awe limited for personal use only - asx · awe increases waitsia 2p reserves by 80% to 820pj gross...

THE WAITSIA GAS FIELD

Presentation to the Petroleum Club

of WA

27 March 2018

SUZANNE HUNT

General Manager WA Assets and Engineering

AWE Limited

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DisclaimerDisclaimer

• 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 contains 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.

Reserves and Contingent Resources

The Reserves and Contingent Resources in this presentation are based on and fairly represent information and supporting documentation prepared by and under

the supervision of qualified petroleum reserves and resource evaluators Dr. Suzanne Hunt, AWE General Manager WA Assets and Engineering. Dr. Hunt, a

Petroleum Engineer with a Ph.D. in Geomechanics, is a member of the Society of Petroleum Engineers and has over 20 years’ experience in the petroleum sector in

geoscience, field development planning, reserves estimation, reservoir production and facilities engineering. Dr Hunt has consented in writing to the inclusion of

this information in the format and context in which it appears.

AWE reserves and contingent resources are estimated in accordance with the following:

• SPE/AAPG/WPC/SPEE Petroleum Resources Management System guidelines of November 2011;

• ASX Disclosure rules for Oil and Gas Entities, Chapter 5; and

• ASX Listing Rules Guidance Note 32.

AWE applied deterministic methods for reserves and contingent resource estimation for all assets. The reserves were estimated at the lowest aggregation level

(reservoir) and aggregated to field, asset, basin and company levels. Estimated contingent resources are un-risked and it is not certain that these resources will be

commercially viable to produce.

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Agenda

1 AWE Overview

2 The Waitsia Discovery Recap

3 Appraisal Well Results: Rate and Reserve Upgrades

4 Field Development Planning

5 Stakeholder and Community

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AWE Overview

Need

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HY18 in Review

Western

Australia –

Waitsia

• Three appraisal wells flow tested; delivered outstanding flow test results and significantly enhanced 2P

Reserves

• Waitsia 2P Reserves increased by 80% to 820PJ (gross) following independent review.

• FEED tender submissions received with evaluation continuing.

• Mitsui Bid Implementation Deed prohibits AWE from signing additional Gas Sales Agreements (GSA).

South East

Australia –

BassGas &

Casino

• BassGas production increased by 25% over the previous half-year with further potential to improve

production rates.

• GSA signed with Origin to purchase 100% of Casino gas production from March to December 2018 to

be processed under a new agreement at the Iona Gas Plant.

• Casino-5 shut-in with a workover ongoing.

Indonesia –

Ande Ande

Lumut

• Strengthening oil price is positive for a future AAL development.

• Indonesian Government exercises its right to assign 10% (5% each from Santos and AWE) to a localentity – a sign that the Indonesian Government is keen for the project to progress .F

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Reserves and ResourcesWAITSIA 2P RESERVES INCREASED BY 80% TO 820PJ GROSS (NET 410PJ TO AWE)

• Waitsia-2, -3 and -4 appraisal well data and flow

test results underpinned a significant uplift in

Reserves and Contingent Resource estimates.

• Waitsia now ranked in the top 5 largest gas fields

ever discovered onshore Australia1 with gross 2P

Reserves plus 2C Resources of 910 PJ.

• Significant prospective resource targets identified

within AWE’s nearby existing onshore Perth Basin

permits may result in future resource upgrades

and tie-in opportunities to the Waitsia field.

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Gas80

Liquids2

Western Australia70

South East Australia12

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Openingbalance as at30 June 2017

Produced Revisions - 2PDeveloped

Revisions - 2PUndeveloped

- Waitsia

Closingbalance as at31 December

2017

Product mix Asset mixM

MB

OE

2P Reserve movements - HY18

1Source: Based on IHS Markit International Exploration and Production database ‘Australian Onshore Conventional Fields Discovery History (1900-2014)’, applying AWE estimates of Reserves

as at 31 December 2017. AWE discovered the Waitsia field in 2014.

