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Mr John McRae, Commercial Manager, Senex Energy limited delivered this presentation at the 2013 Mining South Australia conference. The conference has been produced specifically for the South Australian mining and regional development community and represents a unique opportunity to hear the latest developments from the major projects, mines and explorers in South Australia. For more information on the annual event, please visit the conference website: http://www.informa.com.au/miningsa2013
Citation preview
Building an
energy company
Mining South
Australia
John McRae
Commercial Manager
Whyalla
26-27 November 2013
Important notice and disclaimer
Important information
This presentation has been prepared by Senex Energy Limited (Senex). It is current as at the date of this presentation. It contains information in a
summary form and should be read in conjunction with Senex’s other periodic and continuous disclosure announcements to the Australian Securities
Exchange (ASX) available at: www.asx.com.au.
Risk and assumptions - An investment in Senex shares is subject to known and unknown risks, many of which are beyond the control of Senex. In
considering an investment in Senex shares, investors should have regard to (amongst other things) the risks outlined in this presentation and in other
disclosures and announcements made by Senex to the ASX.
This presentation contains statements, opinions, projections, forecasts and other material, based on various assumptions. Those assumptions may or
may not prove to be correct.
No investment advice - The information contained in this presentation does not take into account the investment objectives, financial situation or
particular needs of any recipient and is not financial advice or financial product advice. Before making an investment decision, recipients of this
presentation should consider their own needs and situation, satisfy themselves as to the accuracy of all information contained herein and, if necessary,
seek independent professional advice.
Disclaimer - To the extent permitted by law, Senex, its directors, officers, employees, agents, advisers and any person named in this presentation:
give no warranty, representation or guarantee as to the accuracy or likelihood of fulfilment of any assumptions upon which any part of this presentation is
based or the accuracy, completeness or reliability of the information contained in this presentation; and
accept no responsibility for any loss, claim, damages, costs or expenses arising out of, or in connection with, the information contained in this
presentation.
Reserve and resource estimates
Unless otherwise indicated, the statements contained in this presentation about Senex’s reserve and resource estimates have been compiled by
Mr James Crowley BSc (Hons), who is General Manager – Exploration, a full time employee of Senex, in accordance with the definitions and guidelines in
the 2007 Petroleum Resources Management System approved by the Society of Petroleum Engineers (SPE PRMS).
Mr Crowley consents to the inclusion of the estimates in the form and context in which they appear. Senex’s reserves and resources are consistent with
the SPE PRMS.
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A significant presence in the Cooper Basin
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65 permits, 38 joint ventures, more
than 70,000km2 net acreage
Oil
• 16 operated fields
• 1.25 mmbbls production in 2012/13
• 10.8 mmbbls 2P oil reserves
• >300% reserves replacement ratio
Gas
• Initial drilling confirms
unconventional gas potential
• Hornet conventional gas discovery
• 366 mmboe total 2C resources
• CSG assets in Queensland
A clear strategy that delivers
4
• Majority equity and
operatorship is key
• Massive land position with
prime acreage in the Cooper-
Eromanga Basin
• Strong balance sheet and
cash flows
• Track record of low cost
strategic acquisitions
• Strong management team that
is agile, fresh and focused
Senex doubled its acreage position in 2011
with the acquisition of Stuart Petroleum
5
2010 2013 2011 2012
New management
team appointed
$26 million raised
via placement
Oil permits
acquired
(PELs 182,100, 88)
HQ moved
to Brisbane
Operatorship of
Don Juan CSG
Name change to
Senex (ASX: SXY)
Surat Basin CSG
reserves upgrade
Vintage Crop oil
discovery
Oil production
resumes
Farmin to
PEL 514
Successful
appraisal drilling
Stuart takeover
completed in less
than 3 months
Major oil reserves
upgrade
Growler-Moomba
and Snatcher-
Charo pipelines
Entitlement issue
oversubscribed
Interest increased
in PEL 115
Unconventional
gas campaign
begins in Cooper
Basin permits
Port Bonython
Fuels Project
sold to Mitsubishi
Gas reserves
up by 75%
Another major oil
reserves upgrade
Oil discoveries at
Spitfire and
Mustang Further appraisal
success
Oil production
tops 600,000 bbls
