pex may 1st 2012 · the country later this year to service the high capacity end of the market....

pex monthly

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pex monthly AUSTRALIA’S PETROLEUM

EXPLORATION NEWSLETTER BY SUBSCRIPTION ONLY

In addition to explorer Bengal’s foray into rig ownership, as detailed later in the report in a separate item, there will also be a couple of other rigs being moved into the country later this year to service the high capacity end of the market. First up, Hunt will soon have a new rig on its books, with 1000hp trailer mounted Rig-24 due to arrive in Australia in the second half of the year after being constructed in the US. With half a million pounds of mast hoist capacity, and an ability to drill to 4000m using up to 4.5” diameter drill pipe, 1000hp Rig-24 will compete in the space usually reserved for the likes of MBCentury and Ensign. In fact, the Hunt Rig will have more grunt than all but the most powerful rig in the Ensign stable, coming in close to Ensign’s 1200hp, 4270m Rig-916, currently in the Cooper Basin drilling deep shale exploration wells for Beach. MBCentury will have one unit in Australia soon that will just shade Hunt’s rig, with 4330m, 1000hp Rig-16 commencing for ConocoPhillips in the Canning Basin in July after returning from an extended stint in PNG on a geothermal contract for Newcrest. Ensign will soon be upping the ante significantly itself, with two new rigs due in over the coming months. Newbuild Rig-963, which recently commenced export from Houston, is a 5490m capacity ADR1500 unit that will start for Chevron on Barrow Island in Jun for an initial two infill wells, followed by a program of up to 17 geosequestration wells for carbon storage, in a project that will be the largest of its kind undertaken anywhere in the world. Ensign also has the similarly equipped Rig-963 being imported for Beach’s next round of shale drilling. The 5500m ADR1500 rig is expected to arrive in Q3 to start for Beach in ATP-855-P, with Halifax-1 first up.

Woodside reveals it has had a recent win with the drill bit, with the Norton-1 appraisal discovering oil and gas in WA-36-R, and confirming an extension of the oil bearing sands found at Laverda North-2 to the east. Listed Cue will be hoping the major’s run of luck continues, being one slot away on the Ocean America from being free carried through the drilling of 60-day, 4800m Banambu Deep-1, on trend with the Wheatstone and Pluto LNG developments in WA-389-P. Banambu Deep-1, detailed by 1440km2 Movida 3D which was completed in Apr last year, in addition to current Vucko-1 in WA-433-P and planned Ananke-1 in WA-269-P, designed to feed additional gas into the Pluto LNG project if successful. Woodside has brought South African company Sasol into WA-433-P for 25%, continuing Sasol’s tentative moves in Australia following its entrance into the local industry in 2008. Sasol’s initial project, a 30% stake in Carnarvon block WA-388-P and the La Rocca-1 exploration well in Jun 2011, which was diluted down to 18% when Apache farmed in to operate with 40%, ended unsuccessfully, justifying Sasol’s cautious approach.

Cue closing in on big offshore drill, with operator Woodside in form

WA-433-P *Woodside 45.00 Mitsui 30.00 Sasol 25.00

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pex monthly Commentary

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Pex People

Atwood Oceanics advertises for an Operations Secretary for their Perth office at O’Connor.

Bechtel advertises for three Deputy Employee Relations Managers for their Wheatstone LNG Project.

Central Petroleum announces that Andrew Whittle and Bruce William Elsholz have been appointed as directors

Government of Western Australia The Department of Mines and Petroleum advertises a pool of positions in their Petroleum Division. These WA-based positions will be responsible for the administration and promotion of the Petroleum, Geothermal, Carbon Capture and Storage industries

Kairiki Limited announces that Mr Peter Cockcroft has been appointed to the board as Non Executive Chairman.

Key Petroleum announces the appointment of John Lloyd Kane Marshall as Managing Director

Meo Australia announces that Oliver Gross has commenced employment with MEO as Geoscience Adviser.

New Standard Energy Ltd announces the appointment of Chris Sadler as a non executive director.

Nexus Energy Ltd announces the appointment of Lucio Della Martina as its Chief Executive Officer.

Shell advertises for a Fuels Account Manager, Lubricants Account Manager and a Lubricants Key Account Manager

Woodside advertises for Perth-based Manager, Marine Projects and Production Readiness with proven offshore operating experience, plus Perth-based IT Project Manager, Business Systems Analyst and Subsea Surveillance Engineer

Transfield Worley advertises for Perth-based Senior Piping Designers and Senior SMP Estimator, and Karratha-based Shutdown Co-ordinator

Chevron advertises for Subsea, Risk, Marine, Interface, Instrumentation and Controls, Electrical Power, Contracts, Reliability, Process, Pipeline, Mechanical Systems and Quality Assurance Engineers, all Perth-based, plus Perth-based Project Manager/Engineer, Controls and Cost Manager and Construction Manager

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Finally there’s some levels of exploration levels to get excited about happening offshore following some lengthy delays created by a mix of upgrades and maintenance programs, cyclone activity and protracted rig acceptance processes. Tap reached the end of its short run with the Atwood Eagle under BHP Billiton’s operatorship around Apr 18, with Tallaganda-1 P&A’d in Carnarvon Basin WA-351-P after cores and log results confirmed determine the extent and significance of gas shows encountered. The Atwood Eagle has since picked back up with Chevron, spudding the Pontus-1 well around May 1. In the Browse, the ConocoPhillips-Karoon JV is finally underway following substantial upgrades to the Transocean Legend BOP system, and will continue well into 2013. The program kicked off on Apr 5 with Boreas-1 in WA-315-P, which was preparing to drill the 12-1/4” hole section at 2822m in late Apr, to be followed by Zephyros-1 and Proteus-1 in WA-398-P. Around the other side of the country in southern waters, Origin has kicked off its 200-day Otway Basin gas program with the Stena Clyde spudding exploration well Thistle-1 in VIC-P-43 on Apr 19, with two Geographe gas development wells to follow in VIC-L-23. The start of activities in the Otway may help take some of the focus off the Bass Strait, where it is looking more likely that drilling on the Yolla field, as the second component of the Yolla Mid-life Enhancement project in TAS-L-1, will be deferred to the summer season of 2013/2014. Origin and its JV partners are seeking a particular breed of specialised jackup due to the design of the Yolla platform to drill Yolla-5 and -6 as part of the field enhancement, with the platform upgrade of the overall $485mil MLE project now underway. However, there may be a silver lining in the timing, with the later arrival of a jackup likely to work better for Origin in NZ, where the Kupe JV will be requiring a rig for the next phase of field activity in PML-38146, possibly around that time. Back on the North West Shelf, even though Hess’ first well in WA-390-P is an appraisal, with Glencoe-2 spudding on Apr 11 following a lengthy and stringent rig assessment and acceptance period, Hess also has exploration wells coming up, with Bravo-1 next on the agenda, and also incorporating Chryseis-1 on the near term schedule. Ocean America will move from Woodside’s current 3300m Vucko-1, which spudded on Apr 16, to Banambu Deep-1 in WA-389-P around mid May, where junior listed partner Cue holds 35%.

