unlocking our energy future: the potential value of the ...basin – farm-out process currently...
TRANSCRIPT
August 2013
Unlocking our energy future: the potential value of the
Canning Basin
Phil Thick, Managing Director
Contents
2
1. New Standard Energy company overview
2. Global shale gas position
3. Onshore Australia
4. Canning Basin
5. WA energy market
6. The opportunity, the challenges and the road to
market
Company overview
3
Positioned for growth in the emerging shale sector
New Standard Energy ASX:NSE
Ordinary shares 305.3m
Unlisted rights 2.12m
Market capitalisation
(at $0.16c per share) $48.8m
Cash (net) June 2013 $41.5m
Investment in Elixir Petroleum
(121.8m shares at 1.7c per share) $2.07m
NSE share performance over past two years
Applicable as at 23 August 2013
Corporate overview
Applicable as at 23 August 2013
Company overview
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Strategically positioned for WA energy market Large Acreage Position in Strong, Growing Market
Merlinleigh Project, onshore Carnarvon Basin
100% equity & operator
5,800km2 (1.4m acres) with conventional and
shale/tight gas potential
located on major gas infrastructure
Southern Canning Project, Canning Basin
25% equity and operator, US$119m farm-out to
ConocoPhillips (46%) & PetroChina (29%)
48,000km2 (11m acres) with shale/tight gas & wet gas
potential
3 wells in Phase 1 program
Laurel Project, Canning Basin
65% equity and operator of EP417 (with Buru 35%)
and 100% of Seven Lakes STP-EPA-109
5,800km2 (1.4m acres) with conventional and
shale/tight gas potential
Growing infrastructure in Kimberley region with large
players positioning and Buru State Agreement provides
certainty on infrastructure and path to market for gas in the
Canning
Planned drilling program
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Data acquisition focus
• New Standard recently secured Enerdrill Rig #3 for a multi well
program over the next 18 months
• Contract is for two firm wells plus two options
• One firm well in late 2013 (Merlinleigh Project in Carnarvon
Basin – farm-out process currently underway)
• 1 – 3 well program proposed for Canning Basin from mid 2014
(potentially covering both of our Canning Basin projects)
• All wells are initial exploration wells gathering data and
information to further define and quantify structures and potential
resources in the respective basins
• Enerdrill is a WA company, competent operator with remote
drilling experience in Australia and a strong technical and
operational background
Global shale gas
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Huge global potential for shale gas
95 major shale basins in 41 countries
Source: US Energy Information Administration
Global shale gas
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Comparison of 2011 EIA/ARI Study and Current EIA/ARI Study of
Assessed World Shale Gas Resources
Source: US Energy Information Administration
2011 2013
Continent Technically
Recoverable (Tcf)
Technically
Recoverable (Tcf)
North America (Ex.
U.S.) 1,069 1,118
Australia 396 437
South America 1,225 1,431
Europe 624 883
Africa 1,042 1,361
Asia 1,404 1,403
Total 5,760 6,634
The rise of US shale
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Game Changing Results + Global Impact
US Energy Information Agency predictions:
• US to overtake Saudi Arabia as world’s
largest oil producer by 2020
• North America to become net oil exporter
around 2030
• US set to become a net exporter of
natural gas by 2020
• US to be almost energy self-sufficient by
2035
Lessons learned: Shale gas, shale oil and tight gas are a significant, game changer
that is impacting global energy markets
Onshore Australia: a rapidly emerging
sector
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International majors continue to increase their presence in the Australian
unconventional sector
20 June 2012:
Statoil - $210m
17 Feb 2011:
CNOOC - $50m
2 Oct 2012:
Santos - $150m
27 July 2011:
BG Group - $130m
30 Sep 2011:
ConocoPhillips - $119.5m
15 June 2010:
Mitsubishi - $150m
14 Apr 2012:
Hess - undisclosed
6 Nov 2012:
Total - $190m
22 February 2011:
Hess - $55m
25 Feb 2013:
Chevron – up to $349m
21 Feb 2013
PetroChina • Corporate activity significant in
past two years
• Deals continuing to be concluded
• Majority of transactions at
the asset level via farm-in
• Latest major deal: Chevron
farming into BPT acreage
for up to $349m
• Significant interest from global
and international companies
• Australian companies also active
Cooper / Eromanga
Otway
Amadeus
Georgina Canning
Browse
Carnarvon
Perth
Galilee
Beetaloo
Putting the Canning Basin into perspective
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Size of Assessed Shale Gas and Shale Oil Resources, at Basin and Formation Levels
Independent assessments of Goldwyer shale formation in the Canning Basin provide strong support for
Industry player’s focus:
• Canning Basin:
• Canning Basin – Risked Gas In Place: 1,227Tcf Technically recoverable: 235Tcf
• Canning Basin – Risked Oil In Place: 244bbl Technically recoverable: 9.7bbl
Country Basin Risked Gas In-
Place (Tcf)
Technically
Recoverable
(Tcf)
Risked Oil In-
Place (Billion
bbl)
Technically
Recoverable
(Billion bbl)
Australia
Cooper 325 93 29 1.5
Maryborough 64 19 0 0.0
Perth 168 44 14 0.5
Canning
(Goldwyer) 1,227 235 244 9.7
Georgina 68 13 25 1.0
Beetaloo 194 44 93 4.7
Source: US Energy Information Administration
Acreage grab in the Canning Basin
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Most prospective acreage already ‘locked up’
WA energy market
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Attractive exploration environment Favourable Onshore Outlook
• Sustained upward pressure on WA gas
prices
• Limited existing supply side
alternatives
• Declining North-West Shelf domestic
gas availability
• Increasing costs of incremental supply
especially offshore
• Large offshore fields need scale
economy of LNG, petrochemicals
• High value as LNG
• Prices likely to remain high
0
200
400
600
800
1000
1200
1400
1600TJ/day
Existing domgas New offshore domgas Demand
WA Onshore Gas Demand-Supply Equation
A clear opportunity for shale gas and tight gas resources is emerging in WA
Source: ACIL Tasman, Morgan Stanley Shale Conference Presentation, April 2012
Shale and Tight
Gas Opportunity
IMO’s Gas Statement of Opportunities
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The rise of shale & tight gas
There are several medium to long-term challenges confronting the WA LNG industry,
these include:
• potential changes to international LNG supply;
• the potential end of premium LNG pricing in the Asia Pacific region;
• the high cost of LNG production in WA; and
• the emergence of unconventional gas as a source of supply
The emergence of unconventional gas as a new source of gas supply is also a
potential game changer. In the last decade, unconventional gas has transformed the
US from a net importer into a net exporter of gas.