by 30 June 2012
Entitlement issue
oversubscribed
Hornet gas field
discovered
Contingent gas
resource of 5.5 Tcf
Record oil sales
revenue and profit
Oil reserves up
Cuisinier sold
Interest gained in
PEL 105
2P oil reserves
Up 575% Oil production
Up 793% NPAT up to
$61 million
Phenomenal growth over three years…
… but planning for the long term
• Understanding the risks of
building a long-term, profitable
energy business
• Strong focus on collaboration
6
The 15 year tenure security
agreement is a great example:
• A win:win for Senex and
South Australia
• Exploration dollars directed
according to prospectivity
• Operational flexibility
• Investment security
7
Senex’s
growing gas
business
8
North American gas supply – conventional gas to
shale: Australia 10 years behind
• Conventional gas substitution from coal seam gas and tight gas sands initially
• Tight gas sands include conventional stratigraphic traps and basin centred gas, both
present in material quantities in the Cooper Basin
• Traditional gas supply has been eclipsed by the rise of shale gas (and latterly liquids
rich shale gas), now accounting for more than 30% of supply
Source: Wood Mackenzie
LNG 1,720PJ
Domestic 630PJ
2017 (2,350 PJ/a)
CSG 1,590PJ
Otway and other
115PJ
Gippsland 260PJ
Cooper 105PJ
Forecast shortfall
and required
third party supply 280PJ
Market opportunity provides gas supply catalyst
Power 210PJ
Major Industrial
110PJ Utility 400PJ
2012 (720 PJ/a)
Demand
CSG 270PJ
Cooper 94PJ
Otway 105PJ
Gippsland 258PJ
Other 4PJ
Supply
Source: EnergyQuest
Domestic
Material new conventional
gas discovery
• Opportunity to
commercialise into east
coast gas market with
material supply shortfall
forecast
Next steps:
• Introduce the right
partner at the right time
• Progress field appraisal
and development plan
• Numerous commercial
opportunities under
consideration
9
10
Huge gas potential in the north and south
SA Cooper Basin
Early success with Hornet gas discovery
11
Early success delivers 2.4 Tcf 1 Hornet gas field
1 3C contingent resource
Record resources
12
Continued growth in 2P and 3P reserves in
Queensland’s Surat Basin
Hornet gas discovery • Net reserves:
– 2P reserves 156.6 PJ
– 3P reserves 357.7 PJ
– 598 PJ of reserves and
resources (~102.8 mmboe)
• Exploration and appraisal to
build 2P reserves and enhance
resource definition
• Field development planning and
future pilot production programs
• Well located for CSG to LNG
projects that will require
additional third party gas supplies
Record resources
13
Continuing value add in CSG in 2013/14
Hornet gas discovery • 4-well program underway on
western permits
• Targeting reserves additions,
wells to be plugged and
abandoned upon completion
of testing
• 7-well program planned
across eastern permits
7.5 13.2
23.1 26.2
14.9
41.7
52.5
59.8
-
10
20
30
40
50
60
70
80
30 Jun 10 30 Jun 11 30 Jun 12 30 Jun 13
Net 2P Reserves
Net 3P Reserves
Net 2C Resources
Net 3C Resources
Major new
contingent
resource in the
Cooper Basin
Continued
growth in
Surat Basin
coal seam gas
reserves
325.0
914.0
200
300
400
500
600
700
800
900
1000
Million barrels of oil equivalent (mmboe)
Where to next? Commercialising gas reserves and resources
14
15
High margin,
high growth
oil business
Cooper Basin oil production at a 20 year high
16
• Basin wide exploration effort mirrors the
Cooper Basin Liquids Project from the 1980s
• Early 2013/14 exploration success with
nine of eleven wells cased and suspended
for future oil production
• Burruna oil discovery has commenced extended
production test with flow rates up to 3,600 bopd
• Dunlop-1 oil discovery with 1,200 bopd free flow
• Appraisal and development opportunities near
existing assets
Burruna-2 oil discovery
0
2
4
6
8
10
12Cooper Basin oil production (mmbbls)
Source: APPEA and DMITRE (South Australia)
Senex oil production ramping up
17
A solid start to the new year:
• First quarter production of 0.3 million barrels
• Production expected to increase with new discoveries
and work overs
• 2013/14 production guidance of 1.4 million to
1.6 million barrels, up from 1.25 million barrels in
2012/13
Q1
1 To mid-point of 2013/14 guidance
18
Net oil reserves upgraded:
• 2P reserves of 10.8 mmbbls, up 3.9 mmbbls
• 3P reserves of 21.4 mmbbls, up 8.6 mmbbls
• 2P reserves growth guidance of 4 million to
6 million barrels in 2013/14, a reserves
replacement ratio of 333%1
• High quality 3D seismic improving
exploration success
Drilling underway:
• More than 30 exploration, appraisal and
development targets to be drilled in 2013/14
• Low-risk, high-return targets near existing
fields, and greenfield exploration plays
• Program will soon move to the western flank
and 3D seismic targets
Successful exploration delivers record oil reserves
1 Before production and divestments, to the mid point of guidance
19
Oil discoveries span the western flank fairway
20
Massive new oil resource already proven...