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The Waitsia Discovery Recap

1964 - Yardarino discovery

2014 Senecio-3 - Waitsia Discovery Well

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AWE Acreage in WA

• AWE has a substantial acreage position in the onshore north

Perth Basin.

• AWE has an interest in a number of gas and oil production

facilities (Xyris, Dongara, Mt Horner, Beharra Springs,

Woodada).

• AWE’s acreage has access to both major pipeline (Dampier to

Bunbury Natural Gas Pipeline (DBNGP), Parmelia Gas Pipeline)

to southern markets.

• AWE actively markets gas to customers.

PRIME LOCATION, BROAD FOOTPRINT

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Waitsia FundamentalsWAITSIA GAS PROJECT (AWE 50%, OPERATOR)

Permit: Production Licence L1/L2

Location: The Waitsia gas field is located on pastoral land

in the Shire of Irwin, about 14.5 kilometres east

of Dongara and 367 km north of Perth.

Facilities: Xyris currently operational and processing gas

from Waitsia. Providing data as part of the

extended production test and in addition

delivering gas to sales.

Xyris Production FacilityAWE has basin-dominant position in the onshore

northern Perth Basin

Exploration and Appraisal success at Waitsia, Senecio, Irwin.For

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The Waitsia Discovery

The Senecio-3 well targeted the Dongara-Wagina

sands. Below this intersection, the team observed

further shows of gas – drill bit was in good condition,

well was under budget – decision made to continue.

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Field Appraisal and Reservoir Structure

Date Activity Result

2005 Senecio-1/2 • Dongara TIGHT GAS discovery

2013 Irwin 3D • Improved mapping – Senecio 1/2 in local fault zone

2014 Senecio-3 • Dongara better quality reservoir (not tested)

• Well deepened due to very high gas shows

• Kingia/High Cliff CONVENTIONAL GAS discovery

• Testing confirmed high flow potential

2015

2017

Irwin-1 • Dongara TIGHT GAS discovery (not tested)

• Kingia secondary target wet as expected but good quality

reservoir

Waitsia-1 • Confirmed lateral extent of Kingia/High Cliff reservoir

• Defined GWC

• Testing further confirmed high flow potential

Waitsia-2 • Confirmed field extension to south (tested in 2017)

Waitsia-3 • Confirmed southern extension and improvement in quality of

the Kingia

Waitsia-4 • Kingia intersected, further improvement in reservoir quality and

thickness

Less than two years from discovery to development

Kingia/High Cliff 3D Model

Gross gas column of 350m

Area 50 km2

Status: Full Field Development Planning

Early start-up with connection of S-3, W-1 to existing Xyris

Facility

New wells

Figure from Investor site tour 2 August 2017

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Reserves development in the northern Perth Basin

Reserve development through time

~ 50 years

Figures from Investor Site Tour 2 August 2017

Trap defined by Mountain Bridge & Senecio faults

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Appraisal Well ResultsWaitsia-2, 3 and 4

Rate and Reserve Upgrades

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Log Data and Gas shows from the Waitsia Wells

Waitsia-2

Kingia 25.7 Mmscf/d

High Cliff 24.7 Mmscf/d

Kingia 38.5 Mmscf/d

12.3 Mmscf/d

Waitsia-1

Senecio-3

Prior Well Test RatesAverage rates

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Recent Waitsia Well ResultsAPPRAISAL WELL RESULTS

Waitsia-2

• Kingia 42m interval perforated (from 3173m-3215m

MDRT)

• Ave rate of 38.5 Mmscf/d on an 80/64 inch choke at

1,315psig for approx. 2 hours

Waitsia-3


MDRT)


1,929psig for approx. 2.6 hours

Waitsia-4


MDRT)


2,395psig for 23 mins Waitsia-2 flow test

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Existing Appraisal WellTop Kingia

