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PETSEC ENERGY An Exploration and Production Company in
The USA and China
Macquarie Bank Emerging Oil Corporate Day
Sydney, AustraliaJuly 11, 2007
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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 commodityprices 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.
FORWARD STATEMENT DISCLAIMER
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Petsec Energy LtdA growth exploration & production company
Operations in the Gulf of Mexico, USA andBeibu Gulf, China
2P Reserves at 31 December 2006 (Petsec estimate) USA: 38 Billion cubic feet of gas equivalentChina: 3.6 – 4.6 Million barrels of oil
Prospect InventoryUSA: 290 Bcf + 30 MMbbl oilChina: 5 – 8 MMbbl oil
2006 Cashflow of US$45 millionCurrent production of 20 MMcfe/dMarket capitalisation A$220 (9/7/07)
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Personnel - USA
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
Denis Swords – General Counsel and Secretary• 7 years experience as an exploration geologist• 15+ years experience as legal counsel for oil and gas companies• Master of Science in Geology; Juris Doctorate
Frank Steele – Land Manager Edward Blaise - Geologist• 25+ years landman experience 30+ years experience in the oil and gas industry• Certified Professional Landman Bachelor of Science in Geology
Nick Repar – Geophysicist Larry Teter - Geophysicist• 25+ years experience in the oil and gas industry 25 years as a geophysicist• Bachelor of Science in Applied Geophysics Bachelor of Science in Geology
Michael Welborn – Reservoir Engineer Team of 30• 30 years in the oil and gas industry• Bachelor of Science – Petroleum Engineering
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Gulf of Mexico
53 Offshore Leases 18 Held by production
Terrebone Parish
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Why the Gulf of Mexico
Infrastructure (One Land Owner - Regulator)1,141 Oil & Gas Fields - 1.6 MMBO & 10.1 BCF Per Day14,000 Miles of Pipeline
Majors exploring/developing deep water leaves opportunitiesfor proven shelf acreage
e.g. W&T ACQ KERR-McGEE SHELF 150 MMCFe/D & 330 BCFe
MMS ESTIMATE GOM SHELFRemaining Proved Reserves 4,870 MMBO & 21.5 TCF 777 MMBO & 15.4 TCFUnproved Reserves 3,361 MMBO & 9.0 TCF 201 MMBO & 3.1 TCF
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Gulf of Mexico - Lease Turnover
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Gulf of Mexico – Top 50 Producer
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Gulf of Mexico – Producing Assets
• Production 8.2 Bcfe (2006 year)• Operating Cashflow US$ 44.4m (2006 year)• Producing fields - Vermilion 258
- Main Pass 18/19- Mobile Bay 953/955
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Mobile Bay Development – Q4 ‘07
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Mobile Bay 952A Platform
• Acquisition:
- Mobile Bay 952A platform & pipelines
- Mobile Bay 955 lease, pipelines & 1producing well
- Mobile Bay 953 lease & 2 producing wells
• Host facility for production of discoveries at Mobile Bay 993, 994, 950, 951 & VK26.
• Consideration is assumption of abandonment liabilities
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Mobile Bay 993, 994, 950 & 951
4”
6”
6”
6”
MO 953-1 MO 953-3
MO 950-1Single Well
IP Rate 5 MMCFD
MO 993-1Single Well
IP Rate 6 MMCFD
MO 994 A2 Wells
MO994-2IP Rate 3 MMCFD
VK26-1IP Rate 3 MMCFD
MO 951-1Single Well
IP Rate 4.2 MMCFDMO 952 A
Host Platform40 MMCFD Capacity
MO 953-3Rate 5 MMCFD
Remote WellsIP Rate 21.2 MMCFD Total
6” Sales LineIP Sales Rate 26.2 MMCFD
Petsec Energy Petsec Energy
Petsec EnergyPetsec Energy
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Mobile Bay 873
6”
MO 829Single Well
IP Rate 9 MMCFD
Petsec Energy
Subsea Tie In To DIGP Sales Line
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Petsec - Focus Gulf of Mexico Joint Venture
• Exploration partnership targeting OCS lease sales• Complimentary strengths
– Petsec’s offshore operating expertise– Focus’s dedicated full-time prospect generation
• 50% interest in 33 OCS lease blocks acquired mid-2006– Continually being high graded – No mandatory commitment to drill– 3D seismic in house
• JV to continue in 2007 & 2008 with a 35% W.I
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Petsec - FocusJoint Venture Current Status
7 wells drilled to date• 6 successful – Mobile Bay• 1 dry hole – Eugene Island 310• Petsec expected reserves 59 BCFE gross, 19.6 MCFE net• F&D costs to date including Eugene Island 310 - $1.76/mcfe
