AWE`s 2012 AGM Presentation

AWE Limited
Annual General Meeting
22 November 2012
Opening
Welcome
Introduction of directors
Bruce Phillips, Chairman
Bruce Clement, Managing Director
3
Introduction of directors
David McEvoy
Andy Hogendijk
4
Introduction of directors
Kenneth Williams
Nick Jukes
5
Introduction of directors
Vijoleta Braach-Maksvytis
Neville Kelly, Company Secretary
6
Today’s formal business
Notice of meeting
Accounts and reports
Chairman’s address
Managing Director’s report
Questions
Resolution 1 - Remuneration report
Resolution 2(A) - re-election of Bruce Phillips as a director
Resolution 2(B) – re-election of Andy Hogendijk as a director
Resolution 2(C) – election of Raymond Betros as a director
Resolution 3 - Issue of Cash Share Rights
Resolution 4 - adoption of changes to constitution
Resolution 5 – adoption of changes to constitution (proportional
takeover provisions)
Closure
7
Chairman’s address
AWE relative share price performance
AWE Relative Share Price Performance
as at 20 November 2012
160
AWE
Energy Index
140
120
100
80
60
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
9
Chairman’s address
Tui off-take 2012
10
Managing Director’s report
Disclaimer
This presentation may contain forward looking statements that are subject to risk factors
associated with the oil and gas businesses. It is believed that the expectations reflected
in these statements are reasonable but they may be affected by a variety of variables
and changes in underlying assumptions which could cause actual results or trends to
differ materially, including but not limited to: price fluctuations, actual demand, currency
fluctuations, drilling and production results, reserve estimates, loss of market, industry
competition, environmental risks, physical risks, legislative, fiscal and regulatory
developments, economic and financial market conditions in various countries and
regions, political risks, project delay or advancement, approvals and cost estimates.
This presentation may also contain non-IFRS measures that are unaudited but are
derived from and reconciled to the audited accounts. All references to dollars, cents or $
in this presentation are to Australian currency, unless otherwise stated.
The reserve and resource information contained in this report is based on information
compiled by David Gaudoin (General Manager, Exploration and Geoscience) and Ian
Palmer (General Manager Development). Mr Gaudoin is a petroleum geologist, holds a
Masters Degree in Petroleum Geology, and has 22 years experience in petroleum
exploration. Mr Palmer holds a Bachelor Degree in Engineering and has 31 years
experience in the practice of petroleum engineering. Both have consented in writing to
the inclusion of this information in the format and context in which it appears.
12
The year in review – FY 2011-12
Highlights
Acquired AAL and Anambas PSCs in Indonesia
Completed sale of 11.25% of BassGas Project
Achieved 31% growth in total 2P Reserves and 2C Resources
Record Sugarloaf AMI production and development in USA
Good progress on unconventional gas project in Perth Basin
Production and operational performance from core assets
Established $300 million multi-currency bi-lateral loan facility
Special dividend of 5 cents per share paid
Disappointments
Implementation of BassGas MLE project
Substantial progress achieved despite BassGas challenges
13
Building a sustainable business
AWE’s Sustainability Principles
2011-12
Achieve a healthy and safe workplace with zero harm to people
Minimise the impact of our business activities on the environment
Benefit the local communities in which we operate
Build a diverse, engaged and motivated team
Deliver superior, sustainable returns for shareholders
Actively working with stakeholders and partners on safety initiatives
14
Financial Performance
for the 2011-12 financial year
Key financial results (at 30 June 2012)
Production of 4.7 million BOE
Sales revenue of $298.4 million
Field EBITDAX of $188.7 million
Statutory NPAT loss of $66.5 million
Underlying NPAT of $14.8 million
Operating cash flow after tax (and before exploration
expenditure) of $148.4 million
