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WELCOME
Chairman of Meeting
Quorum
Notice of Meeting
Meeting Procedures
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INTRODUCTIONSBoard of DirectorsDr Neale Taylor Chairman
Mr Bob Cook Non-Executive Director
Mr Tony Strasser Non-Executive Director
Mr Barry Smith Non-Executive Director
Mr Matthew Healy Non-Executive Director
Chief Executive OfficerDr Scott Hornafius
Company SecretaryMr David Franks
Company Auditor’s RepresentativeMr Gareth Few Partner, BDO
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BUSINESS AGENDA
Minutes
Ordinary Business
Presentations by Chairman & CEO
Accounts
Resolutions 1 to 10, noting Resolutions 1 and 8 have been withdrawn
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MINUTES
Minutes of the previous Extraordinary General Meeting held on 26 June 2014 have been signed by Dr. Neale Taylor as a true and correct record and are available for inspection.
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PRESENTATIONS Neale Taylor - Chairman Scott Hornafius - CEO
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2013-14 FINANCIAL SUMMARY
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2013-14 2012-13
A$’000 A$’000
Revenue 340.12 398.95
Oil Price, US$/B 90.16 81.04
Expenses:
Cost of sales 802.56 1,386.94
Professional & corporate services 866.365 662.77
Admin 588.50 593.24
Directors & employees 1781.86 2,132.50
Financial & Other expenses 3647.88 1,219.17
NPAT (LOSS) (7,346.97) (5,595.66)
Forex Gain (219.30) 759.26
Total NPAT (loss) (7,566.27) (4,836.40)
Development Expenditure 390.93 2,638.48For
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From major milestone achievements in 2012-13 to funding challenges consequent to Grieve 1st oil deferral by JV Operator in April 2014
June-August: Sale process for Wyoming AssetsSeptember: Sold Ash CreekAug – Sept: Placement & SPPPost August: Pursuing corporate transaction, debt
financing, and new private investorsNovember: Denbury announces 2015 cost reductions
Scott Hornafius, CEO, will address:
Project progress at Grieve (Wyoming) and Singleton (Nebraska) Forward funding plans
2013-14: GRIEVE 1ST OIL DEFERRAL BY JV OPERATOR
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2013-2014PROJECT HIGHLIGHTS
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ELK’S EXISTING ASSETS
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GRIEVE CO2-EOR PROJECT
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DEVELOPMENT STATUS OF THE GRIEVE CO2-EOR PROJECT- ELK’s current primary asset
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Project Status on 1 Nov 2014 Completed Work
Wells and flow lines Site works & testing manifold 3-mile CO2 supply line
12.2 Bcf of CO2 injected Sufficient to achieve initial
production CO2 injection suspended until
close to first oil
6.0+ million barrels of water injected
Project expenditure >US$70 million to date by JV partners
Grieve Pressure Surveys vs Simulated Pressure Response Range
Reservoir pressure rising in line with forecast (see figure)
200
400
600
800
1000
1200
1400
1600
1800
2000
2200
2400
2600
2800
3000
3200
Res
ervo
ir P
ress
ure
(psi
g) MMP = 2250 (psig)
BHP is at FreeFlowing Condition
0
Well #20
Well #22
Well #30
Well #11
Well #5
Well #10
Well #18
Well #12
Well #6A
First Oil Sept. 2015
First Oil Sept. 2016
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DENBURY-OPERATED GRIEVE CO2-EOR PROJECT
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100
200
300
400
500
600
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1000
1100
1200
1300
1400
1500
1600
1700
1800
Res
ervo
ir P
ress
ure
(psi
g)0
DRI Simulation FirstSales Sept 2016
Well #20
Well #22
Well #30
Well #11
Well #5
Well #10
Well #18
Well #12
Well #6A
Development scenario for Grieve
Grieve Average Daily CO2 and Water Injection RatesCumulative Injection Through September 2014 = 12.2 BCF of CO2 & 5.7 MMBW
Grieve Pressure Survey vs Simulated Pressure Response
10,000
0
20,000
30,000
CO
2 In
ject
ion
(MC
FD)
Wat
er In
ject
ion
(BW
PD
)
40,000
50,000
5,000
0
10,000
15,000
20,000
25,000
CO2 (MCFD) Water (BWPD)
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GRIEVE PROJECT – PROGRESS IN 2014 Operator-owned Grieve substation completed in October 2014
Construction commenced in May 2014; Commissioned on October 28
Installed high-voltage power line to the Grieve Field (230-kV) Additional power to the field will allow water injection to 37,000 BWPD
Higher water injection rates will accelerate re-pressurization
Foundation work for CO2 recycling facilities completed in October 2014
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Project Update From Denbury On 21 November 2014
Continue to build reservoir pressure through water injection
Increase water injection capacity through installation of dual ESP in water source well
Optimize timing of compressor installation with timing of reservoir reaching desired operating pressure (3000 psi)
Continue gathering bottom-hole pressure and injection profile data
Elk capital expenditure reduced to US$0.65 million in 2015
