Challenger Gold Limited · ASX:CEL
Challenger Gold — Shareholder Meeting (November 2011)
30 slides from Challenger Gold's shareholder meeting presentation, Nov 23, 2011
Slide 1: AGM Presentation
For personal use only AGM Presentation 23 November 2011 1
Slide 2: Disclaimer
Disclaimer For personal use only This announcement contains “forward-looking statements”. Such forward-looking statements include, without limitation: estimates of future earnings, the sensitivity of earnings to oil & gas prices and foreign exchange rate movements; estimates of future oil & gas prod
Slide 3: Corporate Overview
Corporate Overview For personal use only Shares on Issue: 214,021,000 Non Executive Chairman - Michael Fry Michael holds a Bachelor of Commerce degree from the University of Western Listed Options 105,222,171 1 Australia, is a Fellow of Financial Services Institute of Australasia, and is a past memb
Slide 4: Strategy
Strategy For personal use only Identify, acquire and appraise material upstream oil and gas exploration opportunities: Utilising network of global contacts Primarily unconventional hydrocarbons, CBM, Shale Gas, Shale Oil. Low cost of entry, with primary expenditure on the drill bit High ma
Slide 5: Why Unconventional Gas?
Why Unconventional Gas? For personal use only Can test large play concepts cheaply Attractive acquisition targets for major Oil & Gas Companies Deal Location Date Net Acres Value BHP - Petrohawk Eagleford (SA) July 11 1,000,000 US$12.0b Historical transactions for BHP-Chesapeake Fayettteville (U
Slide 6: Asset Portfolio
Asset Portfolio For personal use only Mercury Stetson Shale Gas Prospect Barnett Shale Woodford Shale Triple Crown Hybrid Gas Play South Africa Fort Brown Shales 6
Slide 7: Mercury Stetson
Mercury Stetson For personal use only Two proven shale formations – Barnett and Oklahoma Woodford Woodford Anadarko Arkoma Large prospect area – Basin Basin potentially up to 55,000 acres (86 sq miles) Hollis Basin Properties consistent with core areas of current Newark Field Core Barnett sh
Slide 8: Expected Stratigraphy & Thickness
Expected Stratigraphy & Thickness For personal use only Note: TOC results are from cuttings – Actual TOC expected to be ~ 100% higher based on experience with analysis of results in the Barnett shale. 8
Slide 9: Mercury Stetson – Log Analysis
Mercury Stetson – Log Analysis Log from only well For personal use only previously drilled in the Barnett Shale area that penetrated the 10,725 formations. High Density Porosity > 10% Drilled in 1978 – chasing In both shales conventional target at 17,000 ft. Log shows all common features of th
Slide 10: Has all the elements of successful shale
Has all the elements of successful shale For personal use only Element Mercury Stetson Prospect Kerogen Type - Target: Amorphous Kerogen Amorphous Kerogen Organic Richness (TOC) - Target: 2% to 6% Range: 2% to 5% Avg: Barnett 3.2%, Woodford 3.1% Gas in Place - Target: >100 BCF/Section (sq Mile) 360
Slide 11: Proven Shales
Proven Shales For personal use only Barnett Shale First recognised shale gas project in US with more than 14,000 wells now drilled Wells in core area recovering ~ 3 BCF Producing 1.8 TCF/yr Woodford Shale More recently developed Wells in core area recovering ~ 4 BCF Over 1,000 wells dril
Slide 12: Mercury Stetson - How much gas could be produced?
Mercury Stetson - How much gas could be produced? For personal use only RESERVES PER WELL METHOD RECOVERY FACTOR METHOD Reserves per well of 3 to 5 bcf OGIP for the prospect is estimated to be 360 bcf/sq mile Prospect size of 55,000 acres (85sq Miles) Net (100%) ownership of 35,000 acres (55
Slide 13: How much could this be worth?