Cash at year end of $42.8 million
Undrawn facilities at year end of $284.3 million
Solid financial and operating performance
16
P&L analysis
P&L items
$ million
Sales revenue
298.4
Production costs and royalties
(109.7)
Field EBITDAX
188.7
Amortisation
(80.5)
Exploration expense
(36.5)
Asset impairments
Other income / (expenses)
Tax
(138.2)
3.4
(3.4)
Statutory NPAT
(66.5)
Adjusted for BassGas impairment
Adjusted for other non-recurring items
Underlying NPAT
96.8
(15.5)
14.8
Results achieved on production of 4.7 million BOE
17
P&L analysis – on a BOE basis
P&L items
$ million
$ per BOE
298.4
63.5
(109.7)
(23.3)
Field EBITDAX
188.7
40.1
Amortisation
(80.5)
(17.1)
Exploration expense
(36.5)
(7.8)
(138.2)
(29.4)
3.4
0.7
(3.4)
(0.7)
(66.5)
(14.1)
96.8
20.6
(15.5)
(3.3)
14.8
3.1
Sales revenue
Production costs and royalties
Asset impairments
Other income / (expenses)
Tax
Statutory NPAT
Adjusted for BassGas impairment
Adjusted for other non-recurring items
Underlying NPAT
Underlying NPAT driven by operating costs, amortisation and exploration expense
18
Reserves and Resources
AWE 2P Reserves and 2C Resources (as at 30 June 2012)
200
Sugarloaf
180
Anambas and Lengo
million BOE
160
140
Growth
Opportunities
Australian Gas
120
Australia & NZ Liquids
100
Ande Ande Lumut
80
60
40
2P Reserves - Gas
2P Reserves - Gas
20
2P Reserves - Liquids
2P Reserves - Liquids
0
Note: Does not include Perth Basin shale gas
2P
2P+2C
AWE is well positioned to benefit from anticipated liquids price growth
19
Building a growth platform
Production outlook - 2P Reserves
12
11
10
9
million BOE
8
7
Production
Range
6
5
2P Reserves
4
3
2
Note: At June 30, based
on $100 per bbl oil price,
indicative model only and
not formal company
guidance
1
2012
2013e
2014e
2015e
2016e
2017e
2018e
2019e
Current 2P Reserves provide a solid platform for growth
2020e
20
Building a growth platform
2P production + 2C AAL (50%) and Sugarloaf
12
11
10
9
million BOE
8
7
2C AAL (50%),
Sugarloaf
6
5
4
Production
Range
3
2P Reserves
2
Note: At June 30, based
on $100 per bbl oil price,
indicative model only and
not formal company
guidance
1
2012
2013e
2014e
2015e
2016e
2017e
2018e
2019e
2020e
AAL (50%) has the potential to deliver considerable production momentum
21
Building a growth platform
12
2P production + 2C AAL (50%), Sugarloaf + Lengo, Trefoil,
Senecio
11
10
2C Trefoil,
Lengo, Senecio
9
million BOE
8
2C AAL (50%),
Sugarloaf
7
6
Production
Range
5
4
2P Reserves
3
2
Note: At June 30, based
on $100 per bbl oil price,
indicative model only and
not formal company
guidance
1
2012
2013e
2014e
2015e
2016e
2017e
2018e
2019e
Additional opportunities to generate further production upside
2020e
22
Capex and operating cash flow
Development & Exploration expenditure estimates (AAL 50%)
400
350
300
$ million
250
200
Exploration $50m/year
(est)
Capex Midpoint (est)
150
100
Note: At June 30, based
on $100 per bbl oil
price, indicative model
only and not formal
company guidance
50
2013e
2014e
2015e
2016e
2017e
Capital expenditure estimates include BassGas, Sugarloaf and AAL
23
Capex and operating cash flow
Development & Exploration expenditure and Operating Cash
Flow estimates (AAL 50%)
400
350
300
Cash Flow Range
$ million
250
Cash Flow (est)
200
Exploration $50m/year
(est)
150
Capex Midpoint (est)
100
Note: At June 30, based
on $100 per bbl oil
price, indicative model
only and not formal
company guidance
50
2013e
2014e
2015e
2016e
2017e
Healthy cash flows underpin funding requirements
24
Capex and operating cash flow
Development & Exploration expenditure and Operating Cash
Flow estimates (AAL 50%)
400
350
Sale of 50% AAL,
book value
300
Cash Flow Range
$ million
250
Cash Flow (est)
200
Exploration $50m/year
(est)
150
Capex Midpoint (est)
100
Note: At June 30, based
on $100 per bbl oil
price, indicative model
only and not formal
company guidance
50
2013e
2014e
2015e
2016e
2017e
Funding requirements matched by operating cash flow and 50% AAL sale
25
Asset Review
Operations, Development and Exploration
Focused on key energy markets
Based in Australia, AWE is focused on delivering growth in key energy markets
27
Committed to value creation
