ASX Announcement 15 M arch 2017 The Company Announcement Officer - PDF document

ASX Announcement 15 M arch 2017 The Company Announcement Officer ASX Ltd via electronic lodgement Australian Domestic Gas Outlook 2017 Conference Presentation – M arch 2017 Please find attached a presentation to be given today by M r David Baker (M anaging Director) at the Australian Domestic Gas Outlook 2017 conference being held at the Four Seasons Hotel Sydney on the 13 th to 16 th M arch 2017. Yours faithfully M atthew Montano Chief Financial Officer & Company S ecretary Strike Energy Limited ABN 59 078 012 745 P: +61 2 9195 5600 120B Underwood Street, Paddington NSW 2021 www.strikeenergy.com.au E: strike@strikeenergy.com.au

STRIKE ENERGY LIMITED Exploring the supply optjons for a domestjc gas market stjll ‘short’ March 2017

Introductjon Eastern Australian gas prices Innovatjve funding Pre-requisites for successful development of low cost supply projects for the domestjc market Strike Energy Limited – 5th Annual Australian Domestjc Gas Outlook Conference 2017 2

How are Eastern Australian gas prices responding to market tjghtness?

Wholesale domestjc gas pricing • Major domestjc gas users have historically relied upon long term bilateral contracts predominantly from Gippsland and Cooper Basins. • Since 2013 the availability of forward wholesale gas for 5-10 year supply commitments has progressively tjghtened, as to price, gas volumes (ACQ and TCQ) and contractual terms. • In the last 6-9 months, as all of the Gladstone LNG trains have come online, wholesale gas prices for 2018/2019 delivery are at least $8/GJ and trending above $10/GJ. • This trend is refmected in the STTM ‘spot’ market at the major domestjc hubs. 15 Adelaide Brisbane Sydney 10 ~10 STM Price The current market price is three tjmes 5 the historical average Typical east coast historical gas prices 3 ~3 0 2010 2011 August 2016 March 2017 “Gas squeeze gets worse” - AFR March 2017 Strike Energy Limited – 5th Annual Australian Domestjc Gas Outlook Conference 2017 4

Developing an innovatjve mix of funding sources for domestjc gas customers

Funding optjons for Strike in a curiously constrained capital market Typical exploratjon Increase in exploratjon funding sources funding innovatjon Equity capital $13 Million + Gas ofg take $17 Million + Equity capital Additjonal + funding R & D funding $25 Million optjons Cash fmow + JV funding $30 Million + Cash fmow $5 Million (Eagleford sale) Multj-well, extended productjon test advancing towards commercialisatjon Strike Energy Limited – 5th Annual Australian Domestjc Gas Outlook Conference 2017 6

Critjcal pre-requisites for successful development of low cost supply projects for the domestjc market

Locatjon, locatjon, locatjon ... and competjtjve economics ... Coal seam gas fundamentals (in the current market) Positjve Economies Locatjon Low Supply Cost Regulatory Industry Support of Scale Environment Access to market Supply gap Alignment of security (150-250 PJ/a) Proximity to services Positjon on cost curve South Australia of supply + + CSG critjcally reliant upon Competjtjve land use Delivered cost Queensland Firm, long term ofg-take economies of scale Social licence Strike Energy Limited – 5th Annual Australian Domestjc Gas Outlook Conference 2017 8

Scale and Locatjon 2C Prospectjve Contjngent Resource + Resource Moomba PEL 94 2,702 Bcf^ PEL 95 3,817 Bcf^ Marsden 1 PEL 96 4,492 Bcf* Total 11,011 Bc f PEL 95 PEL 94 PEL 96 Phase STX 50% Davenport 1 Mount Isa 1,123 Bcf* 104 Bcf* STX 35% One Area Le Chifgre 1 Gladstone Klebb productjon testjng area Moomba Brisbane PELA 640 PEL 96 STX 100% STX 66.67% Sydney Adelaide 0 20 Kilometers Melbourne PEL 96 Phase One Area Strike Phase One Area wells drilled Gas Pipeline Strike Wells Drilled Oil Pipeline PEL Net STX Acres PEL 96 Ofgset Wells Hobart Strzelecki Track PEL 96 and PELA – STX Operated PEL 94 77,925 * Mean estjmate (net to Strike determined on a probalistjc basis) per ASX announcement dated 19 Feb 2014 and adjusted for announced PEL 95 160,248 contjngent resource estjmate per ASX announcement dated 27 April 2015. PEL 96 443,880 ^ Mean estjmate (net to Strike determined on a probalistjc basis) per ASX announcement dated 19 September 2012. PELA 640 850,786 + The estjmated quantjtjes of petroleum that may potentjally be recovered by the applicatjon of a future development project relate to undiscovered accumulatjons. These estjmates have both an associated risk of discovery and a risk of development. Further exploratjon Total 1,532,839 appraisal and evaluatjon is required to determine the existence of a signifjcant quantjty of potentjally movable hydrocarbons. Strike has an ideally positjoned long-life multj-Tcf resource to supply into ~40 Tcf Eastern Australian gas demand over the next twenty years Strike Energy Limited – 5th Annual Australian Domestjc Gas Outlook Conference 2017 9

