Petsec Energy Ltd Investor Presentation Resources Rising Stars - - PowerPoint PPT Presentation

Petsec Energy Ltd

Investor Presentation Resources Rising Stars Conference May 2017

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. To the maximum extent permitted by law, the company and its personnel:  disclaim any obligations or undertaking to release any updates or revisions to the information to reflect any change in expectations or assumptions;  do not make any representation or warranty, express or implied, as to the accuracy, reliability or completeness of the information in this presentation, or likelihood

• f fulfilment of any forward looking statement or any event or results expressed or implied in any forward looking statement; and

 disclaim all responsibility and liability for these forward looking statements (including, without limitation, liability for negligence). Nothing contained in this presentation constitutes investment, legal, tax or other advice. The Information does not take into account the investment objectives, financial situation or particular needs of any recipient. Before making an investment decision, each recipient of this presentation should make its own assessment and take independent professional advice in relation to the information and any action taken on the basis of this presentation. The reserves assessment follows guidelines set forth by the Society of Petroleum Engineers – Petroleum Resource Management System (SPE-PRMS). The USA and Yemen reserve estimates provided within this presentation are based on information contained within the following releases to the ASX: Announcements on 24 February 2017; and the 2016 Annual Report. The Company confirms that it is not aware of any new information or data that materially affects the information included within the above releases, and that all the material assumptions and technical parameters underpinning the estimates therein continue to apply and have not materially changed.

Corporate Objective To increase shareholder value through successful oil and gas exploration, development and production, and by oil and gas reserve acquisitions, thereby building Petsec Energy into a significant mid-tier oil and gas exploration and production company. Corporate Strategy To drill high impact exploration prospects, predominately for oil and develop those discoveries, and to acquire

• il and gas reserves, developed/producing or undeveloped, in onshore leases which hold significant

development, low risk exploitation and high exploration potential, that make a major positive impact on the value of Petsec Energy. The geographical focus is onshore and offshore Louisiana and Texas, USA , the Republic of Yemen, and the MENA region generally.

Petsec Energy: Corporate Objective and Strategy

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 Louisiana, USA (offices Houston & Lafayette), and onshore in Yemen (offices Sanaa & Dubai-UAE).

 USA Net 2P reserves (1 January 2017): 3.9 MMboe 1 / NPV10 US$25.7MM (Cawley, Gillespie & Associates) / Mystic Bayou - 1 well; Hummer - 1 well  Operated in USA Gulf of Mexico and Louisiana since 1991.  Drilling success: 109 wells / 81 successful / 74% success – net production > 214 Bcfe, US$555MM EBITDAX.  Active Projects: Mystic Bayou & Hummer (Main Pass 270/273/274) , both discovered 2015.  Mystic Bayou: 1 well producing, 3 further well locations;  Hummer: Discovery well production tested in Nov 2016 at flow rates >20 MMcfgpd + 400 BOPD, production due Sept 2017, 3 to 8 further well locations.  2017 Development - Hummer: Fabrication of production facilities, installation of platform deck, hook- up of pipelines to gas and oil sales pipelines. First production expected in late September 2017.

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

Petsec Energy: USA Operations USA

Petsec Energy: Yemen Operations YEMEN

 Commenced operations 2014. Acquired 100% Block S-1 ( 2016) and Block 7 (2014-2016).  Damis (Block S-1) Production Licence (100% working interest / 82.5% participating interest): Acquired February 2016:

 Holds five oil & gas discoveries – An Nagyah (developed/productive) and Osaylan, Harmel, An Naeem & Wadi Bayhan (undeveloped).  An Nagyah Oilfield 2P reserves 1 (1 January 2017): 12.8 MMbbl oil gross / 5.6 MMbbl net (NPV10 U$155.4MM).  The four undeveloped oil & gas fields hold resource potential 2: ~ 35 MMbbl oil + 550 Bcf gas gross.

 Block 7 (Al Barqa) 100% working interest (85% participating interest) 3 acquired 2014/2015/2016:

 Al Meashar undeveloped oil discovery – 2 wells / target 11 MMbbl oil gross (9.3 MMbbl net) / > 50 MMbbl potential  Eight prospects / leads: target sizes range from 2 to 900 MMbbl oil gross

1 Source: DeGolyer and McNaughton Canada Limited 2 Source: Wood Mackenzie Asia Pacific Pty Ltd 3 The Company has agreements with Oil Search Limited (40% W.I.) and KUFPEC (25% W.I.) to acquire their respective interests in Block 7, and assume operatorship. The agreements are pending completion and are subject to customary approvals from the Government of Yemen and the Ministry of Oil and Minerals.

