Red Sky Energy Limited · ASX:ROG
Red Sky Energy — LNG Outlook Asia 2010
84 slides from Red Sky Energy's conference presentation, Jun 1, 2010
Slide 1: Red Sky Energy: an ideal exploration partner for coal seam gas
For personal use only Red Sky Energy... an ideal exploration partner for coal seam gas in Australia Presentation to: LNG Outlook Asia 2010 ‐ Singapore Rohan Gillespie, Managing Director June 2010
Slide 2: CSG to LNG: unique opportunity
CSG to LNG: unique opportunity For personal use only Putting CSG to LNG in global context: – Unique: major new LNG province within two years of conception – Size of resource: coal seam gas 2P: 25TCF, 3P: 51TCF, 2C 26TCF – Credibility: y Conoco,, Shell,, BG and Petronas teamed with substantive Austra
Slide 3: CSG to LNG: key drivers
CSG to LNG: key drivers For personal use only Investment attraction of Australia: – Stable politically: no risk of nationalisation – Security of tenure: clear title to exploration and production areas – Competitive p royalties: y State based 10% royalty at well‐head, although uncertainty about propo
Slide 4: CSG to LNG: key drivers (LNG market in Asia)
CSG to LNG: key drivers For personal use only LNG market in Asia: – Growth: Asian LNG demand is forecast to grow to 290mtpa by 2030 due to continued urbanisation of China and India – Market share: Australia is well positioned to capture half of this growth – Price: LNG prices have been strengthening
Slide 5: CSG to LNG: key drivers (CSG lower risk)
CSG to LNG: key drivers For personal use only CSG lower risk than conventional gas: – Track record: Most coal basins have been proven to work for CSG – Discovery risk: extent of coals well known from coal exploration – Lower cost: Targeted g spend, p , cores <$1m, $ , pilots < $5m – More certainty o
Slide 6: CSG to LNG: key drivers (QLD and NSW strengths)
CSG to LNG: key drivers For personal use only CSG strengths in QLD and NSW: – Coal: highest quality coal province globally – Supply security: has been demonstrated, supplying into domestic markets – Size of resource: > 200 TCF gas‐in‐place – Cost competitive: Amortised capex plus opex ~$2.50/GJ, BG
Slide 7: Potential entry positions
Potential entry positions For personal use only Entry positions for new incumbents are scarce! • Existing LNG proponents: Unlikely to require further partners plus very high entry price • Mid tier and junior explorers: Very few with resource size suitable for LNG • Acquire acreage: Almost all acreag
Slide 8: Red Sky Energy – An Ideal Partner: acreage position
Red Sky Energy – An Ideal Partner For personal use only Acreage position: – Focus: CSG and unconventional gas – Acreage: Major acreage position across several basins – Materiality: Targeting a portfolio with p potential for at least 50tcf ggas‐ in‐place – Location: Positioned for supply to the Glads
Slide 9: Red Sky Energy – An Ideal Partner: track record
Red Sky Energy – An Ideal Partner For personal use only Track record: – Substantial exploration company: established within 12 months Secured access to $4m capital raising and Chairman Drilling Biogenic g shareholder approval approval.. appointed.. appointed rig Methane Managing Director NSW acreage
Slide 10: Red Sky Energy – An Ideal Partner: industry experience
Red Sky Energy – An Ideal Partner For personal use only Proven industry experience: – Rohan h Gill Gillespie: i Previously i l VP and d COO off BHP Billiton’s illi ’ Coal C l Seam S Gas G business, b i involved i l d in i pioneering Moranbah Gas Project from inception – Murray Durham: Previously wit
Slide 11: Red Sky Energy – An Ideal Partner: value
Red Sky Energy – An Ideal Partner For personal use only Value: – Low entry price: Red Sky Energy gives broad exposure at a reasonable cost – Undervalued: Red Sky Energy is undervalued with respect to acreage portfolio Market Company Capitalisation Comments ($m) Bow Energy 326 Focused on gas to power
Slide 12: Red Sky Energy value proposition
Red Sky Energy value proposition For personal use only • Unique opportunity: CSG to LNG in Eastern Australia is a never‐ to‐be‐repeated resource play • Team of choice: Red Sky Energy has vast industry experience and has made significant achievements in a short time • Portfolio still growing: Red Sky
Slide 13: Disclaimer
Disclaimer For personal use only The information presented herein contains predictions, estimates and other forward looking statements that are subject to risk factors that are associated with the oil and gas business. Certain information in this presentation has been derived from third parties and,
Slide 14: Yaraka Project
Yaraka Project For personal use only • Yaraka • Taroom Trough • Sandy Camp • Lightning Ridge • Tibooburra • Darling Basin • Pedirka Basin
Slide 15: Eromanga Basin
Eromanga Basin For personal use only The Eromanga Basin covers an area of 1,000,000 km2 in central Australia and includes a large part of western Queensland, the o t e Territory, Northern e to y, New e Sout South Wales and South Australia.
