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| 8-K - FORM 8-K - TELLURIAN INC. /DE/ | d8k.htm |
 Financing Review
May, 2010
New York
William H. Hastings
Portland, Maine
Exhibit 99.1 |
 Forward-Looking Statements
Forward-Looking Statements
Except
for
historical
information,
this
presentation
contains
forward
looking
statements
and
information
with
respect
to
net
reserve
valuations
and
sums,
gas
sales
in
Australia
and
its
valuation,
oil
and
gas
development
projects,
expense
reduction
plans
and
other
potential
development
projects,
exploration
and
drilling
plans.
These
statements
are
subject
to
risks
and
uncertainties
that
could
cause
actual
results
to
differ
materially
from
those
expressed
or
implied
from
such
information.
The
United
States
Securities
and
Exchange
Commission
(SEC)
permits
oil
and
gas
filings
with
the
SEC
to
disclose
only
proved
reserves
that
a
company
has
demonstrated
by
actual
production
or
conclusive
formation
tests
to
be
economically
and
legally
producible
under
existing
economic
and
operating
conditions.
Investors
are
urged
to
consider
closely
the
disclosures
in
Magellan’s
periodic
filings
with
the
SEC
available
from
us
at
the
company’s
website
www.magellanpetroleum.com |
 Magellan; publicly listed E&P company
•
$112mm market Cap trading under the symbol : MPET
No Sell-Side Research Coverage
$38mm of Cash and no debt
•
Net of A$15 million spent for recent Evans Shoal property
acquisition Owns onshore gas fields in Australia
•
$20mm of Proved PV-10 as of June 30, 2009
•
Proved reserves understate physical reserves as Gas Contracts with
Darwin are expiring •
If full gas sales are achieved, PV-10 is $70-80 million.
New management installed in 2008
New Strategic investor acquired 27% stake in 2009
Acquired two growth projects,
•
the Poplar Dome fields in Montana
•
the Evans Shoal gas field, offshore Australia
•
Together, the fields have 450 million BOE of net resource
(adjusted for CO2 content) •
220 million BOE is planned for development by 2014
Overview
Key Points |
 1954
1954
•
•
MPET listed as exploration-oriented oil company
MPET listed as
exploration-oriented oil
company
-oriented
oil company oriented oil company
1960’s
1960’s
•
•
Amadeus Basin Gas Fields in Central Australia discovered with partner,
Santos. Amadeus Basin Gas Fields in Central Australia discovered
with partner, Santos.
rtner, Santos.
1980’s and 90’s
1980’s and 90’s
•
•
Pipeline completed connecting gas fields and Darwin. Gas
fields Pipeline completed connecting gas fields and
Darwin. Gas fields produce 40 mmcfd
produce 40
mmcfd
mmcfd
gross for more than
gross for more than
25 years.
25 years.
2003
2003
•
•
Amadeus
Amadeus
Basin
Basin
Gas
Gas
Fields
Fields
lose
lose
tender
tender
for
for
renewal
renewal
of
of
25
25
year
year
gas
gas
sales
sales
contract
contract
to
to
Darwin
Darwin
to
to
Eni’s
Eni’
s
’s
s
Black
Black
Tip offshore field to spur development of this undeveloped field
Tip offshore field to spur development of this undeveloped field
December 2008
December 2008
•
•
Bill
Bill
Hastings
Hastings
is
is
hired
hired
as
as
new
new
CEO
CEO
with
with
mandate
mandate
to
to
reposition
reposition
company.
company.
July 2009
July 2009
•
•
YEP
YEP
Energy
Energy
Fund
Fund
completes
completes
$10mm
$10mm
strategic
strategic
investment
investment
and
and
adds
adds
Wilson
Wilson
and
and
Bogachev
Bogachev
to
to
Board
Board
October 2009
October 2009
•
•
Announced
Announced
HOA
HOA
and
and
Exclusivity
Exclusivity
with
with
Major
Major
Global
Global
Methanol
Methanol
producer
producer
October 2009
October 2009
•
•
Acquired
Acquired
control
control
of
of
69%
69%
(57.4%
(57.4%
effective)
effective)
interest
interest
in
in
Poplar
Poplar
Dome
Dome
Fields
Fields
in
in
Montana
Montana
for
for
MPET
MPET
stock
stock
April 2010
April 2010
•
•
Acquired
Acquired
40%
40%
interest
interest
in
in
from
from
6.5
6.5
to
to
8
8
TCF
TCF
(Santos
(Santos
6.6
6.6
TCF)
TCF)
undeveloped
undeveloped
gas
gas
field
field
in
in
Australia
Australia
for
for
$91mm
$91mm
•
•
Announced
Announced
acquisition
acquisition
of
of
an
an
additional
additional
26%
26%
interest
interest
in
in
Poplar
Poplar
Dome
Dome
fields
fields
for
for
$5
$5
mm
mm
cash.
cash.
