Aj Lucas Group Limited · ASX:AJL
Aj Lucas — Corporate Update (January 2018)
42 slides from Aj Lucas's corporate update, Jan 19, 2018
Slide 1: Capital Raising and Corporate Update
CAPITAL RAISING AND CORPORATE UPDATE For personal use only 19 January 2018 Information Pack AJ Lucas Group LDS February 2016 AJ Lucas Group Limited (ACN 060 309 104)
Slide 2: Disclaimer
Disclaimer For personal use only This Presentation has been prepared by AJ Lucas Group Limited (ACN 060 309 104) (AJL). Summary information • This Presentation contains summary information about AJL. This information is of a general nature and does not purport to be complete nor does it contain all
Slide 3: Disclaimer (continued)
Disclaimer (continued) For personal use only Disclaimers • None of AJL’s advisers or Patersons Securities Limited, nor any of their respective affiliates, related bodies corporate, directors, officers, partners, employees, contractors, professional advisers or agents (“Limited Parties”), have author
Slide 4: Contents
Contents For personal use only 1 Capital Raising 2 AJ Lucas Corporate Overview and Financial Update 3 UK Shale Gas Opportunity and Progress 4 Australian Operating Business Overview 5 Key Risks 6 Selling Restrictions 4
Slide 5: Capital Raising
For personal use only CAPITAL RAISING Preston New Road exploration site, Lancashire
Slide 6: Entitlement offer and placement (Capital Raising)
Entitlement offer and placement (Capital Raising) For personal use only Offer summary • Pro-rata accelerated non-renounceable entitlement offer (Offer) to raise up to $31.2 million. • Offer to existing shareholders at $0.32 per New Share; 1 New Share for every 6 existing shares held. • The Offer is
Slide 7: Proceeds to fund UK investment, debt reduction and Australian working capital
Proceeds to fund UK investment, debt reduction and Australian working capital For personal use only • Net proceeds from the Capital Raising will be between approximately $45 million and $52 million depending on final take-up of the Offer, and approximately $49 million based on the Indicative Offer S
Slide 8: Details of the Offer
Details of the Offer1 For personal use only 1 for 6 pro-rata accelerated non-renounceable entitlement offer (Offer) to raise up to $31.2 million. Up to 97.5 million new AJL shares to be issued under the Offer. The Offer is non-underwritten. Offer description Offer Shares will rank equally in a
Slide 9: Shareholder commitments to the Offer
Shareholder commitments to the Offer For personal use only • AJL and the Lead Manager have received firm commitments from ten of AJL’s largest shareholders, representing approximately 75% of the share register (prior to Placement). – Kerogen (58.6% stake prior to Placement) has agreed to take up its
Slide 10: Amendment to Senior Loan Notes
Amendment to Senior Loan Notes For personal use only • At the end of December 2017, AJL amended certain provisions that govern the Senior Loan Notes (Amendment). • The Amendment includes a commitment to reduce the principal from US$45 million ($58 million) prior to the Amendment to US$20 million (ap
Slide 11: Balance sheet impact of Amendment and Capital Raising
Balance sheet impact of Amendment and Capital Raising For personal use only Pro forma adjustments1,2 Financial Senior Loan Proforma position position at Notes Capital adjusted for Amendment $m 30-Jun-17 Amendment Raising3 and Capital Raising Notes to Pro Forma adjustments 1. Basis of Preparation: th
Slide 12: Indicative Offer timetable
Indicative Offer timetable1 For personal use only Event Date Launch of Entitlement Offer and Placement Friday, 19 January 2018 (after market close) Trading halt Monday, 22 January 2018 Institutional Entitlement Offer and Placement close Monday, 22 January 2018 AJL shares recommence trading on ASX Tu
Slide 13: AJ Lucas Corporate Overview and Financial Update
For personal use only AJ LUCAS CORPORATE OVERVIEW AND FINANCIAL UPDATE Preston New Road exploration site, Lancashire
Slide 14: Corporate summary
Corporate summary For personal use only Corporate Overview Ownership and governance AJL Board Substantial Shareholders INVESTMENT OPERATING BUSINESS UNITS (% holdings prior to Capital Raising) Chairman Phil Arnall Kerogen Engineering & (Specialist O&G private equity fund) 58.6% UK Gas Drilling Servi