Unconventional Cooper Basin action by the listed majors is continuing, with some more successes being chalked up along the way. Beach has reported some promising findings from mainly conventional well Haslam-1 in PEL-106, which has been cased for production testing after flowing 3MMcf of liquids rich gas from the Patchawarra, while also reporting significant gas shows throughout the 30m recovered core. Final stratigraphic-structural target in the program, Southend-1, is now underway with Ensign Rig-930 for Beach in PEL-107. In late Apr, Beach struck another winner, with the casing of dedicated shale play Moonta-1 in PEL-218 for fraccing at TD 3810m, with mud logging data showing gas saturation within multiple target sections over a 1km interval. Over in Senex-operated turf, the company has had a significant win with the first of its three shale exploration tests, with Sasanof-1 cased at TD 3102m for a May fraccing and flow testing program. Over 220m of coring was carried out along with samples taken in the REM shales, with early analysis indicating significant liquids rich gas shows within the tight Epsilon and Patchawarra sands, along with high gas contents noted in the Toolachee and Patchawarra coals. Senex’s second unconventional well, Talaq-1, spudded on Apr 10 and will core for 230m in the REM section and 90m in the Patchawarra coals. Oil prospect Kruger-1, targeting 380,000bbls oil, will follow in the Mudlalee block of PEL-516, where newfloat Ambassador farmed in for 60% in Aug 2011.

Exploration back on the agenda offshore with programs firing up

Beach and Senex keep kicking unconventional goals

WA-315-P *ConocoPhillips 60.00 Karoon 40.00

VIC-P-43 *Origin 67.23 Benaris 27.77 Toyota Tsusho 5.00

WA-390-P *Hess 100.00

TAS-L-1 AWE 46.25 *Origin 42.50 Toyota Tsusho 11.25

PML-38146 *Origin 50.00 Genesis 31.00 NZOG 15.00 Mitsubishi 4.00

Contact Tino Guglielmo Managing Director Ambassador Oil & Gas Tel: (03) 9570 5451 Fax: (03) 9563 7170

PEL-106B *Beach 50.00 Drillsearch 50.00

PEL-516 *Senex 100.00

PEL-516 (Mudlalee) Ambassador 60.00 *Senex 40.00

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The risks and degree of difficulty involved in moving from pure exploration company to explorer/rig owner has not appeared to dampen the enthusiasm of Canadian company Bengal Energy for the move, with Bengal to attempt to become one of the few success stories out of this major transitional play by purchasing a rig for its Australian operations. With 3-6 wells lined up in the Tookoonooka block of Cooper Eromanga permit ATP-752-P, instead of taking the usual route and hiring a specialist to provide equipment to drill the well, Bengal seems to be comfortable to take on many of the financial risks itself to give it what it describes as “a vital strategic advantage over its competition.” In a move that has been reported to cost US$2.75mil to purchase, modify and move, Bengal has signed up to import an onshore rig from Dubai, initially for its own use, but also to make available to the wider industry once it’s own drilling needs are met. At 750HP, and with a capacity to drill to around 3000m with 3-1/2” drill pipe, Bengal’s new hardware acquisition is likely to be comparable in capability to MBCentury’s Rig-3 and Ensign Rig-918. On current schedules, the rig will arrive and rig up some time in Q3 to start Bengal’s conventional oil and gas exploration program of up to six wells. Drilling to between 1800-2200m and taking around four months, the three firm and three optional wells will be selected from an inventory of targets refined by the 422km Bellalaie Creek 2D and 48.6km2 3D, recorded by Terrex Crew 404 between Oct 26 and Jan 15 this year. At this stage, the ‘cat’ themed prospect portfolio includes Snow Leopard, Tigris, Panthera, Cheetah, Puma and Caracal. While it sounds good on the surface, to have a rig at your beck and call whenever an operational need arises, a move into rig ownership can potentially be a recipe for disaster for the well intentioned but under-prepared explorer. History is littered with tales of plans gone sour for a number of companies that have dabbled in the rig ownership market, from Icon, to drill for equity explorer White Sands, to Empire Energy - all having a cautionary tale to tell. US junior Buccaneer may be on course to determining how expensive things can be in the offshore market, having spent tens of millions initially for a share in a jackup purchased from Transocean for its Cook Inlet operations. The rig is scheduled to arrive this quarter so it remains to be seen how Buccaneer is able to handle such a considerable step in its evolution. However, in Bengal’s defence, the company is not going in overconfident and blind to the risks of taking on a rig. Instead, the company will be hiring a specialist in the rig contracting space, in the rather obviously named Consultancy for Oil & Gas (COG), to provide management, operational and HR services for the rig. It will be a case of watch this space to find out if the move by Bengal into rig ownership will become one of the very few success stories.

A suite of new onshore permit application have been made by a handful of lesser known and unlisted energy entities with Sydney-based Paltar Petroleum, chaired by CEO Marc Bruner, applying for a handful of new blocks in the Daly/Ord Basins in the NT. Paltar has submitted applications for central western Daly blocks EP-230, EP-231, EP-232, EP-234 & EP-237 in addition to Daly/Ord blocks EP-233, EP-235, EP-236 & EP-238. These new areas will greatly enhance the portfolio of Paltar, which is understood to have an IPO that’s been ready to launch for several months to raise $25mil. Also in the NT, listed Empire Energy is hoping for an award this year of seven McArthur and Georgina applications, which have been applied for by 100% subsidiary Imperial Oil & Gas. In NSW, the first onshore application in around a year has been made, with non-listed Apex Energy applying for CSG prospective PEL-136 near Woollongong, to build its current operated portfolio which comprises PEL-442, PEL-444 & PEL-454 in collaboration with ASX-listed Ormil Energy. Ormil currently holds 20% in the three blocks, with options to increase to 50%.

Bengal adopts tiger-like fearlessness in pursuit of rig ownership

Relative unknowns take up position in virtually untouched NT basins

ATP-752-P (Tookoonooka) *Bengal 100.00

ATP-752-P (Barta) *Santos 45.00 Bengal 25.00 Bow 15.00 Senex 15.00

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The onshore shale/CSG sectors are, unsurprisingly, continuing to gather momentum, with new programs being worked up by a couple of lesser known participants in the unconventional exploration market. Unlisted Real Energy began building momentum in Aug-Sep last year ahead of a targeted ASX-listing, originally slated for late last 2011, venturing into a couple of significant farmin deals in some Cooper-Eromanga permits held by Bow and Drillsearch. On Aug 10 2011, Real entered an agreement with then ASX-listed Bow to enter a 14,500km2 four-block spread by operating up to six wells over two years, with four of them and 500km of 2D stipulated as firm program over that time frame. The second agreement entered around mid Sep will see Real take a 50% operating stake in Cooper application blocks ATP-927-P and ATP-932-P from Drillsearch, in return for funding the reprocessing of 1000km of 2D, and recording new 2D and 3D in both blocks, with the deal subject to both the granting of the blocks Real completing an IPO. However, it’s in the areas subject to the first farmin with Bow where Real plans to open its drilling account, with four wells being worked up within ATP-794-P, ATP-809-P, ATP-944-P and ATP-948-P. Drilling will focus on the unconventional Toolebuc shale, with a mix of conventional oil targets also wound in. There will be one notable difference in this particular program equation, and that is, Bow won’t be there, having been delisted from the ASX in Jan this year. Bow, due to its strong Surat Basin gas potential considered likely to feed an LNG development, was taken over by Arrow in Q4 last year for $1.52 per share, with Arrow itself a subsidiary vehicle of a JV between Shell and Petrochina, which acquired Arrow in 2010 for $3.5bil. Real Energy finds itself well credentialed in the oil and gas patch, being the next vehicle in the industry for some former, well experienced Mosaic personnel, following its takeover by AGL for $142mil in 2010. Ex-Mosaic CEO Lan Nguyen and CFO Scott Brown are now on Real’s board, along with industry veteran Norm Zillman, best known as the founder and original CEO of QGC, which was taken over by BG Group in the early stages of a heady period of CSG sector consolidation $5.7bil. Also in the sector, Exoma and CNOOC will set out to follow up a successful seven well Galilee program in 2011, with another program of up to 22 wells this year. Using two rigs from Ausdrill, including one recently commissioned, the program will comprise a mix of CSG, shale oil and conventional oil and gas targets in ATP-999-P, ATP-1005-P and ATP-1008-P and CSG wells in ATP-991-P and ATP-996-P.