Capital Structure

Market Listing ASX: PSA / OTC ADR: PSJEY Shares on issue 320.3 MM Market cap’n at 23/5/17 @ 15.0 c/s ~ A$48 MM Cash at 31/3/17 US$10.2 MM US$15MM convertible note facility – 31/3/17 (available) US$10.0 MM Net oil & gas reserves (2P) as of 1/1/17 9.5 MMBoe NPV10 reserves (2P) as of 1/1/17 US$180.7 MM or A$0.75/share

Damis (Block S-1) Yemen Acquisition Successful Hummer Production Test Mystic Bayou Discovery Hummer Discovery

Petsec Energy: Corporate Structure & Share Price

“Hummer”- Main Pass

• Blks. 270,273,274

ASF #4 Ouiski Bayou Mystic Bayou

KEY: Producing Field Leases/Prospects

NEW ORLEANS LAFAYETTE VENICE

Petsec Energy: USA Production / Development

Mystic Bayou Field Hummer Development

Mystic Bayou Gas / Oil Field – Onshore Louisiana

 Petsec Energy: 25% W.I. (18.5% N.R.I.) – 1 producing well.  Discovered and brought into production in 2015.  Net 2P reserves as at 1 January 2017: 8.8 Bcf of gas + ~ 162.6 Mbbl (1.6 MMboe)  Currently producing at a gross rate of ~ 4.2 MMcfgpd and ~ 95 bcpd (1 well)  Net Revenue of US$1.2 MM – US$1.5 MM p.a.  3 additional development well locations

Mystic Bayou Gas/Oil Field – Onshore Louisiana Petsec Energy: USA Production / Development

Hummer Gas/Oil Field – Main Pass 270, 273, 274

Discovery: Nov 2015 / Commercial Production: Sep 2017

Main Pass 270 #3 Flow Test - November 18, 2016

 Petsec Energy: 12.5% working interest (10.24% net revenue interest)  Field discovered in Nov 2015. Platform installed. Well completed and production tested in Nov 2016.  Well tested > 20 MMcfgpd + 400 BOPD on 16/64th inch choke with an average flowing WHP of 9753 psi.  Net 2P reserves (1 January 2017): 9.2 Bcf of gas + 600 Mbbl of

• il (2.2 MMboe); discovery well.

 Commercial production late Q3 2017, well production > 20 MMcfgpd + 400 BOPD, Petsec net cash flow ~ US$2.5 million p.a. per well.  Field has 5 gas/oil reservoirs extending over 3 offshore leases (15,000 acres).  Potential reserves likely to exceed upper mapped target of 183 Bcf gas & 3.7 MMbbl oil. 3 – 8 additional well locations.  Appraisal and development drilling likely to commence late 2017/ early 2018

Petsec Energy: USA Production / Development

Hummer Gas/Oil Field – Main Pass 270, 273, 274

Gas/water contact

Petsec Energy: USA Production / Development

 Well results exceed pre-drill resource estimates.  Additional 4 pay sands to that of target sand.  Test results confirm high production rates: > 20 MMcfgpd + 400 BOPD in target sand.  Large structural closure over 3 offshore leases (15,000 acres).  Upside potential exceeds pre-drill mapped potential for the target sand, 183 Bcf, 3.7 MMbbl.  Multiple development well locations (3 to 8).  The initial well was drilled as a straight hole and was not designed to test all potential reservoirs in the most advantageous structural positions  One sand was tested and completed for production  Reservoir D appears to exceed our pre-drill mapped upper target range of 183 Bcf & 3.7 MMbbl (34 MMboe).  Significant upside potential exists in additional reservoirs that have hydrocarbon shows and log calculated pay but were not tested  Future development and delineation wells will test the reservoirs in more

• ptimum locations

Hummer Structure Map Schematic Cross Section

Yemen – Oil & Gas Exploration History

 Little exploration until early 1980’s  Commercial success rates in past 30 years of exploration wells in the order of 30%.  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% of 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)

Block S-1 Block 7

Petsec Energy: Yemen Production / Development

Block 7 Block S-1

Houthi

Glencore lifts 3-4 million bbls in August 2016 & 2-3 million bbls in January 2017

 The areas of conflict are highlighted in Red - located approximately 350km west of Petsec oil and gas fields .  Export terminals, pipelines and associated infrastructure are intact and have been well maintained.  Petro Masila is currently producing approximately 50,000 BOPD and exporting crude

• ut of the Ash Shihr Terminal near the city of Al Mukalla on the Arabian Sea.

