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19th March 2010 Company Announcements Platform Australian Stock Exchange Level 4 20 Bridge Street SYDNEY NSW 2000
By e-Lodgement
Company Presentation Material
Please find attached a copy of the presentation slides to be used by Aurora Oil and Gas Limited (“Aurora”) in a presentation to the Excellence in Oil conference in Sydney.
For Aurora Oil and Gas Limited Julie Foster Company Secretary (Data referencing activities in adjacent acreage has been sourced from publically available information) Technical information contained in this report in relation to the Sugarloaf project and Sugarkane field was compiled by Aurora from information provided by the project operator and reviewed by I L Lusted, BSc (Hons), SPE, a Director of Aurora who has had more than 15 years experience in the practice of petroleum engineering. Mr Lusted consents to the inclusion in this report of the information in the form and context in which it appears.
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An Emerging Producer
Excellence in Oil & Gas
Sydney
April, 2010
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Disclaimer
2
This document has been prepared by Aurora Oil & Gas Limited (“Aurora”) in connection with providing an overview to interestedanalysts / investors.
This presentation is being provided for the sole purpose of providing preliminary background financial and other information to enable
recipients to review the business activities of Aurora. This presentation is thus by its nature limited in scope and is not intended to
provide all available information regarding Aurora. This presentation is not intended as an offer, invitation, solicitation, or
recommendation with respect to the purchase or sale of any securities. This presentation should not be relied upon as a
representation of any matter that a potential investor should consider in evaluating Aurora.
Aurora and its affiliates, subsidiaries, directors, agents, officers, advisers or employees do not make any representation or warranty,
express or implied, as to or endorsement of, the accuracy or completeness of any information, statements, representations or
forecasts contained in this presentation, and they do not accept any liability or responsibility for any statement made in, or omitted
from, this presentation. Aurora accepts no obligation to correct or update anything in this presentation.
No responsibility or liability is accepted and any and all responsibility and liability is expressly disclaimed by Aurora and its affiliates,
subsidiaries, directors, agents, officers, advisers and employees for any errors, misstatements, misrepresentations in or omissions
from this presentation.
Any statements, estimates, forecasts or projections with respect to the future performance of Aurora and/or its subsidiaries contained
in this presentation are based on subjective assumptions made by Aurora's management and about circumstances and events that have
not yet taken place. Such statements, estimates, forecasts and projections involve significant elements of subjective judgement and
analysis which, whilst reasonably formulated, cannot be guaranteed to occur. Accordingly, no representations are made by Aurora or
its affiliates, subsidiaries, directors, officers, agents, advisers or employees as to the accuracy of such information; such statements,
estimates, forecasts and projections should not be relied upon as indicative of future value or as a guarantee of value or future
results; and there can be no assurance that the projected results will be achieved.
Prospective investors should make their own independent evaluation of an investment in Aurora.
Nothing in this presentation should be construed as financial product advice, whether personal or general, for the purposes of section
766B of the Corporations Act 2001 (Cth). This presentation consists purely of factual information and does not involve or imply a
recommendation or a statement of opinion in respect of whether to buy, sell or hold a financial product. This presentation does not
take into account the objectives, financial situation or needs of any person, and independent personal advice should be obtained.
This presentation and its contents have been made available in confidence and may not be reproduced or disclosed to third parties or
made public in any way without the express written permission of Aurora.
