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Target Energy Ltd OGIS New York April 2013 1
Target Energy Ltd
OGIS New York
April 2013
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This Presentation is provided on the basis that none of the Company nor its respective officers, shareholders,related bodies corporate, partners, affiliates, employees, representatives and advisers make any representation orwarranty (express or implied) as to the accuracy, reliability, relevance or completeness of the material contained inthe Presentation and nothing contained in the Presentation is, or may be relied upon as, a promise, representationor warranty, whether as to the past or the future. The Company hereby excludes all warranties that can beexcluded by law.
The Presentation contains prospective financial material which is predictive in nature and may be affected byinaccurate assumptions or by known or unknown risks and uncertainties, and may differ materially from resultsultimately achieved.
All persons should consider seeking appropriate professional advice in reviewing the Presentation and all otherinformation with respect to the Company and evaluating the business, financial performance and operations of theCompany. Neither the provision of the Presentation nor any information contained in the Presentation orsubsequently communicated to any person in connection with the Presentation is, or should be taken as,constituting the giving of investment advice to any person.
NOTE: In accordance with ASX Listing Rules, any hydrocarbon reserves and/or drilling update information in this report has been reviewed and signed off by MrLaurence Roe, B Sc, Managing Director of Target Energy, who is a member of the Society of Exploration Geophysicists and has over 30 years experience in thesector. He consents to that information in the form and context in which it appears.
Target reports Barrels of Oil Equivalent (BoE), using a gas to oil conversion rate based on equivalent thermal energy , i.e. 6000 cubic feet of gas = 1 Barrel of Oil).
Disclaimer
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• Target Energy Limited is an exploration and production company listed on the Australian Securities Exchange (ASX), stock code “TEX”, with offices in Houston, Texas and Perth, Western Australia.
• The Company is in the process of providing access to its stock to US‐based investors via the OTCQX platform. This is expected to be in place in May 2013.
• Target’s business strategy is to acquire meaningful acreage leaseholds in U.S. on‐shore hydrocarbon basins that have significant infrastructure, access to oilfield services and supply companies and, most importantly, significant un‐tapped hydrocarbon reserves.
• Our objective is to grow production, reserves and cash flow “through the drill‐bit” by applying current oilfield technology to known hydrocarbon producing formations that will yield meaningful production, proved reserves, cash flow and shareholder value.
Business Strategy
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• Producing assets in Permian Basin and in Texas & Louisiana Gulf Coast.
• Expanding Permian Basin assets.
• Growing oil production, reserves and cash flow through the drill bit.
• Company’s production increased by 320% in 2013 following successful Permian Basin drilling campaign.
• Ongoing 2013 drilling programs in Permian Basin and Louisiana likely to add significantly to Target’s production and reserves.
In Summary
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Corporate Snapshot
Directors & Management
Chris Rowe ChairmanLaurence Roe Managing DirectorStephen Mann Non Executive DirectorRowan Caren Company Secretary
Ralph Kehle Chairman, TELA (USA)**Don Sytsma VP Finance, TELA (USA)Gregg Bonagurio Reservoir & Production EngineerBradley Holmes Investor Relations
*Subject to confirmation. **TELA (USA), Inc. is a wholly‐owned subsidiary of Target Energy.
Shares on issue (ASX: TEX) 452.1m
Options (Warrants): $0.10 exp 31 Mar 2014 40.5m$0.12 exp 24 Oct 2014 0.8m
Market cap A$36.2m (US$37.2m)
Company in process of providing access to stock for US‐investors via OTCQX platform. Expect trading on OTCQX (stock code “TEXQY”*) to commence in May 2013.
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Target Energy Projects
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Production, Appraisal & Development
Sand SML #A1 SML #A3 SML #A2
Marg Howie Yet to be produced Not Intersected Yet to be produced
1st Camerina Yet to be produced Yet to be produced In Production**
3rd Marg Tex Produced Yet to be produced* Produced
Lower 3rd Marg Tex Yet to be produced In Production Not Intersected
4th Marg Tex Produced Tight Produced
Hackberry A1 Not Reached Not Intersected Produced
Hackberry A4 Not Reached Produced Produced
Section 28 Project – St Martin Parish, Louisiana
SML A1 presently shut‐in awaiting recompletion*May be partially depleted due to prior A1 production
**SML A2 recompleted in 1st Camerina in Feb 2013;Initial flow at 1500 mcfgd + 20 BCPD
• Target Energy Working Interest 25%• Attic production at Section 28 salt dome. Wells drilled 2007‐2009.
