Excellence in Oil and Gas 2008 26-27 May 2008
Forward Statement Disclaimer 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. Although the company believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those included in the forward-looking statements include the timing and extent of changes in commodity prices for oil and gas, the need to develop and replace reserves, environmental risks, drilling and operating risks, risks related to exploration and development, uncertainties about the estimates of reserves, competition, government regulation and the ability of the company to meet its stated business goals. All references to dollars in this presentation are to US currency, unless otherwise stated.
Petsec Energy A growth exploration & production company • Operations in Gulf of Mexico / Gulf Coast, USA and Beibu Gulf, CHINA • USA - Estimated 2008 Production: ~15 Bcfe gas - Estimated 2008 cashflow: ~US$85 million ($5.70/Mcfe margin) - Estimated reserves: ~48 Bcfe gas (proved & probable,1/1/08) • CHINA - Estimated 2P reserves: 14-16.5 MMbbl oil (7-8 MMbbl if CNOOC back-in for 51%) - Developing: 7-9 MMbbl oil (3.4-4.5 MMbbl if CNOOC back-in for 51%) - Production: Early 2010
Location of Operations
Market Information • Australian Stock Exchange listed: Symbol: PSA • Shares on Issue 154.2 million • Share Price A$1.18 per share (22 May 2008) • 52 week high A$1.97 per share • 104 week high A$3.46 per share • Market capitalisation A$182 million • Enterprise value A$232 million
Market Capitalisation A$182 million Share Price A$1.18 (22/05/08) 52 week 6.12 South Oil High $1.97 Discovery A$ Low $0.64 3.50 Placement 15 million shares @ $2 Placement 11.5 million Mobile Bay shares @ $2.40 Production Main Pass 19 commences Vermilion commences 3.00 production resumes US Acquisition Settles 2.50 Main Pass 19 #2&3 wells success Hurricanes Katrina & Rita 2.00 Drilling Success Main Pass 19 #1 Moonshine success 1.50 Main Pass 18 G-6 Mobile Bay success 6 Successes 1.00 Vermilion 257 Dry Hole 0.50 Main Pass 19 G-7, G-4, G-5 success 0.00 M ay-05 Aug-05 Nov-05 Feb-06 M ay-06 Aug-06 Nov-06 Feb-07 M ay-07 Aug-07 Nov-07 Feb-08 M ay-08 ASX Symbol: PSA Issued shares: 154.2 million OTC Symbol: PSJEY.PK 1 ADR: 5 Ordinary Shares
Senior Management Terry Fern – Chairman & CEO Over 30 years in international petroleum & minerals exploration, development & financing • Bachelor of Science degree • Exploration Geophysics & Natural Resource Investment experience • Director of OceanaGold Corporation Ross Keogh – President 25 years experience in the oil & gas industry Bachelor of Economics degree Michael Radabaugh – Vice President of Business Development and Planning 25+ years experience in petroleum exploration and production Bachelor of Science in Civil Engineering (Team of 30 Oil and Gas Staff at offices in Lafayette, LA & Houston, TX) Fiona Robertson – CFO Over 25 yrs experience in resource finance & banking Craig Jones – GM Corporate & Company Secretary Over 25 yrs corporate finance experience, FCPA
Shareholder Base PSA Directors & Mgt, 17% Australian Institutions, 12% Retail, 53% International Institutions, 13% Brokers & Custodians, 5% PSA Directors & Mgt Australian Institutions International Institutions Brokers & Custodians Retail
Objectives and Strategy Objectives: • Consistent Growth in Profitable Reserves • Build a significant mid-tier E&P company • Funded principally by internally generated cashflow Strategy: US Gulf of Mexico / Gulf Coast - Gas, water depths up to 1200 ft • Exploration: Low to moderate risk, high profit margin, high success rate, rapid development, early return of capital • Acquisition: Producing reserves with exploration potential China / South East Asia - Oil • Exploration: Moderate risk close to existing reserves, reasonable infrastructure • Acquisition: Developed & undeveloped reserves, large licence areas with high exploration potential
Financial Performance 2003 – 2007 Production Bcfe 10 8.1 8.2 8 2007 4 Yr CAGR 6 4 • Production 8.1 Bcfe 16% 2 0 2003 2004 2005 2006 2007 Net Revenue US$ Million 75 64 59.2 60 45 • Revenue US$64 million 26% 30 15 0 2003 2004 2005 2006 2007 EBITDAX US$ Million • EBITDAX US$46 million 23% 50 46 45.3 40 30 20 • Underlying 10 Earnings US$17 million 0 2003 2004 2005 2006 2007