Slide 16: ATP 946P
ATP 946P For personal use only • ATP946 is located 94 km south east of Jundah and 200 km south west of Blackall in the Eromanga basin. • The main coal bearing formation in the area is the Winton Formation. • The Winton Coal Measures are present from surface to depths of 800m and with a likely lik l
Slide 17: ATP 946P Structure
ATP 946P Structure For personal use only • Within ATP946 there are three significant structures: – The Th P Powellll D Depression, i which hi h trends t d NE‐SW through the centre of the tenement, roughly from Grey Range 1 to Banmirra 1; – The Cothalow Anticline, which trends NE‐SW, through Milo 1 a
Slide 18: Biogenic Methane Potential
Biogenic Methane Potential For personal use only No‐flow boundaries such as faults or synclinal axes are primary targets for coal seam methane exploration. The possibility exists that concentrations of biogenic methane may exist close to no‐flow boundaries in ATP 946P (from Scott & Hamilton, 2006).
Slide 19: Exploration History
Exploration History For personal use only Exploration in the Eromanga Basin, proximal to ATP 946P, 946P has primarily been completed by: – Sentry Petroleum Limited – Holds an interest in the four permits (ATP 863, 864, 865 and 866) surrounding the tenement; – Bow Energy Limited – Holds an interest i
Slide 20: Talundilly-1
Talundilly‐1 For personal use only Talundilly‐1 (located in ATP862) intersected: • 25m of coal at depths ranging from 200 to 450m; • Vitrinite reflectance of the Winton Formation to be Romax 0.47 ‐ 0.53%. Therefore, it appears likely this any CSG present would be a product of biogenic processes. Usi
Slide 21: Bow Energy Limited
Bow Energy Limited For personal use only Other exploration in the Eromanga has been completed by BOW. Drilling of two CBM exploration l i wellsll iin ATP560 and ATP794 was completed in the first quarter of 2009. Both wells drilled to ~400m in depth p and intersected 5.72m and 22.34m of net coal. Fin
Slide 22: East Energy Resources Limited
East Energy Resources Limited For personal use only To the east of ATP 946, in the coal exploration permit (EPC) 1149 EERL is exploring the Winton Formation. Coal exploration completed in 1974 included chip and core wells at 14 sites. Most wells were terminated at a depth of 92m with an average net
Slide 23: Geological Modelling
Geological Modelling For personal use only Where suitable electronic geophysics were found,, the followingg p parameters were used: • Sonic readings of between 120‐160 us/ft were defined as coal if complimented by the gamma; • Coal seams were defined as clean if the gamma was less than 45 API. If th
Slide 24: Grey Range Lithology Log
Grey Range 1 Lithology Log For personal use only Grey Range 1 is located just outside the north eastern corner of the lease and d iis believed b li d to lie li within i hi the h Powell P ll Depression. 11 seams were identified from the graphical lithlog for this hole, with seams varying in thickness
Slide 25: Banmirra Lithology Log
Banmirra 1 Lithology Log For personal use only Banmirra 1 lies near the western edge of the lease in the Powell Depression. 29 seams were identified from the geophysics for this hole, with seams varying y g in thickness from 0.3 m to 1.85 m, totaling approximately 27.5m of net coal. The seams span a
Slide 26: Depth to Winton Floor
Depth to Winton Floor For personal use only Powell Depression NE to SW.
Slide 27: Net Coal Thickness
Net Coal Thickness For personal use only Grey Range 1 andd Banmirra i 1 are believed to lie within the Powell Depression. NOTE: Red Sky believes that the thick coals also occur between Grey Range 1 and Banmirra 1 in the Powell Depression.
