  Focus on highly productive, underexplored areas which hold potential for large oil discoveries ( > 100 MMbo)  Focus on investments in projects at the appraisal and development stages of the upstream lifecycle that will generate the best risk-adjusted returns  Target de-risked projects at the discovery or early production stages to minimise subsurface risk and deliver significant upside through the application of new technology, low overheads, and low cost

• perations

 Acquire ‘distressed’ assets in the MENA region during the current political climate which prohibits much larger companies from operating, and where our network of contacts and relationships can advance projects  Acquire ‘distressed’ assets at low cost in the current low oil price environment through leveraging equity

The Company has sought opportunities outside of the U.S. where it can acquire producing oil reserves or near development reserves, with associated high potential exploration in large lease areas. In 2014, the Company focussed on opportunities in the MENA region, and acquired a 29.75% interest in Block 7, Yemen, which held the Al Meashar oil discovery made in 2010.

Petsec Energy Oil & Gas Assets – MENA Operations

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The Company’s entry into MENA provides the opportunity to acquire large onshore leases with oil reserves/resources and holding high potential exploration targets that have the potential to substantially increase the value of Petsec Energy.  Approximately 54% of the worlds proven crude oil reserves, at the end of 2013 are located in the Middle East

(Source: OPEC Annual Statistical Bulletin 2014)

 There are a large number of acquisition opportunities in the region which hold the potential to substantially increase the value of Petsec Energy.  Yemen provides very favorable contractor terms in comparison to other countries in the region.

MENA Yemen Oman UAE Egypt Tunisia Algeria Morocco

Contractor Take - Ranking for Yemen and Selected Countries

Source: (Oil Search Limited)

US GOM / Onshore LA Yemen, Block 7

Petsec Energy Oil & Gas Assets – MENA Operations

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Yemen – Exploration History

 Little exploration until early 1980’s  First commercial discovery made in 1984 – Hunt Oil in the Marib-Shabwah Basin Alif #1 well (Block 18) averaged 8,000 BOPD Commercial reserves discovered in Marib- Shabwah Basin area > 2 billion BOE  Canadian Occidental (now Canadian Nexen) made a discovery in Say’un-Masilah Basin, Sounah #1 (Block 14) in 1991 Commercial reserves discovered in Say’un- Masilah Basin area > 1.5 billion BOE  Commercial oil reserves in Yemen are concentrated in these two large basins – together the fields in these areas comprise 72%

• f Yemen’s 2P reserves

 Yemen recoverable reserves 5.3 billion BOEs of which 2.2 billion BOEs remain to be produced  Peak production reached ~ 440,000 BOPD

• 2001. In 2014 ~ 100,000 BOPD

 Oil and gas represent > 60% of Yemen government revenues

Source: (Wood Mackenzie)

Petsec Energy Oil & Gas Assets – MENA Operations

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 2010 Arab Spring resulted in shut down of drilling activity – exploration drilling in the country is currently on hold  Commercial success rates in past 30 years

• f exploration wells in the order of 30%

 Activity 1980’s: Hunt Oil. Marib-Shabwah Basin oil discoveries > 2 billion BOE  Activity 1990’s: Canadian Occidental (now Canadian Nexen). Say'un-Masilah Basin oil discoveries > 1.5 billion BOE  Activity 2000’s: OMV discovered S2 Habban Field (2005) – OMV stated gross 2P reserves: 170 MMbo

Yemen Drilling Success

Source: (Wood Mackenzie)

Petsec Energy Oil & Gas Assets – MENA Operations

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Republic of Yemen – Oil & Gas Infrastructure

 Three main oil pipelines in Yemen transport the bulk of the country’s crude oil production to three terminals on the coast of the Gulf of Aden and the Red Sea  Yemen has three oil terminals: Ash Shihr and Rudhum, located on the Gulf of Aden, and Ras Lsa, located on the Red Sea. Storage capacity at the three ports totals 5.7 MMbo  Yemen has two oil refineries: the Aden refinery and the Marib topping plant. Proposal in place for the construction of two new refineries  Yemen LNG is an integrated upstream LNG plant project consisting of two identical trains, each with a production capacity of 3.35 MMtpa