Low Gas Supply Cost: Key Parameters The geological and reservoir characteristjcs in each gas fjeld defjne the overall quantjty and quality and ultjmate recovery of the gas resource. Geology varies between gas basins with implicatjons for exploratjon actjvity and productjon outcomes. The pilot stage appraisal of the southern Cooper coals supports a favourable combinatjon of key CSG parameters. Resource Concentratjon Productjvity Well Costs Resource concentratjon Drilling Net coal thickness “Fracability” Stjmulatjon & completjon Gas content / Permeability Connectjon Resource Concentratjon Productjve Potentjal EUR / Capex Potentjal Field Processing Gas Transport Field Reserve Potentjal Modular gas processing Domestjc (SA) PEL 96 Pipeline access Domestjc (East Coast) PEL 94 & PEL 95 Water handling Export PELA 640 Target Outcome Median Outcome Potentjal Outcome SCBGP Rankings Low Acceptable Good Very Good Excellent These are the key parameters that, in combinatjon, determine a low cost CSG producer Strike Energy Limited – 5th Annual Australian Domestjc Gas Outlook Conference 2017 10

SCBGP: Primary risks to low supply cost: Permeability Typically CSG reservoirs are commercialised where they are shallower than 1,000m due to the stress induced by the overburden and resultjng closure of cleats and natural fractures. In the Queensland fjelds, typical CSG reservoirs are from 300m to 1,200m. The southern Cooper coals are at depths of 1,600 to 2,100m but are in a low stress environment with residual permeability much higher than expected at these depths and a relatjve ease of efgectjve stjmulatjon which has already enabled maximum dewatering rates in excess of 1,000 bwpd. More over, current modelling indicates that development wells may produce up to 4MMscfd of raw gas from multj-zone Patchawarra completjons. Permeability (mD) <0.01 0.1 1.0 10 100 >1,000 Nappamerri Trough SCBGP Shale Gas Queensland CSG Low Acceptable Good Very Good Excellent The southern Cooper coals have very good productjve potentjal Strike Energy Limited – 5th Annual Australian Domestjc Gas Outlook Conference 2017 11

SCBGP: Primary risks to low supply cost: Thermal Maturity & Resource Concentratjon Typically increases with burial history (maximum depth). Southern Patchawarra Cooper coals have a Vitrinite refmectance of 0.6%-0.8%, which is within the gas generatjon window for inertjnite macerals. Inertjnite is a primary component of the southern Cooper coals. Gas in the southern Cooper coals has a combinatjon of biogenic and thermogenic sources. Typical Queensland CSG Southern Cooper Patchawarra Coals Resource Resource concentratjon concentratjon ~14Bcf/km 2 ~4-6Bcf/km 2 20m 8m 45m 65m / Low Acceptable Good Very Good Excellent Gas content and net coal thickness in the Southern Cooper coals exceptjonal resource concentratjon Strike Energy Limited – 5th Annual Australian Domestjc Gas Outlook Conference 2017 12

SCBGP: Reservoir Fundamentals The southern Cooper coals are thick, competent, consistent and contjnuous over tens of kilometres. The wells are cased and fracture stjmulated so that de-watering is from the target seams only and not from interbedded sands, as can be the case in the open-hole completjons of many CSG plays. Pilot test pressure data has confjrmed that de-watering actjvity is confjned to the southern Cooper coal seams and that the de-watering task is fjnite. Southern Cooper well logs Surat Basin well logs The fundamental drivers are difgerent for each CSG play Strike Energy Limited – 5th Annual Australian Domestjc Gas Outlook Conference 2017 13

SCBGP: Status of pilot appraisal The remaining key objectjve for the Klebb pilot is to confjrm the range of gas content of the Vu Coal at Klebb, which represents approximately 50% of the target Patchawarra coals. Flow testjng has positjvely refjned our understanding of the key play drivers. Further testjng will confjrm the range of gas content within the southern Cooper coals. Achievement of target pilot test fmow rate objectjves will confjrm excellent development potentjal. Current modelling indicates Klebb 3 Klebb 1 Klebb 2 development wells may produce up to 4 MMscfd of raw gas 3000 from multj-zone Patchawarra 170m 250m completjons. Pressure Reductjon 2000 Estjmated current pressure profjle afuer ~600Mbbls of de-watering 1000 Estjmated pressure profjle by end- June afuer a further 90Mbbls of de-watering 0 Consistent, efgectjve de-watering is the key to successful pilot test appraisal Strike Energy Limited – 5th Annual Australian Domestjc Gas Outlook Conference 2017 14