DRILLSEARCH ENERGY LIMITED SCHEME MEETING
PRESENTATION BY CHAIRMAN JIM MCKERLIE
27 JANUARY 2016
IMPORTANT NOTICE
Forward Looking Statements
These materials contain forward looking statements. Often, but not always, forward looking statements may be identified by the use of words such as "may", "will", "expect", "intend", "target", "anticipate", "continue", "guidance" and "outlook", or similar expressions and may include (without limitation) statements regarding plans, strategies, objectives, anticipated operating or financial performance, including production volumes and costs.
Forward looking statements involve subjective judgments regarding future matters which are subject to known and unknown risks, uncertainties and other factors. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations, general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and development activities, political and social risk s, both general and those specific to the oil and gas industry, changes to the regulatory framework in which the company conducts its business, environmental condition s, including extreme weather conditions, recruitment and retention of personnel, industrial relation issues and litigation.
While Drillsearch considers that there is a reasonable basis for all forward looking statements made, readers are cautioned not to place undue reliance on forward looking statements as actual results may vary materially from projected future results expressed or implied by forward looking statements. The company gives no assurance that assumptions upon which forward looking statements may be based will prove to be correct, or that the company's business, performance or results will not be affected in any material manner by these or other factors not foreseen or foreseeable by the company or beyond the company's control.
Forward looking statements in these materials speak only as to the date of issue. Subject to any continuing obligations under applicable law, including the rules of relevant securities exchanges, the company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.
References to "Drillsearch" may be references to Drillsearch Energy Limited or its applicable subsidiaries.
The FY2015 reporting period is the twelve months to 30 June 2015. Unless otherwise shown, comparative period is twelve months to 30 June 2014. References to $ are references to Australian dollars unless otherwise stated.
DRILLSEARCH SCHEME MEETING JANUARY 2016
WELCOME
The Drillsearch Board would like to welcome you to the Scheme Meeting
Jim McKerlie
Chairman
Philip Bainbridge
Non-Executive Director
Teik Seng Cheah
Non-Executive Director
Fiona Robertson
Non-Executive Director
Ross Wecker
Non-Executive Director
DRILLSEARCH SCHEME MEETING JANUARY 2016
BACKGROUND TO THE SCHEME
Structure
share held
Combined group
Board and management composition
All-scrip merger with Beach Energy via a scheme of arrangement
Drillsearch shareholders will receive 1.25 Beach shares for each Drillsearch
Drillsearch shareholders to own ~30%1 of the combined group
Glenn Davis to continue as Chairman of Beach
Matthew Kay appointed Beach CEO in January 2016
Drillsearch Chairman Jim McKerlie and Director Phil Bainbridge to join Board of combined group
Two Beach Directors to stand down
Assumes all options are acquired for cash, all performance rights vest and no conversion of Convertible Notes; Beach currently holds 21,053,615 Drillsearch shares (~4.56% )
DRILLSEARCH SCHEME MEETING JANUARY 2016
MERGER BENEFITS
Creating the leading ASX-listed oil and gas mid-cap
Synergies from two complementary businesses
Strategies aligned around a Cooper focus, East Coast Gas and nearby Australia Existing shared values and a track record of joint venture success
Primed to pursue growth opportunities
Creating a business based on expertise and a track record of growth Balance sheet strength allowing new opportunities to be pursued
A clear strategy and the ability to execute
Significant benefits for both sets of shareholders
Both shareholders retain exposure to existing portfolios and gain new opportunities Potential value accretion for both sets of shareholders as synergies are realised
Greater relevance for investors and potential for improved liquidity, re-rating and dividends
Australia's largest onshore oil producer
Premier Western Flank position, strong exposure over rest of Cooper Basin Potential to generate greater efficiencies in the Cooper Basin
Set for East Coast gas market opportunity
4.8 MMboe gas and gas liquids production in FY20151
Infrastructure, existing production, new Cooper discoveries plus Otway
Combined Beach and Drillsearch production in FY2015
DRILLSEARCH SCHEME MEETING JANUARY 2016
COOPER BASIN AT THE CORE FOR BOTH COMPANIES
Combined interests in permits covering ~69,000 km2
DRILLSEARCH SCHEME MEETING JANUARY 2016
RECENT MARKET DEVELOPMENTS
As foreshadowed in the Scheme Booklet, volatility in global oil markets continues
Impact of oil price - persistently below US$40/bbl for the past two months:
Australian exploration and production companies highly leveraged to oil price
Since the merger was announced:
Oil price has declined ~36%1 in US$ terms and ~34%1 in A$ terms
S&P/ASX 200 Energy Index has declined ~21%1 over the same period
Recent market updates from Drillsearch and Beach:
Drillsearch
Beach
FY2016 production now expected to be at or above top end of guidance
Narrowed FY2016 production guidance to higher end of previous range
FY2016 capex expected to be at lower end of guidance
Capital expenditure guidance lowered for FY2016
Cash position remains robust; new $100 million debt facility announced2
Cash balance of $164 million at 31 December 2015; new $530 million financing facility announced
No material impairment of oil and gas assets expected; exploration and evaluation assets may be affected
Non-cash impairment charge of $450 to $650 million anticipated on a pre-tax basis
Source: Bloomberg
Subject to Conditions Precedent.
DRILLSEARCH SCHEME MEETING JANUARY 2016
TWO COMPANIES ALIGNED ON STRATEGY
Underpinned by similar values and approach, and a history of successful partnership
Cooper Basin core
East coast gas marketCooper Basin core provides platform to consider the emerging opportunity set created by the weakness in oil prices
Emerging opportunities in Australia and nearbyStrategy
DRILLSEARCH SCHEME MEETING JANUARY 2016
INDICATIVE TIMETABLE
Event
Date
Drillsearch shareholder meeting to vote on the scheme
11.00am, 27 January 20161
Second Court Date
18 February 2016
Scheme Effective Date
18 February 2016
Record Date
7.00pm, 25 February 2016
Implementation Date (Indicative)
1 March 2016
These dates and times are indicative only and are subject to change. Unless otherwise specified, all times and dates refer to Sydney, Australia time. Any changes to the timetable will be announced to the ASX and notified on Drillsearch's Web site at www.drillsearch.com.au
DRILLSEARCH SCHEME MEETING JANUARY 2016
QUESTIONS
Questions regarding the proposed MergerDRILLSEARCH SCHEME MEETING JANUARY 2016
FORMAL
BUSINESS
DRILLSEARCH SCHEME MEETING JANUARY 2016
NOTICE OF SCHEME MEETING
Notice of Scheme Meeting Dated 16 December 2015
DRILLSEARCH SCHEME MEETING JANUARY 2016
Drillsearch Energy Limited issued this content on 27 January 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 08 February 2016 13:59:29 UTC
Original Document: http://drillsearch.com.au/?wpdmdl=2554