Deliver base
business
Maximise
near-field
opportunities
Focus on core
assets & optimise
production
performance
Focus on delivery of
opportunities near
to existing
infrastructure
BassGas
• Additional Tui in-field
• Restart production
opportunities under
review
• MLE compression
• Trefoil development
• MLE drilling planning
Cliff Head
• Workover
opportunity
Develop
opportunities in
New Energy
Grow through
exploration &
acquisitions
Utilise skills from
Sugarloaf and Perth
Basin initiative
Identify and pursue
selective growth
assets
• Sugarloaf AMI – drilling
of over 35 wells in 2H
2012
• Progress Ande Ande
Lumut development
in Indonesia
• Perth Basin tight gas
and shale gas testing
program
• Indonesia shale gas
studies progressing
• Additional
unconventional and
emerging opportunities
• Pursue new ventures
& acquisitions in New
Zealand, Australia &
Asia
• Lengo and Anambas
exploration/appraisal
in Indonesia
Continued focus on strategic initiatives to grow shareholder returns
28
Strategic growth initiatives
FY 2012-13
Managing portfolio – sale / farmout of up to 50% of AAL
Perth Basin – Senecio tight gas feasibility study and shale gas testing
Bulu PSC – Lengo-2 appraisal well in 1H 2013
Sugarloaf – tighter well spacing and accelerated drilling campaign
FY 2013-14
Anambas exploration / appraisal
BassGas MLE delivery and Upper EVCM potential
AAL Final Investment Decision
Perth Basin unconventional gas commercialisation
Tui – potential in-fill drilling
Longer term
Trefoil commercialisation
Indonesian shale
29
Enhanced core asset performance
Cliff Head oil field, AWE 57.5%
Otway Basin, AWE 25%
Tui oil field, AWE 42.5%, Operator
Maximising returns from quality assets
30
BassGas – MLE update
Accommodation module
installed
Production restarted in
October and current rate
approximately 50-60 TJ/day
Compression lift and
development drilling now
planned for summer of
2013/14 and 2014/15
Upside potential in Upper
EVCM recognised
Longer term development
potential in Trefoil
Yolla Platform, BassGas project, AWE 46.25%
Upside reserves and resource potential in strengthening east coast gas market
31
Sugarloaf AMI
Record production growth in 2012
Upside potential being actively pursued
− Tighter well spacing
− Austin Chalk above Eagle Ford shale
− Deeper shale plays
10% working interest in Sugarloaf AMI
Recent Sugarloaf deals (non-AWE) demonstrate significant increase in value
32
Perth Basin tight gas
Senecio-2 well, 22 August 2012, AWE 50%, Operator
Arrowsmith-2 well, 31 July 2012, AWE 44.25%
Offers significant reserves potential, possible 50-100 Bcf recoverable gas field at Senecio
33
Perth Basin shale gas
Hydraulic stimulation spread,
Arrowsmith-2 well, 2012, AWE 44.25%
Multiple shale zones being evaluated in Arrowsmith-2 well
34
Ande Ande Lumut – project status
AAL Development Concept, NW Natuna PSC, AWE 100%, Operator
Source: Genting POD
FPSO Concept, Source: Genting POD
76 million barrels of recoverable oil
Approved POD, WHP with approximately 40 development wells, leased FPSO
$600 million development for WHP and drilling, AWE Operator
Substantial growth project can be funded from balance sheet & future operating cash flows
35
Guidance for FY 2012-13
Item
2012-13
Guidance
2011-12
Actual
Production (million BOE)
4.9 to 5.3
4.69
Revenue ($m)
270 to 300
298.4
Development expenditure ($m)
150 to 180
171.5
50
39.2
Exploration expenditure ($m)
Revenue guidance is based on A$100 per barrel Brent oil price and AUD/USD exchange rate of $1.00
Production guidance for FY 2012-13 exceeds result for previous year
36
FY 2012-13 goals
Corporate & Operational
Sustainability objectives
Production 4.9 – 5.3 million BOE
Revenue $270 – $300 million
Strategic
Increased operatorship through AAL and Perth Basin
Enhanced technical and commercial performance
Manage portfolio balance
Project
AAL selldown / farmout by mid 2013, ready for FID in 2H 2013
Sugarloaf development drilling / Reserves growth opportunities
Perth Basin – Senecio tight gas feasibility study and shale gas testing
Lengo-2 appraisal well in 1H 2013
AWE has repositioned itself for a sustained period of growth
37
Accounts and reports
Questions?
