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ASX Spotlight Conference Presentation
London & New York
February 2014
David Casey, Managing Director
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Disclaimer
Important Notice
• This presentation does not constitute investment advice. Neither this presentation nor the information contained in it constitutes an offer, invitation,
solicitation or recommendation in relation to the purchase or sale of shares in any jurisdiction.
• Shareholders should not rely on this presentation. This presentation does not take into account any person's particular investment objectives,
financial resources or other relevant circumstances and the opinions and recommendations in this presentation are not intended to represent
recommendations of particular investments to particular persons. All securities transactions involve risks, which include (among others) the risk of
adverse or unanticipated market, financial or political developments.
• The information set out in this presentation does not purport to be all inclusive or to contain all the information which its recipients may require in
order to make an informed assessment of Petrel. You should conduct your own investigations and perform your own analysis in order to satisfy
yourself as to the accuracy and completeness of the information, statements and opinions contained in this presentation.
• To the fullest extent permitted by law, the Company does not make any representation or warranty, express or implied, as to the accuracy or
completeness of any information, statements, opinions, estimates, forecasts or other representations contained in this presentation. No
responsibility for any errors or omissions from this presentation arising out of negligence or otherwise is accepted.
• This presentation may include forward looking statements. Forward looking statements are only predictions and are subject to risks, uncertainties
and assumptions which are outside the control of Petrel. These risks, uncertainties and assumptions include commodity prices, currency
fluctuations, economic and financial market conditions in various countries and regions, environmental risks and legislative, fiscal or regulatory
developments, political risks, project delay or advancement, approvals and cost estimates. Actual values, results or events may be materially
different to those expressed or implied in this presentation. Given these uncertainties, readers are cautioned not to place reliance on forward
looking statements.
• Any forward looking statements in this presentation speak only at the date of issue of this presentation. Subject to any continuing obligations under
applicable law and the ASX Listing Rules, Petrel does not undertake any obligation to update or revise any information or any of the forward
looking statements in this presentation or any changes in events, conditions or circumstances on which any such forward looking statement is
based.
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Petrel Energy’s Diversified Global Portfolio
Norte Basin Uruguay – Cordobes Shale and
Cerrezeulo and La Paloma SS Targeting unconventional and conventional oil targets in Piedra
Sola & Salto Concessions (3.5M acres)
Lochend Cardium Alberta, Canada
Targeting “tight oil” in lower siltstone and sandstone in 6,400 acres.
Betic Alps Spain – Aljibe Formation Targeting conventional sandstone gas reservoirs in 94,000 acres in
Southern Spain.
Conventional and unconventional oil & gas project diversity
PETREL ENERGY’S OBJECTIVE IS TO CREATE SHAREHOLDER WEALTH THROUGH THE ACQUISITION,
EXPLORATION AND APPRAISAL OF A DIVERSIFIED PORTFOLIO OF SUBSTANTIAL OIL AND GAS
PROJECTS
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Corporate Profile
Share price has increased 4 times since Uruguay and Spain assets acquired
Capital Structure
Cash: $10.1m (December 2013)
Issued Cap: 443.1m Shares
Market Cap: $100m (at $0.225)
Debt: $0
ASX Code: PRL
Board & Management
Stephen Mitchell* Chairman
David Casey* Managing Director & CEO
Alexander Sundich* Non-Executive Director
David Hobday Non-Executive Director
Ian Kirkham Company Secretary
Shareholders
David Casey* 8.7%
Stephen Mitchell* 7.3%
Alexander Sundich* 5.0%
Cameron Richard Pty Ltd 6.6%
Smithley Super Pty Ltd 4.8%
Linwierik Super 3.9%
Top 20 55.0%
Uruguay & Spain Acquired
Coring Programme commenced
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Share Performance
Petrel best performing ASX oil & gas company by share price for 2013
ResourceInvest - AOGR Report - 1 February 2014
$0.225
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URUGUAY
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Uruguay Background
Total was granted two onshore shale blocks in the Norte Basin in late 2013
Stable democracy, population 3 million and ranked among the least corrupt countries in the world
Increasing international attention turning to Uruguay after recent successful offshore licencing round with
companies such as BP, BG and Total acquiring extensive offshore and more recently onshore permits
“…Total joins Argentina’s YPF and independents Schuepbach Energy and Petrel Energy.”
75kms
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Uruguay Ideal Operating Environment
Politically stable democracy with excellent fiscal terms and proactive business
environment
Ready local market for oil and gas at international prices – Uruguay currently imports 40,000 bopd into La Teja Refinery in Montevideo
Attractive PSC terms. ANCAP (Energy Ministry) involved in upstream and downstream activities
Ideal operating conditions with ready access to equipment in neighbouring Brazil and Argentina – 2 Coreholes drilled by local contractors, seismic planning underway
"By the way, Uruguay is booming. Full employment,
construction everywhere, and everyone seems happy."