Some timing clashes on the western front have thrown a spanner in the works for Empire Oil’s WA seismic plans, with a clash of scheduling with local agricultural activities shifting a survey previously planned for May, into Q1 2013. The 100km2 North Erregulla 3D in northern Perth Basin permits EP-368 & EP-426, to be funded by Origin as part of a farmin deal to earn 40% in each area from Empire, has had to be postponed by a year due to an inability to get the contracted WesternGeco in before crop seeding activities commenced around the wheatbelt towns of Mullewa and Mingenew. WesternGeco’s Crew 1160 also had to suspend Origin’s 450km2 Redback/Irwin 3D in nearby EP-320, L-1 & L-2 at 63% complete for similar reasons, and has since left WA for the Cooper Basin. In direct competition with Cooper Basin incumbent Terrex, Crew 1160 has been awarded a large swathe of 3D work for Drillsearch, commencing with 260km2 in ATP-539-P & ATP-549-P early this month. A program of greater substance, 1050km2 in Cooper block ATP-940-P, will follow for the WG crew, along with a possible additional 400km2 in SA permit PEL-91, keeping the crew occupied for the better part of the year. In a prolific month for WesternGeco, Crew 1160 has also been awarded the lions share of Hess’ remaining Beetaloo Basin 2D, with 2000km going to WG and 1000km to Terrex Crew 406.

New program with intent to prove shale newcomer is the Real deal

WesternGeco packs crew off for the Cooper following timing issue EP-426

Origin (farming in) 40.00 *Empire 21.11 Norwest 20.00 ERM 13.00 Allied 5.00

EP-368 Origin (farming in) 40.00 *Empire 40.00 Norwest 20.00

ATP-927-P, ATP-932-P

*Real 50.00 Drillsearch 50.00

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Recommendation: Speculative Buy Key Points: Recent board and corporate overhaul resulted in focus firmly upon its

key Cooper Basin and Eagle Ford Shale unconventional assets Immediate focus is on examining the ‘unconventional’ resource potential

of the Cooper Basin, which so far remains untapped By far the best value play in terms of Cooper Basin exposure, with a

huge acreage position of more than 16,000 sq km The company is not far behind its large cap peers in terms of activity or

technical understanding with regards to the Basin The company’s Eagle Ford Shale asset has huge potential with drilling

expected to commence mid year A recently announced $20 million placement to institutional investors

sees the company in a strong position to fund its Cooper Basin and Eagle Ford Shale projects

Strike Energy is going through a rebuilding phase as it refocuses market attention away from its traditional USA ‘conventional’ oil plays and instead towards its large acreage position in Australia’s prolific Cooper Basin. The company represents probably the best value exposure to what is sure to be an active period of unconventional exploration activity during 2012. Company Overview Strike Energy (ASX: STX) is a junior energy play that is looking to firmly re-establish its credibility by refocusing its immediate exploration and appraisal programs on Australia’s Cooper Basin. The company’s key strengths are its rebuilt board and management team, which have adopted a measured and conservative approach to its ongoing exploration and appraisal activities. This is particularly important with respect to the unconventional energy sector in Australia, which is a virtually brand new challenge for industry participants in this country.

Whilst unconventional energy has been enormously successful in the USA over recent years, there are marked differences between the industry there and the fledgling industry here. These include significant demarcations in respect of geology, technical know how and infrastructure. Importantly, Strike Energy’s management is well aware of these challenges. Strike Energy has assembled a strong management and technical team that aim to close the enormous value gap between it and its Cooper Basin unconventional energy peers, most of which have market values of $1bn or more. Strike represents by far the best value Cooper Basin ‘unconventional’ exposure.

Strike Energy (STX): Breakaway Research

Viewpoints Disclaimer: Pex Publications accepts no responsibility for the accuracy or validity of the information presented in the Viewpoints section. Information and opinions presented in Viewpoints were obtained or derived from sources Pex believes are reliable, but Pex makes no representations as to their accuracy or completeness. Pex accepts no liability for loss arising from the use of the material presented in Viewpoints. The advice contained or referred to in Viewpoints may not be suitable for all readers, and it is recommended that you consult the company responsible for producing the research and/or an independent investment advisor if you are in any way in doubt about any of this information. The terms & conditions of the individual research companies represented in the Viewpoints section applies to all research, and it is the readers’ responsibility to find and accept these disclaimers, terms & conditions before acting on any information put forward.

Grant Craighead Gavin Wendt March 2012

To view full report click here.

Cont’d next page

http://www.strikeoil.com.au/investor-centre/analysts-reports/27/category/exploration-oil/bowen-basin/coal-methane/

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If we analyse recent corporate transactions in the Cooper Basin, we also get a clear picture of Strike Energy’s undervalued status. For example Beach Energy’s takeover of ASX listed Adelaide Energy implied a valuation of $675/acre, whilst BG Group’s 60% farm in to Drillsearch’s ATP 940P implied a $340/acre valuation. If we apply a valuation to Strike equivalent to just one fifth that of Drillsearch’s valuation (i.e. $68/acre) we derive a theoretical valuation of $272 million – a multiple of almost 3 times its current market value. And this excludes Strike’s Eagle Ford Shale and other assets. If we apply a similar valuation to Drillsearch, i.e. $340/acre, Strike Energy’s implied value is a whopping $1.36b! We’re not suggesting that Strike should presently be valued at such lofty levels, but the differential between companies with much larger market values and that of Strike is stark. The company clearly presents itself as the value play in the Australian unconventional space.

It’s also worthwhile comparing the share market performances of the key Cooper Basin unconventional players over the past 12 months. As the chart below demonstrates, Strike Energy has a lot more upside ahead of it compared to its peers Senex and Drillsearch (up around 180%) and Beach Energy (up 70%). Senex is perhaps the most relevant comparison because it is a pure unconventional exploration play and its Cooper Basin permits are adjacent to Strike’s, whereas Beach and Drillsearch are producing companies. Now let’s briefly turn our attention to Strike’s international assets, which are located in the US state of Texas, the nation’s most established hydrocarbon producing state. Strike has a 27.5% working interest in the Eagle Landing Joint Venture, with more than 8,500 net acres within the hugely prospective Eagle Ford Shale and 1,875 net acres within the Permian Basin, along with conventional producing and exploration assets targeting the Wilcox sands.

pex monthly Viewpoints continued


Strike has a lot more share price upside ahead of it when compared to its peers

Cont’d next page

Strike holds a major position in the hugely prospective Eagle Ford Shale in the US

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The Eagle Ford Shale is commonly considered one of the best resource plays in North America. Wells drilled into the Eagle Ford Shale are showing strong initial production rates and ultimate recovery of hydrocarbons per well within a cost structure that makes the play commercially attractive. The added benefit with the Eagle Ford Shale is that a high proportion of the hydrocarbons produced are condensate liquids (or light oil), which attracts a significant premium over gas at current prices. Over the last few years other gas shale plays, the Fayetteville, Woodford, Marcellus and the Haynesville, have become major development areas. Each has been subject to significant investment by both international and US based upstream oil and gas companies such as Shell, BP, Norske Hydro, Repsol, British Gas, Anadarko, Petrohawk and Chesapeake. Over more recent times BHP Billiton has invested almost US$17 billion in two acquisitions and plans to spend another US$50 billion over the next decade. The logic behind these transactions is that huge resource bases are being acquired and unlike offshore developments where the majority of capital is committed prior to production, investment in the resource plays such as the Eagle Ford Shale can be scaled to match demand and commodity prices with a relatively short lead time. The USA is the largest energy market in the world and infrastructure is well developed, which is one of the keys as to why shale liquids and gas is economically viable there. The acreage values of Eagle Ford Shale have increased significantly, with a number of large acquisitions completed at US$15k $25k/acre valuations. Strike’s strategy is to prove up the technical and commercial potential of its Eagle Ford Shale and to achieve a similar re rating of its acreage position. A major evaluation program is now underway to assess the productivity of the company’s Eagle Ford Shale, which will form the basis for future development drilling that is likely to commence in mid 2012. Strike clearly has little current market value assigned to its Eagle Ford acreage position. However, using the look through value of Sanchez Energy’s (NYSE: SN) ‘Marquis area’ Eagle Ford acreage, which is in the immediate vicinity of Strike’s, this implies a current market value of Strike’s acreage of over $50 million.