Unconventional gas is also transforming gas markets in eastern Australia and there
are indications that WA is well endowed with unconventional gas resources. While its
production is still in its early stages in WA and around the world, unconventional gas
has the potential to transform gas markets internationally. The impact of
unconventional gas on LNG exports is still not clear and will need to be monitored
closely by WA LNG exporters, market regulators and governments.
Source: IMO Gas Statement of Opportunities, July 2013
Balancing the expectations
• Western Australia is already supported by a healthy domestic gas market coming
from the North West Shelf
• Domestic gas prices are high relative to the east coast due to global export prices
• New sources of domestic gas should reduce prices, but not to eastern states
levels or US levels
• Shale gas could be seen as a source of domestic gas for the future and could
support the North West Shelf energy hub
• There is enough shale gas potential in the Canning Basin alone to meet
Australia’s energy needs without support from any other reserves
• In terms of the Western Australian domestic market, the Canning Basin gas
potential will quickly and easily meet the gap, with substantial potential for export
to global markets
• Time frame remains the biggest question mark in terms of getting Canning Basin
gas into the domestic market, and this is driven by remoteness, cost of
infrastructure and cost of drilling and future production
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Domestic Gas vs. Robust Export Market
Domestic gas price outlook
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Prices likely to remain high until forecasted 2022
The road to development
• Remoteness
• Most prospective shale gas prospects
are in remote, frontier locations
• Challenges include
• Lack of infrastructure
• Limited geological understanding
• Availability of water
• Large operating costs
• Support industry is still maturing
• Access to rigs very limited
• Market for experienced operators and
technicians remains tight
• Stakeholder engagement
• Native title and TO agreements
remain a challenge
• The “anti campaign” continues to
grow and our response continues to
be reactive
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Challenges of exploring in the Canning Basin
How do we unlock the potential value?
• Opening the frontier
• Invest now in infrastructure
• Building the crew
• Partner with experience global
operators
• Building the knowledge base
• Understand your acreage
• Informing the stakeholders
• Don’t leave communities in the dark
– inform early and often
• Two-way communication
• WA legislation has mandatory
reporting of all materials used
during drilling process
• Be accountable
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De-risk the project
This document has been prepared by New Standard Energy Limited ABN 20 119 323 385 (“New Standard")
This presentation contains certain statements which may constitute "forward-looking statements". It is believed that the expectations
reflected in these statements are reasonable but they may be affected by a variety of variables and changes in underlying assumptions
which could cause actual results or trends to differ materially, including, but not limited to: price fluctuations, actual demand, currency
fluctuations, drilling and production results, reserve and resource estimates, loss of market, industry competition, environmental risks,
physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions,
political risks, project delays or advancements, approvals and cost estimates.
All of New Standard’s operations and activities are subject to joint venture, regulatory and other approvals and their timing and order may
also be affected by weather, availability of equipment and materials and land access arrangements, including native title arrangements.
Although New Standard believes that the expectations raised in this presentation are reasonable there can be no certainty that the events
or operations described in this presentation will occur in the timeframe or order presented or at all.
No representation or warranty, expressed or implied, is made by New Standard or any other person that the material contained in this
presentation will be achieved or prove to be correct. Except for statutory liability which cannot be excluded, each of New Standard, its
officers, employees and advisers expressly disclaims any responsibility for the accuracy or completeness of the material contained in this
presentation and excludes all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as
a consequence if any information in this presentation or any error or omission there from. Neither New Standard nor any other person
accepts any responsibility to update any person regarding any inaccuracy, omission or change in information in this presentation or any
other information made available to a person nor any obligation to furnish the person with any further information.
It is not intended as an offer, solicitation or recommendation with respect to the purchase or sale of any securities. Prospective investors
should make their own independent evaluation of an investment in New Standard including without limitation, seeking professional advice.
Competent Person: The information in this presentation has been reviewed by Dr Mark Hagan (BSc Hons, PhD) who is a Petroleum
Geologist and Geophysicist with more than 35 years experience in the industry. Dr Hagan is Technical Director of New Standard Energy
and consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
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Important notice
