Slide 1: AJ Lucas Group Limited Capital Raising
For personal use only AJ Lucas Group Limited Capital Raising, 17 March 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 the AJ Lucas Group. This information is of a general nature and does not purport to be complete nor does
Slide 3: Disclaimer (continued)
Disclaimer (continued) For personal use only Disclaimers • None of AJL’s advisers or Kerogen Investments No.1 (HK) Limited, nor any of their respective affiliates, related bodies corporate, directors, officers, partners, employees, contractors, professional advisers or agents, (“Limited Parties”), h
Slide 4: Summary of capital raising
Summary of capital raising For personal use only • AJL is undertaking an Entitlement Offer to raise gross proceeds of approximately $21.1 million. • Size and structure – 3 for 8 Accelerated Non‐Renounceable Institutional Entitlement Offer to raise ~$17.4 million. – 3 for 8 Non‐Renounceable Retail En
Slide 5: Summary of capital raising
Summary of capital raising (continued) For personal use only • Institutional Entitlement Offer – Proceeds raised under the Institutional Entitlement Offer – approximately $17.4 million. – AJL’s largest shareholder – Kerogen – has agreed to subscribe in full for its pro rata entitlement (52.8 million
Slide 6: Pro forma balance sheet
Pro forma balance sheet For personal use only • Expected gross proceeds from the Entitlement Offer would be $21.1 million. • Additional cash available to the Company would be not less than $7.7 million.(6) 1 $8.0 million is restricted cash (held at JV for project expenditure) 2 $6.0 million has been
Slide 7: Underwriting
Underwriting For personal use only Patersons Securities Limited (the Underwriter) has received firm commitments from AJL’s two largest shareholders. The Underwriter has agreed to underwrite the shortfall (excluding the firm commitments). The Underwriter has obtained sub‐underwriting support from Ker
Slide 8: Underwriting
Underwriting (continued) For personal use only Indemnity Subject to certain exclusions relating to, among other things, wilful default, misconduct, fraud, negligence or breach of contract of an indemnified party, AJL agrees to keep the Underwriter and certain associated parties indemnified from loss
Slide 9: Sub-underwriting
Sub‐underwriting For personal use only Kerogen and the new international institutional investors have each agreed with the Underwriter to act as sub‐underwriters to the Entitlement Offer. Kerogen sub‐underwriting agreement • Kerogen has entered into a Sub‐underwriting Agreement with the Underwriter
Slide 10: Use of proceeds
Use of proceeds For personal use only • The Entitlement Offer will allow AJL to make a minimum payment of $11.1 million that is due and payable to Kerogen1. • The expected gross proceeds from the Entitlement Offer would be $21.1 million and it is expected that the additional cash available to the Co
Slide 11: Future financing plans
Future financing plans For personal use only • The current fund raising may be insufficient to meet AJL’s future liabilities which include: – its repayment obligations to the ATO (approximately $690,000 per month); – the servicing and repayment of its loans from Kerogen (which are due in early 2017)
Slide 12: Kerogen Consent
Kerogen Consent For personal use only • Kerogen has consented to AJL’s request that it: – Allow any interest and fees due and any loan amounts currently repayable (see page 13) that are not repaid from the proceeds of the Entitlement Offer to be deferred and accrued to 30 September 2016. – Allow any
Slide 13: Pro forma substantial shareholders
Pro forma substantial shareholders For personal use only • The issue of new shares under the Entitlement Offer would have the following effect on AJL’s major shareholders: Current Share Shareholders shareholding % Maximum pro‐forma shareholding1 Share % As at the close of the Institutional Entitleme
Slide 14: Indicative Timetable