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East Chalkley Field, Cameron Parish, Louisiana
• Target Energy Working Interest 35%
• 2012 Independent Technical Specialist (RISC Pty Ltd) report on East Chalkley confirmed most likely technically recoverable reserves and resources (“2P/2C”) of 1.7 MMBO with an upside (“3P/3C”) estimate of 4 MMBO.
• Field producing 40‐50 BOPD from Pine Pasture #2 well.
• Updip oil development well (Pine Pasture #3) to be drilled in later April / May 2013 – potential Initial Production of 200‐300 BOPD. Downdip injection well planned for Q2/Q3.
• Potential for additional appraisal/development wells + injectors to develop down dip sector plus additional development well + injector updip from existing production.
• Based on reserves from RISC report, Target estimates East Chalkley’s (“most likely”) NPV10 value at US$12.1 million net to Target with a (“upside”) PV10 value of US$31.8 million net to Target.
Production, Appraisal & Development
10Depth Alliance W2 (feet)/Google Earth Image1 mile
East Chalkley Field, Cameron Parish, Louisiana
Production, Appraisal & Development
Pine Pasture #3 Proposed LocationApril/May 2013
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Production, Appraisal & Development
East Chalkley Field, Cameron Parish, Louisiana
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• Howard & Glasscock Counties, West Texas
• Target Energy Lease‐hold (gross acres): 3,492
• Target Energy Working Interest: 60%
• Net Revenue Interest: 75%
• Estimated number of vertical development locations in 3,492 ac leasehold:
At 40 acre spacing 87
At 20 acre spacing 174
Howard & Glasscock Counties
Fairway ‐ Permian Basin Tight Oil Resource Play
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Fairway ‐ Permian Basin Tight Oil Resource Play
Source: Tudor Holt Pickering @ Executive Oil Conference 3 April 2012
Midland, Tx
Target Energy Fairway Project
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Fairway ‐ Permian Basin Tight Oil Resource Play
Howard Glasscock Field (1925)
1 mile
1.6 km
Howard CountyGlasscock County
Target Energy leaseholdings
IP = Initial Production
ProducerProposed Well Location
Darwin #1 (Sep 2012), #2 (Dec 2013) Combined 170 BOPD + 210 mcfgd
BOA 12 #125 BOPD
Darwin #3 proposed location
Sydney #1 (Feb 2013) –Fusselman IP 150 BOPD + 200 mcfgd
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BOA 12 #1 Production Interval
Equivalent prospective section in Darwin #1
Equivalent producing zone in Darwin / Sydney (Fuss)
Fairway ‐ Permian Basin Tight Oil Resource Play
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• Darwin #12012 Wolfberry/Fusselman well. Initial Fusselman reserves estimated at 200,000 BO. Well commenced production on 18 January. Currently producing at 110 BOPD with 155 mcfgd.
• Darwin #2Offset to Darwin #1. Well successfully re‐entered in December 2012. Well on pump 60 BOPD + 106 mcfgd.
• Sydney #1Drilling concluded in Feb 2013. Commence production from Fusselman IP at 150 BOPD + 180 mcfgd.
• BOA 12#1Wolfberry well ‐ drilled late 2011. Currently producing app 25 BOPD + 100 mcfgd.
• Darwin #3800m east of Darwin #1. Permitting underway. Well will test Fusselman and Wolfberry.
• Fairway gas is liquids rich (~1400 BTU), attracting premium pricing.
• Partners are planning further drilling in Q3 2013.
Fairway ‐ Permian Basin Tight Oil Resource Play
0
50
100
150
200
250
300
350
400
450
500BO
EPD
Fairway Project 2013 Gross Weekly Production (avg BOEPD)
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Fairway ‐ Permian Basin Tight Oil Resource Play
Sydney 1 online
Darwin 2 online
Darwin 1 online
Darwin 1 10 day shut in
awaiting equipment
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Sources: Laredo Petroleum @ Executive Oil Conference 3 April 2012
Most operators still drilling vertical wells with stacked pays, but we are seeing a rapid acceleration in horizontal drilling.