US Economist John Mauldin remarked in Montevideo recently
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Uruguay Concessions
Piedra Sola and Salto concessions total
14,000 km2 (~3.5 million acres)
Magnetotelluric (MT) programme
completed confirming existence of rift
basin with Devonian and Permian
sediments
Two coreholes have confirmed the
existence of oil producing source and
reservoir rocks across the Piedra Sola
Block
Multiple unconventional and
conventional reservoir targets.
Oil can be transported to La
Teja Refinery via truck, rail or
pipeline
Oil Can be trucked or
piped to Uruguay River &
barged to La Teja Refinery
Uruguay represents a rare company transforming “first mover” opportunity for Petrel
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Uruguay Corehole Success
Cardozo Chico E-1 corehole confirmed Total Organic Carbon content’s (TOC) averaging 3.32% with a maximum of 11.6% and amorphous (oil prone) kerogen ranging from 40-70%.
Cerro Padilla E-1 corehole is yet to be completed but preliminary results are very encouraging with intersection of 30m of Permian Shale with TOC’s up to 4.2% with high amorphous kerogen
Corehole results confirm existence of an active petroleum system
Uruguay core hole ACHAR E-1
Excellent porosity and permeability measured from core samples by Weatherford. Porosities commonly greater than 20% with some measured permeability’s in excess of 1 Darcy (1000md)and higher in some samples
Multiple mature source rocks identified
Oil leaching from Devonian
sandstones just below Cordobes
Shales (306 – 315m) Excellent Conventional Reservoir Potential
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Uruguay 2014 Seismic Programme
Seismic scouting has been completed
Permitting of the seismic has started with presentations to the various local councils and key stakeholders.
Seismic (blue lines) will be largely conducted on public roads
Seismic will define reservoir and resource extent in mid-2014
Proposed seismic programme (blue) and existing MT lines (green)
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Uruguay How Does Norte Basin Compare?
Bakken Analogue
Currently producing more than 500,000 bopd and anticipated to increase to more than 1-2 MM bopd by 2020
USGS estimates 7.4 billion bbls recoverable oil potential
Current areal extent of US producing play area 28,000km2
Vaca Muerta Analogue
First shale oil discovered Nov 2010 by YPF, partnered with Exxon / EOG / Total / Shell, current production 16,000 bopd
US EIA estimates total recoverable hydrocarbons to be 16.2 billion bbls and 308 TCF
Current areal extent of play area 30,000km2
Similarities
Same Devonian-age shales
Similar geological environments
Both have condensed organic rich sections
Kerogens are mainly amorphous and hydrogen rich – more oil and liquids prone
Comparable Bakken analogue is largest US oil development in decades
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Uruguay How Does Norte Basin Compare?
The Vaca Muerta is proof that very large shale plays are being found outside the USA
* Preliminary results from limited sampling
“Energy gurus Wood Mackenzie recently called Argentina’s shales the best in the world” www.oilandgas-investments.com February 2014
“U.S. oil company Chevron Corp signed an agreement with Argentina’s YPF to invest $1.24 billion in the Vaca Muerta shale oil and gas formation, thought to be one of the biggest reserves in the Western Hemisphere” Reuters, 16 July 2013
Uruguay Argentina USA (ND) USA (PA - NY)
Cordobes San Gregorio Mangrullo Vaca Muerta Bakken Marcellus
Hydrocarbon Type Oil Oil Oil Oil Oil Gas
Depth, feet 1000' - 10,000' 1500' - 8000' 2500' - 7000' 5500' - 10,000' 4000' - 11,000' 4800' - 8500'
Net (Shale) Pay 300' 70' 270' 325' 10 - 60' 50-250'
TOC 1% - 4%* 1% - 11.5% 1% - 4.5%* 3% - 14% 10% - 15% 3% - 11%
Ro% 0.67 - 0.85 0.75 - 0.8 0.73 - 0.8 0.45 - 0.6 0.8 - 3.0
Recoverable Oil bbbls Unknown Unknown Unknown 16 7 1
Recoverable Gas TCF 308 6 84
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SPAIN
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Spain Background
Two contiguous license areas total 38,000ha (94,000 acres), Cadiz province, southern Spain
License contains 1956 Almarchal-1, which flowed gas from stacked porous & permeable conventional sandstones at shallow depths
Thinly populated rural area, good relationship with local authorities & land owners
Access to 40” gas pipeline with excess capacity 3km from well
~USD14 spot gas price
Known gas accumulation with ready access to high priced European gas markets
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Spain Highlights
Prospective Resource of up to 3TCF certified by
Netherland, Sewell & Associates, Inc. (NSAI)
Almarchal-1 well location selected on basis of field geology and gravimetry, not seismic
Detailed formation evaluation suggests upwards of 500m of net pay with gas columns in excess of 400m
Exhaustive data compilation and analysis confirms excessive formation damage likely due to heavy fresh water drilling fluids
Petrel and advisers Challenge Energy continue to appraise farmout opportunities for the Tesorillo prospect with a number of high quality companies having submitted expressions of interest by the due date.