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Company Profile
218m ordinary shares on issue (ASX:AUT)
6m options exercisable 4/10 to 12/11 at $0.19 – $0.70
Current cash $8.0m - nil debt
Management & Board – approx. 12% owners
Focussed onshore USA in south east Texas Eagle Ford shale / Austin
Chalk – Sugarkane Gas & Condensate Field
Participate in approx 50,000 acres within premium proven new
Sugarkane Field discovery adjacent to several major companies
operating in same trend
Low risk development assets with a drilling inventory of
approximately 500 well locations and very significant production
growth profile
Active drilling program delivering exciting results3
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Sugarkane Gas & Condensate Field – Eagle Ford & Austin Chalk
4
Secured a material interest by participation in the discovery of a large
onshore gas & condensate field in SE Texas – Sugarkane Field
Remained conservatively funded:
Last capital raising 2007 – no debt
Discovery drilling and acquisition of land position using capital
Limited spend but moved up the technical learning curve in a new trend,
particularly in drilling & completions, by watching others - leveraged off
their transfer of shale experience & spend capacity
De-risked appraisal of project via industry farmout:
Introduce a well funded technically competent partner (Hilcorp) to prove
concept and demonstrate value through extensive carried drilling program
currently underway
Maximise value and deliver on value proposition via effective, profitable
development with experienced cost effective operator
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“The biggest development of the first decade of the 21st century is not solar,
not wind, but unconventional gas.”
(Source: Daniel Yergin, Chairman, Cambridge Energy Research Associates, January 2010)
Area of High
activity since
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The Eagle Ford is Now a Premium US Shale Play
Company Market Capitalisation US$
ConocoPhillips $71 billion
Anadarko $34 billion
Chesapeake $17 billion
EOG Resources $23 billion
Murphy Oil Corporation $10 billion
Petrohawk Energy Corp $6 billion
Pioneer Natural Resources $5 billion
Encana Corporation $24 billion
ExxonMobil $307 billion
BP $166 billion
Large US and multinational E&P companies are investing significant capital
into the Eagle Ford trend with holdings from 100 - 450,000 acres.
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Some 50 new wells have been drilled and completed along the Eagle Ford
trend to date with this forecast to double by year end.
We are seeing:-
Improved Initial Production rates
Decrease in early decline rates
Substantial reduction in costs
7
Eagle Ford Drilling Activity Growing Rapidly
“Advances in horizontal drilling
completion technologies have driven a
fundamental shift towards shale and
unconventional resources in the past
four years” Source Chesapeake Energy Feb, 2010
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Apache
450,000 gross acres
> 5 wells
Pioneer
310,000 acres
5 wells, 1 drilling
ConocoPhillips
300,000 acres
15 wells (min)
50,000 acres (gross)
6 wells drilled, 2 underway
Anadarko, Newfield,
St Mary, EnCana
> 12 wells
Petrohawk &
Swift JV
26,000 acres
Recent Eagle Ford Activity
EOG
Multiple
>30 wells
BP
Reported deal up
to 200,000 acres
Murphy Oil leases
100,000 acres
2 wells drilled, 1
tested
Petrohawk
210,000 acres
26 wells
El Paso
132,000 acres, 2
well
New Petrohawk Area
53,000 acres
2 wells, 3 drilling
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LaSalle McMullen Live Oak
Bee
KarnesAttacosa
Wilson
Dewitt
Gonzales
Dry Gas – 0 CGR
1 – 50 CGR
101 – 200 CGR
201 – 300 CGR
300 + CGR
51 – 100 CGR
Oil Well
Dry Gas
Window
Condensate
Window
Oil
Window
Eagle Ford Shale
Hydrocarbon Map
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Pioneer
Crawley #1
17 mmscf/d (dry)
St Mary
4 wells
Average IP
7.5mmcfe/d
(12:1)
El Paso
2 wells
IP 7.4 & 12.6
mmcfe/d (12:1)
Rosetta
Resources
2 wells. Av IP
6.25 mmcfe/d
(12:1)
50,000 acres (gross)
6 wells drilled, 1 underway
IPs 19.1 mmscfe/d (12:1) and
12.1 mmscfe/d (12:1)
ConocoPhillips
11 Sugarkane Wells
Reported IP
5.1 - 12 mmcfe/d
Pioneer
Sinor Ranch #5
14.3 mmcfe/d
(12:1)
ConocoPhillips
Bordovsky A7
IP 4mmcf/d &
1,500bbl/d
~22mmcfe/d (12:1)
Recently Reported Eagle Ford Wells
Petrohawk
>26 wells
Average IP 10.4
mmcfe/d (12:1)
Murphy Oil
George Miles
Well
7.5 mmscf/d
Antares Energy
1 well
IP 10.4 mmcfe/d
(12:1)
Geosouthern/Petrohawk
Krause 1H IP 3.3 mmcf/d
& 1,150 bbl/d
(17.1mmcfe/d 12:1 )
Lanik #1H IP 2.7mmcf/d
& 930 bbl/s
(14.5mmcfe/d 12:1)
Pioneer
Charles Riedesel GU 1-1
IP 11.6 mmcf/d & 680
bbl/d
(22.7mmcfe/d 12:1)
Pioneer
Handy Unit #1
IP 7.7 mmcf/d & 2,030
bbl/d
(34 mmcfe/d 12:1)
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Sugarkane Gas and Condensate Field – AMI’s
This diagram is an indicative pictorial representation of the Sugarkane Gas &
Condensate Field and is not intended to be definitive schematically, to scale or
reference owners of mineral rights.