Indicative Timetable 1 For personal use only Event Date Announce Entitlement Offer (trading suspension to continue) Thursday, 17 March 2016 Institutional Entitlement Offer opens Thursday, 17 March 2016 Trading suspension Thursday, 17 March 2016 to Friday, 18 March 2016 Institutional Entitlement Offe
Slide 15: Appendix
For personal use only APPENDIX
Slide 16: Corporate summary
Corporate summary For personal use only Business Overview Ownership and governance Key Shareholders* AJL Board Kerogen Capital 52.6% Chairman Phil Arnall Specialist O&G private equity fund Director Julian Ball Paul Fudge 12.4% unconventional energy specialist Director Ian Meares Andial Holdings 6.5%
Slide 17: AJL & Cuadrilla corporate structure
AJL & Cuadrilla corporate structure For personal use only AJL has an effective 46.8% interest in the Bowland asset, held as follows: – Direct interest: 23.75% – Indirect interest: 23.1% (45% shareholding in Cuadrilla x 51.25% Cuadrilla interest) DEBT US$63 million(1) (1) Aggregate amount due under S
Slide 18: Oil & Gas Investments
For personal use only OIL & GAS INVESTMENTS
Slide 19: AJ Lucas E&P investment history
AJ Lucas E&P investment history For personal use only • Major integrated unconventional player in Europe. Cuadrilla European Plays KOSP (EDL244, EXL189) Kimmeridge Clay Fm PEDL165, EXL269 Bakken‐type Oil Shale Play • Early involvement in unconventional plays resulting in largest Bowland Shale Fm 293
Slide 20: UK gas & Bowland shale
UK gas & Bowland shale For personal use only UK domestic supplies are dwindling North of England Bowland shale offers UK a huge gas (So are Norway’s, a major supplier to the UK)1 potential Start of decline • “The lower limit of the range is 822 tcf and the upper limit is 2,281 tcf, but the central e
Slide 21: Bowland shale
Bowland shale For personal use only Preese Hall pad site – limited footprint Bowland shale in context Shale cores takes by Cuadrilla AJ LUCAS GROUP | MARCH 2016 21
Slide 22: Bowland farm-in transaction
Bowland farm‐in transaction For personal use only Centrica Farm‐in – June 2013 • 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. – AJL’s effective interest in Bowland was
Slide 23: UK regulatory environment
UK regulatory environment For personal use only UK Regulatory Environment Lancashire County Council ‐ Appeal • A number of bodies oversee shale gas regulation in the UK. • In June 2015, Lancashire County Council (LCC) rejected Cuadrilla’s – Department for Energy and Climate Change (DECC) application
Slide 24: Awards from 14th Licensing Round
Awards from 14th Licensing Round For personal use only BGS estimates significant resource potential Cuadrilla was awarded 18 blocks in the 14th Round • TIn June 2013, the British Geological Survey (BGS) in • The 14th Licensing Round was announced on 17 December association with the Department of Ene
Slide 25: Lucas Drilling Services (LDS)
For personal use only LUCAS DRILLING SERVICES (LDS)
Slide 26: Lucas Drilling Services (LDS)
Lucas Drilling Services (LDS) For personal use only Overview Business Highlights Financials metrics • Largest drilling fleet servicing the coal sector Year ended 30 June ‐ $million 2012A 2013A 2014A 2015A HY2016A in Australia. Revenue 190 163 94 84 38 • Leading contractor to all major mining houses.
Slide 27: Lucas Engineering & Construction (LEC)
For personal use only LUCAS ENGINEERING & CONSTRUCTION (LEC)
Slide 28: Lucas Engineering & Construction (LEC)
Lucas Engineering & Construction (LEC) For personal use only Overview Business Highlights • Specialist civil engineering contractor focused on Financials and other key data pipelines; a leader in Australia in horizontal Year ended 30 June ‐ $million 2012A 2013A 2014A 2015A HF2016A directional drilli
Slide 29: Historic Balance Sheet
Historic Balance Sheet For personal use only Overview Financial information Year ended 30 June Balance sheet summary 2011 2012 2013 2014 2015 HY2016 $M $M $M $M $M $M Cash 1.3 4.3 9.7 29.3 16.0 17.1 Receivables and inventories 114.1 113.0 68.8 48.4 40.3 24.7 Plant and equipment 136.9 133.6 110.0 79.
