ASX Announcement 4 June 2014 The Company Announcement Officer ASX Ltd via electronic lodgement INVESTOR PRESENTATION Please find attached an Investor Presentation providing an update on the Company’s activities associated with the rapid development and commercialisation of its Southern Cooper Basin Gas Project. In addition, Mr David Wrench, will be presenting at the Energy Users Association of Australia – NSW Energy Forum to be held at the Rydges World Square in Sydney on 4 June 2014. A copy of this presentation is available on the Strike Energy Limited website. Yours faithfully SEAN MCGUINNESS Chief Financial Officer & Company Secretary Further information: Strike Energy Limited T: +61 2 9397 1420 E: [email protected] For personal use only Strike Energy Limited ABN 59 078 012 745 P: +61 2 9397 1420 120B Underwood Street, Paddington NSW 2021 www.strikeenergy.com.au STRIKE ENERGY LIMITED Investor Presentation June 2014 For personal use only Company Overview: Corporate Strike Energy Limited (ASX : STX) is an Australian based, independent oil and gas exploration and production company. The company is focused on the development of a substantial gas resource in the Southern Cooper Basin to meet Eastern Australian gas market demand. Listing ASX (ticker STX) Issued Shares 833,330,946 Options/ Performance Rights 21,900,000 Market Capitalisation $100.0 million (2 June 2014) Production (2012/13) 100,698 boe Revenue (2012/13) $4.6 million Firm Analyst Bell Potter Di Brookman Blackswan Equities Michael Eidne Analyst Coverage Ord Minnett John Young For personal use only Wilson HTM James Redfern RBC Capital Andrew Williams Lonsec Tim Gerrard Strike Energy Limited - Investor Presentation - 4 June 2014 2 Company Overview: Assets Australia, Southern Cooper Basin USA, Texas Moomba Marsden 1 PEL 95 Permian Basin Davenport 1 Le Chiffre 1 PEL 94 Klebb 1 TEXAS Eagle Ford Shale PEL 96 Eaglewood JV (Louise field) 0 20 Kilometers For personal use only SOUTHERn COOPER BASin, AustraliA TEXAS, USA Strike Energy Limited - Investor Presentation - 4 June 2014 3 SOUTHERN COOPER BASIN GAS PROJect For personal use only Australian east coast gas demand Historically, Australia’s east coast gas demand approximated 650 -> 750 PJ/annum, was over supplied and characterised by low pricing (A$2-$3/GJ) and low liquids upside. The maturation of significant coal seam gas (CSG) reserves in the Bowen and Surat Basins were the enabler of a massive investment program, commencing in 2011, involving an initial 6 LnG trains at Gladstone, Queensland. This investment is unlocking onshore gas resources by connecting these resources to global energy demand. A Arrow project (yet to be sanctioned) 1,400 TJ/d 9.0 mtpa capacaty D East coast export exploiting Bowen and Global + supply (shipping cost - B Mount isa Surat Basin Energy A Demand US$ 1.25 MMBtu) advantage B to Asian markets 1,415 TJ/d C 8.5 mtpa capacaty ~ $60 billion investment (6 LnG trains - Gladstone) + Moomba Brisbane C Annual total gas demand (PJ/yr) East coast gas demand 1,300 TJ/d 9.0 mtpa capacaty Sydney = Adelaide 4,115 TJ/d Total New LNG demand [4.0 Bcf/d] Melbourne Existing demand 1,900 TJ/d Hobart For personal use only pipelines Key gas pipelines Substantial east coast LnG investment driving onshore gas demand increase of ~ 4.0 Bcf/d Strike Energy Limited - Investor Presentation - 4 June 2014 5 Changing market dynamics All three LnG projects are likely to be short gas. Moreover, there is increasing uncertainty as to the deliverability, rate and cost of a significant component of ‘equity’ gas outside of the core CSG sweet spots. Supply PRICING Significant cost ‘tiering’ emerging across LnG JV equity gas reserves. There is Onshore gas reserves now linked to oil-indexed LnG price. significant displacement potential from competitive third party supply. new gas supply contracts largely governed by a LnG netback pricing model. Forecas ts for the East Coast gas cost curve in 2019E Gas Price A$/GJ (Moomba ex- plant) 10 A$/GJ Ex-plant breakeven (A$/GJ) 9 Queensland CSG Tranche 3 8 A$7.96/GJ Queensland CSG Tranche 2 7 Cooper unconventional Gunnedah Tranche 2 6 Gippsland (Future) Queensland CSG Tranche 1 Narrabri CSG 5 Trefoil Cooper Basin inll Bass Strait (New) NSW CSG (Other) 4 Gloucester 2019E Demand BassGas Otway/Minerva QLD CSG Sweet-spots 3 Cooper Basin Bass Strait Strike comment: Surat Conventional - significant project, deliverability, rate and 2 cost uncertainty creating opportunity for new competitive third party supply 1 TJ/d 0 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 For personal use only Source: Goldman Sachs Global Investment Research Eastern Australia onshore gas reserves now connected to oil-indexed contracted LnG Strike Energy Limited - Investor Presentation - 4 June 2014 6 The opportunity Strike’s successful appraisal program (PEL 96) together with recent funding initiatives have positioned the Company to accelerate a focussed commercialisation program centred on the PEL 96 permit. The fully funded 2014 activities have the objective