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Recommendation: Horizon remains a buy with an upgraded valuation of 60 cps, before risked upside of an additional 10 cps. The company is fully funded for development of its Beibu Gulf oilfield in China by early 2013 and its Stanley condensate project in 2014.

Exploration and appraisal in the Taranaki Basin during the 2012/13 summer period holds additional upside potential. Follow-up drilling on the Ketu discovery in 45% owned, PNG permit PRL-21 appears to have doubled the field’s 2C gas reserves, previously estimated at 107 Bcf plus 6.7 mmbbls of condensate. This drilling follows a similar upgrade to the Elevala gas field, resulting from the Elevala-2 appraisal well. Ketu-2 was drilled to try and intersect the field’s edge so that a gas-water contact

could be established but no water contact was found, indicating that Ketu-2 was still well within the field. Ketu-2 was planned as a gas injector, but may now be used initially as a production well when development is undertaken, with additional wells on the field perimeter required for gas reinjection, following condensate stripping. Drilling confirms that the Ketu field has a lateral extent of at least 9 kilometres and a gas column height of over 50 metres. Mapping indicates a total areal extent of around 20 km2, so the overall field could hold in excess of 200 Bcf of gas plus 13 mmbbls of

condensa te . Fo l l ow ing exercise of a back-in option by the PNG government, Horizon’s likely final equity in the project will be 34.875%. Appraisal of PRL-21 and PRL-4 along with upside at the Tingu prospect and the lead to the west of Elevala, sees the region shaping up to supply over 1.3 Tcf of gas, which could find a market as merchant gas into expanding LNG capabilities in PNG.


Horizon (HZN): StockAnalysis

Peter Strachan 26th April 2012


The following item is extracted from an issue

of StockAnalysis by Peter Strachan (AFS:

259730). For more information about

StockAnalysis or any of the articles contained

please contact Pex Publications Pty Ltd

http://www.stockanalysis.com.au

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The Most Undervalued African Explorer on the Market Scott Spencer (Chairman) and Richard Aden (Executive Director) from JKA gave a highly impressive company update to our dealing desk on 11 April 2012. African focussed junior explorers have generally outperformed the market in CY2012 on the back of corporate activity and large discoveries within the region. Our preferred ASX listed exposure in this space is JKA which is up ~26% (YTD) outperforming the Energy 200 which is up ~8% over the same period. JKA has all the key attributes that we look for in quality oil and gas companies which include high calibre management with a strong track record of delivery, a high quality asset portfolio, a fully funded 2012 activity program and near term cashflow generation potential. We believe JKA is an outstanding Speculative Buy and our price target is $0.51/sh.

Key Points: New venture entry into Somaliland: On 2 April 2012, JKA

announced it had entered into an agreement with Petrosoma Ltd to acquire a 50% interest and become operator of the Habra Garhajis block which is located in the south west of Somaliland and covers an area of 22,000km2. The geology on the block is estimated to be analogous to the prolific producing basins of Yemen where 9.8bnboe have been discovered or are to be discovered. The prospectivity of the block is highlighted by multiple oil seeps with nine confirmed as light sweet crude/condensate similar to Yemen fields. The addition of the Habra Garhajis block provides JKA exposure to a frontier rift basin with significant blue-sky exploration potential and a competitive in-country operational advantage provided by JV partner Petrosama.

High quality and well balanced asset portfolio: We believe JKA has

built a high quality and well balanced asset portfolio comprising lower risk/near term cashflow potential assets (Hammamet West, Tunisia and the Aje oil field, offshore Nigeria) and blue-sky exploration potential highlighted by frontier acreage in the prolific East African region (Ruhuhu Basin, Tanzania and the Habra Garhajis block, Somaliland).

Aje field undervalued by the market: We believe JKA’s 5% revenue

earning interest in the Aje field, offshore Nigeria has been undervalued by the market to date. On a valuation basis alone, we estimate JKA’s 10mmboe of 2C resources (assuming they are converted to reserves) provides $100m of NPV (unrisked) which is more than double JKA’s current market cap. In addition, we highlight the project is technically and commercially de-risked given the field has been successfully appraised with a Final Investment Decision (FID) expected in Q3 2012 whereby resources will be matured to reserves.

Hammamet West appraisal well to be spud in October: JKA expects

the high impact Hammamet West appraisal well located in the Bargou block, offshore Tunisia to be spudded in October 2012 which will target an estimated P50 (base case) contingent resource of 111mmbbls oil (17mmbbls net to JKA). The primary target will be the Abiod formation which is a proven producer in the region. The entry of LSE listed Dragon Oil (market cap of ~£3bn) to the JV provides significant operational capability and enhances the credibility of the permit.


Jacka Resources (JKA): DJ Carmichael

Edwin Bulseco 13 April 2012


Cont’d next page

http://www.jackaresources.com.au/images/stories/corp/JKA%20130412%20DJ.pdf

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Investment Thesis The key reasons why we believe JKA is an outstanding Speculative Buy are the following: 1. High quality management: Key management of JKA are ex-Hardman

Resources Ltd which was acquired by Tullow Oil plc during 2006/2007 for $1.5bn. The team has a significant competitive advantage in East Africa given they were pioneers of first oil in the East African Rift and have an existing network of contacts within the region. Management has demonstrated the ability to leverage off its experience in Africa by building a high quality asset base in a short timeframe.

2. High Quality and well balanced asset portfolio: We believe JKA has

built a high quality and well balanced asset portfolio comprising lower risk/near term cashflow potential assets (Hammamet West, Tunisia and the Aje oil field, offshore Nigeria) and blue-sky exploration potential highlighted by frontier acreage in the prolific East African region (Ruhuhu Basin, Tanzania and the Habra Garhajis block, Somaliland).

3. Undervalued relative to its peers with significant upside: We are

always cautious in placing too much emphasis on resource peer comparisons as a number of qualitative factors must also be considered such as geopolitical risk, calibre of management and quality of project to explain variances throughout the market. However JKA is currently trading at a significant discount to its ASX listed peers on an EV/Contingent Resource/Reserve metric which we do not believe is justified given the quality of its management, assets and Joint Venture partners. This view is supported by our valuation of $0.51/sh and our unrisked valuation of over $1.00/sh.

4. High Corporate Appeal: Notwithstanding the intense industry focus on

East Africa due to recent corporate activity and the high exploration success of major oil companies, JKA is building a portfolio of strategic assets which is highly attractive to large cap oil and gas companies, in our view. This view is supported by the JV partners JKA is currently working with such as Vitol, Chevron, Dragon Oil and Apache.



Cont’d next page

12

Valuation Our valuation for JKA is $0.51/sh. Our key assumptions are the following: We have used a $/boe metric of $10 to value the contingent resources

from the Aje field and Hammamet West discovery. We have applied a Probability of Success (POS) of 60% to the Aje field

and 40% to the Hammamet West discovery. As Aje has been fully appraised and deemed commercial with Chevron/Vitol as technical advisor we have confidence in the future development of this project. However, we have still applied a risking of 60% as the final development concept and costs are not finalised and JKA will need to secure funding post project sanction. We have risked Hammamet West more heavily as the discovery will require further appraisal to define the resource size and commercial potential.