Elk expected lease operating expense (LOE) reduced to ~$US1.25 million in 2015
First oil/facility start-up expected on 1 March 2017
DEVELOPMENT STATUS OF THE GRIEVE CO2-EOR PROJECT- ELK’s current primary asset
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GRIEVE PROJECT – REMAINING STEPS TO FIRST OIL
Denbury-owned oil processing & CO2 recompression facilities Construction commenced in August 2014
Complete remaining production facilities and well work in 2016 Drill one producing well in 2016 immediately prior to first oil production
Complete remaining flow lines and well work-overs in 2016
CO2 injection into the field planned to restart prior to first oil
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EXISTING WYOMING CO2-EOR PROJECT – EXAMPLE 1
Anadarko’s Patrick Draw – Monell FieldPurchased CO2 Utilization 7.46 MCF/BO
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EXISTING WYOMING CO2-EOR PROJECT – EXAMPLE 2
Devon Energy’s – Beaver CreekPurchased CO2 Utilization 7.59 MCF/BO
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GRIEVE CRUDE OIL EXPORT PIPELINE
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Focus has changed from seeking private investors in a new pipeline company to asset sale
Current discussions are progressing with two bidders regarding a sale of the pipeline
Due diligence has been started with one company
Buyer is required to put pipeline into service prior to first oil production
A firm transportation tariff for Elk will be a condition of the sale
Plan is to monetize the pipeline
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SINGLETON EOR DEVELOPMENT
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Elk completed purchase of the Singleton Unit effective 1 May 2014 Elk resumed water injection into the field to maintain the Unit
Wells tested for compliance with regulatory requirements Fluid levels indicate uniform pressures across the field
CO2 supply secured from Bridgeport Ethanol in December 2013 Three-year option on 10-year supply contract for CO2 starting in December 2016, plus 5-
acre lease on property adjacent to ethanol plant
Facilities design work started at the the Bridgeport ethanol plant
CO2 pipeline right-of-way acquisition progressing First five miles of ROW acquired from private landowners
County commissioners support using road right-of-ways for remaining ROW
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SINGLETON OIL FIELD – SUITABLE FOR EOR DEVELOPMENT
Excellent reservoir quality
Ideal for CO2-EOR
Reservoir close to MMP
About 20 well bores available
Injection water available
Potential for early oil
2-4 million EOR oil barrels
Low cost operating area
Favourable fiscal regime
Singleton Unit - J Sand Isopach
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BRIDGEPORT, NEBRASKA – EOR DEVELOPMENT
Singleton Field is 25 miles to Bridgeport
10 nearby oil fields produced 51 million barrels
Development concept: CO2 pipeline to Singleton which is hub for future project
Elk AOI has 25 million BO potential
Singleton project has 25%-35% IRR
Elk AOI in Panhandle of Nebraska Provides Low Cost Entry to New CO2 Area
Singleton
Bridgeport
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ELK FORWARD FUNDING PLAN
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ELK FORWARD FUNDING OPTIONS
Corporate Transaction Discussions have advanced with an ASX listed company regarding a corporate
transaction While these negotiations are incomplete and non-binding, agreement could be
reached in the next few weeks If agreement is reached, Elk will advise the market and seek shareholder approval
Debt Transaction Indicative term sheet for debt facility has been obtained To finalise terms, technical due diligence is required If agreement is reached, Elk will advise the market
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QUESTIONS TO MANAGEMENT & DIRECTORS
RETURN TO ORDINARY BUSINESS OF AGM
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ACCOUNTS FOR THE YEAR TO 30 JUNE 2014
Accounts in 2014 Annual Report Receive
Consider any questions or comments
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RESOLUTIONS
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RESOLUTIONS1. Re-election of a Director – Mr Barry Smith WITHDRAWN
2. Re-election of a Director – Mr Robert Cook
3. Adoption of Remuneration Report
4. Approval of Employee Incentive Rights Plan
5. Approval of Non-Executive Director and Adviser Rights Plan
6. Grant of Performance Rights and Retention Rights to Dr Neale Taylor (NED)
7. Grant of Performance Rights and Retention Rights to Mr Robert Cook (NED)
8. Grant of Performance Rights and Retention Rights to Mr Barry Smith (NED) WITHDRAWN
9. Grant of Performance Rights and Retention Rights to Mr Anthony Strasser (NED)
10. Grant of Performance Rights and Retention Rights to Mr Matthew Healy (NED)
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RESOLUTION 1– RE-ELECTION OF DIRECTOR - MR BARRY SMITH
To consider and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:
“That Mr Barry Smith be re-elected as a Director of the Company.”