Remuneration report
Resolution 1, adopt remuneration report
Remuneration report
Resolution 1, adopt remuneration report
• This resolution is an advisory resolution
Proxies for
300,403,166
Proxies against
3,922,707
Proxies undirected
2,376,035
Proxies abstained
698,485
40
Re-election and election of
directors
Election of directors
Resolution 2(a)
That Mr Bruce Phillips be reelected as a director of the
Company
42
Election of directors
Resolution 2 (a), that Mr Bruce Phillips be re-elected as a director of
the Company
• This resolution is an ordinary resolution
Proxies for
294,290,975
Proxies against
10,183,821
Proxies undirected
2,434,607
Proxies abstained
490,990
43
Election of directors
Resolution 2(b)
That Mr Andy Hogendijk be reelected as a director of the
Company
44
Election of directors
Resolution 2 (b), that Mr Andy Hogendijk be re-elected as a director of
the Company
• This resolution is an ordinary resolution
Proxies for
300,136,884
Proxies against
4,209,761
Proxies undirected
2,443,719
Proxies abstained
610,029
45
Election of directors
Resolution 2(c)
That Mr Raymond Betros be
elected as a director of the
Company
46
Election of directors
Resolution 2 (c), that Mr Raymond Betros be elected as a director of
the Company
• This resolution is an ordinary resolution
Proxies for
302,857,876
Proxies against
1,568,522
Proxies undirected
2,444,945
Proxies abstained
525,850
47
Issue of Cash Share Rights
Issue of Cash Share Rights
Resolution 3 (a), regarding the issue of 331,474 cash share rights to
the Managing Director, Mr Bruce Clement.
To be tested against performance related vesting conditions at 30
June 2015.
This resolution involves the issue of 165,737 Absolute TSR cash
share rights and 165,737 Relative TSR cash share rights.
49
Issue of Cash Share Rights
Resolution 3 (a), regarding the issue of 331,474 cash share rights to
the Managing Director, Mr Bruce Clement.
• This resolution is an ordinary resolution
Proxies for
299,675,462
Proxies against
4,603,236
Proxies undirected
2,492,750
Proxies abstained
627,031
50
Adoption of changes to
constitution
Adoption of changes to constitution
This resolution is a special resolution
Resolution 4, regarding changes to the Company’s constitution (excluding
Proportional Takeover Provisions).
The Directors propose a number of changes to broadly bring the
Company’s constitution into line with current law and standards
of modern corporate governance.
The majority of the changes are administrative in nature and on
that basis, will have no significant impact on shareholders.
52
Adoption of changes to constitution
Resolution 4, regarding changes to the Company’s constitution
(excluding Proportional Takeover Provisions).
• This resolution is a special resolution
Proxies for
291,706,344
Proxies against
12,632,431
Proxies undirected
2,451,490
Proxies abstained
610,128
53
Adoption of changes to
constitution
(Proportional takeover provisions)
Adoption of changes to constitution
(Proportional takeover provisions)
This resolution is a special resolution
Resolution 5, regarding changes to the Proportional Takeover Provisions of the
Company’s constitution.
As the proportional takeover provisions in the Company’s
constitution have not been reviewed for more than three years,
they have expired and are deemed omitted from the constitution
by law.
This proposed change seeks to re-insert the proportional
takeover provisions in the same form as the previous provisions.
55
Adoption of changes to constitution
Resolution 5, regarding changes to the Proportional Takeover
Provisions of the Company’s constitution.
• This resolution is a special resolution
Proxies for
302,440,954
Proxies against
1,863,056
Proxies undirected
2,455,314
Proxies abstained
641,069
56
Closure
Thank you for your attendance
Download and view AGM presentation at
www.awexplore.com
AWE thanks you for your attendance today
57