Slide 28: ATP946 Gas in Place
ATP946 Gas in Place For personal use only It is unknown what coal thickness could be expected over the entire ATP, but on the basis of anecdotal evidence and proximal boreholes in the surrounding tenements it is estimated that the net coal thickness may be up to 25m, with an ATP average of 8m. An es
Slide 29: Anecdotal Gas Information
Anecdotal Gas Information For personal use only • Gas Readings of the Winton Formation in Jampot 1 registered 6% methane gas in WINT 18‐20 and 11% methane gas in WINT21. WINT21 • Kaloola 1, in the eastern edge of the lease tested 500‐5000 ppm methane (up to 0 005%) in the coal bearing interval of th
Slide 30: Permeability
Permeability For personal use only The permeability of the Winton Formation in the Eromanga Basin is not well understood. However, permeability is anticipated to be relatively high due to the low overburden pressure (depths <650m). Permeability is a key parameter that Red Sky will be testing in the
Slide 31: Other Cretaceous Coal Plays
Other Cretaceous Coal Plays For personal use only It is well known that the Cretaceous period hosts major coal seam gas plays throughout the world. The most famous example is the San Juan Basin in New Mexico and Colorado Colorado, USA. USA In addition, addition Cretaceous coals are well documented i
Slide 32: The Future
The Future For personal use only • Red Sky plan to drill two (2) vertical core wells in the third quarter of 2010. • These wells will be designed to sample coals within the cretaceous sequences of the Winton Formation. • The well design includes the capability to measure the stratigraphy and coal ga
Slide 33: Taroom Trough Project
Taroom Trough Project For personal use only • Yaraka • Taroom Trough • Sandy Camp • Lightning Ridge • Tibooburra • Darling Basin • Pedirka Basin
Slide 34: Ideal location
Ideal location For personal use only ATP 840 is close to the major CSG fields underpinning the proposed LNG projects in Gladstone
Slide 35: Potential for Basin Centred gas in ATP
Potential for Basin Centred gas in ATP 840 For personal use only • A review of the Basin centred gas plays in the Surat Basin, has identified two plays within ATP 840P which have significant potential – Triassic Rewan Formation play – Permian Tinowan Formation (Overston) play • There have been ggas
Slide 36: The rise of Non Conventional Gas
The rise of Non Conventional Gas For personal use only Natural gas production in the contiguous 48 states by type The US experience 1990-2005 • The USA has been the leader in developing non‐conventional gas resources. – From 1990 to 2005 total gas production in the h USA increased i d from f 16.9 16
Slide 37: Surat Basin – non conventional gas potential
Surat Basin – non conventional gas potential For personal use only • Coal Seam Gas – Massive growth in the last few years – Conventional gas production is in decline • Basin Centred Gas – Has not started but the potential is there – Based on the USA experience, it could become more significant than
Slide 38: Basin Centred Gas – background
Basin Centred Gas ‐ background For personal use only • A basin‐center gas system is typically described as a regionally extensive gas accumulation situated in the central, deeper parts of a basin. • Reservoir rocks are typically low porosity (< 13%), low permeability (<0.1 md) discontinuous sandston
Slide 39: Surat Basin – Basin centred gas potential
Surat Basin – Basin centred gas potential For personal use only • The Piceance Basin in Piceance Basin Colorado has been explored for a considerable time, and i wellll d is documented t d – 2005 production was 271bcf from the basin centred tight sand play • There are a number of similarities i il i
Slide 40: Gas shows around ATP
Gas shows around ATP 840 For personal use only • A number of wells around ATP 840P have tested gas in the Early Triassic and Late Permian sands • These have been relatively tight, but still flowed gas with little water • Gas flows include Kinkabilla Cabawin and Overston Overston 1,2 REWAN FM SAGITTA
Slide 41: Well Tests
Well Tests For personal use only Kinkabilla 1 Well Log • Kinkabilla‐1 – Rewan Fm flowed gas to surface – Combined Flow rate of 60,000cfd • Cabawin‐1 – Tinowon Fm flowed gas to surface – Flow rate of 205,000cfd Lower Tests Triassic • These flow rates were Rewan achieved with standard oil Formation fi
Slide 42: Resource Volumes