Waitsia-1 Kingia: 25.7 MMscf/d

Waitsia-1 HCSS: 24.7 MMscf/d


Senecio-3 Kingia: 12.3 MMscf/d

Senecio-3 HCSS: 0.3 MMscf/d



Senecio-3 Kingia Test – flare shown @ 10.0 MMscf/d

Currently Producing in Stage 1A

Waitsia-1 HCSS Test – flare shown @ 15.5 MMscf/d

W-3

W-2

S-3W-1

W-4

Waitsia-2 Kingia Test – flare shown @ 20 MMscf/d

Waitsia Gas Field Test ResultsF

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Stage 1A Extended Production Test Objectives

• Gather long term well and field production behaviour for input

into full field development

• Firm up min connected gas volume, well count, phasing and

recovery estimates

Well Test vs. Extended Production Test Results

S-3 Kingia: Waitsia field – 12.3 MMscf/d

• EPT flowing and build-up pressure analysis estimated the

connected volume had increased significantly towards the higher

end of pre-production estimates.

W-1 HCSS: Best HCCS penetration to date – 24.7 MMscf/d

• HCSS reservoir demonstrates excellent productivity

• EPT result shows excellent reservoir quality and broad connectivity

in B Block

New Well Test Results

Excellent reservoir quality and connectivity from the recent well test

results

Stage 1A EPT Well Performance ResultsF

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Appraisal and Early Production Contribution

• W-1 and W-2 core data (RCA +

SCAL)

• Improved petrophysical

interpretation

• Kingia depositional and facies

model development and

understanding of reservoir

quality preservation

mechanism

• Seismic data reprocessing and

interpretation an depth

conversion methodology

Subsurface

Characterisation

W-3 & W-4

appraisal drilling

Field development

plan optimisation

W-2, W-3 & W-4

modified

isochronal well

tests

Benchmarks

against analogue

fields

W-1 and S-3

Extended

Production Test

data and history

matching

Improved reservoir

characterisation

resulting in larger

GRV and NRV

• Improved confidence in

reservoir connectivity, well

deliverability and UR

• Contingent Resources to Reserves maturation

• Additional data (core, logs, pressure)

• Excellent flow rates observed in line with

pre-test modelling

• History matched well test results in

dynamic simulation model

• Tubing upsized for increased deliverability

and accelerated production

• Fuel and flare consumption and CO2 removal

energy conversion estimates

• Benchmarks against analogue fields

• IHS database and analysis

of analogue fields

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Appraisal Process leading to Reserve Adjustments19

• Since 2014 the exploration and appraisal

process has led to step-wise adjustments

in reserves.

• Nov/Dec 2017 change are due to the

reclassification of 2C Contingent Resources,

previously held for the southern extension of

the field.

• The 3D seismic data volume has been

reprocessed and re-depth converted using the

new well data. The observed thicker Kingia

reservoir and refined depth conversion also

resulted in the estimation of greater thickness,

rock volume and improved reservoir

properties, resulting in a significant increase to

the gas initially in-place and recoverable

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Impact on Waitsia Reserves

AWE increases Waitsia 2P Reserves by 80% to 820PJ gross

(net 410 PJ to AWE)

• Waitsia-3 and Waitsia-4 appraisal well data and the

excellent flow test results from the Waitsia Field

confirmed an uplift in reserves and resource estimates

• Waitsia now ranked in the top 5 largest gas fields ever

discovered onshore Australia with gross 2P plus 2C of

910 PJ2

• Significant prospective resource targets have been

identified within AWE’s existing permits that may result in

future resource upgrades and tie-in opportunities to the

Waitsia Field

Waitsia Reserves December 20171

Waitsia Reserves June 2017

Contingent Resources December 20171

Notes 1: Announced to the ASX on 19th December, 2017 and incorporated in AWE’s Reserves Update (as at 31 December 2017) announced on 20 February 2018

Note 2: Source: Based on IHS Markit International Exploration and Production database ‘Australian Onshore Conventional Fields Discovery History (1900-2014)’, applying AWE estimates of Reserves as

at 31 December 2017. AWE discovered the Waitsia field in 2014.

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21Source: R Xiang

Field Development Planning

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Field Development Plan

Stage 1A: Development & Appraisal

• Connected existing wells to Xyris Production Facility for early

sales and to establish drainage efficiency.

• First gas delivered August 2016.