• f LNG

Petsec Energy Asset Overview – MENA Operations

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 Participating Interests: Company P.I. Petsec Energy (Operator) 63.75% * KUFPEC (Aden) Limited 21.25% The Yemen General Corporation for Oil and Gas 15.00%  Completion of transactions expected to

• ccur in late 2015

* Subject to completion and government approvals:

• Oil Search (ROY) Limited – 34%
• Mitsui E&P Middle East – 8.5%
• AWE – 19.25%

 Block 7, Al Barqa Permit is an onshore exploration permit covering an area of 5,000 km2 – 340 km East of Sana’a the capital of Yemen  Block granted to Oil Search JV in 2007; US$110 MM spent to date – 3 wells drilled ( all intersected oil), 277km2 3D seismic  Al Meashar oil discovery in 2010 – gross 637m oil column in fractured Basement (target 11 MMbo gross, 7 MMbo net @ 63.75%). Two wells - peak flow of 1046 BOPD & 6.36 MMcfpd gas on 1” choke over Shukra, Kuhlan and basement. Character of field very similar to Habban Oil Field 14 km to West, discovered 2005, gross 2P reserves 170 MMbo, current production ~ 20,000 BOPD.  8 prospects/leads defined by 2D and 3D seismic – target sizes range between 2 to 900 MMbo  In 2014, the Company entered into agreements with AWE (21.25%) and Mitsui (8.5%) to acquire a total 29.75% Participating Interest in Block

• 7. In 2015 entered into an agreement with Oil Search to acquire its Participating Interest (34%) in Block 7 and operatorship – thereby

increasing total Participating Interest in Block 7 to 63.75%. Completion of these transactions is subject to customary approvals from the JV Partners and state owned Yemen Oil and Gas Company

Republic of Yemen: Block 7 (Al Barqa Permit) – Onshore

Petsec Energy Oil & Gas Assets – MENA Operations

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Block 7 (Al Barqa) – High Potential Petroleum System

 The Block 7 data set includes three (modern) exploration wells (2009, 2010), seven vintage wells (pre 1980), 277km2 of 3D seismic data, and over 3000km

• f 2D seismic. JV has spent > US$110 MM since 2007.

 Petroleum system is proven in the Shabwah Basin and in Block 7 with the Al Meashar discovery (2010).  Exceptional ‘world-class’ Kimmeridgian/Tithonian source rock in the Madbi Formation  Clastic reservoirs: Jurassic Kuhlan, Sabatayn, Lam, Cretaceous Qishn  Top seal: Provided by the Sabatayn salt sequence  Variety of play types: structural and stratigraphic. Eight prospects/leads 2 to 900 MMbo

Source: Oil Search Limited

Petsec Energy Oil & Gas Assets – Yemen

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Petsec Energy 2014 Key Achievements For personal use only

Petsec Energy 2014 Key Achievements – Corporate

Well Positioned to Execute Business Strategy  Appointments to strengthen North American business + expand into MENA

• Appointed Dick Smith as CEO to the Company’s USA operations in March 2014
• Appointed Maki Petkovski as CEO to the Company’s new MENA operations in April

2015

 Monetised mature and fully developed Marathon & Main Pass Block 270 fields

• US$17 MM cash consideration + option to participate in up to four prospects
• Monetised at high point in oil and gas prices
• Intend to apply funds to high impact exploration in 2015

 Acquisition – Block 7, Al Barqa Permit, Republic of Yemen

• Acquired 29.75% P.I. in Block 7 – AWE (21.25%) and Mitsui E&P (8.5%)
• Acquired Oil Search’s 34% P.I. in Block 7 and operatorship in April 2015
• Petsec now holds a 63.75% P.I. and operatorship of the block

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US Oil and Natural Gas Prices

Petsec Energy 2014 Key Achievements

Collapse of US gas prices 2009 – US$8 to US$2/Mcf. Current ~ US$2.50/Mcf Decoupling of oil & gas 1:6 energy price relationship 2009: US$100/bbl oil energy equivalent to US$16.66/Mcf gas. Collapse of oil prices 3rd Qtr. 2014 from ~ US$100 to US$40/bbl. Current ~ US$58/bbl