AMI
AUT
Interest %Pre farmout
Acreage
Grossapprox
Acreage
Netapprox
Sugarloaf 20 23,500 4,800
Longhorn 50 23,800 11,900
Ipanema 80 4,400 3,600
Total 51,700 20,200
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Sugarkane Gas and Condensate Field - Technical
Sugarkane field consists of a high quality Austin Chalk reservoir directly overlaying
an organic rich and calcareous regional Eagle Ford shale.
The field has been delineated by more than 25 wells with consistent reservoir and
hydrocarbons from all penetrations.
12
AUT Acreage Regional Eagle Ford
Depth (ft) 12,000 – 13,000 6,000 – 14,000
Porosity (%) 6% – 10% 2% – 12%
Pressure (psi/ft) 0.76 – 0.80 0.43 – 0.80
Condensate Ratio (bbls/mmscf) 75 - 300 0 – 300+*
Total Organic Content (%) 2% - 6.6% 2% - 6.6%
GIIP/640 acres (Bcfe) 120 -250 100 – 300
* Across the regional Eagle Ford trend there are dry gas, condensate rich gas and oil prone zones, the origins of which are linked to
depth and pressure at time of maturation (hydrocarbon generation). AUT’s acreage is within a condensate rich gas area and has a
variable condensate ratio trend across it. On a cash sales basis condensate and oil are considerably more valuable than
comparative BTU gas production.
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Sugarkane Field Reservoir & Drilling
Incre
asin
g S
hale
Incre
asin
g C
halk
The reservoir is characterised from top to bottom
as a clean Austin Chalk with increasing content of
interbedded organic shales.
The Texas Railroad Commission has issued a ruling
that the Sugarkane Field is considered a single gas
field across the entire section.
Austin
Chalk
Eagle
Ford
Shale
The whole vertical reservoir i.e. Austin Chalk +
Eagle Ford is accessed by staged fracture
stimulations carried out along the horizontal
section of the well as depicted in this picture.
Courtesy of Schlumberger
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Current 2010 Forecast Carried Program – AUT Acreage
Q1 Start Q1
End Q2
Start Q2
End Q4
Q4
Current rate of activity could see this program completed earlier
Drilling now complete at
Sugarloaf AMI with frac
program commenced on 3
new drilled and cased
wells.
New drilling now focussed
on Aurora’s Longhorn
acreage then Ipanema
until completion of
farmin commitments.
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Current 3 Year Forecast of Activity – AUT Acreage
Revenues expected Q4 2010 after farminee cost payout.
Modest additional capital for drilling requirement net of cashflow for AUT in
2011 based on above program and results to date*.
More than 500 drilling
locations.
Ruling by Texas
Railroad Commission
that each well will hold
640 acres as Sugarkane
is designated as a gas
field.