Fairway is also in the heart of the Cline Shale play trend
Fairway ‐ Permian Basin Tight Oil Resource Play
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Fairway ‐ Permian Basin Tight Oil Resource Play
Target Energy Fairway Project
Activity around Target leases: Laredo
Source: Laredo Petroleum, ADAM Dallas Luncheon 6 Dec 2012
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Fairway ‐ Permian Basin Tight Oil Resource Play
Target Energy Fairway Project
Source: Apache Energy, Bank of America Conference, 14 Nov 2012
Activity around Target leases: Apache
23Source: Apache Energy: Howard Weil 41st Annual Energy Conference 18 March 2012
Fairway ‐ Permian Basin Tight Oil Resource Play
Target EnergyLeases
Activity around Target leases: Apache
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Fairway ‐ Permian Basin Tight Oil Resource Play
• Permian Basin has multiple (expanding) proven vertical and horizontal plays.
• Wolfcamp / Cline / Strawn / Miss / Dev / Fusselman all present at Fairway.
• In Fairway project area, Target now producing over 230 BOEPD (net to our WI) from one Wolfberry and three Fusselman wells. Wolfberry yet to be tested in the Fusselman wells.
• Further Wolfberry/Fusselman drilling at Fairway planned for late Q2/Q3 this year.
• Reliable economics in vertical drilling: Wolfberry wells typically recover 120 – 130 mBOe. Fusselman wells such as Darwin #1 can recover 200 mBOe.
• Fairway leases also well placed in Cline Shale Fairway in Howard / Glasscock Counties. Additional Deadwood potential.
• Horizontal drilling activity already increasing in and around Fairway area – will add substantial value. Local (Apache) Cline Shale wells have EUR’s ranging up to 528 mBOE.
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Fairway Project – Howard & Glasscock Counties, Tx TEX WI: 60%Production: Wolfberry/Fusselman
BOA 12 #1 (2011) Darwin #1 (2012) approx 320 BOPD + 400 mcfgdDarwin #2 (2012) Sydney #1 (2013)
East Chalkley Oil Field – Cameron Ph, La TEX WI: 35%Production: Alliance W2 sands – approx 40 ‐ 50 BOPD
Pine Pasture #1 shut‐inPine Pasture #2 (2008)
Section 28 Project – St Martin Ph, La TEX WI: 25%Production: MgTex/Hackberry – app 900 mcfgd + 25 BOPD
Snapper #A‐1 (2007) shut‐in awaiting workoverSnapper #A‐2 (2008) Snapper #A‐3 (2009)
Multiple pay zones in all wells.
Merta Gas Field‐Wharton Co, Tx TEX WI: 25%Production: Cook Mountain – approx 350 mcfgd + 3 BOPD
Merta #1 (2009)
Projects – Gross Production
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Reserves
30/6/12 Audited Reserves & Exploration Potential (net to WI/NRI)
Fairway reserves not included
Audited Reserves(000 BOE)
Proved & Probable
Possible Contingent (Best
Estimate)
Contingent (High Estimate Increment)
Total
30 June 2012 132.9 88.9 315.5 490.8 1028.1
Subsequent to the Reserves Audit, the recent drilling at Fairway has added the following volumes (internal preliminary estimates ‐ unaudited):
PDP (Proved Developed Producing)*BOA 12 #1 Wolfberry 80 mBOe gross / 36 mBOe net TargetDarwin #1 Fusselman 200 mBOe gross / 90 mBOe net TargetDarwin #2 TBASydney #1 Fusselman 200 mBOe gross / 90 mBOe net Target
Additional PDNP (Proved Developed Non Producing) reserves exist at Darwin and Sydney but are yet to be quantified.
*Assumes current economic and operating conditions going forward.
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Resource Plays: Fairway• Building production profile:
o Gross production increased from 25 BOPD to 320 BOPD in Q1 2013• Continuing drilling program in 2013.• Monitor expanding horizontal plays.
East Chalkley Oil Field Development: Pine Pasture #3 Well ( April/May 2013)Further Appraisal/Development Drilling
Ongoing Production:FairwaySection 28 Project AreaEast Chalkley Oil FieldMerta Gas Field
Continue evaluation of new opportunities:CorporateTechnical
What’s in the pipeline…
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1900 St James Place, #425Houston TX 77056 USA
Ph: +1 713 275 9800
Suite 5, 6 Richardson St,West Perth WA 6005 Australia
Ph: +61 8 9476 9000
W: www.targetenergy.com.au
