PETRATHERM LIMITED ABN

Transcription

1 ASX Release PETRATHERM LIMITED ABN Company Update & Overview Presentation Petratherm s Managing Director, Mr. Terry Kallis, will present in Sydney on Thursday 11 September to the Renewables / Future Energy Meeting of Minds 2008 Forum sponsored by ABN AMRO. The Forum will enable eight selected high profile renewable energy companies to meet with over a dozen of the largest institutional investors over three hours to discuss the prospects of their companies and the renewables sector generally. 10 September 2008 The three key messages from the Company s presentation (attached) are as follows: Petratherm has developed an international and balanced portfolio of quality geothermal energy projects in Australia, Spain and soon to be developed in China. The Paralana Geothermal Energy JV Project is expected to be commercially viable at all stages and is considered the best Australian geothermal energy project. The Madrid District Heating project exhibits excellent prospects for high internal rates of return with revenues as early as mid ASX Code: PTR Yours faithfully ABN Greenhill Road Unley 5061 South Australia Tel: Fax: W: E: admin@.com.au Terry Kallis Managing Director MEDIA CONTACT: Terry Kallis Petratherm Ltd Kevin Skinner Field Public Relations /

2 Company Update & Overview Presentation September 2008 Managing Director Terry Kallis Explorer and Developer of Geothermal Energy

3 Disclaimer This presentation has been prepared by Petratherm Limited (Petratherm). The information contained in this presentation is a professional opinion only and is given in good faith. Certain information in this document has been derived from third parties and though Petratherm has no reason to believe that it is not accurate, reliable or complete, it may not have been independently audited or verified by Petratherm. Any forward looking statements included in this document involve subjective judgment and analysis and are subject to uncertainties, risks and contingencies, many of which are outside the control of, and maybe unknown to, Petratherm. In particular, they speak only as of the date of this document, they assume the success of Petratherm s strategies and they are subject to significant regulatory, business, competitive and economic uncertainties and risks. Actual future events may vary materially from the forward looking statements and the assumptions on which the forward looking statements are based. Recipients of this document ( Recipients ) are cautioned not to place undue reliance on such forward looking statements. Petratherm makes no representation or warranty as to the accuracy, reliability or completeness of information in this document and does not take responsibility for updating any information or correcting any error or omission which may become apparent after this document has been issued. To the extent permitted by law, Petratherm and its officers, employees, related bodies corporate and agents ( Agents ) disclaim all liability, direct, indirect or consequential (and whether or not arising out of the negligence, default or lack of care of Petratherm and/or any of its Agents) for any loss or damage suffered by a Recipient or other persons arising out of, or in connection with, any use or reliance on this presentation or information. All amounts in Australian dollars (AUD) unless stated otherwise. 2

4 Corporate Overview Madrid & Barcelona Direct heat, EGS and hydrothermal China Exclusive exploration agreement Key Statistics Current shares on issue 57.9m (plus m options) Market capitalization $35m (at share price of $0.60) Cash $4.5m Major shareholder Minotaur Exploration (34%) Projects Tenerife & Gran Canaria Volcanic geothermal South Australia Paralana, Callabonna and Renmark 11 projects spanning South Australia, Spain and China EGS, conventional and direct heat Flagship project Paralana Exciting growth projects: Direct heat, conventional and EGS geothermal projects covering Madrid, Barcelona and the Gran Canaries Exclusive government supported exploration agreement in China Joint Venture Partners Beach Petroleum (up to 36% for $30m) TRU Energy (up to 30% for $57m) 3

5 Business Model Leverage off core competencies (project identification and proof of concept) Focus on projects that exhibit all of the necessary ingredients to be commercially viable Appropriately diversify Develop partnerships with financially and technically strong industry participants Secure free carry arrangements where appropriate Use Petratherm s geothermal expertise and unique Exploration Model to identify economically viable geothermal prospects ready for drilling. Discussed later in more detail on slide 8. Geography build a manageable international portfolio. Gain exposure to countries with comparatively high electricity prices and favourable regimes for renewable energy. Technology and market build a balanced portfolio. Conventional geothermal through to hot rocks, as well as hot water (direct use). Secure the funding and external expertise required to commercialise projects. Leverage off partnerships to pursue other opportunities where possible and use experience gained from partners to advance Petratherm along the knowledge curve. Recognise that diversifying risk and securing resources can add real value. Assess the balance between the benefits of introducing partners with the value impact of diluting project interests. Whilst project ownership/control is not essential at all projects, the intention is to maintain control at several projects in the portfolio. 4