Operating Margins /Mcf Average Gas Equivalent Price Received per Mcfe US$7.93 8.00 2007 6.00 • Gas Price Received: US$7.93 4.00 • Total Operating Cost: US$2.28 2.00 0.00 • Cash Operating Margins: US$5.69 2003 2004 2005 2006 2007 Margin = 72% Total Operating Expense (LOE & GG&A) per Mcfe US$/Mcfe 3.00 US$2.22 2.50 2.00 US$1.35 1.50 1.00 US$0.87 0.50 March 2008 Quarter 0.00 2003 2004 2005 2006 2007 • Gas Price Received: US$8.77 LOE GG&A Cash Operating Margins • Total Operating Costs: US$1.43 US$/Mcfe 7.00 US$5.75 6.00 • Cash Operating Margins: US$7.34 5.00 4.00 Margin = 84% 3.00 2.00 1.00 0.00 2003 2004 2005 2006 2007
2003 – 2007 CAPEX, F&D Costs Exploration, Development & Acquisition Expenditure US$ Million 160 140 • EBITDAX US$170 million 120 US$104m 100 80 • Exploration US$98 million 60 40 US$20m 20 US$22m 0 2003 2004 2005 2006 2007 • Development US$86 million Exploration Development Acquisition Finding & Development Costs US$/Mcfe 3 yr Average on Petsec 2P Reserves • Acquisitions US$121 million 4.50 4.00 3.50 3.00 • F&D 3yr average $4.10/Mcfe 2.50 2.00 1.50 1.00 0.50 0.00 2003 2004 2005 2006 2007
Consistent Growth of Reserves 2002 – 2007 CAGR 31% Wells Drilled/Successful Number of wells 12 10 8 • USA 6 25 successes from 32 drilled - 78% success 4 2 • CHINA 0 3 (+2 sidetracks) successes from 5 wells 2002 2003 2004 2005 2006 2007 drilled - 60% success Successful Unsuccessful Proved and Probable Reserves - Year End Bcfe 69.6 80 60 • 2007 Year End Reserves 69.6 Bcfe** 48.1 Bcfe Gas, USA 40 3.5 Mmbbl Oil, China** 20 (assuming CNOOC back-in for 51%) 0 2002 2003 2004 2005 2006 2007 • Reserve additions of 103 Bcfe ** Proved and Probable Reserves* Bcfe 80 70 ** excludes 3.5-4.5MMbbl of recoverable oil 60 discoveries from 6.12 upside, 12.8 East, 12.2,12.3 50 in China, not yet formally booked to reserves. 40 (Assuming CNOOC back-in 51% interest) 30 20 10 0 2002 2003 2004 2005 2006 2007
US Exploration Potential Portfolio of • 61 Gulf of Mexico Leases (~300,000 acres) 18 held by production 39 undrilled leases • 6 Onshore Areas & 4 Onshore fields • >40 Prospects/Leads • Reserves potential ~300 Bcfe net to Petsec
Petsec Energy Value Range of Broker values – US Reserves A$1.40 - A$1.57 (A$216 - A$242 million) – China Reserves A$0.32 - A$0.73 (A$ 49 - A$112 million) – Exploration / Other A$0.03 - A$1.32 (A$ 4 - A$203 million) – Less Net Debt A$0.50 - A$0.55 (A$ 76 - A$ 84 million) Total A$1.25 - A$3.07 (A$193 - A$473 million) Average of A$2.01
USA - Gulf of Mexico Interests 61 Offshore Leases, 6 Onshore Areas Reserves 48 Bcfe (1/1/08), Prospect/Lead Inventory ~300 Bcfe
Recent Lease Sale Results • Emphasis on larger prospects • OCS Sale 205 – October 2007 – 5 Blocks won and awarded • OCS Sale 206 – March 2008 – 3 Blocks won, two awarded to date Lead Net Potential Bcfe Type Eugene Island 394 (54%) 8 - 12 Stratagraphic Amplitudes in 388’ Water Depth Vioska Knoll 27/Mobile 955 2 - 5 Small Shallow Amplitudes near existing (35%) Mobile Area Production Vermilion 353 (54%) 10 - 15 Amplitude Play in 230’ Water Depth Green Canyon 21 (54%) 20 - 30 Oil Play offsetting nearby production in 771’ Water Depth East Cameron 102 (35%) 8 - 12 Amplitudes in Shallow Water West Cameron 631/636 (100) 30 - 40 Larger deeper play in 330’ Water Depth
US Exploration Potential Portfolio of • 61 Gulf of Mexico Leases (~300,000 acres) 18 held by production 39 undrilled leases • 4 Onshore fields • >40 Prospects/Leads • Reserves potential ~300 Bcfe net to Petsec
2008 Production • Estimated 2008 Production: ~ 15 Bcfe (up from 8.1 Bcfe in 2007) • Estimated 2008 operating cashflow: ~US$85 million @ US$5.70/Mcfe margin • Producing fields - Vermilion 258/244 - Main Pass 18/19/20/270 - Mobile Bay 873/950/951/952/993/994 - Chandeleur 31/32 - Four Onshore Fields Vermilion 258 Main Pass 19 Mobile Bay 952A Main Pass 20 Main Pass 270 Chandeleur 31 4 Onshore Fields Onshore Onshore Humphreys Humphreys South Sunrise South Sunrise South Thornwell South Thornwell Lapeyrouse Lapeyrouse MP / CA Area NEW ORLEANS NEW ORLEANS NEW ORLEANS NEW ORLEANS MP 20 CA 31 MP 270 VR / SMI Area VR 272/SMI 102 VR 171/SMI 15 EI/SS Area EI 110
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