for personal use only · us$75/bbl oil escalated at $5/bbl/yr to $100/bbl, then flat. cost of...

Annual General Meeting

29 November 2012

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Disclaimer

NOTE: In accordance with ASX Listing Rules, any hydrocarbon reserves and/or drilling update information in this report has been reviewed and signed off by MrLaurence Roe, B Sc, Managing Director of Target Energy, who is a member of the Society of Exploration Geophysicists and has over 30 years experience in thesector. He consents to that information in the form and context in which it appears.

Target reports Barrels of Oil Equivalent (BoE), using a gas to oil conversion rate based on equivalent thermal energy , i.e. 6000 cubic feet of gas = 1 Barrel of Oil)

This Presentation is provided on the basis that none of the Company nor its respective officers,shareholders, related bodies corporate, partners, affiliates, employees, representatives and advisersmake any representation or warranty (express or implied) as to the accuracy, reliability, relevance orcompleteness of the material contained in the Presentation and nothing contained in the Presentation is,or may be relied upon as, a promise, representation or warranty, whether as to the past or the future.The Company hereby excludes all warranties that can be excluded by law.

The Presentation contains prospective financial material which is predictive in nature and may beaffected by inaccurate assumptions or by known or unknown risks and uncertainties, and may differmaterially from results ultimately achieved.

All persons should consider seeking appropriate professional advice in reviewing the Presentation and allother information with respect to the Company and evaluating the business, financial performance andoperations of the Company. Neither the provision of the Presentation nor any information contained inthe Presentation or subsequently communicated to any person in connection with the Presentation is, orshould be taken as, constituting the giving of investment advice to any person.

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Business Strategy

• Target Energy Limited is an exploration and production company listed on the ASX, stock code “TEX”, with offices in Houston, Texas and Perth, Western Australia.

• Target’s business strategy is to acquire meaningful acreage leaseholds in U.S. on‐shore hydrocarbon basins that have significant infrastructure, access to oilfield services and supply companies and, most importantly, significant un‐tapped hydrocarbon reserves.

• Our objective is to grow production, reserves and cash flow “through the drill‐bit” by applying current oilfield technology to known hydrocarbon producing formations that will yield meaningful production, proved reserves, cash flow and shareholder value.

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Corporate Snapshot

Directors & Management

Chris Rowe ChairmanLaurence Roe Managing DirectorStephen Mann Non Executive DirectorRowan Caren Company Secretary

Ralph Kehle Chairman, TELA (USA)Mike Martin Non Executive Director, TELA (USA)**Don Sytsma VP Finance, TELA (USA)Gregg Bonagurio Reservoir & Production Engineer

*TELA (USA), Inc. is a wholly‐owned subsidiary of Target Energy. **To 29 November 2012

Shares on issue (TEX) 403.6m

Options $0.07 exp 31 Mar 2013 16.6m$0.10 exp 31 Mar 2014 40.5m$0.12 exp 24 Oct 2014 0.8m

Market cap A$40m

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Target Energy Projects

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• Target Energy Lease‐hold (gross acres): 3,492

• Target Energy Working Interest: 60%

• Net Revenue Interest: 75%

• Estimated number of vertical development locations in 3,492 ac leasehold:

At 40 acre spacing 87

At 20 acre spacing 174

Howard & Glasscock Counties

Fairway ‐ Permian Basin Wolfberry Oil Resource Play

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US Focus ‐ Texas & LouisianaTarget Energy Fairway Project

Source: Laredo Petroleum @ Executive Oil Conference 3 April 2012

Substantial activity in Permian Basin with numerous plays with stacked targets and the with recent growth of horizontal drilling. Plays include Bone Spring, Avalon Shale, Wolfbone, Wolfberry, Wolffork, Wolfcamp Shale, Penn Shale, Cline Shale etc.

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Source: Tudor Holt Pickering @ Executive Oil Conference 3 April 2012

Target Energy Fairway Project

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• BOA 12#1Wolfberry well ‐ drilled 2011. Currently producing app 30‐50 BOPD + 100 mcfgd.

• Darwin #1Wolfberry/Fusselman well ‐ drilled 2012. Initial Fusselman reserves estimated at 200,000 BO. Gas line being laid to well. Expect to go into production in December at 160 BOPD + 300 mcfgd.

• Darwin #2Offset to Darwin #1 to produce from Wolfberry. Waiting on rig – expect to start drilling next week.

• Darwin #3800m east of Darwin #1. Well will test Fusselman and Wolfberry. Drilling planned for late December, after Sydney #1.