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
Key Risks (continued) For personal use only Specific risks relating to investing in the Offer Shares 1. Market Conditions a) 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 o
Slide 32: Key Risks
Key Risks (continued) For personal use only Specific risks relating to investing in the Offer Shares (continued) 4. Kerogen Senior Facilities a) Kerogen has continued to support the company through agreeing to defer all interest payment due on the Loan Facilities since April 2015 until 30 September
Slide 33: Key Risks
Key Risks (continued) For personal use only General risks relating to the operating businesses of AJL and the markets in which it operates 1. Commercial, financial and operational risks a) As a business operating in the engineering, energy, mining and infrastructure sectors, AJL faces general commer
Slide 34: Key Risks
Key Risks (continued) For personal use only General risks relating to the operating businesses of AJL and the markets in which it operates (continued) 3. Resources sector risks a) The resources sector as a whole in Australia is facing difficult times for a number of reasons, including a softening of
Slide 35: Key Risks
Key Risks (continued) For personal use only General risks relating to the operating businesses of AJL and the markets in which it operates (continued) 5. Project based sales revenue a) A significant proportion of AJL’s revenue and earnings is sourced from specific projects. These may not be repeated
Slide 36: Key Risks
Key Risks (continued) For personal use only General risks relating to the operating businesses of AJL and the markets in which it operates (continued) 7. Cost variation (continued) b) Further, in some contracts, AJL assumes the risk that sub‐contractors do not perform to their contracts. Although re
Slide 37: Key Risks
Key Risks (continued) For personal use only General risks relating to the operating businesses of AJL and the markets in which it operates (continued) 10. Additional Funding Requirements and Financing Risk a) Following the Offer the Company’s ability to service its debt will continue to depend on it
Slide 38: Key Risks
Key Risks (continued) For personal use only General risks relating to the operating businesses of AJL and the markets in which it operates (continued) 12. Environmental a) Environmental laws and regulations in Australia and abroad can affect the operations of businesses, including AJL and entities i
Slide 39: Key Risks
Key Risks (continued) For personal use only General risks relating to the operating businesses of AJL and the markets in which it operates (continued) 13. Natural disasters and seasonal weather conditions a) Some of the areas in which AJL has operations, particularly its drilling operations in Queen
Slide 40: Key Risks
Key Risks (continued) For personal use only General risks relating to the operating businesses of AJL and the markets in which it operates (continued) 16. Reliance on Key Personnel a) Like other companies, AJL’s performance is dependent on the ability of its senior executives and key personnel to ma
Slide 41: Key Risks
Key Risks (continued) For personal use only General risks relating to the operating businesses of AJL and the markets in which it operates (continued) 19. Labour disputes a) If any material disputes were to arise between AJL and its employees or sub‐contractors, there would be potential for disrupti
Slide 42: Key Risks
Key Risks (continued) For personal use only General risks relating to overseas investments 22. 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 changes in laws,
Slide 43: Key Risks
Key Risks (continued) For personal use only General risks relating to overseas investments (continued) 24. Inability to meet exploration licence funding obligations ‐ AJL Direct Interests a) AJL has the following direct and indirect interests in the Bowland (PEDL 165) and Weald (PEDL 244) licences •
Slide 44: Key Risks
Key Risks (continued) For personal use only General risks relating to overseas investments (continued) 27. Inability to recover unconventional hydrocarbons a) Cuadrilla’s ability to develop its concessions for unconventional hydrocarbons depends not only upon the presence of significant in‐ place hy
Slide 45: Key Risks
Key Risks (continued) For personal use only General risks relating to overseas investments (continued) 27. Inability to recover unconventional hydrocarbons (continued) g) The commercial viability of any particular unconventional reservoir will be largely a function of the prevailing prices for oil a
Slide 46: Key Risks
Key Risks (continued) For personal use only General risks relating to overseas investments (continued) 29. A range of factors may affect the investments of AJL (including Cuadrilla), including, but not limited to, exploration, appraisal and production: a) geological conditions; b) unanticipated oper
Slide 47: Foreign Jurisdictions
Foreign Jurisdictions For personal use only European Economic Area (EEA) In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (2003/71/EC) (each, a “Relevant Member State”) an offer to the public of any entitlements or the New Shares may not b
Slide 48: Foreign Jurisdictions
Foreign Jurisdictions 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 be communica
Slide 49: Glossary
Glossary For personal use only Term Meaning AJL AJ Lucas Group Limited ASIC Australian Securities and Investment Commission ATO Australian Tax Office GBP British Pound, the lawful currency of the United Kingdom. M millions Tcf Trillion cubic feet (10^12 cubic feet) AJ LUCAS GROUP | MARCH 2016 49