We have not attributed any value to JKA’s exploration portfolio. Although we do recognise the substantial potential and upside that exists, we would prefer to have more visibility on the future exploration program and funding requirements before attributing value.

We have not assumed any equity dilution at this stage but will look to incorporate this once future Capex requirements for follow up exploration, appraisal and development are known for 2013.

We would like to highlight that substantial upside exists in our valuation and if both the Aje field development and the Hammamet West discovery are a success, JKA’s valuation on an unrisked basis would increase substantially to over $1.00/sh. Investment View JKA is our top pick in the junior African explorer space. JKA has all the key attributes that we look for in quality oil and gas companies which include high calibre management with a strong track record of delivery, a high quality asset portfolio, a fully funded 2012 activity program and near term cashflow generation potential. Management has leveraged off its previous experience at the successful Hardman Resources to build a very impressive African focussed portfolio of assets in a relatively short timeframe which have high corporate appeal. Notwithstanding the strong share price run JKA has had so far in 2012, we believe there is significant upside over the next 12 months. We are comfortable that our valuation of $0.51/sh is relatively conservative given we have not attributed any value to the significant exploration upside from JKA’s portfolio. We believe JKA is an outstanding Speculative Buy.



Cont’d next page

13

The Cooper Manoeuvre - Merger with Somerton Highlight Following the announcement of the merger with Somerton, we have

increased our target price to A$0.80 per share (from A$0.60 per share), and we reiterate our Outperform recommendation. The merger, accretive to Cooper and in our view, will yield a much larger entity with increased newsflow while diversifying Cooper’s geological risk across four different Australian basins. Trading at a 20% discount to our target and at a 2012E DACFM of 2.8x, we believe Cooper is an attractive opportunity to play unconventional resources in the Otway basin, but still benefitting from a stable oil production base.

Offer Details Cooper Energy has announced a plan to merge through a recommended

takeover bid in which Cooper will acquire all the shares of Australian listed Somerton Energy (SNE AU). Under the offer terms Somerton shareholders will receive one Cooper Energy share for each 2.8 Somerton share or alternatively one Cooper Energy share for each 4.73 Somerton share plus 9 cents. The offer represents a 56% premium to Somerton’s closing share price and values Somerton at A$31.5 mm at closing share price.

The Directors of Somerton are supporting the offer and the Chairman of

Somerton (who is also the Chairman of Beach) has contributed to the pre bid agreement, representing 19% of the share capital of Somerton.

No AGM is required and management has indicated June 7, 2012, as

the earliest the offer can close, assuming the offer receives approval of 90% of the shareholders, which would lead to a compulsory acquisition.

Creating a World Class Unconventional Resources Portfolio Somerton owns various working interests in the Otway and Gippsland

basins, summarized in the table below. Exploration of PEL 495 (65% WI post-merger) is the most advanced to date play in the portfolio and an exploration well, Sawpit-2 well, is planned for drilling during H2 2012. Management estimates that PEL 495 and the extended Somerton Energy acreage could hold between 14 and 48 tcf of unconventional gas in place. In PEL 186, Otway Basin (33.33% WI), Somerton and its partners have planned to acquire a 60 km2 3D seismic. In PEL 168 (50% WI), an exploration well is likely to be drilled next year in 2013.

Somerton also has the option to earn interests in acreages located in the

Gippsland and Bonaparte basins. In PRL 2 (option to earn up to 16.7%), Gippsland basin, the option is linked to funding the farm-in share and there is no change of control provision. In the Bonaparte basin, Beach Energy Limited has granted Somerton options to earn interests including up to an 18% interest in EP 126 and EPA 138 and up to a 10% interest in EPA 135 and NTC/P10. There is a change of control provision and the Cooper management has proceeded on the basis that this change of control provision will be enacted. We have not incorporated the value of these options in our valuation which could represent further upside.


Cooper Energy (COE): FirstEnergy

Gerry F. Donnelly 23 April 2012


Cont’d next page

http://www.cooperenergy.com.au/media/files/The_Cooper_Manoeuvre_-_Merger_with_Somerton.pdf

14

Cooper’s technical expertise will also be strengthened as Cooper intends to appoint the current Managing Director of Somerton, Hector Gordon, as an Executive Director. Hector Gordon is a geologist with over 30 years of experience and was previously the COO and Executive Director of Beach Energy.

Two High Impact Wells in H2 2012 In PEL 495, Otway basin, the Sawpit 2 well is planned for H2 2012, with

Cooper funding 30% for a 65% working interest post-merger with Somerton. The well is targeting the Sawpit conventional oil discovery (best case prospective resources less than 1 mmbbl; however, the main purpose is to evaluate the Casterton shale which management estimates to hold between 14 and 48 tcf of unconventional gas in place. We carry the contribution of PEL 495 at A$0.10 per share risked (A$2.04 per share unrisked). We also note that PEL 495 is close to already existing gas infrastructure.

In Tunisia, the farm-in of Dragon Oil (DGO LN, Outperform, £8.00) in the

Bargou exploration permit has been approved by the Tunisian government.



Cont’d next page

15

The 600 km2 3D seismic acquired over the western portion of the Nabeul Permit is expected to be interpreted during Q3 2012. Drilling of the high impact Hammamet West-3 (A$0.24 per share risked, A$0.81 per share unrisked) is expected to start in Q4 2012.

Current production from the Cooper basin is above c.1,700 bbl/d (net to

Cooper). Production from the Indonesian assets (planned for divestment this year) is c.60 bbl/d (COE share).

Valuation and Recommendation We have included only the contribution of PEL 495 in the Otway basin

which will be drilled by H2 2012. Other prospects are unlikely to be drilled within our 12 months valuation timeframe and have therefore not been included in our risked NAV, but represent further upside.

Management’s guidance for PEL 495 and the extended Somerton

Energy acreage in place gas resources is 14-48 tcf, with an estimated 5-10% recovery factor. We have assumed a 10% recovery factor as well as a conservative 5% chance of success and we are using an unrisked NPV per barrel of US$2.00 per bbl for the unconventional resources, in line with our valuation for PetroFrontier (PFC, Speculative Buy, C$6.00). We carry the contribution of PEL 495 at A$0.10 per share risked (A$2.04 per share unrisked).

We have also reflected the dilution that results from the shares offer. We

have assumed that 50% of Somerton’s shareholders will accept the shares-only option and that the remaining will accept the shares-pluscash settlement.

The net effect on our risked NAV is a positive A$0.18 per share increase

and we increase our target price to A$0.80, in line with our new risked NAV and re-iterate our Outperform recommendation. Trading at a 20% discount to our target and at a 2012E DACFM of 2.8x, we believe Cooper is an attractive opportunity for investors to play unconventional resources in the Otway basin, while benefitting from a stable production base.



16

SC55 Extension & March Quarterly Report Price Target: $0.19/sh Investment Case: Delay to Cinco does not alter our OEL valuation, we maintain a Buy recommendation with a $0.19/sh price target. The JV remains committed to execution and is currently awaiting response from the Philippine Department of Energy regarding a 12-18mnth permit extension. Production from Galoc Phase 1 continues to outperform 2P expectations providing strong cash flow underpinning the FID and development of Phase 2. Value crystallisation via FID, a Phase 1 reserve upgrade and possible new venture activity is imminent short term. Key Points: OEL and JV partner BHPB have submitted an 18mnth extension

proposal to the Philippine DOE pertaining to the Cinco well commitment (SC55). The JV is awaiting response which is expected imminently.

Cinco (OEL 33.18% post farm-down) now requires a suitable rig contract for execution, we do not anticipate well spud in CY’12. OEL is free carried for a two well program (Cinco + 1) with BHP earning a 60% interest.