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RESOLUTION 2– RE-ELECTION OF DIRECTOR - MR ROBERT COOK
To consider and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:
“That Mr Robert Cook be re-elected as a Director of the Company.”
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To consider and if thought fit, to pass, with or without amendment, the following resolution as a non-binding resolution:
“To adopt the Elk Remuneration Report for the year ended 30 June 2014.”
NOTE: the vote on this resolution is advisory only and does not bind the Directors.
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RESOLUTION 3– ADOPTION OF REMUNERATION REPORT
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RESOLUTION 4– APPROVAL OF EMPLOYEE INCENTIVES RIGHTS PLAN
To consider and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:
“That the Employee Incentives Rights Plan (EIR Plan), a summary of the rules of which are set out in the Explanatory Statement accompanying this Notice of Meeting, and the issue of shares under the EIR Plan, be approved for purposes including ASX Listing Rule 7.2 Exception 9.”
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RESOLUTION 5– APPROVAL OF NON-EXECUTIVE DIRECTOR AND ADVISER RIGHTS PLAN
To consider and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:
“That the Non-Executive Director and Adviser Rights Plan (NEDA Plan), a summary of the rules of which are set out in the Explanatory Statement accompanying this Notice of Meeting, and the issue of shares under the NEDA Plan, be approved for purposes including ASX Listing Rule 7.2 Exception 9.”
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RESOLUTION 6– GRANT PERFORMANCE RIGHTS AND RETENTION RIGHTS TO DR NEALE TAYLOR
To consider and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:
“That approval be given for all purposes, including of Listing Rule 10.14, for the grant of up to 1,200,000 Performance Rights and up to 600,000 Retention Rights to Dr Neale Taylor, a Non-Executive Director of the Company, over the next three years, in accordance with the NEDA Plan and on the terms set out in the Explanatory Statement accompanying this Notice of Meeting.”
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To consider and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:
“That approval be given for all purposes, including of Listing Rule 10.14, for the grant of up to 600,000 Performance Rights and up to 300,000 Retention Rights to Mr Robert Cook, a Non-Executive Director of the Company, over the next three years, in accordance with the NEDA Plan and on the terms set out in the Explanatory Statement accompanying this Notice of Meeting.”
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RESOLUTION 7– GRANT PERFORMANCE RIGHTS AND RETENTION RIGHTS TO MR ROBERT COOK
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To consider and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:
“That approval be given for all purposes, including of Listing Rule 10.14, for the grant of up to 600,000 Performance Rights and up to 300,000 Retention Rights to Mr Barry Smith, a Non-Executive Director of the Company, over the next three years, in accordance with the NEDA Plan and on the terms set out in the Explanatory Statement accompanying this Notice of Meeting.”
RESOLUTION 8– GRANT PERFORMANCE RIGHTS AND RETENTION RIGHTS TO MR BARRY SMITH
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To consider and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:
“That approval be given for all purposes, including of Listing Rule 10.14, for the grant of up to 600,000 Performance Rights and up to 300,000 Retention Rights to Mr Anthony Strasser, a Non-Executive Director of the Company, over the next three years, in accordance with the NEDA Plan and on the terms set out in the Explanatory Statement accompanying this Notice of Meeting.”
RESOLUTION 9– GRANT PERFORMANCE RIGHTS AND RETENTION RIGHTS TO MR ANTHONY STRASSER
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To consider and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:
“That approval be given for all purposes, including of Listing Rule 10.14, for the grant of up to 600,000 Performance Rights and up to 300,000 Retention Rights to Mr Matthew Healy, a Non-Executive Director of the Company, over the next three years, in accordance with the NEDA Plan and on the terms set out in the Explanatory Statement accompanying this Notice of Meeting.”
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RESOLUTION 10– GRANT PERFORMANCE RIGHTS AND RETENTION RIGHTS TO MR MATTHEW HEALY
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CLOSE OF MEETING
No other business
Meeting closed
Thank you for your attendance
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Please join the Directors, CEO and Elk’s advisorsfor refreshments
Please join the Directors, CEO and Elk’s advisorsfor refreshments
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