• Drilled two further appraisal wells to define reserves.

Stage 2: Development Concept

• Full field development of good quality reservoir.

• Plateau rate ~100 TJ/D1 from 5 initial wells (ie 5

appraisal/development wells already drilled).

• Total of 15-19 production wells to maintain plateau over 20+

year field life - tied to centralised processing facility with regional

hubs.

Future Stages

• Progressive understanding of the contingent resource.

Notes 1: Waitsia Gross Production Profile Low Case A. AWE Limited Target’s Statement 2018 Mitsui & Co., LTD

✓

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FID and Related ActivityFIELD DEVELOPMENT PLANNING

• Development of Waitsia Stage 2 is subject to a joint venture

‘Final Investment Decision’ (FID).

• AWE has shortlisted proponents to provide project

engineering and construction services for the development.

AWE, as operator, is investigating two construction options,

being ‘EPC ' and ‘BOO'. Commercial negotiations with

shortlisted proponents are ongoing.

• In the pre-FID period for Stage 2, AWE is also conducting gas

marketing activities on behalf of the joint venture.

200m

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Waitsia Stage 2: Project Update

Significant progress has been made on Waitsia Stage 21 with three key work streams progressing well:

1. Subsurface – 2P Reserves increased by 80% to 820 PJ (gross)

2. Gas Marketing – Continuing discussions with prospective buyers, however, current terms of BID with Mitsui prohibits

AWE from signing additional GSA’s

3. Facilities FEED – Design competition tenders received and being reviewed

Takeover bids validate the value of Waitsia - AWE continues to target first gas for CY20202

1 Waitsia Stage 2 Project capable of producing 100TJ/day of gas over at least 20 years. 2 Subject to project FID by 30 June 2018.

Subsurface

2017 20181

Gas Marketing

Facilities FEED

RISC certify 2P Reserves to underpin

10yr project

Completed Pre-FEED in Q2 2017

2

3

✓

✓

✓

Detailed Gas Marketing –

September 2016✓

Waitsia-2, -3 & -4 flow test results

exceed expectation

First term sheet (15TJ/day) signed

February 2017

Commence FEED June 2017

✓

✓

✓

RISC review increased 2P Reserves by 80%

Additional gas sales (~+50TJ/day) to underwrite project

Facility tenders due November 2017

(3 x EPC, 2 x BOO)

✓

✓

Ongoing cost optimisation and field deliverability studies

Facility tenders received and being reviewed

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Greater Waitsia – Exciting Exploration PotentialFURTHER DEVELOPMENT POTENTIAL IN WAITSIA BEYOND STAGE 2

AWE has one of the largest

exploration acreage position in the

onshore Perth Basin

Potential to extend the field life or

in time increase production from

Stage 2

Kingia and HCSS horizons

Significant exploration potential at

Kingia and HCSS horizons south and

east of Waitsia

Beharra Springs Deep

Potential Beharra Springs Deep

well targeting Waitsia-like prospect

adjacent to Beharra Gas Plant

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Stakeholder and Community

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Benefits to Mid West and Beyond

Mid West service providers helped deliver Waitsia Gas Project- Stage 1A on time and under

budget

• AWE has a policy of employing local people to run its

gas production facilities and using local businesses and

support services wherever practical

• The number of personnel working in the region

increases substantially during periods of exploration and

development activity

• AWE invested more than $16m in FY16 and more than

$10m in FY17 into the Mid West economy.

• Waitsia Stage 2 development is likely to inject significant

funds into the local economy and employ many people

during construction

WAITSIA WILL CONTRIBUTE SIGNIFICANTLY TO THE LOCAL AND REGIONAL ECONOMIES

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Stakeholder Engagement & EnvironmentAWE’S APPROACH TO COMMUNITY AND STAKEHOLDER ENGAGEMENT IS OPEN AND TRANSPARENT

Community roundtable meeting

Stage 1A launch celebration

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THANK YOU

Waitsia-2

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awe limited for personal use only - asx · awe increases waitsia 2p reserves by 80% to 820pj gross...

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