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Petsec Energy 2014 Key Achievements – USA Operations

Highlights

 Asset Divestiture

• Divestiture of Marathon & Main Pass 270 gas fields in July 2014 (effective date 1/1/14)

for US$17 MM

 2014 Net Production

• 1,612 MMcfe (average daily net production of ~ 4.4 MMcfepd)
• Remaining producing fields:
• ASF #4 well, Jeanerette Field, onshore Louisiana (commenced initial production 30/6/14)
• Main Pass Block 19, shallow waters of GOM
• Main Pass Block 18 Field (GOM) ceased production in March 2014
• Chandeleur Block 31 / 32 Field (GOM) decommissioned in August 2014

 Exploration & Development

• The Company returned to conventional exploration in 2014
• Nine prospects acquired / generated, predominately oil, high impact, for testing in 2014 / 2015 –

prospect target sizes range between 2.4 Bcfe and 6.7 Bcfe, net to Petsec

• Two wells drilled in 2014 for one discovery – ASF #4 well in the Jeanerette Field
• One well drilled in January 2015 – unsuccessful (Ruth R. Bravanec, et al #1 well)

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Petsec Energy 2014 Key Achievements – USA Production

Sold Mature Fields at PV10 / Funds Applied to EXPLORATION – our strength

 Effective transaction date 1/1/14  Cash consideration of US$17 MM + option to participate in up to four separate drilling prospects for up to 12.5% W.I., on a non-promoted basis  Sold 1.1.14. 1P reserves @ ~ US$3.04/Mcfe + 2P reserves @ ~ US$2.65/Mcfe  The assets sold by the Company pursuant to the transaction included:

• All of Petsec’s production and exploration rights in the

Marathon field

• All of Petsec’s interests in the Main Pass Block 270

producing wells

• Assignment of working interests in the exploration rights
• n Main Pass Blocks 270, 273 and 274

Petsec retained a 12.5% working interest in the exploration rights in Main Pass Blocks 270, 273 and 274

Main Pass 270 Marathon

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 The Company returned to conventional exploration in 2014  High impact prospects – Objective:

• Drill 5 – 10 exploration wells per year
• Average target of each well > 4 Bcfe, net to Petsec
• > US$10 MM PV10 / well
• DHC < US$2 MM / well
• POS better than 1 in 3

 Nine prospects acquired/generated for testing in 2014 / 2015 – prospect target sizes range between 2.4 Bcfe and 6.7 Bcfe, net to Petsec  Two wells drilled in 2014 for one discovery – ASF #4 well in the Jeanerette Field  One well drilled in January 2015 – unsuccessful (Ruth R. Bravanec, et al #1 well)  Remaining 2015 Exploration Programme: Six wells, US$7.8 MM net DHC, US$21.1 MM net development cost on success, target 1.76 MMbo & 14.5 Bcfg net to Petsec.

Exploration & Development

Petsec Energy 2014 Key Achievements – Exploration

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Petsec Energy 2014 Key Achievements – Financials

Key Financials

The divestiture of the Company’s production interests in the Marathon and Main Pass Block 270 fields in July 2014 significantly reduced production and the financial results compared to the 2013 year

* Nil debt

KPI FY2014 Result Change

• n

FY2013 Net Production 1,612 MMcfe Down 56%

• Avg. Sales Price

US$5.08/Mcfe Up 13% Net Revenue US$8.2 MM Down 50% EBITDAX US$3.4 MM Down 56% Net Loss After Tax US$1.1 MM n/a Cash at 31/12/14 * US$32.6 MM Up 28% Net 2P Oil & Gas Reserves 1.9 Bcfe Down 74%

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Petsec Energy 2014 Key Achievements – Financials

Key Factors Impacting Upon Results Positives

 US$2.2 MM net gain on sale of Marathon and Main Pass Block 270 interests  Higher U.S. natural gas prices:

• Average gas price received of US$4.68/Mcf;
• Average sales price of US$5.08/Mcfe on gas equivalent basis, up 13% on 2013

Negatives

 Lower production: 1.6 Bcfe, down 56%  Net impairment, abandonment, work-over and exploration expense of US$3.0 million:

• US$1.6 MM DHC of unsuccessful Herbert #1 well on the SW Holmwood Prospect
• US$1.2 MM DHC of unsuccessful Main Pass Block 18 G-6 well recompletion
• US$0.2 MM impairment in relation to pre-drill costs associated with the unsuccessful

West Crab Lake Prospect drilled in January 2015

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Petsec Energy 2015 Exploration & Development (“E&D”) Programme

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New Discoveries – The Engine of Growth

Petsec Energy 2015 E&D Programme

FY1991 – Jan 2015

102 wells drilled in USA / 79 successful – 77% success rate Cumulative production: ~ 214 Bcfe Cumulative EBITDAX: ~ US$568 MM PSA peak price $7.92 Sep 1997 (Oil U$20/Bbl, gas US$2/Mcf) PSA peak price $3.66 Jun 2006 (Oil U$60/Bbl, gas US$6/Mcf)

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 Transition from gas to oil; and Gulf of Mexico to onshore Louisiana and Texas (USA)  High Impact conventional targets 20 – 200 Bcfe gross target size  Acquisition of reserves developed or undeveloped with significant exploitation and exploration potential  Predominantly onshore Louisiana and Texas  Focussing on oil targets  Drill 5 – 10 exploration wells p.a., targeting:

• 4 Bcfe net per well
• > PV10 US$10 MM / well
• Risk capital < US$2 MM / well
• POS better than 1:3

Exploration Strategy

Petsec Energy 2015 E&D Programme – USA

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Petsec Energy 2015 E&D Programme – USA

Six wells – targeting 1.76 MMbo & 14.5 Bcfg (net) – five of the wells to be spud/drilled in May/June

Onshore – Louisiana  English Bayou Deep – Holcombe #1  Mystic Bayou – Williams #2 Alt  Northeast Starks – Rauser et al #1  North Cossinade – Simon Family #1  Ouiski Bayou – McCollum #1 Gulf of Mexico  Hummer prospect – Main Pass Block 270 #3 Combined Prospect Potential (Net to Petsec)  Exploration Costs of US$7.8 MM  Success Case Development Costs of US$21.1 MM (11 development wells + facilities)  Un-risked Target Potential: 1.76 MMbo plus 14.5 Bcfg

North American Exploration Opportunities

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Petsec Energy 2015 E&D Programme – USA

North American Exploration Opportunities

“Hummer”

NEW ORLEANS LAFAYETTE

Main Pass 18,19 ASF #4

English Bayou Deep

• N. Cossinade

NE Starks Ouiski Bayou Mystic Bayou

Six Currently Planned Drilling Prospects in South Louisiana and Offshore Gulf of Mexico Working Interests: 12.5% – 45% Operated and Non‐operated interests Un‐risked target potential: ~ 10.7 MMbo + 116.6 Bcfg (gross) and 1.76 MMbo + 14.5 Bcfg (net) Total exploration costs: ~ US$7.8 MM (net) Six Currently Planned Drilling Prospects in South Louisiana and Offshore Gulf of Mexico Working Interests: 12.5% – 45% Operated and Non‐operated interests Un‐risked target potential: ~ 10.7 MMbo + 116.6 Bcfg (gross) and 1.76 MMbo + 14.5 Bcfg (net) Total exploration costs: ~ US$7.8 MM (net)

KEY: Producing Field 2015 Drilling Programme

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Petsec Energy 2015 E&D Programme – USA

 Located in Calcasieu Parish, onshore Louisiana USA  Petsec is the operator of this prospect with a 27.5% working interest  The prospect is a large structural closure in the Yegua sands interval which is defined by 3D seismic data and enhanced by seismic attributes  The Holcombe #1 well is being drilled as a straight hole to a total depth of 13,000 ft.  The drill site is located at the edge of a low lying wooded area and has been boarded to ensure a stable foundation so that the drilling rig does not sink into the soft soil  Net exploration costs are ~ US$1.6 MM  The well was spud on 24 April 2015 using the Energy Drilling #14 rig and is expected to reach TD in late May

• r early June 2015

North American Exploration Opportunities

English Bayou Deep – Onshore Louisiana

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Petsec Energy 2015 E&D Programme – USA