Cinco targeting a mean prospective resource of 2.1Tcf and 74mmbls could be worth 10-18cps on a success case basis.

Galoc Phase 1 production (OEL 33%) has reinitiated at rates circa 6,300bopd; production continues to outperform 2P expectations. No water cut has occurred.

Galoc Phase 2 FID is expected mid CY’12. Subsequent FID approval, 1-3 new wells can be expected CY‘13, targeting 3-9mmbbls of 2C resources.

We anticipate a reserve upgrade to Galoc Phase 1 within the short term (<3months) in the order of ~2mmbbls 1P in line with JV partners (NDO) previous estimates.

OEL’s Mar Qtly cash position stands ~$29.5m as expected, down from $38m previous. No production off-take occurred within the Q due to refurbishment of the Galoc FPSO.

Analysis: Currently limited valued is afforded to OEL beyond Galoc + Cash (10cps). Delay to Cinco albeit disappointing, is a timing issue and does not affect our valuation. We maintain a price target of $0.19/sh representing our current valuation - Buy. Cinco represents the most high impact catalyst to OEL; we expect significant re-rating of the stock upon exploration drilling success. We note that a suitable rig contract remains the greatest roadblock to execution. OEL’s broader Philippine focus provides material exploration and appraisal opportunities in CY’12 through CY’13, whilst onshore Africa is an emerging low cost high impact asset expansion. We expect OEL to bid on additional permit within the upcoming release by the Philippine government, success further cementing OEL’s significant acreage position within the region.

Otto Energy (OEL): Euroz


Michael Skinner 23 April 2012


Cont’d next page

http://www.ottomanenergy.com/IRM/Company/ShowPage.aspx/PDFs/1798-14691433/EurozReportApril2012

17

Recent production re-initiation from Galoc phase 1 (rates ~6,300bopd) provides sustaining cash flow through CY’12 underpinning the near term FID and development of Phase 2 (expected mid CY’12). We expect OEL to fund it share of Galoc Phase 2 ($50 - 70m) via phase 1 production revenue and debt. Cash at Mar Q end ~$29.5m is as expected, operations, production and G&A the primary cash costs. We expect revenue generation within the Jun Q from production at Galoc; production off-take is expected late May CY’12. OEL’s recent entry into East Africa is viewed as positive. Significant exploration acreage (some 300% increase) is expected to provide a plethora of hydrocarbon prospects, the basis for long-term growth and value addition. Attractive fiscal terms offered by the Tanzanian government compliment the early stage exploration work requirement.

Otto Energy (OEL): Euroz


18

Conferences & Events Calendar Upcoming Oil & Gas Industry Conferences and Events of Interest

Oil & Gas Kenya 2012

KICC, Nairobi - Kenya 10th May 2012 - 12th May 2012

Phone: +971-4-3721421

Fax: +971-4-3721422

Email: [email protected]

Web: www.expogr.com/kenyaoil

APPEA 2012

Adelaide, South Australia 13th May 2012 - 16th May 2012

Phone: +61 2 9553 1260


Web: www.appeaconference.com.au

Permit Approvals WA

Pan Pacific, Perth, Western Australia 14th May 2012 - 16th May 2012

Phone: +61 2 9279 2222

Fax: +61 2 9279 2477


Web: www.permitapprovalsWA.com

19

Following on the heels of last week’s delivery, another newbuild drillship was delivered this week, increasing the global mobile offshore drilling unit supply to 827. The number of contracted rigs also rose by one to 670. The worldwide fleet utilization rate is holding steady at 81.0 percent.

In the US Gulf of Mexico, both the supply and contracted count of offshore drilling rigs rose by one. With 74 out of 114 units under contract, the fleet utilization rate has increased to 64.9 percent. Within the South American offshore rig market, the supply has decreased by one to 139, while the contracted rig count is unchanged at 112. As a result of the change in supply, the regional fleet utilization rate has risen to 80.6 percent. Once again, the Europe/Mediterranean Sea region is unchanged. With a supply of 119 and a contracted count of 108, the fleet utilization rate stands at 90.8 percent.

ODS-Petrodata’s World Rig Count Another new drillship delivered this week

pex monthly World Rig Count

continued

U.S. Gulf of Mexico

Today Last Week Month Ago Year Ago

Total Rigs in Drilling Fleet 114 113 113 125

Rigs Under Contract 74 73 72 70

Rigs w/o Contract 40 40 41 55

Fleet Utilisation Rate 64.9% 64.6% 63.7% 56.0%

Europe/Mediterranean Sea






Worldwide






Note: The rig count tables above include all MODU types except tenders. "Rigs Under Contract" does not reflect the number of rigs actually working at any given time, as some contracted rigs may be moving between locations, undergoing maintenance, waiting on weather, etc.

Offshore Platform Rigs In addition to mobile drilling units, 300 platform rigs are deployed worldwide.

Area Platform Rig Fleet Total

Contracted/Working

Contracted Fleet Utilisation Rate

U.S. Gulf of Mexico 51 22/14 43.1%

Europe/Mediterranean* 107 103/23 96.3%

Worldwide* 300 246/132 82.0%

*As of March 23, 2012 (updated quarterly).

3200 Wilcrest Dr., Suite 170 Houston, Texas 77042 USA

email: [email protected] Telephone: 832-463-3000

Fax: 832-463-3100 © 2011 ODS-Petrodata Inc.

For additional information, contact: Cinnamon Odell, at

832-463-3000, email [email protected].

Cont’d next page

20

Offshore West Africa, both the supply and the contracted count of offshore drilling rigs are the same as last week. With 59 out of 71 units under contract, the regional fleet utilization rate remains at 83.1 percent. The Middle East market has added one unit to its supply, bringing the total number of rigs to 122. However, the contracted count is unchanged at 102, resulting in a lower fleet utilization rate of 83.6 percent for the region. The supply of mobile offshore drilling units in the Asian/Australian market is the same as last week, as is the number of rigs with contracts. With 124 out of 154 units under contract, the regional fleet utilization rate remains at 80.5 percent.

ODS-Petrodata’s World Rig Count Another new drillship delivered this week

pex monthly World Rig Count

continued

21

A guide to stock market speculation on the potential or results of Australian oil & gas wells with exploration potential being drilled or scheduled for drilling in the next few months. Gearing is calculated as equity in this well divided by current market traded capitalisation. This number is then multiplied by 10,000 to offer readers a more meaningful number with which to compare companies: the higher the gearing, the greater the theoretical scope for the market price to respond to the well's performance - pinpointing the company with the best entry terms. Figures from listed majors (eg. Woodside, BHP Billiton, & Santos) when mentioned may be distorted due to high market capitalisations.

Gearing

Offs

hore

C

urr

ent/P

lann

ed

AGL Energy

Beach

Cue

Karoon

MEO

Origin

Santos

Tap

Woodside

Shar

e Pr

ice

(As

at A

pril

30th

) 14

.98

1.40

0.

27

6.45

0.

30

13.2

6 14

.02

0.80

34

.92

Ban

ambu

Dee

p-1,

WA

-289

-P

35.0

0

*65.

00

2.39

756

0.

0263

5

Bla

ckw

ood-

2, N

T-P-

68

*50.

00

5.

4475

1

Bo

reas

-1, W

A-3

15-P

40.0

0

0.40

056

Cro

wn-

1, W

A-2

74-P

30.0

0

0.

0275

5

Her

on-3

, NT-

P-68

*5

0.00

5.44

751

Hos

s-1,

WA

-208

-P

6.00

10

.00

*3

1.31

0.00

852

0.07

251

0.02

875

Map

le-2

, AC

-RL-

7

20

.00

1.

3700

3

N P

egas

us-1

, TP-

8

12.2

2

1.

4677

0

Prot

eus-

1, W

A-3

98-P

40.0

0

0.