29 currently identified prospects remaining• Expect to drill approximately 60% over next 3 – 4 years• Petsec risked expected reserves 165 BCFE• Future capital - $120 MM for drilling & $210 MM for development• Projected F&D costs $2.00/mcfe
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0
20
40
60
80
100
120
140
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13
MM
cfe/
day
Vermilion 258 MP 19/18 Mobile China Onshore Focus Gas Focus Oil
Petsec – Indicative Production ProfileExisting Reserves + US Prospects
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Gulf Coast - Moonshine Exploration
• West bank of Mississippi River,50 miles west of New Orleans
• 94 square mile area, only 25% cover with 2D seismic, no previous 3D seismic
• Known productive area- 340 Bcfe gas, 7.3 MMbbl oil
• 3D seismic programme completed in August 2005
• Drilling commenced April 2007
36 - 37.5% NRIOperator
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Moonshine Drilling
•Bowie Lumber # 1 well encountered tight gas and not completed•Rig released and seismic to be reprocessed •Drilling potentially to resume in 4th qtr of 2007
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Terrebonne Parish- AVO Prospect Package
A
A’
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China – Beibu Gulf
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China 6-12 South Oil Discovery
• 320 feet net hydrocarbon pay, including 270 feet net oil
• Oil extends down dip beyond structural closure
• 70-100 MMbbl OIP
• 30 - 50% oil recovery
• Appraisal flow-test 5,750 boe/day
• Updip side-track - cores
• Downdip side-track - downdip potential
• Estimated reserves 6.12/6.12.S Area19-37 MMbbl2.3-4.5 MMbbl net to Petsec
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China 6.12/6.12 South Oil Development
Development Options• WHPP – FSO• WHP - FPSO• Production capacity 20,000-25,000 bopd• Capacity to tie 12.8W/E & 12.2/12.3 into
6.12S facility• Development Timing
– Feasibility Study 1Q 2007– Overall Development Plan
mid 2007– Final Investment Decision
3Q 2007– Start development 4Q 2007– Production 1st half 2009
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China 6.12 Area Exploration– 4 wells Q4
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Financial Performance 2002-2006
02
46
810
2003 2004 2005 2006
ProductionBcfe
0
15
30
45
60
75
2003 2004 2005 2006
Net RevenueUS$ Million
0
10
20
30
40
50
2003 2004 2005 2006
EBITDAXUS$ Million
0
10
20
30
40
50
2003 2004 2005 2006
Net Operating CashflowUS$ Million
3 yr CAGR 33%
3 yr CAGR 35%
3 yr CAGR 22%
3 yr CAGR 41%
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Operating Margins 2002 – 2006
0
2
4
6
8
2003 2004 2005 2006
Gas Price ReceivedUS$/Mcfe
0
0.5
1
1.5
2
2003 2004 2005 2006
Total Operating ExpensesUS$/Mcfe
0
2
4
6
2003 2004 2005 2006
EBITDAX (Cash Operating Margin)US$/Mcfe
0
0.6
1.2
1.8
2.4
3
2003 2004 2005 2006
Finding & Development Costs(3yr average - 2P Reserves)US$/Mcfe
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2007 Outlook
• Development Main Pass 18 gas China 6.12/6.12 South Mobile Bay gas
• Exploration US 20 - 40 Bcfe gas China 4 - 6 MMbbl oil- GOM 4 - 6 wells - China 4 - 6 wells- Onshore 4 - 6 wells
• Cash on hand US$ 33 million (April 30 2007)
• Production 7.5 - 8.5 Bcfe
• Cashflow US$ 40 - 45 million
• Capex US/China Exploration US$ 30 - 35 millionDevelopment US$ 28 million
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0
10
20
30
40
50
60
1980 1990 2000 2005 2010 2020 2030
Natural Gas
Petroleum
Nuclear
Coal
Nonhydro renewables
Hydropower
History
quadrillion Btu
Energy Consumption by Fuel1980-2030
Source: EIA Annual Energy Outlook 2007
Projections
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0
20
40
60
80
100
120
140
1980 1990 2000 2005 2010 2020 2030
Net imports
Consumption
Production
ProjectionsHistory
Total Energy Production & Consumption 1980-2030
quadrillion Btu
Source: EIA Annual Energy Outlook 2007
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Natural Gas Production, Consumption,and Imports
0
5
10
15
20
25
30
1960 1970 1980 1990 2000 2010 2020 2030
(trill
ion
cubi
c fe
et 16%21%Net ImportsConsumption
ProductionNatural Gas Net Imports, 2005 and 2030
(trillion cubic feet)
3.0
0.60.9
4.5
01234567
Pipeline Liquefied Natural Gas
20052030
Source: EIA Annual Energy Outlook 2007
20.5 Tcf
26.1 Tcf
History Projections
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Conclusion
• Successful explorer• Strong growth in reserves/production/cashflow• High profit margin reserves• Strong cash flow• Large prospect inventory provides basis for
continuing growth• Experienced management team• Exposure to two recognised regions