Resource Volumes For personal use only • The Lower Rewan (Sagittarius Sst) appears to be Possible test the most promising reservoir for the basin centred location gas play. • The Lower Rewan is thick (>400m) within ATP840P relative to adjoining blocks to the west and east • A potential resource of 1
Slide 43: Sandy Camp Project
Sandy Camp Project For personal use only • Yaraka • Taroom T T Trough h • Sandy Camp • Lightning Ridge • Tibooburra • Darling Basin • Pedirka Basin
Slide 44: Extensive Cretaceous coal play
Extensive Cretaceous coal play For personal use only PEL 465, 480, 467, 481 and 482 cover the western and southern edges of the Surat Basin, and part off th the western t edge d off the th Gunnedah Basin in NSW. Towns in the tenement area i l d Dubbo include D bb , Coonamble C bl and d Walgett. The
Slide 45: Previous drilling - Sandy Camp
Previous drilling ‐ Sandy Camp 1 For personal use only Sandy Camp 1 lies in the southern sector of PEL467, near the northern edge g of PEL481. 12 seams were identified from the geophysics for this hole, with seams varying i iin thickness thi k f from 0 0.3 3 m tto 3 m, totaling approximately 7m of n
Slide 46: Geological Structures
Geological Structures For personal use only In this area there are four significant structures: •The Coonamble Embayment; Coonamble •The Cobbora subbasin – which is Embayment located near the eastern edge of PEL482. This subbasin is a western extension of the Gunnedah basin; •The Tooraweena Trough –
Slide 47: Coonamble Embayment is main structure
Coonamble Embayment is main structure For personal use only Orion Petroleum Limited recently drilled Kurrabooma‐1, which reached h dad depth th off 438.7m 438 7 and d successfully intersected ~4m of net coal. It is i theorised th i d that th t th the Coonamble C bl Embayment which extends through ar
Slide 48: Potential Gas in Place
Potential Gas in Place For personal use only Based on geological interpretation of proximal boreholes in the surrounding tenements, it is estimated that the net coal thickness may be up to 7m, 7m with an average of 3‐4m. 3 4m An estimate of potential Gas‐In‐Place can be inferred from the following:
Slide 49: Also a Permian coal play in PEL
Also a Permian coal play in PEL 482 For personal use only Cobbora subbasin – Permian Black Jack Coal Measures
Slide 50: PEL – RC96CC014
PEL 482 – RC96CC014 For personal use only RC96CC014 is located in the centre of the Cobbara subbasin, 5km north of PEL482. Six seams were identified in the Permian Black Jack Coal Measures, totaling approximately 8.8m 8 8m of net coal. The seams are located between 135 to 179m, with 7.4m intersected
Slide 51: PEL – Soda
PEL 482 – Soda 2 For personal use only Soda 2 is located 1km south of the northern edge of PEL482, and appears to lie at the southern end of the Tooraweena Trough. Trough Three seams were identified in the Permian Black Jack Coal Measures, totaling approximately 4.9m of net coal. The seams are locat
Slide 52: Likely gas contents
Likely gas contents For personal use only With a vitrinite reflectance of 0.62 and depths of ~200m. Gas contents of 6m3/t may be interested if the coals are fully saturated.
Slide 53: Way forward
Way forward For personal use only • Red Sky plans to drill a vertical core well in the fourth quarter of 2010 in PEL 467. • This well will be designed to sample coals within the cretaceous sequences of the R lli D Rolling Downs G Group. • The well design includes the capability to measure the strati
Slide 54: Lightning Ridge Project
Lightning Ridge Project For personal use only • Yaraka • Taroom T T Trough h • Sandy Camp • Lightning Ridge • Tibooburra • Darling Basin • Pedirka Basin
Slide 55: Geological Setting
For personal use only Geological Setting
Slide 56: Great Artesian Basin brings gas from QLD
Great Artesian Basin brings gas from QLD For personal use only
Slide 57: Prevalence of gas occurs in water bores
Prevalence of gas occurs in water bores For personal use only aquifer gas across very large areas
Slide 58: Gas produced from water bores
Gas produced from water bores For personal use only
Slide 59: Key Methane Water Bores Emitters
Key Methane Water Bores Emitters For personal use only APCRC Report No. 16 - Compositional and Isotopic study of Gases and Organics in Artesian Bore Waters from NSW
Slide 60: Way forward
Way forward For personal use only • Conduct extended production test on existing gassy water wells; • Drill a number of stratigraphic wells to test gas bearing formations;
Slide 61: Tibooburra Project
Tibooburra Project For personal use only • Yaraka • Taroom T T Trough h • Sandy Camp • Lightning Ridge • Tibooburra • Darling Basin • Pedirka Basin