Background |
 Management Team
Management Team
100 years + of oil industry experience (added last
year) •
William Hastings
Joined in 2008, retired in 2007 from Marathon Oil
Corporation after 27 years there. Last 8 years (off/on) involved
with North Sea (Alvheim development) and Africa (EGLNG)
Undergraduate and MBA degrees (Purdue and Indiana)
•
J. Tom Wilson
Founded international group at Apache Corporation; managed
first entry into Australia Board Member representing YEP
Investment Fund CEO of Khanty
Mansysk
Oil (KMOC) sold to Marathon
•
Nikolay
Bogachev
Chairman
and
CEO
of
the
two
Companies
that
developed
Yamal
LNG;
sold
to
GazProm
in
2006
Board Member representing YEP Investment Fund
Founder of Khanty
Mansysk
Oil
•
Hugh Roberts
Commercial Advisor. Retired from Marathon Oil as Manager of
Industry/Regulatory Affairs Past Vice Chairman of Gas Industry
Standards Board •
COO and CFO being recruited
Advisory Roles
•
Les Thomas
•
Currently Group Director, Production Facilities, Wood Group.
Formerly President, Marathon Oil UK Offices in Portland,
Maine; Denver, Colorado; Brisbane, Australia |
 |
     Elm Coulee Bakken play
“Brigham”
Bakken play
Magellan Poplar Dome
Saskatchewan Power
potential CO2 separation
project
Existing CO2 extraction
and sale plant and
pipeline (shown in solid
red)
Existing , successful CO2
flood properties
Burlington Northern Mainli
(black)
Northern Border Gas Pipeli
(light blue) |
 Poplar Dome Plans -
Poplar Dome Plans -
2011
2011
•
Drill Infill wells, Evaluate Bakken JV, Test CO2 factors
Infill
•
Drill up to eight infill wells out of thirty-six infill
locations •
Probable reserves at 600k to 1.2 million barrels per well
•
Capital cost for eight wells will be $12 million
•
Finding and Development costs are $2.50 per barrel
•
Further geophysical work on correlations with emphasis on NW syncline
and southwest nose Bakken
•
Evaluate farm-out and joint venture options for 23,000 ac. Bakken
play •
Existing well penetrations, good reservoir quality,
source shale for other Poplar zones •
Third party engaged to manage the process. Working
partner issues. Target completion August, 2010 CO2
Flood •
Complete three single well tracer operations to test Residual Oil
saturation •
CO2 effectiveness driven by saturation
•
Examine part-scale startup economics for northwest side of the
field. |
 Growth Opportunity
Growth Opportunity
2. Gas to Methanol development, offshore Australia
Signed Agreement to acquire a 40% operating interest in the Evans
Shoal field, offshore Australia with estimated gross contingent
resources of 6.5 to 8 TCF (analysis dependent) and
50 mmbbls condensate. •
Resource acquisition cost of $182 million equates to 5.7
cents/mcf in the ground or 33 cents/ barrel equivalent
•
Will pay $91 million to Santos at Closing
•
Contingent $45 million due on development plan approval:
second contingent $45 million due at first gas
•
Partners are Shell (25%), Petronas (25%), and Osaka Gas
(10%) Development plan addresses less than 25% of reserves
•
Significant Capital Project in partnership with large petrochemical
companies •
$3.7 billion gross including field, plant, and pipeline.
