Aj Lucas Group Limited · ASX:AJL
Aj Lucas — Investor Presentation (May 2017)
45 slides from Aj Lucas's investor presentation, May 18, 2017
Slide 1: Capital Raising and Corporate Update
CAPITAL RAISING AND CORPORATE UPDATE For personal use only 18 May 2017 Information Pack AJ Lucas Group LDS February 2016
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 3 Bowland Shale Gas Opportunity and Progress 4 Australian Operating Business Update 5 Key Risks 6 Selling Restrictions 4
Slide 5: Capital Raising
For personal use only CAPITAL RAISING
Slide 6: Entitlements offer and placement to new institutional investors
Entitlements offer and placement to new institutional investors For personal use only Offer summary • Pro-rata accelerated non-renounceable entitlements offer (Offer) to raise up to $53.7 million. • Offer to existing shareholders at $0.275 per New Share; 1 New Share for every 2 existing shares held.
Slide 7: Capital raising to complete announced refinancing and fund operational growth
Capital raising to complete announced refinancing and fund operational growth For personal use only • Net proceeds from the Offer and Placement are expected to be between approximately $52 million and $57 million. • Proceeds from Kerogen’s participation in the Offer (inclusive of any sub-underwritin
Slide 8: Background to the Offer
Background to the Offer For personal use only June 2016 October 2016 – April 2017 May 2017 Balance sheet refinancing UK planning permission Placement and Entitlements Offer • AJL closes three-year, US$45 million • Planning permission received from • AJL launches Placement and Offer. (c.A$60 million)
Slide 9: Details of the Offer
Details of the Offer For personal use only 1 for 2 pro-rata accelerated non-renounceable entitlements offer (Offer) to raise up to $53.7 million. Offer description Up to 195.3 million new AJL shares to be issued under the Offer. Offer Shares will rank equally in all respects with existing shar
Slide 10: Shareholder, Director and Underwriter support
Shareholder, Director and Underwriter support For personal use only • The Underwriter has received firm commitments from existing AJL shareholders representing 60% of the share register (prior to Placement). – Kerogen (53.1% stake prior to Placement) has agreed to take up its pro rata entitlement of
Slide 11: Historical balance sheet and impact of refinancing
Historical balance sheet and impact of refinancing For personal use only Financial position at 31-Dec-16 Financial position Pro forma for Offer A$m at 31-Dec-15 Actual and Placement1 Notes to Pro Forma adjustments Current Assets 57.5 77.9 98.7 Assumes net cash proceeds of $20.8m2 Non-Current Assets
Slide 12: AJL progress since March 2016 equity raising
AJL progress since March 2016 equity raising For personal use only 1 4 Balance sheet restructure: UK Government planning permission • US$45 million, three-year senior for exploration at PNR: facility. • Centrica farm-in recommenced. • Kerogen facility extended to • Site preparations well progressed.
Slide 13: Indicative Offer timetable
Indicative Offer timetable1 For personal use only Event Date Announcement of Offer, Placement, and Trading Halt Thursday, 18 May 2017 Institutional Entitlements Offer opens Thursday, 18 May 2017 Institutional Entitlements Offer closes Friday, 19 May 2017 AJL shares recommence trading on ASX Monday,
Slide 14: AJ Lucas Corporate Overview
For personal use only AJ LUCAS CORPORATE OVERVIEW
Slide 15: Corporate summary
Corporate summary For personal use only Corporate Overview Ownership and governance AJL Board Substantial Shareholders INVESTMENT OPERATING BUSINESS UNITS (% holdings prior to Placement) Chairman Phil Arnall Kerogen Engineering & Director Julian Ball (Specialist O&G private equity fund) 53.1% UK Gas
Slide 16: AJ Lucas & Cuadrilla corporate structure
AJ Lucas & Cuadrilla corporate structure AJ Lucas effective interest in Bowland licence = 48.0% For personal use only Minority Kerogen shareholders 53.1% 46.9% AJ Lucas Cuadrilla Riverstone Group Limited management Holdings OPERATING BUSINESS UNITS 100% 100% 47.4% 7.4% 45.2% Lucas Engineering & Luca
Slide 17: Bowland Shale Gas Opportunity and Progress
For personal use only BOWLAND SHALE GAS OPPORTUNITY AND PROGRESS
Slide 18: Potential for gas extraction from the Bowland shale
Potential for gas extraction from the Bowland shale For personal use only Significant Bowland shale gas extraction potential based on Map of the Bowland shale independent research • British Geological Survey (BGS) scientists have estimated total gas in place within northern England’s Bowland shale i
Slide 19: Potential for gas extraction from the Bowland shale (cont'd)
Potential for gas extraction from the Bowland shale (cont’d) For personal use only Shale cores taken by Cuadrilla from Becconsall and Grange Hill, Representative Bowland shale geology near the PNR site, demonstrate promising lithology Preese Hall, less than 10 kms from the PNR site, flowed gas after
Slide 20: Bowland licence details