• Sydney #1Drilling in new leasehold. Well is approx 1000m from existing third‐party Fusselman well flowing 190 BOPD + 304 mcfgd. Drilling planned for December after Darwin #2.

• Partners are also looking at an active 2013 drilling campaign at Fairway.


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Darwin #1 expectedIP 160 BOPD; 300 mcfgd

Trilogy FusselmanIP 167 BOPD



Trilogy FusselmanIP 99 & 354 BOPD

Cobra WolfberryIP 114 & 68 BOPD

Linn WolfberryIP 110 BOPD

Cobra Wolfberry68 BOPD

Cobra WolfberryIP 26, 56 BOPD

Linn WolfberryIP 63 BOPD

Cobra WolfberryIP 72 BOPD

Howard Glasscock Field (1925)

1 mile

1.6 km

Laredo WolfberryIP 136 BOPD

Howard CountyGlasscock County

IP = Initial Production

BOA 12 #1

Crownquest124 BOPD

Laredo WolfberryIP 102 BOPD

Cobra WolfberryIP 26, 56 BOPD

ProducerProposed Well LocationTarget Energy leasehold

Trilogy Fusselman Tests195, 277, 210, 480 BOPD

Trilogy WolfberryIP 30 BOPD

Sydney #1Proposed location

Darwin #2, #3 proposed locations


…Fairway area ‐ activity and success…

Trilogy CSM 1R189 BOPD + 304 mcfgd

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Darwin #1 expectedIP 160 BOPD; 300 mcfgd

Target Energy leaseholdings

BOA 12 #1 30‐50 BOPD

1 mile

1.6 km

Darwin #3 proposed location

Darwin area

Darwin #2 location

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BOA 12 #1 Production Interval

Darwin #1, #2*

Darwin #3*

*proposed locations 13

Sydney #1*Fairway ‐ Permian Basin Wolfberry Oil Resource Play

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Source: Pioneer Natural Resources @ Executive Oil Conference 3 April 2012 15


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Sources: Laredo Petroleum @ Executive Oil Conference 3 April 2012; *DrillingInfo 20/6/12 “Midland Basin Horizontal Opportunities Go Deeper”

Most operators still drilling vertical wells with stacked pays, but we are seeing a rapid acceleration in horizontal drilling.

Fairway is also in the heart of the Cline Shale play trendIn recent years, we have seen a marked increase in horizontal drilling activity, with work in the Cline Shale being actively developed in Howard and GlasscockCounties, with the industry type curve quoted at 420 mBOE EUR/well and a 30 day IP of 575 BOED (75% oil).*

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In other words:

• Permian Basin has multiple proven plays with robust well performance.

• Reliable economics ‐Wolfberry wells typically recover 120 – 130,000 barrels of oil equivalent (BOe). With additional pay zones, this can go up to 180,000 BOe.

• Successful Fusselman wells such as Darwin #1 can recover 200,000 barrels of oil

• Horizontal drilling activity increasing in and around Fairway area – will add substantial value

Target’s acreage presently can accommodate up to 87 drilling locations that could generate over US$300 million in cash, net to Target, over a 23 year period*.

*Refer to model on Page 19 in this presentation.

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30 year production life Recovers app 180 MBOe

Well payout in 25 months

Type Well(Wolfberry plus additional zones)

30 year production life Recovers app 180 MBOe

Modelled production based on Wolfberry “Type” wells with production from

additional zones.


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Production peaks at >4,000 BOEPD in 47 months

The 87 well model indicates up to 15.1 mmBOE prodn in 23 years; could generate >$340m in cash for TEX (undiscounted), >$120m NPV10.

Model assumes all 87 wells successful and matchWolfberry Type well with 22 successful inFusselman as well. Fairway wells may not matchType well and may produce more oil and gas (orless).

US$75/bbl oil escalated at $5/bbl/yr to $100/bbl, then flat. Cost of financing not included.

87 Well Continual Drilling Program

(model)


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Gas shows encountered in open hole

• Original 2001 well drilled to 13,180 feet (cased to 12,500 ft). Channel sand not tested.

• Well‐bore now re‐entered, plugs drilled out and open hole cleaned out to TD.

• Gas influx noted immediately on re‐entering open hole ‐ drilling mud weight reduced from 16.2 ppg –15.3 to ppg.

• Gas shows persisted during operations.

• Testing program to resume – test top of Channel and sands above (Tests #4 and #5)

• 500 BCF – 1 TCF of potential in follow‐up “Low‐Resistivity” prospects.