Slide 15: AJ Lucas & Cuadrilla corporate structure
AJ Lucas & Cuadrilla corporate structure AJ Lucas effective interest in Bowland licence c.48% For personal use only AJ Lucas Group Limited Cuadrilla Riverstone management Holdings OPERATING BUSINESS UNITS 100% 100% 47.4% 7.4% 45.2% Lucas Engineering & Lucas Drilling Cuadrilla Resources Construction
Slide 16: Operational update – Australian business performance
Operational update – Australian business performance For personal use only Australian business performance update • The operational performance of the Australian businesses as a whole has improved considerably since the start of the current financial year, after performing below expectations in the
Slide 17: UK Shale Gas Opportunity and Progress
For personal use only UK SHALE GAS OPPORTUNITY AND PROGRESS Preston New Road exploration site, Lancashire
Slide 18: Preston New Road drilling progress update
Preston New Road drilling progress update For personal use only Preston New Road Phase I exploration programme Shale cores by Cuadrilla from • Drilling of the first vertical well at Preston New Road has now been completed Becconsall and Grange Hill, near PNR, to a depth of over 2,700 metres, and ext
Slide 19: Preston New Road planning permissions reaffirmed; Roseacre Wood consent progressing
Preston New Road planning permissions reaffirmed; Roseacre Wood consent process progressing For personal use only • Cuadrilla, as operator of PEDL 165, received planning permission from the UK Government in October 2016 to drill, frack and test gas flow of up to four wells at the Preston New Road si
Slide 20: Centrica carry milestone updated to reflect extended gas flow testing
Centrica carry milestone updated to reflect extended gas flow testing For personal use only Background to Centrica farm-in • In June 2013, AJL and Cuadrilla announced the sale of a combined 25% interest in Bowland to leading British energy company Centrica plc, in return for staged payments and carr
Slide 21: Bowland licence details
Bowland licence details For personal use only Bowland licences PEDLs 290, 333, 347 Cuadrilla 100% • Cuadrilla is the operator of licences in the Bowland shale totalling 2,391 km2, PEDL 165 Cuadrilla 51.25% Licences making it one of three significant AJ Lucas 23.75 awarded in Centrica 25.0% 14th Lice
Slide 22: Balcombe licence details
Balcombe licence details For personal use only PEDL 244 (Balcombe licence) – background • Cuadrilla and AJL own a 75% and 25% interest respectively in PEDL 244 in West Sussex county in the South of England, giving AJL an effective interest of approximately 60% in the licence. • Planning permission w
Slide 23: Potential for gas extraction from the Bowland shale
Potential for gas extraction from the Bowland shale For personal use only Bowland shale gas extraction potential based on independent research • British Geological Survey (BGS) scientists have estimated Map of the Bowland shale total gas in place within northern England’s Bowland shale is 1,329 tril
Slide 24: Macro support for UK shale gas extraction
Macro support for UK shale gas extraction For personal use only UK gas sources1 Strong UK Government support for domestic shale gas industry • Strong Government support for commercial shale gas development in the UK, as evidenced by statements in October 2017 from UK Prime Minister Theresa May: • “S
Slide 25: Other UK shale gas industry activity
Other UK shale gas industry activity For personal use only INEOS iGas Energy Third Energy • Multinational chemicals company, • UK publicly listed company. • Third Energy is looking to fracture and Britain’s largest privately owned firm. • April 2017: announced completion of flow test its existing Ki
Slide 26: Australian Operating Business Overview
For personal use only AUSTRALIAN OPERATING BUSINESS OVERVIEW Surface-to-inseam drilling at Goonyella Riverside Mine for BMA
Slide 27: Lucas Drilling Services (LDS) overview
Lucas Drilling Services (LDS) overview For personal use only Business Highlights Financials metrics (year ended 30 June - $m) • LDS is a market leader in coal seam development and 2011A 2012A 2013A 2014A 2015A 2016A 2017A exploration drilling in Australia and the leading surface-to- Revenue 185.9 18