North American Exploration Opportunities

Mystic Bayou – Onshore Louisiana

 Located in St. Martin Parish, onshore Louisiana USA  Petsec has a non operating 25% working interest  The prospect is part of a field that has already produced in excess of 3.4 MMbo + 39.2 Bcfg  The targets are Lower Miocene Planulina sands which are situated up dip to productive wells  The Williams #2 Alt well is being drilled directionally to a total depth of 17,441 MD / 17,035’ TVD  The drill site is located in a low lying area of the Atchafalaya River Basin which can only be reached via canals and bayous  Petsec net DHC exposure is US$1.6 MM  The well was spud on 4 May 2015 using the Parker Drilling 54B barge rig and is expected to reach TD in mid to late June 2015

For personal use only

Petsec Energy 2015 E&D Programme – USA

Rauser #1

 Located in Calcasieu Parish, onshore Louisiana USA  Petsec is the operator of this prospect with a 45% working interest  The prospect is a stratigraphic feature in the Oligocene age Hackberry sand section. It is defined by 3D seismic data and enhanced by seismic attributes  The Rauser #1 well will be drilled as a straight hole to a total depth of 9,200 ft.  The drill site is located in an agricultural field near the edge of a heavily wooded area.  Petsec net exploration exposure is ~ US$0.83 MM  The well is anticipated to spud in late May or early June 2015 and is expected to take approximately 2 weeks to reach target depth

North American Exploration Opportunities

North East Starks – Onshore Louisiana

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Petsec Energy 2015 E&D Programme – USA

North American Exploration Opportunities

North Cossinade – Onshore Louisiana

 Located in Vermilion Parish, onshore Louisiana USA  Petsec has a non operating 25% working interest in the prospect  The prospect is a faulted structural closure in the Lower Miocene “Alliance sands” interval which is defined by 3D seismic data and enhanced by oil and gas log shows in the down dip well control  Due to surface restrictions the well will be drilled from a roadside location as a slightly deviated hole to a total depth of 11,560’ TVD / 11,722’ MD  Petsec’s net exploration costs are estimated at US$0.6 MM  The Simon Family #1 well is expected to spud in June 2015 and take approximately 25 days to reach target depth

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Petsec Energy 2015 E&D Programme – USA

North American Exploration Opportunities

Ouiski Bayou – Onshore Louisiana

 Located in Terrebonne Parish, onshore Louisiana USA  Petsec has a 12.5% non-operating working interest in this prospect  The prospect is a fault wedge separated across a saddle from production in the Miocene Cris I sands, locally called the “KK and LL sands”. The prospect is defined by 3D seismic data  The McCollum #1 well will be drilled as a directional well to a total depth of 15,933’ MD / 15,800’ TVD.  The drill site is located on the western portion of the Mississippi Delta in an area called the Houma Embayment. The area is very low lying and marshy but is very prolific for oil and gas production.  Petsec net exploration exposure is ~ US$1.2 MM  The well is expected to spud in late Q3 or Q4 2015

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Petsec Energy 2015 E&D Programme – USA

North American Exploration Opportunities

Main Pass 270: Hummer – Gulf of Mexico

 Located in approximately 215’ of water, some 50 miles southeast of the Mississippi River delta, in the Gulf of Mexico USA  Petsec has a 12.5% non-operating working interest in this prospect  The prospect is an up-thrown fault closure in the Middle Miocene Big Hum and Cris I sand section  The Main Pass 270 #3 well will be drilled as a slightly directional well to a total depth of 16,000’ MD  Petsec’s net exploration exposure for the well is ~ US$2 MM  The well is expected to spud in mid-June 2015 and it will take approximately 60 days to reach total depth

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Block 7 (Al Barqa Permit), Yemen – Al Meashar Oil Field – Production Test

 The Oil Search JV has invested over US$110 MM in Block 7 since 2007 with the drilling of three exploration wells (all intersected oil) and the acquisition of 277km2 of 3D seismic data.  The licence includes the Al Meashar oil discovery of 2010 (target 11 MMbo gross, 7 MMbo net @ 63.75%) that extends the productive Kuhlan-Basement play production in the adjacent S2 Habban Oil Field (OMV – discovered 2005, gross 2P reserves 170 MMbo) 14km to the West.  In late 2015 propose to undertake an Extended Well Test (EWT) at the Al Meashar-2 well for a 3 to 9 month period. Should the prior test rates be confirmed and commercial rates be demonstrated, a declaration of commerciality could be made and an application for a Development Licence

• ver the prospective southern quarter of the licence.