6 Why Petratherm is a Standout Quality portfolio of projects High quality resource. Market focussed (proximity, competitive, product) Location/Regulatory Environment. Value Diversification Value in Paralana recognised by industry experts. In Petratherm s view, even more value exists in overseas portfolio (not currently understood by market). Value not yet appreciated by the market. Growing international portfolio covering the entire geothermal spectrum. Expertise Flagship project expected to be fully funded Petratherm geological, renewable energy experience, exploration, project development, commercial Beach Petroleum subsurface, well design, drilling TRU Energy generation, transmission, sales Paralana expected to be fully funded through to 30MW. Project finance thereafter. Substantial upside 100% ownership Endorsement by leading industry participants EGS, direct heat and conventional projects in Madrid, Barcelona, Tenerife and Gran Canaria. Exclusive exploration agreement in China. Further underexplored tenements in Spain. Substantial commitments by Beach Petroleum and TRU Energy. $50m election commitment from previous Federal Government. 5

7 Petratherm s Achievements Petratherm has demonstrated its ability to deliver on its objectives. The achievements over the past two years have created the platform for substantial activity and value creation over the coming 12 months. Beach Petroleum Farm In to Paralana Geothermal Project in Barcelona Spanish media group acquired stake in Petratherm Secured conventional geothermal project on Gran Canaria $50m Coalition election commitment to Petratherm Positive Madrid district heating pre feasibility assessment $57m TRUenergy Farm In to Paralana 30 Jan Feb Feb 07 4 Jun Jun Jun 07 8 Oct 07 1 Nov Nov Nov May Jul 08 4 Aug 08 3 Sep 08 $5m Federal Grant Offer for Paralana Paralana Project moved to well design & rig selection Secured conventional geothermal project on Tenerife Exclusive agreement with Chinese Gov. institutions Petratherm announced drill rig plan Madrid district heating Feasibility Study commences Drilling rig secured for Paralana 6

8 Project Pipeline / News Flow Petratherm has an exciting project pipeline. Many key milestones to be achieved over the next 18 months. Groundwork at Paralana complete all systems go. Madrid hot water project not far behind. Strong news flow Paralana Drilling Paralana 2 Confirm Temperature Paralana 2 Complete Fracture Testing Order plant Drilling Paralana 3 Plant Construction Plant Commissioning Madrid Hot Water Final Feasibility Study Commit to well Heat Sales Agreement with University & Madrid Gov Financing Agreement signed for Post drilling capex Drilling Construction Commissioning begins China Selection of preferred parties and most prospective projects; drilling of first geothermal well. Tenerife detailed exploration assessment of geothermal potential; selection of site for first well; drill first well. Barcelona permitting; detailed geochemistry and geophysics work. 7

9 Necessary Ingredients to successfully take a geothermal project to market Permitting Land access. Government support and incentives. Carbon trading schemes. Support from financially strong JV partner(s). Government funding support. Above and below ground for various end products. Project management capability. Geological, scientific and commercial. Marketing and sales. Access to market. Proximity. Price. Competition. Alternative supply options. Identification. Exploitation. Characteristics (temperature, size, depth, flow) 8

10 Paralana Project - Overview Has the unique ingredients to be commercially viable at all Stages! Temperature and flow rate. Very close to market for initial plant (7.5MW). Off grid market ~ Heathgate Resources Beverley Uranium Mine (10km) and Four Mile. Subsurface and above surface expertise. Potentially fully funded to initial commercial scale plant. Endorsement from major industry participants. $5M Federal REDI Grant. Ability to scale up in commercially viable increments (7.5, 30, 260 and 520 MW) reduces risk! Next step is drilling 4 km HEWI wells. 9

11 Paralana Project Value Considerations Parameter Key Project Parameters Units Petratherm Assumption Temperature ºC 200 Depth km 3.6 Flow lps 75 Net Output per well MW/well 3.8 Total Capex (for 30MW) $m 190 Price $/MWh 125 Capacity Stage 1 (2011) MW 7.5 Capacity Stage 2 (2013) MW 30 TRU Energy Agreement TRUenergy Farmin (Aug 2008) for up to $57M for 30% $3M first well and stimulation. $3M second well and stimulation earns 10%. After HEWI, have an Option to earn a further 5% for $7M. After 7.5 MW pilot plant Option to earn a further 15% for $44M. Plus equity share of project costs at every stage. Comparison With Other Companies Projects Key Project Parameters GDY PTR PAX TEY GRK KEN Market capitalization 4/9/08) High heat flow (>110 mw/m 2 ) Intermediate heat flow temperature confirmation Deep drilling (for proof of concept)* Proof of flow at commercial rates Local connection (<20km) for initial expansion (>5 MW) Local connection paying off grid pricing JV Partners with deep drilling experience Funding to initial commercial scale? PTR and PAX have announced they will commence drilling in Note based on ASX releases and related to primary projects How Should Paralana Be Valued? The final payment for TRU to acquire 15% implies a value of $293m for Paralana (100%). ~$100m for Petratherm s share of Paralana (assuming Beach Petroleum also exercises). Petratherm s share of project costs to this point are fully funded (based on expected capital). Given Petratherm also has an advanced direct heating project in Madrid, other exciting direct heating, EGS and conventional geothermal projects in Spain, and an exclusive exploration agreement in China, why is Petratherm s market capitalization only $35m? 10