Slide 28: Lucas Engineering & Construction (LEC) overview
Lucas Engineering & Construction (LEC) overview For personal use only Business Highlights Financials metrics (year ended 30 June - $m) • Specialist civil engineering contractor focused on long 2011A 2012A 2013A 2014A 2015A 2016A 2017A distance, high pressure pipeline construction for clients in Reve
Slide 29: Key Risks
For personal use only KEY RISKS Preston New Road exploration site, Lancashire
Slide 30: Key risks
Key risks For personal use only Introduction • As with all businesses, there are a number of factors that are specific to AJL and of a general nature that may have a material impact on AJL’s future operating and financial performance. This section describes certain specific areas that are believed t
Slide 31: Key risks: general risks of overseas investments
Key risks For personal use only A. General risks relating to overseas investments of AJL including Cuadrilla Regulatory risk a) AJL has an interest in a number of assets that are located in different jurisdictions. Accordingly, such assets are subject to risks particular to its location, such as cha
Slide 32: Key risks (continued)
Key risks For personal use only A. General risks relating to overseas investments of AJL including Cuadrilla (continued) Cuadrilla funding In the event that Cuadrilla is unable to raise funding, as required, from its shareholders (AJL, Riverstone and Cuadrilla management) or other sources, it may no
Slide 33: Key risks (continued)
Key risks For personal use only A. General risks relating to overseas investments of AJL including Cuadrilla (continued) Risks relating to the AJL has international operations in the unconventional hydrocarbon sector. Any variance in the level of activity in these sectors may have an unconventional
Slide 34: Key risks: operating businesses
Key risks For personal use only B. General risks relating to the operating businesses of AJL and the markets in which they operate (continued) Technical and other A range of factors may affect the investments of AJL, including, but not limited to, exploration, appraisal and production: operating ris
Slide 35: Key risks (continued)
Key risks For personal use only B. General risks relating to the operating businesses of AJL and the markets in which they operate (continued) Project delays a) Delays to the commencement or completion of work on projects have occurred from time to time and may occur in the future due to a variety o
Slide 36: Key risks: debt facilities
Key risks For personal use only B. General risks relating to the operating businesses of AJL and the markets in which they operate (continued) Debt facilities a) The terms of the Senior and Kerogen subordinated facilities include a number of events of default, including non-payment of any amount due
Slide 37: Key risks: environmental
Key risks For personal use only B. General risks relating to the operating businesses of AJL and the markets in which they operate (continued) Environmental a) Environmental laws and regulations in Australia and abroad can affect the operations of businesses, including AJL and entities in which it h
Slide 38: Key risks: reputation and labour
Key risks For personal use only B. General risks relating to the operating businesses of AJL and the markets in which they operate (continued) Reputation and There is significant goodwill vested in the “Lucas” trademark which may be adversely affected in a number of circumstances, including major go
Slide 39: Key risks: investing in the Offer Shares
Key risks For personal use only C. Specific risks relating to investing in the Offer Shares Market conditions The market price of shares can fall, as well as rise, and may be subject to varied and unpredictable influences. Neither AJL nor the Directors warrant the future performance of the Offer Sha
Slide 40: Selling Restrictions
For personal use only SELLING RESTRICTIONS Preston New Road exploration site, Lancashire
Slide 41: Selling restrictions
Selling restrictions For personal use only International Offer Restrictions This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the Ne
Slide 42: Selling restrictions (continued)
Selling restrictions (continued) For personal use only Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and Futures C