$1.5 billion net or $2.00 per mcf •
Methanol value yield $325 per Ton is $10.50/mmbtu at plant inlet
gas (adjusted for plant shrinkage, but using
CO2) Global Methanol demand expected to grow at 8%
•
From 2009 to 2014, demand sources from DME and MEOH fuel additive
growth •
Methanol demand has already increased by 250% since 1995
|
 Abadi 10-14.5 TCF
Evans Shoal 8 TCF
Heron /Blackwood 1.5 TCF
Greater Sunrise 6+ TCF
Black Tip 500 BCF
Petrel & Tern 2 TCF
Caldita -
Barossa 6 TCF
Turtle/Barnett (Undeveloped Oil)
Chuditch 700 BCF
Bayu Undan 8 TCF
Ichthys 14 TCF
Kelp 700 BCF
Montara 2 TCF
Saratoga & Prometheus 1.5 TCF
Crux, Padthaway Complex 2 TCF
Brewster 800 BCF
Scott Reef & Brecknock 18 TCF
Darwin
Lynedoch 1 TCF
Vienta, Waggon Creek, Weaber (Gas)
Mapped; 82 TCF
Frigate Deep 500 BCF
Evans Shoal South 500 BCF |
 |
 Australia Gas to Methanol Overview
Australia Gas to Methanol Overview
•
Development using excess CO2 in process |
 Evans Shoal Plans
Evans Shoal Plans
•
Size and Gas quality testing, followed by development
Fiscal 2011 Plan
•
Receive Co-owner vote to become Operator
•
$80 million gross capital expenditure
•
$32 million net
•
Two delineation wells with significant testing component
•
Transition seismic work across shallow shoal zone
•
Further geophysical work on correlations with emphasis on NW syncline
and southwest nose Fiscal 2012 to 2014 Plan
•
Target FID (Final Investment Decision) for
Q3 2012 •
Minimum development plan (field only) ; $560 million gross
•
Nine total production wells
•
Shallow water, subsea tie backs to jackup production platform
•
Water and CO2 separation facilities as needed (Pipeline to
shore requires all water be removed) Production startup, 360
mmcfd minimum, 2015 |
 Legacy Projects
Legacy Projects
•
Existing onshore licenses and production
Mereenie Oil Field, onshore Australia
•
$175 million PV-10 gross, Magellan is 35%
•
Additional 70mmboe of contingent resource on the western end (not in
PV) •
Proven reserves of 150BCF and 2 mmbbls
•
Significant Bakken-style drilling technology potential
•
Operator, Santos has their 65% for sale
•
Could sell given positive developments in Santos sale effort
– else, takeover and develop
Palm Valley Gas Field, onshore Australia
•
$45 million PV-10, Magellan is 52% and operates
•
Proven reserves of 50 BCF
•
New gas sales contract for remaining life of reserves
•
Could sell as part of Santos process
United Kingdom drilling development
•
Offset drilling to existing oil production
•
Two or three near-term well candidates, development located in
same basin as Wytch Farm •
Deep Gas potential (farm-out discussions now)
•
Available for sale |
 Capital Plan
Capital Plan
•
Financing Requirements
Fiscal 2011 (30th June, 2010 to 30th June, 2011)
Preliminary Budget
Growth Projects
Poplar Dome area, Montana
Drill up to eight infill oil wells
12.0
$
Complete Single Well Tracer program on up to four wells
2.0
$
Evans Shoal Area, Australia
Remaining Acquisition Payment
78.7
$
Drill two delineation wells
23.7
$
Complete Transition Seismic work on shallow shoal
2.0
$
Complete Geophysical correlation studies
1.0
$
Pre FEED work
5.0
$
Legacy Projects
Drill and complete two onshore UK exploration wells
4.9
$
Complete Onshore well test / drilling strategy
2.0
$
Contingency
13.1
$
Total
144.3
$
Cash on Hand
(38.0)
$
2011 to be Financed
106.3
$ |
 Comparison; Magellan (MPET) with
Interoil (IOC)
MPET is significantly undervalued
Comparison of Interoil
and Magellan
Company Variables
Interoil
-
IOC
Magellan -
MPET
Shares Outstanding
44.85
51.90
Share Price
68.00
$
2.16
$
Market Capitalization
3,049.8
$
112.1
$
Cash
75.80
38.00
Debt
52.60
0.50
Value of Refinery & Proven Reserves
365.00
97.38
Mereenie/PV only
Remaining Cost of Evans Shoal Acquisition
78.66
EV of Resources
2,661.60
55.88
Identified Net Resources (mmboe)
900
450
net of CO2
Identified Net Resources -
to be developed by 2014
457
220
Location
Papua NG
Montana & Australia
Commercialization
LNG & NGL
Methanol & CO2 flood
EV/ Resource BOE
2.96
$
0.12
$
EV/ Resources to be Developed
5.82
$
0.25
$
|
 Additional Documents / Data |
 |
 Closest Supply
Magellan Business Model
Pacific
Develop “discovered”
resource for Asia
Redevelop underdrilled, existing assets
Reserves Available
Entry costs from US$ .05/mcf and up
(proven undeveloped)
LNG and Methanol technologies usable
Methanol Needed
US$12 per
mmbtu equivalent delivered
Correlated to oil
Methanol is the “Ethanol”
of
China. It is used as vehicle
fuel supplements there by
Government order. There
are no new Pacific Methanol
plants on the “drawing
board”
now |
 Browse / Bonaparte Basins
Acquired 40% and Seeking
operating interest Evans
Shoal, 100% interest NT09-1
Contingent Resource 6-8 TCF+
Carnarvon Basin
3C 115 TCF **
Darwin
Alice Springs
Amadeus Basin
40mmcfd production level, two
field, oil ring also in production
Contingent Resource 300BCF and
up to 70mmbbl gross after
significant, successful development
drilling |
 Central Darwin
(pop 120,000)
Bayu Undan LNG
(complete)
East Jetty
(offtake connections)
NT Power Plants
Darwin Airport
Methanol Plant Sites |