to position this large prospective resource as a significant supply solution to east coast gas markets. Activities Objectives Resource independent certification certification Resource Accelerated program expansion - commence drilling, stimulation and production testing of 6 additional wells (PEL 96) Commence production accretion Value optimisation initial testing and completion Achieve (Le Chiffre 1, Klebb 1, sustained gas PEL 94 PEL 95 Davenport) flows PEL 96 2014 For personal use only Potential for significant value uplift as rapid commercialisation program achieves key 2014 objectives Strike Energy Limited - Investor Presentation - 4 June 2014 7 Southern Cooper Basin Gas Project: Executive summary Strike’s appraisal drilling confirms presence of world scale gas resource - 4.5 Tcf prospective resource (PEL 96 net to Strike) directly under Moomba to Adelaide Gas Pipeline (MAPS) Strike’s ‘gas saturated coals’ - high resource concentration Well capex of ~$3.5 million - compelling economics Commercialisation program positioning Strike as ‘frontrunner’ for new gas supply Clear path to market established - foundation customer supporting project development - innovative offtake agreements with domestic gas users - Phase One Area resource could supply up to 25% of nSW demand - plan to unlock the potential of the entire resource For personal use only Appraisal drilling results confirm transformational potential of Strike’s Gas Project Strike Energy Limited - Investor Presentation - 4 June 2014 8 Southern Cooper Basin Gas Project: Favourable location Strike’s PEL 94, 95 and 96 permits are ideally located with direct access to infrastructure connecting to Eastern Australian gas markets. Moomba Marsden 1 Permit STX working Operator interest 96 66.67% Strike PEL 95 Davenport 1 Mount isa 95 50% Beach Energy (50%) Le Chiffre 1 PEL 94 Klebb 1 PEL 94, 95 & 96 Gladstone 94 35% Beach Energy (50%) 904,870 acres (net to Strike) Moomba Brisbane PEL 96 Strike Phase One Area wells drilled 0 20 Sydney Strike Wells Drilled Adelaide Kilometers PEL 96 Offset Wells PEL 96 Phase One Area Melbourne Gas Pipeline Oil Pipeline Hobart Strzelecki Track For personal use only Strike has control of planning, timing and execution of activities in PEL 96 Strike Energy Limited - Investor Presentation - 4 June 2014 9 Southern Cooper Basin Gas Project: Resource upgrade Following appraisal drilling, the mean estimate of the prospective resource within Strike’s PEL 96 pemit increased to 4.5 Tcf (Phase One Area 1.25 Tcf). This resource is located directly beneath the Moomba to Adelaide Pipeline System (MAPS). PEL 96 (net to Strike) PEL 96 Phase One Area (net to Strike) Prospective resource Prospective resource Low estimate Mean estimate High estimate Low estimate Mean estimate High estimate 2,767 Bcf 4,492 Bcf 6,818 Bcf 864 Bcf 1,227 Bcf 1,809 Bcf 1,000 Bcf = 1 Tcf 1,000 Bcf = 1 Tcf Marsden 1 Davenport 1 - net coal 43m - net coal 110m - TD 2,625m Klebb 1 Le Chiffre 1 - TD 2,102m - net coal 147m - net coal 105m - TD 2,193m - TD 2,089m PEL 95 PEL 94, 95 & 96 PEL 94 904,870 acres Weena Trough 4km (net to Strike) (including PEL96 4km Phase One Area) Phase One Area ~7km 2 570km ~141km2 ~20km Battunga Trough PEL 96 Milperra Trough PEL 96 Phase One Area Larow Trough Gas Pipeline Weena Trough Oil Pipeline Strike Wells Drilled Strzelecki Track For personal use only PEL 96 Offset Wells Strike Phase One Area wells drilled 4.5 Tcf prospective resource (PEL 96) Strike Energy Limited - Investor Presentation - 4 June 2014 10 Southern Cooper Basin Gas Project: Target interval at optimal depth Strike’s appraisal program has confirmed the presence of thick, dry/gas saturated coals. The target interval at Le Chiffre 1 and Klebb 1 is in the optimal gas generation window at a relatively shallow depth. This delivers significant well cost advantages compared to deeper unconventional Cooper Basin activity. TArgET ZOnE - Depth COMPANY COOPER BASIN: PRIMary UNCONVENTIONAL HYDROCARBON targets AND PERMIT Areas Surface South north Southern Cooper Basin nappamerri Trough PEL 96 PEL SACB ATP PEL - 1,500m 516 JV 94OP 218 PEL ATP Strike Energy 115 855P Primary Target Le Chiffre 1 Gas saturated coals Klebb 1 - 2,200m Senex* Primary Target Origin Energy Tight gas sands; shale gas and deep coals - 3,000m Primary Target SACB JV* Gas saturated (deep) coals, shale gas and basin centred gas Drillsearch* Primary Target BG Shale gas and basin centred gas Beach* Primary Target For personal use only Chevron Shale gas and basin centred gas - 4,000m *Approximations only of target zone depth and permit areas Strike’s relatively shallow target horizon delivers significant well cost advantages Strike Energy Limited - Investor Presentation - 4 June 2014 11 Southern Cooper Basin Gas Project: Well drilling and completion costs Strike has completed an independent review of production well drilling and completion costs based on actual results achieved during the recent drilling program and firm third party tender quotes for the upcoming production testing program.