Blue Energy Limited · ASX:BLU
Blue Energy — Shareholder Meeting (November 2015)
22 slides from Blue Energy's shareholder meeting presentation, November 2015
Slide 1: Annual General Meeting
Annual General Meeting November 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$50/bbl exploration stops – so discov
Slide 5: US Oil Production
US Oil Production Shale well decline rates require treadmill style drilling Debt servicing/price hedging is driving shale production resilience Backlog of 4,200 drilled but uncompleted wells
Slide 6: Something will give
Something will give Breakeven price for Gulf oil producers (incl govt social funding) US$/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) 52 Pj/Bcf • Operatorship and majority equity 3P Reserves (NSAI) 200 Pj/Bcf • Diverse portfolio – oil and gas 3C Contingent Resource 4,392 Pj/Bcf (NSAI) • Material acreage positions Cash (1 October 2015) $6.0 million • Stron
Slide 11: Gas Reserves & Resources
Gas Reserves & Resources Pj Blue Energy Reserve and Resource base Reserves and Resources certified by Netherland, Sewell and Associates Inc – Tier 1 certifier Lowest finding cost in the country Unique reserve and resource growth mechanism
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
Eastern Gas Province Bowen Basin Blue’s 3.4TCF Gas Resource • Producing basin • Coal Seam Gas and Shale Gas Plays • Shell/Petrochina Project adjacent • Export infrastructure developing • Industrial gas demand not being met
Slide 16: Eastern Gas Province
Eastern Gas Province Bowen Basin ATP814P • 100% Blue - Owned and Operated • Uncontracted 2P and 3P Reserves • Large Contingent Resource base ~ 3.4 TCF • NSAI used by Blue and Arrow for reserves
Slide 17: Developing plays
Developing plays Greater McArthur Basin
Slide 18: Intense activity in the NT
Intense activity in the NT Significant Farm in Deals Imperial Oil and Gas – AEP Armour Energy – AEP Pangaea – EMG 2015 drilling Origin: 2 wells in EP98 & 117 Pangaea: 4 wells in EP 167/168 Greater McArthur Basin
Slide 19: 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 20: 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 21: 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 - 22 - 47 - 101 ATP813P 29/10/2014 30/10/2014 - - - 61 - 830 ATP814P Sapphire 13/01/2015 15/01/2015 - 74 50 129 178 229 ATP814P Central 13/01/2015 15/01
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