 Coalition is moving on the Red Sea port city of Hudaydah to free it of rebel occupation and to restart oil production from the Marib-Shabwah Basin through the Marib Oil Pipeline to its terminus at Ras Isa, near Al Hudaydah.

Yemen – Current Political Climate

Petsec Energy: Yemen Production / Development

Block S-1 Block 7

Marib Export Pipeline to Ras Isa Terminal in the Red Sea An Nagyah Central Processing Facility

Al Meashar Oilfield

 An Nagyah Central Processing Facilities: Capacity - 20,000 BOPD; connected by 80,000 BOPD pipeline to the Marib- Shabwah Production Hub; 400,000 BOPD oil pipeline 438 km to the Ras Isa Terminal on the Red Sea, near Port of Hudaydah.  The An Nagyah Oilfield, holds 12.8 MMbbl of oil gross to Petsec Energy (5.6 MMbbl net to Petsec with a NPV10 in the

• rder of US$155MM at 1.1.2017).

 Shut-in since February 2014, at a restricted rate of over 5,600 BOPD, was producing 10,000 BOPD at an unrestricted rate two years earlier.  Additional 4 undeveloped oil and gas fields – Osaylan, An Naeem, Wadi Bayhan, and Harmel which hold approx. 35 MMbbl of recoverable oil and 550 Bcf of gas.

Gross Recoverable Reserves 5 MMbbl Gross Recoverable Reserves 12 MMbbl Cond. 550 bcf Gas Gross Recoverable Reserves 17 MMbbl

An Nagyah Petsec Gross 2P Reserves = 12.8Mbbls [5.6 MMbbl net to Petsec] Gross Recoverable Reserves 1 MMbbl Cond.

50 bcf Gas The CPF connected to the Marib Export Pipeline (400,000 BOPD capacity) to the Export Terminal at Ras Isa on the Red Sea.

Petsec Energy: Yemen Production / Development

Damis (Block S-1): 5 Oil & Gas Fields ~ 47.8 MMbbl oil + 550 Bcf gas

Pipe Laydown Yard

Central Processing Facility

30m

Damis (Block S-1): An Nagyah Oilfield Central Processing Facility (CPF)

 The previous operator has invested over US$450MM developing the An Nagyah Oilfield;  The An Nagyah production facility has been well maintained during the shut- in period and remains in good condition  A recent survey of well heads, pumping station, generators, compressors, control room, pipelines and warehouse confirmed there is no damage and the field can readily be restarted.

Generators & Office Block

 Management is planning to restart production at the An Nagyah Oilfield in 2017.  Planning to transport crude by truck East to the Masila Basin Pipeline Hub then transported through the pipeline South to the Ash Shihr Oil Terminal on the Gulf of Aden, near the city of Al Mukalla.  Current restart activities include:

 Onsite preparations for truck loading facilities  Construction of oil tanker loading facility  Complete contract negotiations for:

• Trucking to Masila Pipeline Hub
• Pipeline access and storage Masila-Ash Shihr
• Sale & shipping of oil from Ash Shihr

Crude Storage

An Nagyah Oilfield Production Restart: Transport by Truck

Crude Processing Train Trucking

 The An Nagyah Oilfield contains a 50 metre oil column and up to a 135 metre gas cap at its structural crest.  Oil is produced through vertical and horizontal wells drilled across the sandstone reservoir.  Production in the field is maintained through an active aquifer in the north-west flank of the field and via gas expansion in the up dip South-Eastern crest where there is a significant gas cap.  Peak production has exceeded 12,000 BOPD but has been limited by gas compression capacity for the re-injection of produced gas back into the reservoir.  The re-injected gas maintains reservoir pressure and allows for greater recovery of oil from the field.

