STRIKE ENERGY Limited Energy Users Association of Australia - 4 June 2014

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1 STRIKE ENERGY Limited Energy Users Association of Australia - NSW Energy Forum 4 June 2014

2 Company Overview: Corporate Strike Energy Limited (ASX : STX) is an Australian based, independent oil and gas exploration and production company. The company is focused on the development of a substantial gas resource in the Southern Cooper Basin to meet Eastern Australian gas market demand. Listing ASX (ticker STX) Issued Shares 833,330,946 Options/ Performance Rights 21,900,000 Market Capitalisation $100.0 million (2 June 2014) Production (2012/13) 100,698 boe Revenue (2012/13) $4.6 million Analyst Coverage Firm Bell Potter Blackswan Equities Ord Minnett Wilson HTM RBC Capital Lonsec Analyst Di Brookman Michael Eidne John Young James Redfern Andrew Williams Tim Gerrard 2

3 Australian east coast gas demand Historically, Australia s east coast gas demand approximated 650 -> 750 PJ/annum, was over supplied and characterised by low pricing (A$2-$3/GJ) and low liquids upside. The maturation of significant coal seam gas (CSG) reserves in the Bowen and Surat Basins were the enabler of a massive investment program, commencing in 2011, involving an initial 6 LNG trains at Gladstone, Queensland. This investment is unlocking onshore gas resources by connecting these resources to global energy demand. A 1,400 TJ/d Arrow project (yet to be sanctioned) B 9.0 mtpa capacaty + 1,415 TJ/d Mount Isa Bowen and Surat Basin D A B C Global Energy Demand East coast export exploiting supply (shipping cost - US$ 1.25 MMBtu) advantage to Asian markets C 8.5 mtpa capacaty + Moomba Brisbane ~ $60 billion investment (6 LNG trains - Gladstone) Annual total gas demand (PJ/yr) East coast gas demand 1,300 TJ/d 9.0 mtpa capacaty = Adelaide Sydney Total New LNG demand 4,115 TJ/d [4.0 Bcf/d] Melbourne Existing demand 1,900 TJ/d Hobart pipelines Key gas pipelines Substantial east coast LNG investment driving onshore gas demand increase of ~ 4.0 Bcf/d 3

4 Changing market dynamics All three LNG projects are likely to be short gas. Moreover, there is increasing uncertainty as to the deliverability, rate and cost of a significant component of equity gas outside of the core CSG sweet spots. Supply Significant cost tiering emerging across LNG JV equity gas reserves. There is significant displacement potential from competitive third party supply. PricING Onshore gas reserves now linked to oil-indexed LNG price. New gas supply contracts largely governed by a LNG netback pricing model Forecasts for the East Coast gas cost curve in 2019E Ex-plant breakeven (A$/GJ) A$/GJ Gas Price A$/GJ (Moomba ex- plant) Queensland CSG Tranche Cooper unconventional Queensland CSG Tranche 2 A$7.96/GJ 6 Gunnedah Tranche 2 Gippsland (Future) Queensland CSG Tranche 1 5 Narrabri CSG Trefoil Cooper Basin infill Bass Strait (New) NSW CSG (Other) Surat Conventional BassGas Otway/Minerva Cooper Basin Bass Strait Gloucester QLD CSG Sweet-spots 2019E Demand Strike comment: - significant project, deliverability, rate and cost uncertainty creating opportunity for new competitive third party supply 0 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 TJ/d Source: Goldman Sachs Global Investment Research Eastern Australia onshore gas reserves now connected to oil-indexed contracted LNG 4

5 Eastern Australia - where will the gas come from? While there are a number of very large gas resources with potential to supply Eastern Australia, near term gas supply will be limited to those resources with access to existing infrastructure and with supportive regulatory environments. Gippsland Basin JV Cooper Basin Conventional infill development Unconventional resources Shale Tight sands Basin centred gas Gas saturated coals 5

6 New supply focus - Cooper Basin In response to both current and likely future gas demand, created by the connection of onshore resources to export markets, a new focus on the Cooper Basin is endeavouring to prove up substantial new reserves. The Cooper Basin is known as Australia's most prolific onshore hydrocarbon basin with 6 Tcf of gas produced to date. The Basin is connected to all major gas pipeline infrastructure. Key companies targeting Cooper Basin'unconventional' * * Mount Isa Bowen and Surat Basin Gladstone Global Energy Demand Moomba Cooper Basin Brisbane ~ $60 billion investment (6 LNG trains - Gladstone) Adelaide Sydney * Two recent Cooper Basin farm-in deals establish unconventional acreage value ~$800-$900 / acre Melbourne Hobart Gippsland Basin Key gas pipelines Cooper Basin is seen as most prospective unconventional resource to deliver commercial reserves of 5-20 Tcf 6