12 Madrid District Heating Resource Three 2000m wells have been drilled, defining an area of at least 50km 2, around 80 o C fluid at 200 m 3 /hr at ~ m depth. Geomadrid Prefeasibility Study indicates doublets Producing 8MWt with an annual production in excess of 45,000MWh (thermal). Strong government support for renewables and energy efficiency (particularly buildings) at all levels of government. Potential for multiple projects from the geothermal resource. Geomadrid is only the first application. Expected to be an economic project with attractive returns! Recent Well Assessment 11

13 Madrid Geothermal Projects 12

14 Geomadrid Economics Key Project Parameters (1) Parameter Units Petratherm Assumption Temperature ºC 75 Depth km 2 Flow m 3 /hour 200 Annual production MWh/annum 45,000 Drilling Capex $ 4.8 Plant Capex $ 1.8 Transmission Capex $ 3.1 Total Capex $ 9.7 Price /MWh 45 Capacity (2010) MW 8 IRR (ungeared/geared) % 13%/19% (2) GEOMADRID WELLS HOSPITAL COMPLEX AUTONOMOUS UNIVERSITY CAMPUS (1) Based on the pre feasibility report (by GPC IP) and the well assessment report. (2) Based on one additional production well. There is significant potential for further upside in the Geo Madrid project through the following opportunities; Increased demand with the development of two new building complexes expanding the annual production and sales to 54,000 MWh from the doublet system; Reduction in per MWh reticulation costs with larger demand and no retro fitting costs for new buildings; Increased sale price per MWh due to the increased cost of alternate heating sources potential to double sale price of heat output; and Potential for energy efficiency subsidies associated with improved energy use in buildings REGIONAL GOVERMENT BUILDINGS 13

15 Other Projects Canary Islands - Tenerife and Gran Canaria Active volcanic terrain. Tenerife & Gran Canaria contain 85% of the energy demand. Tenerife Population ~ 1 Million; load > 800 MW; Off grid (Diesel & Wind). MT data consistent with magma chamber at 3 4 km below surface. Recent analysis by ITER indicates presence of a hydrothermal system with ºC and bars pressure. China Exclusive exploration agreement with four Chinese government institutions. Large market for clean electricity. Underexplored. Bottom hole gradient 94 o C/Km Source: Hu Shengbiao, He Lijuan and Wang Jiyang

16 Thank You Greenhill Rd, Unley, South Australia, 5061 Tel: ASX code: PTR 15

17 Paralana Project Joint Venture Beach Petroleum Farmin (Jan 2007) for up to $30M for 36% $5M first well and stimulation $5M second well and stimulation earns 21% After HEWI Option to earn a further 15% for $20M Plus equity share of project costs at every stage TRUenergy Farmin (Aug 2008) for up to $57M for 30% $3M first well and stimulation $3M second well and stimulation earns 10% After HEWI, have an Option to earn a further 5% for $7M After 7.5 MW pilot plant Option to earn a further 15% for $44M Plus equity share of project costs at every stage Beach Petroleum, TRUenergy and Petratherm have complementary sets of skills and represent a formidable collaboration for the Paralana Project 16

18 Project Costs and Wind Comparison Stage 1 HEWI model $25M to $30M Stage MW pilot plant add nl $40M to $45M Stage 3 30 MW demo. plant add nl $125M to $130M Total 30 MW Project estimate* around $190M to $200M (*total current cost estimates and includes all transmission/substation costs) Paralana Project cost per MW of installed capacity is around $6M for a 30 MW base load project operating 24/7 capacity factor of around 95% would produce about 250 GWh annually Wind Project cost per MW of installed capacity is around $2M for a project size of greater than 30 MW and typically only operates for 1/3 rd of the time capacity factor of 33% and producing around 87 GWh annually For a comparable annual output of 250 GWh the wind farm would need to be almost 90 MW (3 times larger than Paralana 30 MW) and hence overall capital costs to produce would very similar at around $180M Off grid pricing for Paralana enhances the overall project economics. 17