SLIDE 1
Investor Presentation
29th November 2011
SLIDE 2 Disclaimer
Hawkley Oil & Gas 2
This presentation contains certain “forward-looking statements.” All statements, other than statements of historical fact, that address activities, events or developments that Hawkley Oil and Gas Ltd believes, expects or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “believe”, “plan”, “estimate”, “expect”, and “intend” and statements that an event or result “may”, “will”, “can”, “should”, “could”, or “might” occur
- r be achieved and other similar expressions.
These forward-looking statements reflect the current internal projections, expectations or beliefs of Hawkley Oil and Gas Ltd based
- n information currently available to Hawkley Oil and Gas Ltd.
Forward-looking statements are subject to a number of risks and uncertainties, including those detailed from time to time in filings made by Hawkley Oil and Gas Ltd with securities regulatory authorities, that may cause the actual results of Hawkley Oil and Gas Ltd to differ materially from those discussed in the forward-looking statements, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on Hawkley Oil and Gas Ltd. Hawkley Oil and Gas Ltd expressly disclaims any obligation to update or revise any such forward-looking statements. Not for distribution to United States newswire services and not for dissemination in the United States. COMPETENT PERSONS STATEMENT The hydrocarbon reserves estimates of Sorochynska are based on the information compiled by Mr P.D. Patterson, BS, MBA. Mr Patterson is a registered professional engineer with 30 years of relevant experience and is qualified in accordance with the ASX listing rules. Mr Patterson is Managing Directors of Moyes & Co Inc. and has consented to the inclusion of the information in the format and context in which it appears.
SLIDE 3
Presentation Outline
Hawkley Oil & Gas 3
Overview 1 Share Price History 2 Business Model 3 Work Programme Concluding Remarks
SLIDE 4
Milestones
ASX Listing via RTO raises $5.5 million
[27.5 million shares @ $0.20ea]
Sorochynska-201 proved commercial Production & first revenue Spud of Chernetska-1 well Placement raised $15.1 million
[40.86 million shares @ $0.37ea]
Sorochynska B18b Reserves Upgrade Chernetska-1 ?
Hawkley Oil & Gas 4
Jun 2010 Feb 2011 May-Jun 2011 Oct 2011 Dec 2011 Nov 2010 May 2011
SLIDE 5
Snapshot
RESERVES & PRODUCTION
40 BCF + 1 MM bbl 2P reserves Producing 6.2 MMCF/d gas plus
210 bbl/d condensate Limitations at the processing plant Hawkley to build own plant in 2012
Hawkley Oil & Gas 5
Producing 1,200 BOE/d
SALES
US$12/MCF gas US$87/bbl condensate
Royalties c25% combined FINANCIALS
Revenue >US$25 million/yr EBITDA averaging 40-45% Earnings averaging 30-35% Aus$17 million cash-at-bank No debt
2011-12 work programme funded
SLIDE 6
Production & Revenue
Hawkley Oil & Gas 6
SLIDE 7 Financials: Comparison with previous AGM
Hawkley has been transformed
Hawkley Oil & Gas 7
Quarter ending: 30-Sep-10 30-Dec-10 31-Mar-11 30-Jun-11 30-Sep-11 Sales Receipts
$7,678,000 $8,545,000 Net Operating Cash Flows
- $2,364,000
- $3,031,000
- $348,000
$523,000 $2,017,000 Total Operating and Investing Cash Flows
- $3,864,000
- $7,083,000
- $5,687,000
- $4,100,000
$1,881,000 Cash at end of Quarter $2,773,000 $576,000 $1,973,000 $15,231,000 $17,112,000
Trading profitably this fiscal year
SLIDE 8 Share Price Drivers
Shareholders’ primary focus is on risk and return External factors affecting share price are not controllable BUT
Business is also underpinned by
internal factors SO
What is Hawkley doing ‘below
water’ to buoy the share price?