4005

6

Th

istl

e-1,

VIC

-P-4

3

*67.

23

0.04

625

Zeph

yros

-1, W

A-3

98-P

40.0

0

0.40

056

22

pex monthly Gearing

continued

Ons

hore

C

urr

ent/P

lann

ed

Baraka

Beach

Buru

Central

Drillsearch

Empire

Icon

Lakes

Senex

Strike

Shar

e Pr

ice

(As

at A

pril

30th

) 0.

02

1.40

2.

83

0.10

1.

41

0.02

0.

27

0.01

1.

14

0.20

Bla

ck A

rrow

-1, E

P-43

2

*42.

50

13

.888

44

Bos

ton-

1, P

EL-2

18

*1

00.0

0

0.72

510

Cha

rger

-1, E

P-45

4

*5

0.00

16

.339

34

Cyr

ene-

1, E

P-43

8

75

.00

*20.

00

2.90

029

6.53

573

Dav

enpo

rt-1

, PEL

-94

*5

0.00

15

.00

35.0

0

0.36

255

0.

2601

7 7.

9399

3

Dra

gon-

1, P

EP-1

70

*1

00.0

0

12.5

3431

Eolu

s-1,

ATP

-626

-P

*9

9.00

12.4

0897

Hal

ifax-

1, A

TP-8

55-P

*60.

00

40

.00

0.43

506

5.01

373

Has

lam

-1, P

EL

-106

*50.

00

50

.00

0.

3625

5

2.

0293

6

Hol

dgat

e-1,

PEP

-166

*1

00.0

0

40.2

3497

Kru

ger-

1, P

EL-5

16

*100

.00

1.

7344

5

Laun

er-1

, EP-

454/

EP-4

30

50

.00

16.3

3934

Mac

Int y

re-2

, EP-

127

*25.

00

11.0

0255

Mad

igan

-1, E

P-93

/EP-

97

80

.00

14

.615

08

23

pex monthly Gearing

continued

Mai

tland

-1, E

P-45

0

*1

00.0

0

40.2

3497

Mor

eys-

1, P

EP-1

69

*1

00.0

0

40.2

3497

Mt K

itty-

1, E

P-12

5

*7

5.00

13.7

0163

Mus

tang

-1, P

EL-1

11

40.0

0

*6

0.00

0.

2900

4

1.

0406

7

Nan

gwar

ry-1

, PEL

-155

18

.75

33

.518

06

Nic

olay

-1, E

P-45

6

25

.00

4.16

722

Para

dise

Dee

p-1,

EP-

428

50

.00

1.

9335

3

Rile

y-1,

PEL

-92

*75.

00

25

.00

0.54

382

7.76

800

Skip

ton-

1, P

EL-5

16

*1

00.0

0

1.73

445

So

uth

end

-1, P

EL

-107

*4

0.00

60.0

0

0.29

004

2.

4352

3

Stan

ley-

3. P

RL-

4

*50.

00

2.

2108

0

Stre

aky-

1, P

EL-2

18

*100

.00

0.

7251

0

Tala

q-1,

PEL

-516

*100

.00

1.

7344

5

Tige

r Wes

t-1, P

EP-1

70

*100

.00

12

.534

31

Tom

cat-1

, PEL

-111

40

.00

*60.

00

0.29

004

1.04

067

Trap

ia-1

, PR

L-11

52.5

0

0.

0639

8

Tulk

a-1,

PEL

-106

*5

0.00

50.0

0

0.36

255

2.

0293

6

Win

dom

-1, A

TP-6

26-P

*99.

00

12.4

0897

Yakk

a M

unga

-1, E

P-42

8

*50.

00

1.93

353

Yulle

roo-

3, E

P-39

1

*50.

00

1.93

353

Ons

hore

C

urr

ent/P

lann

ed

Beach

Buru

Central

Cooper

Drillsearch

Horizon

Icon

Lakes

New Standard

Oil Search

Rawson

Senex

Shar

e Pr

ice

(As

at A

pril

30th

) 1.

40

2.83

0.

10

0.57

1.

41

0.33

0.

27

0.01

0.

57

7.35

0.

08

1.14

24

April 2012 Drilling Calendar

25

Well Tickets

Cont’d next page

BOREAS-1 WA-315-P Browse ConocoPhillips Transocean Legend 13-39-24.80 S 122-17-52.70 E

ConocoPhillips 60.00 Karoon 40.00

05-04-12 Spudded 05-04-12 Drilling 36” hole to first casing point

PTD 5500m

25-04-12 2822m making up 12-1/4” BHA prior to drilling ahead

DAVENPORT-1 PEL-94 Cooper

Beach Ensign Rig-918

28-47-55.30 S 139-59-17.24 E

Beach 50.00 Strike 35.00 Senex 15.00

25-04-12 Spudded

PTD 2458m

GLENCOE-2 WA-390-P Carnarvon Hess Jack Bates 20-04-57.00 S 113-49-56.00 E

Hess 100.00

04-01-12 Re-commenced 24-01-12 Continuing 25-01-12 De-manning rig due to weather 01-02-12 Re-manning rig after cyclone, continue rig acceptance

PTD UNKNOWN

08-03-12 Continuing rig acceptance activities 15-03-12 Rig secured due to Cyclone Lua. Rig acceptance to continue once rig is re-manned 04-04-12 Continuing rig acceptance 06-04-12 Operations commenced following rig acceptance 26-04-12 Operating on location

GROWLER-10 PRL-15 Cooper Senex Ensign Rig-948

27-33-57.60 S 139-33-24.92 E

Senex 60.00 Beach 40.00

27-03-12 Spudded 30-03-12 658m and DA after setting surface casing

Intersected 15.2m gross oil column in Birkhead formation over interval 1728-1744m, with 14m net oil pay

PTD 1838m

04-04-12 1729m preparing to core in the Birkhead formation 11-04-12 TD 1850m C&S as future oil producer

HASLAM-1 PEL-106B Cooper


28-01-45.56 S 139-40-44.19 E

Beach 50.00 Drillsearch 50.00

20-03-12 Spudded 04-04-12 Continuing 10-04-12 TD 2913m case and suspend for extended production

Good hydrocarbon fluorescence and gas shows in Patchawarra and Tirrawarra sandstone sections, with logs indicating hydrocarbon bearing zones in the lower Patchawarra. Recovered 30m core, with significant gas contents assessed within unconventional shales and coals. DST-1 over 4.7m interval from 2628.5-2633.2m flowed 3MMcfd gas on 1/2” choke with significant but unquantified rate of gas liquids

PTD 2828m

testing

KETU-2 PRL-21 Papuan

Horizon Parker Rig-226

06-04-22.66 S 141-51-40.93 E

Horizon 45.00 Talisman 40.00 Kina 15.00

06-03-12 Spudded 06-03-12 Drilling surface hole prior to running and setting 18-5/8” casing

Testing recovered liquids rich gas with no water

PTD 3824m

12-03-12 1256m and DA in 17-1/2” hole after setting 13-3/8”

19-04-12 Continuing after running 9-5/8” casing at 2545m 03-04-12 2550m pressure testing BOPs prior to DA in 8-1/2” hole casing at 1181m

producer or gas re-injection well 23-04-12 TD 3787m running 7” liner to complete as future gas

26

Cont’d next page

MARSDEN-1 PEL-95 Cooper


28-34-33.55 S 140-35-41.19 E

Beach 50.00 Strike 50.00

22-02-12 Spudded 01-03-12 Continuing 07-03-12 1908m wait on weather to re-establish access to site

Over 800m of Permian shales coals and sands intersected with ele-vated gas readings, including presence of heavy hydrocarbons (up to pentane), recorded across the target formations

PTD 2640m

04-04-12 Waiting on weather to re-gain location access 11-04-12 TD 2625m commence wireline logging 17-04-12 TD 2625m C&S for future testing