Shepard’s Channel Prospect

Recovered Water

Incomplete

Shepard’s Channel – Lafourche Ph, LaTEX WI: 15.33%

By‐passed Gas Pay ‐ 200 Bcf potential / 12 MMBC

500 Bcf – 1 Tcf in follow up Lo‐Res “PUD” opportunities Test #5

Recovered Water

Test #4 – top of Channel

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Target Energy Producing Properties

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East Chalkley Tank Battery

Production, Appraisal & Development

East Chalkley Field, Cameron Parish, Louisiana

• Target Energy Working Interest 35%

• 2012 Independent Technical Specialist (RISC Pty Ltd) report on East Chalkley confirmed most likely technically recoverable reserves and resources (“2P/2C”) of 1.7 MMBO with an upside (“3P/3C”) estimate of 4 MMBO.

• Field producing 40‐50 BOPD from Pine Pasture #2 well.

• Pine Pasture #3 Development well – potential Initial Production of 200‐300 BOPD. Operator has advised of plans to drill PP#3 in Q1 2013, along with injection well.

• Potential for additional appraisal/development wells + injectors to develop down dip sector plus additional development well + injector updip from existing production.

• Based on reserves from RISC report, Target estimates East Chalkley’s (“most likely”) NPV10 value at US$12.1 million net to Targetwith a (“upside”) PV10 value of US$31.8 million net to Target.

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Depth Alliance W2 (feet)/Google Earth Image1 mile


Pine Pasture #3 Proposed Location

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Sand Snapper A1 Snapper A3 Snapper A2

Marg Howie Yet to be produced Not Intersected Yet to be produced

1st Camerina Yet to be produced Yet to be produced Yet to be produced

3rd Marg Tex Produced Yet to be produced* In Production

Lower 3rd Marg Tex Yet to be produced In Production Not Intersected

4th Marg Tex Produced Tight In Production

Hackberry A1 Not Reached Not Intersected Produced

Hackberry A4 Not Reached Produced Produced

Section 28 Project – St Martin Parish, Louisiana

Snapper A1 presently shut-in awaiting recompletion*May be partially depleted due to prior A1 production

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Projects – Production

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Fairway Project – Howard County, Tx TEX WI: 60%Production: Wolfberry/Fusselman

BOA 12 #1 (2011) – app 50 BOPD + 100 mcfgdDarwin #1 (2012) – shut in, expect IP 160 BOPD + 300 mcfgd

East Chalkley Oil Field – Cameron Ph, La TEX WI: 35%Production: Alliance W2 sands – approx 40 ‐ 50 BOPD

Pine Pasture #1 shut‐inPine Pasture #2 (2008)

Section 28 Project – St Martin Ph, La TEX WI: 25%Production: MgTex/Hackberry – app 500 mcfgd + 50 BOPD.

Snapper #A‐1 (2007) shut‐in awaiting workoverSnapper #A‐2 (2008) Snapper #A‐3 (2009)

Multiple pay zones in all wells.

Merta Gas Field‐Wharton Co, Tx TEX WI: 25%Production: Cook Mountain – approx 220 mcfgd + 5 BOPD

Merta #1 (2009)

Projects – Production

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Reserves

30/6/12 Audited Reserves & Exploration Potential (net to WI/NRI)

Fairway reserves not included

Audited Reserves*(000 BOE)

Proved & Probable

Possible Contingent (Best Estimate)

Contingent (High Estimate Increment)

Total

30/06/12 132.9 88.9 315.5 490.8 1028.1

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Resource Plays: Fairway• Darwin #1 Fusselman should IP around 160 BOPD + 300 mcfgd.• Darwin #2, #3, Sydney #1 drilling Q4 2012.• Continuing program in 2013• Monitor expanding horizontal plays.

By‐passed Pay:Shepard’s Channel – Complete Testing Program

East Chalkley Oil Field Development: Pine Pasture #3 Well (tentative timing Q1 2013)Further Appraisal/Development Drilling

Ongoing Production:FairwaySection 28 Project AreaEast Chalkley Oil FieldMerta Gas Field

Continue evaluation of new opportunities:CorporateTechnical

What’s in the pipeline…

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Good Oil Conference 2009

1900 St James Place, #425Houston TX 77056 USA

Ph: +1 713 275 9800

Suite 5, 6 Richardson St,West Perth WA 6005 Australia

Ph: +61 8 9476 9000

E: [email protected]

W: www.targetenergy.com.au

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for personal use only · us$75/bbl oil escalated at $5/bbl/yr to $100/bbl, then flat. cost of...

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