Prospective Resource may be conservative if drilling confirms more extensive oil water
contact than assumed in certification
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Spain Almarchal1 well
DST13: flowed 7Mscf/d Gas
DST36: flowed 5Mscf/d Gas
DST5: rec 793m gas & mud
DST6: rec 1055m gas & mud DST7: rec gas cut mud
DST8: rec gas cut mud & fm water
DST14, 19: swabbed mud & fm water
DST21: rec 114m slightly gas cut mud DST12: rec 366m gas cut mud
DST23: rec 274m gas cut mud
DST27: rec 76m gas cut mud
Miocene Aljibe SS
Gross interval 1180m
(1030-2210m)
Net reservoir >500m
Almarchal-1 Drilled 1956/57 by Valdebro, 12 months to drill, many hole problems due to swelling shales, 4 sidetracks, gas flared from leaky surface casing for most of well duration
39 DST’s, most recovered small amounts of gas (max 93% CH4), little to no water
61 cores, 41 good quality porosity and permeability measurements by IFP (Paris), good reservoir quality indicated
Despite reservoirs very likely damaged by fresh water drilling fluids reacting with swelling shales in combination with heavy mud weights in excess of 11ppg - gas flowed to the surface on multiple occasions.
Twin of Almarchal-1 to be drilled & tested with inhibited mud system to protect reservoirs & ensure optimal gas rates
Recent petrographic studies support notion of excessive reservoir damage from
swelling clays
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CANADA
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Canada Background
In March 2013 Petrel acquired a 40% interest of up to 5,888
gross acres in Lochend Cardium immediately west of Calgary for $2.8m
The Cardium is a late Cretaceous age formation comprised primarily of sandstone & shale and represents one of the most prolific hydrocarbon producing zones in North America
It is an unconventional “tight oil” play targeting siltstone and sandstone reservoir
Renewed focus in the area came with the development of horizontal wells and multi-stage fraccing
Multiple operators achieving success in the area
IP’s range from 100-1,000 boe/d - 38°API (Lochend 100-350 boe/d)
Estimated 100 - 150 Mboe per well
Ground floor, no promote, entry to low risk light oil play
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Canada Cardium Production Potential
Well 16-19-25-3W5M at Lochend yielded a 30 day initial production (IP 30) rate of 150 boed.
Joint venture is currently seeking to permit new well(s) for drilling
Continue to identify and appraise improvements in drilling technologies and reducing costs
Additional acreage being considered
Recent successful Cardium transactions provides Petrel with the option to monetise its Cardium assets to fund its potentially larger scale projects in Uruguay and Spain
The Cardium play provides Petrel with near term growth & monetisation optionality
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Canada Nearby Successful Operators
TRIOIL
140 (gross) sections of land
2012 production 2,130boe/d
Est. 2013 Avg. production 4,100 boe/d
IP30 for 6 (Eastern) wells 180boe/d (90% oil)
IP30 for 13 (Central West) wells 331boe/d (85% oil)
PKN Orlen bought TriOil for C$240m in Sept 2013 $58,000/boe/d, $12/2P boe and 4.4x EV/EBITDA
LIGHTSTREAM RESOURCES (PetroBakken)
275 (net) sections of land
2012 production 46,000boed
Est 2013 Avg. production 49,000boed
2013 drilling programme 67 (net) wells
Recent TriOil transaction & well permitting confirm play development and acreage acquisition
is heading south
Development trend
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Looking forward ...the year ahead
Continue to underpin value by realising large upside in existing projects with tailored appraisal
programmes
Consolidate Cardium acreage if cost effective opportunity arises to maximise reserves & pursue
monetisation options
Str
ate
gic
URUGUAY
Detailed core analysis & geological modelling
Increased interest to 51% (Spain 43.3%)
Seismic mid 2014 to enable resource delineation with possible follow up corehole programme
CANADA
Review recent advances in drilling & completion technology applicable to Cardium
Permit several new wells, drill 1 potentially 2 wells
SPAIN
Progress well permitting & approvals
Continue farmout process seeking well and possible seismic commitment
Permit MT programme to assist with pre-drilling appraisal
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Thank you… www.petrelenergy.com