How much could this be worth? For personal use only RESOURCE TRANSACTION METRICS PROJECT ECONOMICS A review of recent resource play transactions NPV 10 provides indicative “resource” transaction metrics Drill 875 wells at a cost of $4.5 M with an average In recent transactions in both the US
Slide 14: Current Testing Program
CURRENT PLANNED Current Testing Program For personal use only Proof of Concept Testing Program: Construct lease Mobilise rig and re-enter surface casing and drill out cement plug at 2,500 ft Tag and re-enter existing intermediate casing at ~5,000 ft Run and cement 7” casing to ~10,000 ft D
Slide 15: Mercury Stetson - Go Forward Plan
Mercury Stetson - Go Forward Plan For personal use only 2011 2012 2013 and beyond First BOOK vertical GAS Drill BOOK 2ndCore Vertical Drill 2 Well additional GAS Analysis Well RESERVES COMMENCE HZ wells RESOURCE & Vertical or FULL PROOF Delineation DEVELOPMENT Seismic HZ OF Wells Program Delineation
Slide 16: Triple Crown Prospect
Triple Crown Prospect For personal use only Existing Ellenburger Fields Existing Canyon Sands Fields HP Pipeline Dallas Triple Crown Houston San Antonio Edwards County 50 km 16
Slide 17: Triple Crown Prospect- Texas
Triple Crown Prospect- Texas For personal use only 45,000 Acres in Edwards County Texas Well Options over ~ 6,500 acres acquired Challenger has 80% WI (100% before payout) Two Targets Ellenburger Hybrid (Sand/Unconventional) First appraisal well successfully drilled Dec/Jan 2011. Str
Slide 18: Triple Crown – Canyon Hybrid Play
Triple Crown – Canyon Hybrid Play For personal use only Very strong gas shows over an 1150 ft Sand Challenger believe this to be a hybrid play that consists of a number of sands interbedded within a large unconventional gas zone Sand Preliminary analysis suggests this play has a very 1,150 FT
Slide 19: Karoo Basin – International gas focus
Karoo Basin – International gas focus For personal use only Shale Gas within the Karoo Basin is now a major focus for international E&P companies seeking to put their foot on new resources Following initial 12 month Technical Co-Operation permits, both Shell and Falcon have moved to the next ste
Slide 20: Cranemere Well (CR 1/68)
Cranemere Well (CR 1/68) For personal use only Located in the centre of the Application Area Drilled 1968 Well blowout at around 8,300 ft Peak flow of 16 mmcfd during DST Fort Brown Shales dark grey to black and carbonaceous with occasional siltstone stringers. Strong gas shows in a nu
Slide 21: Summary
Summary For personal use only Challenger Energy’s strategy is to identify, acquire and appraise material upstream oil and gas exploration opportunities Mercury Stetson Prospect in North Texas, US Two proven shale formations – Barnett and Woodford Massive potential gas in place with OGIP esti
Slide 22: Appendix: Supporting Mercury Stetson Slides
For personal use only Appendix Supporting Mercury Stetson Slides November 2011 22
Slide 23: Joint Venture Agreement
Joint Venture Agreement For personal use only Governs relationship between the parties until no leases held by any party. Provides for Challenger to earn 50% interest in Phase 1, by the following: Payment of up to $2.2 million as and when required for the renewal and extension of existing leas
Slide 24: Single Well Economics
Single Well Economics For personal use only Single Well Case Well IP Capex EUR NPV(10) @ US$/mscf Flat MMSCFD US$M BCF $4.5 $6 $7.5 1 2.0 2.6 2.5 1.8 2.4 3.4 2 3.0 2.6 3.0 2.1 3.4 4.8 3 4.0 4.0 4.0 2.1 3.8 5.5 4 5.0 4.0 5.0 3.0 5.2 7.2 Notes Based on current operators in the sector, the Expected U
Slide 25: Fort Worth Barnett
Fort Worth Barnett For personal use only Core area - up to 900 ft thick (avg 400ft) Core area maturity – Ro = 1.5% Tier 1 – 200 ft thick Tier 1 maturity – Ro 1.25-1.5% Mercury Stetson ~ 415 ft. Mercury Stetson Ro = 1.5% Source: Advance Resources International – Barnett Shale Case Study A
Slide 26: Barnett Production
Barnett Production For personal use only Barnett HZ EUR 2001 – 2006 Averaged 2.8 BCF/well Historical production based on field rules of 500 ft spacing with 2,500 ft Lateral equivalent to 80 acres spacing Equates to 1.1 Bcf/1,000ft of lateral length. Extended laterals and changes to frac st
Slide 27: Recovery Factors – still evolving
Recovery Factors – still evolving For personal use only Operators generally expect 15 – 20% recovery of OGIP based on 80 acres spacing. Recovery factors being increased via reduced well spacing to 25- 35%, with some pilot testing occurring to test ability to increase this to over 50%. Source: Ad
Slide 28: Woodford Shale
Woodford Shale For personal use only Woodford production from 4 basins. Arkoma and Anadarko Basins provide most production. Anadarko Basin closest analog to Mercury Stetson Similar Depth, Thickness and Maturity. Source: OK Geological Survey, SPE 139813 (Bill Grieser) Mercury Stetson 28
Slide 29: Woodford EUR
Woodford EUR For personal use only Woodford HZ potential at Mercury Stetson Based on expected thickness of 185 ft and Maturity of Ro = 1.8 – 2.0 Mercury Stetson EUR / Stage ~ 0.350 BCF Current Laterals ~ 5,000 ft with 14 – 15 stages Equivalent to 4.5 BCF for 5,000 ft lateral with 15 Mercur
Slide 30: Woodford IP
Woodford IP For personal use only Woodford HZ Significant increase in lateral length also leading to higher Initial Production rate (IP) Average 30 Day IP for 2010 lateral wells > 3.5 MMCFD. Strong first year production being achieved. Source: OK Geological Survey, SPE 139813 (Bill Grieser)
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