Blue Energy Limited · ASX:BLU
Blue Energy — Investor Presentation (December 2015)
24 slides from Blue Energy's investor presentation, Dec 8, 2015
Slide 1: Investor Presentation
Investor Presentation 8th December 2015 1
Slide 2: Legals
Legals Disclaimer This presentation may contain forward looking statements that are subject to risk factors associated with the gas and energy industry. It is believed that the expectations reflected in the statements contained within are reasonable, but they may be affected by a range of variables
Slide 3: Global Energy Themes
Global Energy Themes •Global oil price crash •LNG capacity coming on line as oil linked spot prices slump •US Lower 48 becomes dominant producer •Shale production resilient - driven by debt and hedging •OPEC seeking to maintain market share •Saudi Arabia looking to bolster its OPEC quota – no longer
Slide 4: Global Energy Themes
Global Energy Themes •Global oil price crash – yet oil demand still rising – Global oil inventories surge to 3 billion bbls •Consumption = 92 million barrels every day ~34 billion barrels each year •Exploration successes yield ~ 10 billion barrels annually •At US$50/bbl exploration stops – so discov
Slide 5: US Oil Production
US Oil Production Shale well decline rates require treadmill style drilling Debt servicing/price hedging is driving shale production resilience Backlog of 4,200 drilled but uncompleted wells
Slide 6: Something will give: Gulf breakeven prices
Something will give Breakeven price for Gulf oil producers (incl govt social funding) US$/bbl IMF October 2014 Steffen Hertog Large Gulf State social programs are funded from oil revenue – austerity may threaten cohesion Saudi is funding military actions on several fronts – further drawing down cash
Slide 7: East Coast Gas
East Coast Gas Eastern Australia is one of the few places globally with a gas supply shortage – due to: - Simultaneous ramp up of LNG production (to 4,000 Tj/day) - Long term Gladstone LNG demand - lasting 30-40 years - 85% of 2P east coast gas reserves tied to Gladstone LNG proponents - Exploration
Slide 8: East Coast Gas
East Coast Gas 20 yr demand ~40,000 PJ ? QCLNG 2 trains online GLNG APLNG •Implied CAPEX requirement to sustain gas demand ~$15-20 billion to 2020 •Why didn’t industrial gas users lock in supply when it was available and cheap? •No vision on fuel switching from diesel to gas in transportation
Slide 9: Lessons learnt
Lessons learnt (….at the bottom of the cycle) • Cost control should be a daily ritual for Management – not something trotted out when the oil price drops dramatically • Commodity prices are often volatile – expect the unexpected • There is no substitute for experience – don’t give up your core compe
Slide 10: Your Company
Your Company • Uncontracted 2P & 3P Reserves ASX Code BUL 2P Reserves (NSAI) 71Pj/Bcf • Operatorship and majority equity (~12 mmboe) • Diverse portfolio – oil and gas 3P Reserves (NSAI) 298 Pj/Bcf (~50 mmboe) • Material acreage positions 3C Contingent Resource 3,942 Pj/Bcf (NSAI) (~657 mmboe) • Stro
Slide 11: Gas Reserves & Resources
Gas Reserves & Resources Reserves Pj Reserves and Resources certified by Netherland, Sewell and Associates Inc – Tier 1 certifier Lowest finding cost in the country 4 Year Reserve CAGR of 67%
Slide 12: Gas Commercialisation
Gas Commercialisation Domestic demand is going un-met in some regions Prices are stable Renewables need gas generation to be uninterruptable Gladstone demand has fundamentally changed the East Coast market Blue’s gas molecules are becoming more valuable as supply tightens
Slide 13: Gas Commercialisation
Gas Commercialisation Three pronged strategy Industrial gas buyers Fuel switching in the nations highest diesel use areas Potential supply to LNG market as a low cost marginal producer
Slide 14: The Blue Portfolio
The B lue Por tfolio 4.4 TCF Resource Base
Slide 15: Eastern Gas Province: Bowen Basin
Eastern Gas Province Bowen Basin Blue’s 3.4TCF Gas Resource • Energy province for Northern Australia development vision • Producing basin • Coal Seam Gas and Shale Gas Plays • Shell/Petrochina export project • Industrial gas demand not being met
Slide 16: Eastern Gas Province: Bowen Basin ATP814P
Eastern Gas Province Bowen Basin ATP814P • 100% Blue - Owned and Operated • Uncontracted 2P and 3P Reserves • Large Contingent Resource base ~ 3.0 TCF • NSAI used by Blue and Arrow for reserves • In discussions with multiple potential gas buyers seeking near term supply
Slide 17: Eastern Gas Province: Cooper Basin
Eastern Gas Province Cooper Basin • Large acreage position • Multiple plays • Under explored northern margin REAL Energy’s Basin Centred Gas play • Adjacent activity identifies Basin Centred Gas • Permits in early stages of exploration
Slide 18: Developing plays
Developing plays Greater McArthur Basin
Slide 19: Intense activity in the NT
Intense activity in the NT Significant Farm in Deals Imperial Oil and Gas – AEP Armour Energy – AEP Pangaea – EMG NEGI Jemena selected to build link between Tennant Creek and Mt Isa Tennant Creek adjacent to Blue Farm in acreage 2015 drilling Origin: 2 wells in EP98 & 117 Pangaea: 4 wells in EP 167/
Slide 20: Activity confirms prospectivity
A ctivity confirms prospectivity Tanumbirini #1 well Drilled by STO (farming in) Tamboran acreage in the Beetaloo targeting the Velkerri Tamboran presentation provides the following: Tanumbirini 1 Thick Mid-Velkerri Shale section ~ 500m TOC up to 8-10% A(v 4%) Strong gas shows whilst drilling 90 met
Slide 21: Corporate run rate
Corporate run rate • Continual line item Total Overhead review 5,000 4,500 • Running costs continue to be cut 4,000 3,500 • Lowest amongst peers $'000 Nominal 3,000 2,500 2,000 1,500 1,000 500 - 12/13 13/14 14/15 15/16 Shareholders funds go toward value adding
Slide 22: Summary
Summary • Blue has a low cost operating strategy • Blue’s CSG targets are shallow and the cost base reflects depth and low pressure setting • Main reserve/resource base is close to current and future infrastructure • Low corporate run rate • Lowest finding cost • Commercialising through dom gas sale
Slide 23: Reserves and Resources
Reserves and Resources Assessment Announcement Permit Block 1P (PJ) 1C (PJ) 2P (PJ) 2C (PJ) 3P (PJ) 3C (PJ) Date Date ATP854P 30/06/2012 19/03/2013 - 23 - 49 - 103 ATP813P 29/10/2014 30/10/2014 - - - 62 - 838 ATP814P Sapphire 5/12/2015 8/12/2015 - 67 60 109 218 188 ATP814P Central 5/12/2015 8/12/201
Slide 24: 24
24