Australis Oil & Gas Ltd. · ASX:ATS
Australis Oil & Gas — Investor Presentation (January 2020)
35 slides from Australis Oil & Gas's investor presentation, Jan 31, 2020
Slide 1: ASX Announcement: Corporate Presentation Material
ASX Announcement For Immediate Release For personal use only 31 January 2020 Corporate Presentation Material Please find attached an updated presentation which sets out the findings of a review of the initial drilling program as referred to in the Quarterly Activities Report lodged today with the AS
Slide 2: Investor Presentation January 2020
For personal use only ASX: ATS Investor Presentation January 2020
Slide 3: Important Notice and Disclaimer
Important Notice and Disclaimer For personal use only This presentation has been prepared by Australis Oil & Gas Limited ACN 609 262 937 (ASX: ATS) (Australis). Summary of information: This presentation contains general and background information about Australis’ activities current as at the date of
Slide 4: Corporate Strategy – progress review
Corporate Strategy – progress review ATS has maintained and executed on a clear strategy – summary of progress and remaining steps For personal use only Acquire and Demonstrate Identify Aggregate Asset Value Realise Value ▪ A Tier 1 oil asset with attractive ▪ Two acquisitions and ▪ Confirm historic
Slide 5: Why we like the TMS Core
Why we like the TMS Core The TMS core has a number of unique advantages that are sought by US shale industry players when seeking to replace depleting Tier 1 oil inventory For personal use only Highly Productive ▪ Proven oil productivity is on par or better than other USA Tier 1 oil shale basins Res
Slide 6: TMS production compares favourably with other basins
TMS production compares favourably with other basins TMS Type Curve wells productivity outperforms many of the other USA liquid rich plays For personal use only 2014 TMS Type Curve v 2017 Basin Average (Cum. Oil Production) ▪ The 2014 drilled TMS wells (15 wells) averaged 216,000 bbl oil in the firs
Slide 7: Significant oil reserve and resource position in TMS
Significant oil reserve and resource position in TMS Significant scale based on 250 acre well spacing and modest EUR's Australis TMS Reserves (only 42,000 acres (<40%) For personal use only ▪ 197 MMbbls net recoverable oil independently assessed as assessed for development)1 89 MMbbl at 31 December
Slide 8: Consistent pricing with operating performance upside
Consistent pricing with operating performance upside The TMS crude generates industry leading pricing and netbacks – high quality oil in the right location ▪ Australis operates 37 producing wells For personal use only Q3 2019 Realised Price & Netback (US$/boe) and has a non-operated interest in 19 n
Slide 9: Australis Initial Drilling Program
Australis Initial Drilling Program The Australis Initial Drilling Program sought to replicate the productivity achieved by the Encana 2014 program For personal use only ▪ Australis drilled 6 new wells during 2018/2019 – locations shown on the above map in orange ▪ The intent was to demonstrate − con
Slide 10: Consistent oil productivity achieved
Consistent oil productivity achieved Australis wells demonstrate productivity consistent with the TMS Type Curve For personal use only ▪ The primary objective of the Australis Initial Drilling Cumulative Oil Production v TMS Type Curve (per ‘000 lateral ft) Program is to replicate the TMS Type Curve
Slide 11: The Australis Initial Drilling Program Progress
The Australis Initial Drilling Program Progress ▪ The 15 wells drilled by Encana in 2014, which Completed Lateral Length (ft) For personal use only contribute to the TMS Type Curve, averaged 7,254 10,000 ft of completed lateral length. The first 6 wells drilled in the TMS by Australis averaged 4,141
Slide 12: TMS drilling challenges
TMS drilling challenges The historical drilling issues & review of the Australis Initial Drilling Program (IDP) Challenge Status Solution For personal use only 1 Well bore stability Resolved – Ability to define operating ▪ Utilised 3D Mechanical Earth Model with Schlumberger and refined with achieve
Slide 13: Australis Initial Drilling Program – Objectives and Results
Australis Initial Drilling Program – Objectives and Results Most objectives achieved and Stewart and Taylor demonstrated highly productive and lower cost wells can be delivered. Repeatable lateral length was a challenge For personal use only Key IDP Objectives ✓ The average initial oil productivity
Slide 14: Well Costs – Continued Improvement Achievable
Well Costs – Continued Improvement Achievable When planned drilling procedures consistently applied, Australis wells demonstrated improved cost and performance For personal use only TMS total well costs 2011 – 2014 compared to the Stewart and Taylor wells drilled by Australis $9,000 $8,000 Improveme
Slide 15: Well Costs Compared to Productivity
Well Costs Compared to Productivity When planned drilling procedures applied consistently, Australis wells demonstrate improved cost and performance The graph below shows the well capex divided by the total production in the first 6 months and is a measure of the For personal use only initial econom
Slide 16: Balance Sheet Flexibility
Balance Sheet Flexibility Flexible capital position enables Australis to manage the TMS asset until the market rebounds For personal use only 1 Robust Balance Sheet – 31 December 2019 ▪ Cash position of US$16 million ▪ Total debt of US$33 million (net debt US$17 million) ▪ No near term major capital
Slide 17: Financial Performance – Q4
Financial Performance – Q4 Balance sheet flexibility and production netbacks provides cashflow for G&A For personal use only ▪ Cash flow from operations continues Key Metrics Unit Q4 2019 Q3 2019 Qtr on Qtr 2019 to grow and funds G&A, land leasing and finance costs Sales Volumes (WI) bbls 208,000 19
Slide 18: US Shale Industry – Transition Underway