Bowland licence details For personal use only • Cuadrilla is the operator of licences in the PEDLs 290, 333, 347 Bowland shale totalling 2,391 km2, Cuadrilla 100% making it one of three significant PEDL 165 Licences operators by licence area along with Cuadrilla 51.25% AJ Lucas 23.75 awarded in INEO
Slide 21: UK planning approval represents a defining step towards commercialisation
UK planning approval represents a defining step towards commercialisation of UK acreage For personal use only • Cuadrilla Resources Holdings (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
Slide 22: Macro support for UK shale gas extraction
Macro support for UK shale gas extraction For personal use only UK gas sources, 20151 Strong UK Government support for shale gas extraction • The UK Government strongly supports the development of a commercial shale gas industry in the UK. • The Government’s stated rationale is that “shale gas has t
Slide 23: 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. • Majority owned by Barclays plc. and Britain’s largest privately owned • April 2017: announced completion of • In December 2016 a High Court jud
Slide 24: Centrica farm-in transaction
Centrica farm-in transaction 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 Centrica plc in return for staged payments and carry totalling up to GBP160 million. – Centrica is a leading UK listed, FTSE
Slide 25: Indicative timeline for PNR appraisal programme
Indicative timeline for PNR appraisal programme1 For personal use only Indicative timeline for appraisal programme • PNR site preparations are expected to be completed by June 2017. • Drilling is then expected to commence in late June or July 2017 with an initial two wells drilled, hydraulically fra
Slide 26: Australian Operating Business Update
For personal use only AUSTRALIAN OPERATING BUSINESS UPDATE
Slide 27: AJL financial overview
AJL financial overview For personal use only Ongoing improvement in underlying Australian operations, balance sheet support to fund growth and UK investment commitments Financial year ended 30 June - A$m FY11A FY12A FY13A FY14A FY15A FY16A 1H17A Performance of Australian businesses Group revenues 43
Slide 28: Lucas Drilling Services (LDS) overview
Lucas Drilling Services (LDS) overview For personal use only Business Highlights Financials metrics (year ended 30 June - A$m) • LDS is a market leader in coal seam development and 2011A 2012A 2013A 2014A 2015A 2016A 1H17A exploration drilling in Australia and the leading surface-to- Revenue 185.9 1
Slide 29: Lucas Engineering & Construction (LEC) overview
Lucas Engineering & Construction (LEC) overview For personal use only Business Highlights Financials metrics (year ended 30 June - A$m) • Specialist civil engineering contractor focused on long 2011A 2012A 2013A 2014A 2015A 2016A 1H17A distance, high pressure pipeline construction for clients Revenu
Slide 30: AJ Lucas investment highlights
AJ Lucas investment highlights For personal use only Leverage to UK shale gas development Funding in place • AJL’s interests in the Bowland shale represent • AJ Lucas balance sheet restructured in 2016. some of the most advanced shale gas developments in the UK. • US$45 million, three-year senior fa
Slide 31: Key Risks
For personal use only KEY RISKS
Slide 32: 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 33: Key risks
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 34: Key risks
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 35: Key risks
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 36: Key risks
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) A range of factors may affect the investments of AJL, including, but not limited to, exploration, appraisal and production: operating
Slide 37: Key risks
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 38: Key risks
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 39: Key risks
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 40: Key risks
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 41: Key risks
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 42: Selling Restrictions
For personal use only SELLING RESTRICTIONS
Slide 43: Selling restrictions
Selling restrictions For personal use only Singapore This document has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this document and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the
Slide 44: Selling restrictions (continued)
Selling restrictions (continued) For personal use only Hong Kong WARNING: This document has not been, and will not be, authorized by the Securities and Futures Commission in Hong Kong pursuant to the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the SFO). No action has been taken in Hong
Slide 45: Selling restrictions (continued)
Selling restrictions (continued) For personal use only United Kingdom Any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) received in connection with the issue or sale of the entitlements or the New Shares has only been communicated or caused to b