Hawkley Oil & Gas 8
Dividend Share Price Strategy, Work Programme Reserves, Production Revenue, Profit Prospects/upside New projects Manpower/skills IR & PR Policies Processes Systems ICT
SLIDE 9 1 Share Price History
Hawkley Oil & Gas 9
XSO down 25%
A B
12 months daily to 25Nov11
HOG vs. Small Ord's Hawkley down with market since April
SLIDE 10 1 HOG vs. Energy Index
12 months daily to 25Nov11
Hawkley Oil & Gas 10
XEJ down 30%
A B
Hawkley down with market since April
SLIDE 11 1 HOG vs. Metals & Mining
Hawkley Oil & Gas 11
XMM down 30%
A B
12 months daily to 25Nov11
Hawkley down with market since April
But contra- market tendencies since September?
SLIDE 12 1 Comments on HOG
Hawkley Oil & Gas 12
Resistance at circa 20c Market-driven Market-driven Reserves Upgrade First Gas Sorochynska-201 Success 12 months daily to 25Nov11 Change of Executives Chernetska-1 Spud Placement Closes
SLIDE 13
2 Business Model
Hawkley Oil & Gas 13
Context of investment
Mitigate geological risk
Assets with discoveries Appraise first, explore later
Mitigate partner risk
Control of assets and operations
Mitigate ‘learning curve’ operational risk
In-country operating subsidiary with experienced nationals Contracts with local companies (e.g. drilling)
Focus is on generating revenue Hawkley’s first well is in production Appraisal well drilling in second licence Production infill well is rigging-up
SLIDE 14 2 Consequences
Not to share risk
Fund 100% of projects & overheads Fewer projects can be supported
Use cash to fund development
Less cash available for exploration and new projects
Appraise first, explore later
Relatively low risk use of CapEx But valued as production company No glamour of exploration upside
Hawkley Oil & Gas 14
Dividend Share Price PRESENTATION TOPICS: Work Programme Reserves Upside New projects Manpower/skills IR & PR
SLIDE 15
2 Constraints
Trading profitably Cash-at-bank Programme funded BUT
Only 1 well producing Caution/prudence required until 2nd well is on-stream Licence tenure must be extended to provide conditions for
long term investment
Major shareholders do not want to dilute
Hawkley Oil & Gas 15
SLIDE 16
3 Work Programme
Resources evaluation (CP) Chernetska-1 appraisal well Drill & tie-in 2nd production well Gas plant design New licences (Ukraine)
Hawkley Oil & Gas 16
Obtain Production Licence Build Sorochynska gas plant Sorochynska 3D (winter 2012) Chernetska well: B24/25 potential
Development New Ventures Exploration In progress
Aim to diversify beyond Ukraine
SLIDE 17 3 Development
Hawkley Oil & Gas 17
YEAR 30 MMCF/D 10 MMCF/D Condensate
1,000 BBL/D 100 BBL/D
Sorochynska B18b, Block 110
3P is 52bcf 5 wells 11 years
#201 well #202 & #203 wells
SLIDE 18 3 Appraisal
Hawkley Oil & Gas 18
Mobilisation Drilling Testing & Comp. Connection Production
Chernetska-1 Well
Drilling ahead @4,273m (midnight on 28 Nov) B20 reservoir target expected at 4,330m (+57m) Expecting to reach B20 end-November Deeper targets: B21, B24/25, B26
2011 2012
Chernetska-1
?
?
B20 oil
?