US Shale Industry – Transition Underway Historical production growth levels at risk - positive for the Australis strategy US Onshore Rig Count For personal use only ▪ Production growth from US shale industry 2,000 80 is under significant pressure: 1,800 70 1,600 - Horizontal drill rig count dropped
Slide 19: US Shale Industry – Opportunity in Diminishing Inventory
US Shale Industry – Opportunity in Diminishing Inventory The industry transition underway highlights the value of the Australis acreage in the TMS core ▪ Industry commentaryA highlighting the likelihood of For personal use only a production growth slowdown in the US “We are seeing a clear turning “T
Slide 20: Strategy – Next Steps
Strategy – Next Steps Implement learnings, maintain financial flexibility and development optionality For personal use only ▪ Capture all learnings in the basis of design engineering document and rig operating procedures Implement outcomes of the IDP ▪ Enhance controls and revise drilling procedures
Slide 21: Summary
Summary Experienced team and strategy will ultimately drive shareholder returns. For personal use only Proven Execution Capability Shareholder Return Driven ▪ Board and management were the ▪ Board and management own 11% of the founders and key executives of Aurora Company and continue to purchase st
Slide 22: Additional Information
For personal use only Additional Information 21
Slide 23: Directors & Management
Directors & Management For personal use only Jon Stewart Alan Watson Steve Scudamore Non-Executive Chairman Non-Executive Director Non-Executive Director ‐ >25 years in the upstream oil and gas industry ‐ 30 years previous experience in international ‐ Over 3 decades experience in Corporate ‐ Founde
Slide 24: TMS is an undeveloped Tier 1 oil shale play
TMS is an undeveloped Tier 1 oil shale play On trend with Eagle Ford Basin in Texas, similar depositional history and age For personal use only TMS Location ▪ Onshore basin - Louisiana and Mississippi. ▪ On trend with Eagle Ford Basin in Texas, similar depositional history and age. ▪ 80 horizontal w
Slide 25: Core Area Definition – targeting the right geology
Core Area Definition – targeting the right geology Individual 24 Month Cumulative Production Per Well – All MS TMS Wells Core area defined through production results 350,000 ▪ Best performing wells have delineated the ‘core’ area All wells with production For personal use only 300,000 above 110,000
Slide 26: Large contiguous land position
Large contiguous land position Size and Flexibility Core TMS Land Position ▪ Majority of 115,000 acre lease position For personal use only held without short or medium term drilling obligations Held by Production 37,700 net acres 18% 33% ▪ Large drilling units of up to 1,920 acres Total position 115
Slide 27: Proximity to accessible infrastructure & premium pricing
Proximity to accessible infrastructure & premium pricing A key differentiator for the TMS compared to other US unconventional plays For personal use only ▪ The TMS produces a light sweet crude (38–41 deg API) TMS Infrastructure that achieves LLS pricing, i.e. an average premium to WTI of >$5/bbl in
Slide 28: Large well inventory each with attractive economics
Large well inventory each with attractive economics Australis has 425 net well locations - each with a base value of US$6.3 million (excluding upside) For personal use only Single Well Economics NPV10A (US$ million) $3.4 $14.1 Stewart well at $60/bbl WTI $1.0 $10.7 $3.4 $6.3 TMS Type Curve: WTI @ 20
Slide 29: The TMS Type Curve
The TMS Type Curve The TMS Type Curve is the average production profile of all 15 wells drilled by Encana (the previous operator) in 2014 For personal use only Total oil production per well - initial 24 months (mbbls) 2014 Australis wells - Production profiles 40,000 Lawson 25-13H 318 Longleaf 29H 2
Slide 30: Single Well TMS Type Curve
Single Well TMS Type Curve TMS Type Curve is an absolute history match to averaged empirical data For personal use only TMS Type Curve – Assumptions TMS Core Type Curve v TMS Production ▪ Oil EUR – 610 Mbbls 250,000 ▪ Gas EUR – 159 MMscf 200,000 Oil Production (bbl) ▪ NGL EUR – 20 Mbbls 150,000 ▪ EU
Slide 31: TMS Base Case Economics – Key Assumptions
TMS Base Case Economics – Key Assumptions The production and opex assumptions are based on history and the capex costs are current development projections For personal use only Base Case Assumptions* Production Forecast EUR (30 Years) 30,000 700,000 Gas 0.16 Bcf Oil/Condensate 610 Mbbl 25,000 600,00
Slide 32: TMS Reserves & Resources
TMS Reserves & Resources1,2 For personal use only ▪ As an ASX participant Australis reports to the SPE PRMS Net Oil1,2 which requires any undeveloped reserves, that are to be 2018 Ryder Scott Reserves Estimate (MMbbls) assessed for reserves classification, are to be developed within a maximum 5 year
Slide 33: Portugal Prospectivity & Volumetrics
Portugal Prospectivity & Volumetrics For personal use only Proposed Work Program Batalha Gas Discovery Batalha Concession Prospects − Drill and test the gas discovery with a vertical well − Drill and core a deep Lamede well in a Lower Jurassic depocenter in the Pombal concession Volumetrics 3,6 Net
Slide 34: Footnotes
Footnotes For personal use only 1. All estimates and risk factors taken from Ryder Scott, report prepared as at 31 December 2018 and generated for the Australis concessions to SPE standards. See ASX announcement released on 6 February 2019 titled “Reserves and Resources Update Year End 2018”. The an
Slide 35: Units & Abbreviations
Units & Abbreviations Unit Measure Unit Measure B Prefix - Billions bbl Barrel of oil For personal use only MM or mm Prefix - Millions boe Barrel of oil equivalent (1bbl = 6 mscf) M or m Prefix - Thousands scf Standard cubic foot of gas /d Suffix - per day Bcf Billion standard cubic foot of gas Abbr
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