Slide 62: Location – extreme west of NSW
Location – extreme west of NSW For personal use only Covers an area of approximately pp y 80,000km2
Slide 63: Geological Setting
For personal use only Geological Setting
Slide 64: Geological Setting
For personal use only Geological Setting
Slide 65: Great Artesian Basin brings gas from QLD
Great Artesian Basin brings gas from QLD For personal use only
Slide 66: Prevalence of gas occurs in water bores
Prevalence of gas occurs in water bores For personal use only Gas shows in water bores
Slide 67: Way forward
Way forward For personal use only • Conduct extended production test on existing gassy water wells; • Drill a number of stratigraphic wells to test gas bearing formations;
Slide 68: Darling Basin Project
Darling Basin Project For personal use only • Yaraka • Taroom T T Trough h • Sandy Camp • Lightning Ridge • Tibooburra • Darling Basin • Pedirka Basin
Slide 69: Little exploration to date
Little exploration to date For personal use only The Darling Basin covers an area of over 100 000 km2 and contains at least seven sub‐basins with up to 8000 m of mainly Devonian age clastic sediments deposited in a wide range of environments. The Darling Basin is the largest onshore basin in New Sou
Slide 70: Stratigraphy
Stratigraphy For personal use only Paleozoic Basin Mainly Devonian Clastic Sediments
Slide 71: Reservoir and seal are present
Reservoir and seal are present For personal use only
Slide 72: Big structures and early structures
Big structures and early structures For personal use only MID DEV UNC Interval velocities show that high velocity indurated rocks seen in wells on “Highs” are not typical of central basin
Slide 73: Adjacent prospect is large
Adjacent prospect is large For personal use only IN ADJACENT ORION PETROLEUM PERMIT With permission of Orion Petroleum Ltd
Slide 74: Seismic Line GA05-TL1 across PEL
Seismic Line GA05‐TL1 across PEL 449 For personal use only W E Sec TWT 20 Km 2 Km
Slide 75: Seismic Line GA08-RS2 across PEL
Seismic Line GA08‐RS2 across PEL 447 For personal use only 2.0 Sec TWT 25 Km
Slide 76: Evidence of hydrocarbon generation
Evidence of hydrocarbon generation For personal use only Presence of hydrocarbon source suggested by geochemical anomalies
Slide 77: Look alikes to Darling Basin
Look alikes to Darling Basin For personal use only Amadeus Basin: One large gas field and one large gas and oil field discovered to date. date Reservoired in Ordovician sandstones. Total reserves 683 BCF gas, 22 MMB oil and condensate. Amadeus Basin Cooper Basin: Australia’s largest Adavale Basin on
Slide 78: Location of proposed strat wells
Location of proposed strat wells For personal use only Stratigraphic Burnamwood 1 wells to identify GA05-TL1 source rocks, which are suggested by PEL 449 geochemical Proposed surveys. Stratigraphic St at g ap c Pondie Range 1 Well Locations PEL 448 A stratigraphic well for each of Blantyre 1 PEL 447
Slide 79: Proposed strat wells
Proposed strat wells For personal use only PEL 447 PEL 448 Burnamwood 1
Slide 80: Permits ideally located
Permits ideally located For personal use only Red Sky Sk Energy Energ Permits Red Skyy has M Moomba-Sydney b S d Pipeline Pi li four permits in the Darling Basin that straddle the D li Basin Darling B i Moomba to Sydney Sydney Pipeline.
Slide 81: Access to gas market
Access to gas market For personal use only • Red Sky holds 100% of PEL 447, 448, 449 and PELA 122. • The h Moomba b to Sydney d Pipeline has significant spare capacity due to decline of Moomba Basin gas supply. • Any gas discovery in the permits would have immediate access to the gas market in the S
Slide 82: Pedirka Basin Project
Pedirka Basin Project For personal use only • Yaraka • Taroom T T Trough h • Sandy Camp • Lightning Ridge • Tibooburra • Darling Basin • Pedirka Basin
Slide 83: Huge coal resource
Huge coal resource For personal use only • Red Sky has the right to earn a 10% interest in four permits across the Pedirka Basin in southern Northern Territory. • Operator is Central Petroleum. • 5 wells to date have intersected substantial coal thicknesses: • CBM107‐002: 65 metres of coal, with two
Slide 84: Commercialisation Options
Commercialisation Options For personal use only • Coal in place is in excess of 1 trillion tonnes above 1000m depth • Red Sky’s Sky s share would be 100 million tonnes • Commercialisation options include Coal Seam Gas (CSG) and/or Underground C l Gasification Coal G ifi ti (UCG)