* Subject to Operator variation
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Well AMI AUT %
Post
Farmout
IP
Gas
mmcf/d
IP
Cond.
b/d
30 Day
average
mmcf/d
30 Day
average
b/d
30 Day
average
mmcfe/d*
Kennedy 1H Sugarloaf 10% 4.39 1,132 3.05 661 11.7
Weston 1H Sugarloaf 10.64% 5.68 414 5.49 388 11.5
Kowalik 1H Sugarloaf 11.46% Post frac completion issue not yet addressed
Morgan 1H Sugarloaf 10% Drilled and cased – frac commenced
Easley 1H Sugarloaf 10% Drilled and cased - frac re-scheduled - imminent
Rancho
Grande 1H
Sugarloaf 10%Drilled and casing being run
Turnbull 1H Longhorn 25% Well currently drilling ahead in horizontal section
Turnbull 2H Longhorn 25% Well permitted
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Drilling Program & Initial Results
IP’s and 30 Day averages are approximately 50% higher than those
reported to date by Petrohawk for their Eaglehawk Field
* Equivalent gas rate calculated on a 12:1 conversion of condensate and a 25% uplift to gas rate based on calorific value.
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Well AUT %
Post
Farmout
Horiz.
length
feet
60 Day
total
mmcf
60 Day
total
bc
60 Day
average
mmcf/d
60 Day
average
bc/d
60 Day
average
mmcfe/d*
Kennedy 1H 10% 2,200 148 30,825 2.47 514 9.26
Weston 1H 10.64% 3,000 342 21,351 5.70 356 11.40
17
2010 Production to Date
60 Day averages are approximately 50% higher than those reported to
date by Petrohawk for their Eaglehawk Field
Production casing strings have not yet been installed in these wells.
Competitor reports indicate improved production following ultimate
deployment of production tubing.
* Equivalent gas rate calculated on a 12:1 conversion of condensate and a 25% uplift to gas rate based on calorific value.
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Independent Contingent Resource Certification
Reservoir
Aurora Working Interest Contingent Resources (Pre Farm out)
Gas (Bcf) Condensate (mmbbls)
Low
Estimate
(1C)
Best
Estimate
(2C)
High
Estimate
(3C)
Low
Estimate
(1C)
Best
Estimate
(2C)
High
Estimate
(3C)
Austin Chalk 81 148 277 14 27 54
Eagle Ford
Shale129 243 475 22 45 93
Total 210 391 752 36 72 147
Netherland, Sewell & Associates, Inc (“NSAI”) carried out an independent
certification of Aurora’s interests in Sugarkane1 in September 2009.
Drilling results to date and those scheduled for balance of 2010 expected
to lead to an upwards revision in resource and an allocation of 3P reserves.
1 In accordance with the definitions and guidelines set forth in the 2007 Petroleum Resource Management System approved by the Society of Petroleum Engineers.
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Initial Field Development Funded by Farmout
The farm out to Hilcorp brought a large
industry participant (4th largest private
US E&P company) into the project to
Operate.
Following earn in work program across its
acreage Aurora will have an interest in 10
horizontal wells within the Sugarkane
field.
Hilcorp will earn incrementally as each
activity is completed (up to ~ 50% of each
Farminor’s interest) leaving Aurora with a
net WI of about 10,000 acres in a total
acreage position of approx. 50,000 acres.
Majority of field development costs
thereafter will come from production
cashflow.
19
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
0 20 40 60
Me
as
ure
d D
ep
th (
ft)
Time (Days)
Sugarkane Drilling times
Easley #1H
Morgan #1H
Rancho Grande #1H
Turnbull #1H
Significant reduction in drilling times.