A B

E E’

East Side – gas cap expansion Central – early gas cap expansion, and bottom water drive West Side: bottom water drive

B A

Oil Gas Water

An Nagyah Oilfield Geological Cross Section

An Nagyah Oilfield Truck / Pipeline Routes to Block 4 & Block 14 Pipelines

Red Route: Full Tankers Blue Route: Empty Tankers

An Nagyah CPF

An Nagyah Oilfield Production Restart: Truck Loading & Offloading

Truck loading gantry tie-in point

Block 14 - Offloading Arms Block S-1 An Nagyah CPF Block 14 - Metering & Pumps

 Contract executed in March for oil tanker loading facility  Installation of twin arm 5,000 BOPD tanker loading gantry will connect to existing, valve controlled, blank on main storage tank  Petro Masila’s Block 14 offloading facility in the Maslia Basin has a 20,000 BOPD capacity

Habban EUR 350mmbbls

Block 3 Block 7

3D Volume Omega Lead West Irema Lead East Irema Lead

Habban Field Habban Oilfield Al Meashar Oilfield

 Block 7 is located approximately 80km east of Block S-1, within the prolific Shabwah Basin.  The block holds the Al Meashar Oilfield (two wells) - targeting 11 MMbbl

• il gross (9.3MMbbl net) to > 50 MMbbl potential.

 In addition, there are eight seismically (3D and 2D) defined prospects and leads with mapped target sizes ranging from 2 – 900 MMbo all with the same primary

• bjectives
• f

the Khulan-Basement reservoirs productive in OMV’s Habban Oilfield 14km to the west of Al Meashar in the adjacent Block S2 (recent past production 20,000 BOPD).  Significant potential is also recognised in Cretaceous sands of the Lam formations (An Nagyah Block S-1 production) - extensive shows in the wells drilled in Block 7 and flowed over 1000 BOPD in the neighbouring Habban Oilfield.

Al Barqa (Block 7) Development & Exploration Potential

Source: Oil Search Limited

Block 7 Block S-1

 The Al Meashar 1 & 2 discovery wells intersected an oil column in excess of 800m in the Kuhlan Sandstone and Basement formations, the same formations as in OMV’s Habban Oilfield which has an oil column of 945m and has been producing ~20,000 BOPD up until production was suspended in March of 2015.  The Al Meashar undeveloped oil discovery within the drilled fault block – two well intersection targets 11 MMbbl oil gross (9.3 MMbbl net) with potential to increase to > 50 MMbbl within the currently mapped red Lowest Closing Contour.  The oil column identified in the Al Meashar wells exceeds the mapped structural closure by more than 200m as defined by the red LCC contour in the map

• below. Current estimates of oil target within the oil-down-to (ODT) green contour exceeds 110 MMbbls.

 Development drilling on the Al Meashar structure is expected to extend the oil potential of the entire play fairway within the Block 7 licence area.

Al Barqa (Block 7) Al Meashar Development Potential

Reserves Estimate LCC Oil Down To TD

E W

Lowest Closing Contour Al Meashar-2 Oil Down To 2C Reserves

Al Meashar Oilfield Structure Map

E W

Lowest Closing Contour Target Potential >50MMbbls Oil Down To TD Target Potential >110MMbbls

Al Meashar 1&2 Fault Block Target Potential >11MMbbls

Yemen Reserves Potential 6 Oil / Gas Fields, 8 Exploration Prospects

An Nagyah Oilfield: NPV10 of US$155MM net to Petsec Energy (1.1.2017 reserves audit engineers DeGolyer MacNaughton)

439MMbbls

Wadi Bayhan

Petsec Yemen Portfolio Six Oil/Gas Fields Undeveloped Block 7 Prospects

An Nagyah

Developed

What are the key drivers to achieve latent value?

USA

Hummer  First production from Hummer discovery well - Sept 2017 with > 20 MMcfpd + 400 BOPD  Generating net cashflows of ~ US$2.5MM p.a.  Reserves drilling late 2017 / early 2018 with potential to add 3 to 4 times current reserves Mystic Bayou  Reserves drilling mid 2018 with potential to add 2 to 3 times current reserves Risks  Drilling outcomes

YEMEN

An Nagyah Oilfield  Restart of production in 2017 with ramp up to 5,000 BOPD  At oil prices of US$50/bbl, trucking 5,000 BOPD, expected to generate Company revenues of US$5MM/month, net cashflow of US$2.5MM/month  Re-opening of Marib Export Pipeline to Ras Isa Oil Terminal allowing production to increase from 5,000 BOPD towards 10,000 BOPD Risks  Delays to restart of An Nagyah Production – Approvals, long lead items, contractual negotiations, political environment

Key Drivers of Petsec Energy Valuation

Petsec Energy Ltd

Investor Presentation Resources Rising Stars Conference May 2017