MOONTA-1 ST1 PEL-218 Cooper Beach Ensign Rig-916

27-45-02.09 S 140-51-50.05 E

Beach 100.00

23-01-12 Spudded 01-02-12 1979m and DA in Wallumbilla formation 01-03-12 Continuing

Mud log data indicates well is gas saturated through Permian target zone, from the Toolachee to the base of the Patchawarra formation. Section covers multiple intervals over a target zone of greater than 1km

PTD 3800m

07-03-12 2924m wait on weather to re-establish access to site 22-03-12 Waiting on weather 04-04-12 3456m and DA in Patchawarra formation 13-04-12 Continuing 24-04-12 TD 3810m evaluate and suspend for frac stimulation

MOREYS-1 PEP-169 Otway

Lakes Hunt Rig-2

38-29-00.00 S 142-53-02.00 E

Lakes 49.00 Armour (farm in) 51.00

20-04-12 Spudded 26-04-12 735m and DA through Dilwyn formation

PTD 2000m

NORTON-1 WA-36-R Exmouth Woodside Ocean America 21-32-12.00 S 113-52-30.00 E

Woodside 60.00 Mitsui 40.00

27-02-12 Spudded 15-03-12 Continuing, waiting on weather (Cyclone Lua)

PTD 1700m

13-04-12 TD completed, details unavailable

P’NYANG SOUTH-1 PRL-3 Papuan ExxonMobil Oil Search Rig-103

05-33-11.00 S (approx) 141-34-53.00 E (approx)

ExxonMobil 49.00 Oil Search 38.50

29-01-12 Spudded 02-02-12 366m and DA in 17-1/2” hole 09-02-12 871m and DA in 12-1/4” hole

Elevated gas readings encountered in the Toro A sandstone, while initial data interpretation indicates the Koi-Iange sandstone is water wet

PTD UNKNOWN

JX Nippon 12.50

16-02-12 1205m and DA in 12-1/4” hole 23-02-12 1788m and DA in 8-1/2” hole 01-03-12 1991m prepare to run 7” liner 08-03-12 2427m and DA in 6” hole

15-03-12 2508m prepare to plug well before initiating sidetrack

29-03-12 2182m and DA in 12-1/4” hole 22-03-12 1628m and DA in 12-1/4” hole

05-04-12 2479m prepare to run 9-5/8” casing 12-04-12 2479m prepare to cement 9-5/8” casing

PUKA-1 PEP-51153 Taranaki Kea Drill Force Rig-1

Unavailable Unavailable

Kea 100.00

24-03-12 Spudded 27-03-12 307m surface casing run and cemented 11-04-12 TD 1550m C&S pending flow testing, and if warranted,

40m interval at around 1400m depth containing several Mt Messenger reservoir quality sands, with logs indicating 4.5m of moveable hydro-carbons, most likely oil, in good quality sands

PTD 3800m

long term production

27

pex monthly Well Tickets

continued

SASANOF-1 PEL-516 Cooper Senex MB Century Rig-3

28-21-38.32 S 140-19-49.44 E

Senex 100.00

04-01-12 Spudded 06-01-12 850m and setting surface casing

09-02-12 2560m and DA 15-02-12 2711m and DA

200m of core samples collected, with 13 cores taken for desorption and testing from the Toolachee, Roseneath, Murteree and Patcha-warra formations Significant gas shows across Epsilon and Patchawarra tight sand reservoir, with analysis suggesting presence of wet gas. Desorption testing of Roseneath and Murteree shale samples plus Toolachee and Patchawarra coal samples delivered positive gas content

PTD 3200m

19-01-12 2198m run 7” casing prior to commencing coring work

23-02-11 Running core 11 04-03-12 Rig evacuated by helicopter due to weather, with roads closed due to flood waters 20-03-12 Waiting on weather 22-03-12 Resume drilling 28-03-12 TD 3102m prepare to log ahead of casing for fraccing 04-04-12 TD 3102m logging ahead of casing 11-04-12 TD 3102m C&S for fraccing and flow testing in early May

SOUTHEND-1 PEL-107 Cooper


28-05-12.60 S 139-42-18.57 E

Beach 40.00 Drillsearch 60.00

17-04-12 Spudded

PTD 2912m

TALAQ-1 PEL-516 Cooper Senex MB Century Rig-3 28-16-39.95 S 140-56-12.88 E

Senex 100.00

10-04-12 Spudded 11-04-12 Drilling ahead to surface casing depth at 800m 18-04-12 796m nippling up BOPs after setting 9-5/8” casing

PTD 2947m

TALLAGANDA-1 WA-351-P Carnarvon BHP Billiton Atwood Eagle 20-52-30.00 S 113-44-36.00 E

BHP Billiton 55.00 Apache 25.00

01-03-12 Spudded 07-03-12 2070m in 17-1/2” hole with surface casing run and

LWD logs indicate gas shows encountered near top of Mungaroo formation, but reservoir quality and net pay is to be determined Wireline sampling confirmed gas discovery in Mungaroo sands with preliminary interpretation of results indicating reservoir quality of gas bearing interval is variable at this location on the Greater Tallaganda Structure

PTD 3109m

Tap 20.00

cemented. Testing BOP’s 14-03-12 2070m BOPs tested, rig secured and de-manned for Cyclone Lua 21-03-12 2070m install BOPs and DA in 12-1/4” hole 28-03-12 3329m and DA in 12-1/4” hole

ahead of resumption of drilling in 12-1/4” hole to TD 04-04-12 3955m and coring ahead in the Mungaroo formation

11-04-12 TD 4365m complete logging and evaluate results prior to

P&A’ing as planned 18-04-12 TD 4365m being P&A’d

THISTLE-1 VIC-P-43 Otway Origin Stena Clyde 38-57-59.85 S 142-53-27.74 E

Origin 67.23 Benaris 27.77 Toyota Tsusho 5.00

19-04-12 Spudded

PTD 2559m

26-04-12 Continuing

Cont’d next page

THUNDERCHIEF-1 PEL-104 Cooper Senex Ensign Rig-948

27-31-21.30 S 139-36-22.40 E


27-02-12 Spudded 27-02-12 394m and DA to surface casing depth at 647m

27-03-12 TD 1877m P&A with non commercial oil shows Encountered poorly developed stratigraphic channel continuing over 10m of fine sandstones with poor porosity

PTD 1850m

07-03-12 653m waiting on weather 22-03-12 Waiting on weather

28

pex monthly Well Tickets

continued

TRICERATOPS-2 PPL-237 Papuan InterOil InterOil Rig-2

06-58-37.66 S 144-46-36.50 E

InterOil 100.00

17-01-12 Spudded 23-01-12 120m running 18-5/8” casing

05-03-12 1231m and DA in 12-1/4” hole 22-03-12 Continuing

Since intersecting the carbonate reservoir to current TD, background gas and persistent mud losses of between 5-40bbls per hour have been encountered Drilled 435m of target carbonate reservoir to date, with gas and condensate shows observed along entire interval

PTD 2300m

02-02-12 516m and DA in 17-1/2” hole

at 1253m 02-04-12 1366m and DA in 8-1/2” hole after setting 9-5/8” casing

TIGERCAT-2 PEL-104 Cooper Senex Ensign Rig-948

27-32-36.45 S 139-37-36.44 E


13-04-12 Spudded 27-04-12 To be P&A with noncommercial oil shows

PTD 1850m

VUCKO-1 WA-433-P Exmouth Woodside Ocean America 21-10-24.00 S 113-07-24.00 E

Woodside 70.00 Mitsui 30.00

16-04-12 Spudded 26-04-12 Continuing

PTD 3300m

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pex may 1st 2012 · the country later this year to service the high capacity end of the market....

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