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Preliminary Results Indicate Robust Economics
Industry analysis shows the Eagle
Ford to be one of the best shale
plays in North America
Project Returns improve with
increased Condensate and NGL
yields
AUT acreage has condensate yields
of 75 – 300 bbl/mmscf and high
yield gas ~1250 BTU/scf
AUT’s initial well results compare very favourably with the best regional Eagle
Ford wells
The solid IP rates extrapolated using analogue decline rates suggest that within
the current cost structure, AUT’s Eagle Ford shale acreage will be very
economic
$2.73
$3.25$3.44 $3.57 $3.70
$3.95$4.25 $4.27
$6.18$6.35
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
US$
/MM
BTU
(A
ssu
min
g B
TAX
10
% IR
R)
Breakeven Gas Prices for Shale Plays Source: Scotia Waterous & Pioneer Natural Resources
(1) Assumes yield of 40 bbl/mmcf and flat oil price of US$60/bbl(2) Assumes yield of 10 bbl/mmcf and flat oil price of US$60/bbl
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Acreage
Gross
Acreage
NetPost farmout
Resource
Estimate
mmboe*
Share
Price
A$
Market
Cap #
Cash
(net)
Carried
Wells &
Fracs
EV/boe
Aurora
(ASX:AUT)51,791 9,659 52 $0.49 $108m 8.0 10 $2.00
* Based on 2C independent resource estimates released, gas converted using 1/12x value ratio
# Based on closing share price 15/04/2010
Summary Position
Single Well Target Economics Based on Initial Results
NPV
0%
$USm
NPV 10%
$USm
Breakeven
Gas
(12:1)
US$/mscfe
Well Costs
Drill, Complete,
Frac & Tie in
US$m
Contingency
cost on per
well basis
US$m
Average
payout
Months
Est. Wells for
Full Field
Development
Oil - $70
Gas - $416.50 11.65 2.13 7.00 $1.00 6 400-650
Key Assumptions:
EUR 2.7 Bcf & 540 kbbls, Haynesville Type Decline curve, After Royalty & US tax, IPs extrapolated to planned development based on initial 2 well results
Note: These estimates are based on a small sample and will continue to be reviewed based on the growing well population.
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“Those that missed the “Big 6”* shale land rush of 2004–2009 will pay
the price through higher finding costs (or significant acquisition premiums) for
years, if not decades, to come…”Source Chesapeake Energy Feb 2010
* Marcellus, Haynesville, Eagle Ford, Barnett, Bossier, Granite Wash
“Unconventional gas is a complete game changer in the US, it probably transforms the
US energy outlook for the next 100 years”(Source: Tony Hayward, Chief Executive Officer ,BP Plc, January 2010)
“Advances in horizontal drilling completion technologies have driven a fundamental
shift towards shale and unconventional resources in the past four years” (Source: Chesapeake Energy Feb, 2010)
“The Eagle Ford shale is galloping into the ranks of the nation’s top resource plays, due
to rich gas, impressive flows and remarkably consistent results.....In August 2009
there were 11 rigs operating. By February 2010 some 45 rigs reported operating
across the trend.” (Source: Oil & Gas Investor March 2010)
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Aurora is positioned for an active and successful 2010 and beyond.
Quality Asset / Significant Size
Positioned in one of the premier North American shale plays
Initial 2C net resource of 52mmboe (post farmout) with scope for significant increase as
more wells drilled
Strong Economics
Strong technical merit, high liquids ratio, low reliance on gas prices
Fast well payback timeframes and majority of development paid out of cashflow
De-risked by Quality Farm Out
Large, competent US Operator experienced with large onshore assets
10 wells to be completed before AUT drilling cost participation
Low Company Valuation Relative to Peer Group and Asset Value
Current market valuation of 2C resource of $1/barrel pre farmout and $2/barrel post
Largest Sugarkane participation of listed juniors with lowest value per acre and per barrel
Sound Balance Sheet
No debt, $8.0m cash
Huge Growth Potential
Project maturity through drilling expected to increase resource, in turn reserves and
revalue assets significantly23
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