 A Development Licence would secure tenure for the next 20 years.

Petsec Energy 2015 E&D Programme – Yemen

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Block 7 (Al Barqa): Al Meashar Oil Field – Appraisal & Development

 A significant oil column in excess of 800m has been demonstrated by the Al Meashar wells, consistent with OMV’s Habban Oil Field oil column of 945m, located 14km to the West  The Al Meashar discovery contains the same reservoir sequence of Kuhlan Sandstone overlying fractured Basement currently producing in excess of 20,000 BOPD in the Habban Oil Field where EUR 2P reserves are 170 MMbo  Growth of reserves at the Habban Field strongly indicate significant resource increases can be anticipated at Al Meashar above the target of 11 MMbo gross, should appraisal drilling demonstrate field extends beyond the tested fault block, beyond the lowest closing contour , and extends to the lowest known oil (“ oil down to “) – oil shows extend 200m below structural closure.

Petsec Energy 2015 E&D Programme – Yemen

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Block 3 Block 7

Habban Field

Block 3 Block 7

Habban Field

Block 7 (Al Barqa) – Prospectivity

 The block is regarded as one of the most prospective blocks in Yemen based on a world class petroleum system and the remaining material prospectivity  To date 8 seismically (3D and 2D) defined prospects and leads have been identified including three large tilted basement fault blocks potentially containing significant volumes of hydrocarbons  Mapped target sizes for these prospects / leads: range from 2 – 900 MMbo  The prospects have primary objectives in the Khulan- Basement reservoirs productive in Al Meashar and the adjacent licences.  Significant potential is also recognised in Cretaceous sands of the Lam and Meem formations which have had extensive shows in the wells drilled in Block 7 and which have tested and flowed over 1000 BOPD in the neighbouring Habban Field (14km West of Al Meashar

• il field) in Block S2

 Multiple stacked reservoir potential has been demonstrated in adjacent blocks to the southwest, in Block 4 as well as the Habban Oil Field

Source: Oil Search Limited

Petsec Energy 2015 E&D Programme – Yemen

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Yemen – Further Opportunities

 First commercial discovery made in 1984 in the Marib-Shabwa Basin by Hunt Oil. More than 2 billion BOE have been discovered in the Marib-Shabwa Basin to date.  Canadian Occidental (now Canadian Nexen) major discovery in the Say’un– Masilah Basin in 1991. More than 1.5 billion BOE have been discovered in the Say’un-Masilah Basin to date.  Yemen discovered reserves 5.3 billion BOEs (since 1984) of which 2.2 billion BOEs remain to be produced.  Commercial success rates in past 30 years of exploration wells in the order of 30%  There are a number of projects available in Yemen that have the potential to deliver significant upside through the application of new technology, and low cost

• perations

 ‘Distressed’ assets are available in the current low oil price environment and the current political climate which restricts larger companies from operating.

Petsec Energy 2015 E&D Programme – Yemen

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Glossary of Certain Industry Terms

1P Proved Reserves 2P Proved and Probable Reserves Bcfe Billion cubic feet of gas equivalent (conversion ratio: 1 bbl of oil = 6 Mcf of gas) Bcfg Billion cubic feet of gas BOE Barrel of oil equivalent BOPD Barrel of oil per day DHC Dry hole cost EWT Extended well test Ft. Feet Mcf Thousand cubic feet MMbo Million barrels of oil MMcfe Million cubic feet of gas equivalent MMcfepd Million cubic feet of gas equivalent per day MMtpa Million metric tonne per annum N.R.I. Net Revenue Interest P.I. Participating Interest POS Probability of success PV10 Present value calculated at 10% discount W.I. Working Interest

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Petsec Energy Ltd

Annual General Meeting 2015

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