The Cooper Basin is significantly
underexplored compared with mature
North American hydrocarbon provinces:
Permian Basin Cooper Basin
Well density 69 / 100 km2 2.3 / 100 km2
2012 2006
Legend
Senex
Beach
Others
21
...with near field, high return targets in the south
Well Permit Type Results
Worrior-8 PPL 207 Development Up to 18 metres net pay
Worrior-9 PPL 207 Exploration Plugged and abandoned
Burruna-2 PEL 115 Exploration 5.3 metres net pay, >750 bopd DST
Ventura-2 PPL 214 Development 13.4 metres net pay
Kobari-2 PEL 516 Exploration Oil shows over 22 metres
Dunlop-1 PEL 113 Exploration 3 metres net pay, 1,200 bopd DST
We are already seeing the benefits
Success in the southern Cooper
• Previously considered fully explored
• Senex targeting low-risk, high upside
prospects near existing oil fields
• Material contribution to production expected
Burruna-2
• Oil flow rate recorded at >3,600 bopd on 40/64”
choke during testing
• Online and producing at ~1,000 bopd
• Approximately 400,000 barrels recoverable oil
from 5.3 metres net pay in Namur Sandstone
Dunlop-1
• Free-flowed during DST at 1,200 bopd
• Approximately 3 metres net pay in McKinlay
Member
• On production this quarter
22
Ensign Rig 48 drilling Burruna-2
The focus has moved to execution excellence
23
Discovery Define well parameters
Design equipment
Approval Procure Construct Online
Discovery Confirm
standard design and approvals
Construct Online
From around 90 days
To around 45 days
Exploration discovery-to-production
How?
• Standardised design and equipment
• Streamlined approval process
• Inventory management
• Exploration success!
Becoming a first class operator
• Operationally nimble,
dynamic and striving for
continuous improvement
• Learning from mistakes
(ours and others)
• Learning from those who
do it best (eg Aera Energy)
• Exploration discovery-to-
connection times already
halved to around 45 days
• Driving down operating costs
24
Trials of larger, electric-drive beam pumps
Senex procurement and supply chain
25
• Senex supports DMITRE
roundtable principals of sourcing
from local suppliers and businesses
• Currently around 400 local and
global suppliers
• Moving toward ‘standardisation’
and ‘fit for purpose’
• A difficult logistical and operational
environment – unsealed roads
• Safety, planning and quality are
critical
• New suppliers should contact:
26
What does it mean for the future?
Continued oil production and reserves growth:
• 2013/14 production guidance of 1.4 million to
1.6 million barrels, up from 1.25 million barrels in
2012/131
• 2013/14 2P reserves growth of 4 million to
6 million barrels (reserves replacement ratio
of 333%)1,2
Early commercialisation of gas assets
• Hornet gas discovery
• Cooper Basin unconventional gas asset
• Surat Basin coal seam gas assets
Zero debt, $125 million cash3
• $120 million to $140 million capital expenditure
guidance for 2013/14
1 Before production and divestments 2 At midpoint of production and 2P oil reserves growth guidance 3 As at 30 September 2013, including approximately $20 million expected from the sale of interests in Cuisinier oil field and associated permits
Registered Office
Level 14, 144 Edward Street
GPO Box 2233
Brisbane Queensland 4000 Australia
Telephone
+61 7 3837 9900
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