Gas
SLIDE 19
3 Appraisal
Hawkley Oil & Gas 19
Chernetska-1 structure: Possibility of a further appraisal well or a development well
SLIDE 20 3 Reserves
Hawkley Oil & Gas 20
Note: entitlement revenue is sales revenue net of state taxes on production (resource rent)
Chernetska Licence
Resources, not reserves Drilling Cherneska-1 to turn resources into reserves Additional potential in B21, B24/25 and B26 reservoirs
Sorochynska Licence
Competent Person statement on B18b pool in Block 110 2P reserves increased 3-fold by the investment in Sorochynska-201 13bcf increased to 29bcf, with 3P upside of 52bcf 2P could generate $430 million in entitlement revenue Field development underway: development well rigging-up
SLIDE 21 3 Upside
Hawkley Oil & Gas 21
80% Gas (158bcf) 15% Condensate 05% Oil
By Host Reservoir By Resource Category By Type
55% Chernetska 45% Sorochynska
By Licence
Source: RISC (Hawkley Prospectus, 2010) with Moyes update on B18 (Oct 2011)
Reserves & resources as follows:
Carbonates Sandstones
Unrisked Unrisked
SLIDE 22 3 Sorochynska Upside
Hawkley Oil & Gas 22 B17, 19, 20 sandstones
Leads identified. Productive in nearby fields
B24/B25 carbonate section
Flowed gas at non-commercial rates in 4 wells in the area
B18b sandstone
Block 469
Multiple targets. 3D seismic will mature prospects
SLIDE 23 3 Chernetska Upside: B24/25 carbonates
Hawkley Oil & Gas 23
Lak-2 flowed at 2 MMCF/d Lak-7 flowed at 1.5 MMCF/d
SLIDE 24
3 B24/25 Expression on Seismic Data
Legacy seismic data, reprocessed 2008
Hawkley Oil & Gas 24
Many leads to evaluate
SLIDE 25
3 New Projects
Applications for 2 exploration licences in Ukraine
Work in progress
Opportunities proposed to BOD
Egypt, North Sea, Czech Republic Focus region is Europe and Mediterranean rim countries
Have engaged consultants to identify distressed assets and
companies on AIM in London
Work in progress
Hawkley Oil & Gas 25
SLIDE 26
3 Manpower & Skills
Recruited CFO Recruiting Exploration & New Ventures Manager
Shortlisted candidates to be interviewed in December
Using consultants to identify distressed assets & companies
Hawkley Oil & Gas 26
SLIDE 27
3 IR, PR & Communications
Site visit to Ukraine in September
Analysts & Brokers: Hartley’s + Cygnet, DJ Carmichael, Indian Ocean Capital, Morgan Stanley, Oceanic
Research Coverage
DJ Carmichael since 6th Oct Edison Investment Research – first report due Feb 2012
Recent Conference Presentations
ASX Small & Mid Caps Conf in Singapore and Hong Kong Oil&Gas Asia Summit, Singapore Good Oil Conf, Perth
Professional IR & Communication services
Engagement proposals under review from several companies
Hawkley Oil & Gas 27
SLIDE 28
Concluding Remarks
Hawkley’s Business Model
No direct peer group for comparison
Hawkley’s Share Price
Market is looking for a longer track record of success
(Chernetska-1)
Price should benefit from news about exploration
Hawkley’s Activities
Focussed on all areas of support for the share price Caution required while revenue only from 1 source
Hawkley Oil & Gas 28
SLIDE 29
Concluding Remarks
Hawkley Oil & Gas 29
Revenue achieved from first well drilled 2011 and 2012 work programme fully funded New wells could take production up to 3,000 BOE/d
and gross revenue of $50-$100 million/yr
Substantial exploration upside in both licences
Good foundation established: A platform to create a sustainable business in Ukraine Hawkley has: the strategic aim, opportunity and capability to grow into a mid-cap multinational E&P Co.
SLIDE 30 Contact Information
Hawkley Oil & Gas Australia
45 Ventnor Avenue West Perth, WA Australia Tel +61 8 9429 8803 Fax +61 8 9429 8800 Email theal@hawkleyoilandgas.com
Ukraine
Boulevard Tarassa Shevchenka 35 Kyiv 01032 Ukraine Tel +380445697418 Fax +380445697416 Email
www.hawkleyoilandgas.com