7 Cooper Basin participants and emerging focus More than 85% of 2P gas reserves in Eastern Australia are coal seam gas based. In the Cooper Basin, the gas saturated coals are an increasing focus of commercial appraisal to meet current and future gas demand. Gas saturated coals emerging as the cheapest source of abundant gas - sustained gas flows already achieved from Patchawarra coals. The Cooper Basin could contain more gas than Santos thought after it fracked deep coal seams below its oil and gas fields. The substantial gas flows have excited chief executive David Knox to the extent that he now says his Cooper Basin ground is now considered more prospective. This could be good news for other Cooper producer explorers that sit above the deep coals, including Senex, Beach Energy, Strike Energy, Ambassador Oil and Gas and DrillSearch. In its full-year results Santos revealed its Moomba-194 vertical well had flowed at the strong rate of a million cubic feet of gas a day from coal seams 3km deep after what it called some innovative hydraulic fracturing (fracking). "The deep coal is field-wide. If that produces gas, and we've demonstrated it does, then this is extremely exciting," Mr Knox said. When challenged on a post-result investor call about his confidence in overall basin reserves, the Santos boss again mentioned the coals. "Our belief in the prospectivity of the acreage has not changed," he said. "In fact, the recent results probably improved that belief, particularly around the deep coal." The Australian - Mar 3, 2014 SACB JV (Santos - operator) Gas saturated (deep) coals, shale gas and basin centred gas Moomba Southern Cooper Basin PEL 94 PEL 96 PEL 95 Strike Energy Gas saturated coals Beach / Chevron Shale gas and basin centred gas Senex / Origin Energy Tight gas sands; shale gas and deep coals Drillsearch / BG Shale gas and basin centred gas Gas Pipeline Oil Pipeline NTS: illustrative purpose only The Cooper Basin's gas saturated coals are an emerging focus of commercial appraisal 7

8 Cooper Basin - vertical section illustrating target horizons Strike s appraisal program has confirmed the presence of thick, gas saturated coals. The target interval at Le Chiffre 1 and Klebb 1 is in the optimal gas generation window at a relatively shallow depth. This delivers significant well cost advantages compared to deeper unconventional Cooper Basin activity. Target Zone - Depth Surface COMPANY Cooper Basin: Primary Unconventional hydrocarbon targets and Permit Areas South North Southern Cooper Basin Nappamerri Trough - 1,500m - 2,200m Strike Energy Le Chiffre 1 Klebb 1 Primary Target Gas saturated coals PEL 96 PEL 516 PEL 115 SACB JV ATP 94OP PEL 218 ATP 855P Senex* Origin Energy Primary Target Tight gas sands; shale gas and deep coals - 3,000m SACB JV* Primary Target Gas saturated (deep) coals, shale gas and basin centred gas Drillsearch* BG Primary Target Shale gas and basin centred gas - 4,000m Beach* Chevron *Approximations only of target zone depth and permit areas Primary Target Shale gas and basin centred gas Strike s relatively shallow target horizon delivers significant well cost advantages 8

9 Strike's Southern Cooper Basin Gas Project Following appraisal drilling, the mean estimate of the prospective resource within Strike s PEL 96 pemit increased to 4.5 Tcf (Phase One Area 1.25 Tcf). This resource is located directly beneath the Moomba to Adelaide Pipeline System (MAPS). Strike has control of planning, timing and execution of activities in PEL 96 (Strike 66.67% and operator). Strike has 35% interest in PEL 94 and 50% interest in PEL 95. PEL 94, 95 & ,870 acres (net to Strike) Davenport 1 - net coal 110m - TD 2,102m Marsden 1 - net coal 43m - TD 2,625m PEL 95 Le Chiffre 1 - net coal 105m - TD 2,089m Klebb 1 - net coal 147m - TD 2,193m PEL Tcf prospective resource (PEL 96) Equivalent to 500 TJ/day over 25 years supply profile 500TJ/day PEL 96 Weena Trough (including PEL96 Phase One Area) 570km 2 Battunga Trough Milperra Trough Larow Trough Weena Trough Strike Wells Drilled PEL 96 Offset Wells PEL 96 Phase One Area Gas Pipeline Oil Pipeline Strzelecki Track Strike Phase One Area wells drilled 4.5 Tcf prospective resource (PEL 96) 9

10 Southern Cooper Basin Gas Project: Rapid commercialisation program To date, unconventional appraisal in the Cooper basin has been characterised by high costs, slow progress and long-dated commerciality. The drivers of these outcomes have included target zone depths, pressures, temperatures and associated technical complexities and geological uncertainties. In contrast, Strike s relatively low cost and rapid commercialisation program is on track to supply gas to east coast markets in Q1 Q2 Q3/Q4 Detailed production test planning Objective - completion design and planning Initial production testing Objective - sustained gas flow to surface Production optimisation Objective - optimise well performance to demonstrate commerciality 2P reserves maturation Development Target gas production Strike s Gas Project positioned as frontrunner for new gas supply 10

11 Southern Cooper Basin Gas Project: PEL 96 Phase One Area path to market The production testing and development timing for the PEL 96 Phase One Area positions Strike as the frontrunner to meet the forecast east coast gas shortage. The 1.2 Tcf prospective resource in the PEL 96 Phase One Area could supply up to ~25% of NSW gas demand. A clear path to market has been established. Activity PEL 96 Phase One Area PEL 96 PEL 96 (STX Operator) - Phase One Area Appraisal Initial production testing Production optimisation Development Gas supply to foundation customer Gas supply to domestic east coast customers ++ Initially, STX could supply up to ~25% of NSW gas demand from the 1.2 Tcf PEL 96 Phase One Area resource Clear path to market established with Orica as foundation customer 11

12 Gas off take agreements Strike has entered into gas off take agreements for up to 292.5PJ of gas with three major industrial gas users. The agreements are conditional on project FID and include prepayments as milestones towards FID are achieved. These agreements will underpin development of an initial project to deliver up to 33PJ pa (~100 TJ/day) (Strike share 22PJ pa, ~65TJ/day). The agreements reflect a balance of risk and reward via a portfolio of production cost based, fixed with indexation and market linked pricing. Delineation of reserves in excess of our current off take commitments will provide scope for additional gas sales. Orora Gas Supply Option Agreement for up to 30PJ 15 January, 2014 Orica Foundation Gas Supply Agreement for up to 250PJ 25 March, 2014 Austral Bricks Gas Supply Option Agreement for up to 12.5PJ 27 February,