body copy font is verdana set at 32 in white a focused play on the caney & woodford shales oil...
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A Focused Play on the
Caney & Woodford Shales
Oil & Gas Investment Symposium – Small CapsPalm Beach, Florida
8 February 2005
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• As a consequence of this success was one of Australia’s top performing stocks in 2004
OFF TO A FLYING START
• Newly formed to exploit conventional formations and unconventional Caney & Woodford Shales in Oklohoma
• IPO in Australia in July 2004 to take advantage of specific investor interest there
• First drilling program of 8 wells produced 100% success rate with surprisingly strong conventional discoveries
• Initial indications from testing Caney & Woodford Shales are highly encouraging – the next Barnett ?
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A STRONG & FOCUSED PLAY
• A new 20-25 well drilling program about to commence – Tomahawk 100% working interest owner
• Options to participate as 100% working interest owner on 5,000 acres
• Options to participate 50/50 on further 15,000 acres
• Option to buy local gas gathering system
• Well supported by Australian investors
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Snell-Heirs Project
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• Revenue already exceeds administration costs
SUCCESS TO DATE
Snell–Heirs project
• 2 producing wells acquired
• 8 wells drilled to date - all discoveries
• Next 6 wells coming into production over next 4 - 6 months
• First 4 wells producing already circa 1,700mcfg/day
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SNELL-HEIRS PROJECT
• Conventional gas play with multiple shallow formations
• Unconventional gas play - Caney Shale & Woodford Shale
• Oil potential in shallow formations
• 100% working interest
• Shallow (4,000 feet) relatively inexpensive wells
• 5 separate options, each to participate in 1,000 acres – potential for up to 125 wells in coming years
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AREA OF MUTUAL INTEREST
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UNCONVENTIONAL
WELL
CONVENTIONAL FORMATIONS STATUS
Feet Hydrocarbons
Formations Feet Hydrocarbons
Snell Heirs
6-1384 7 205
105
23
42
28
7
3
3
4
200
198
220
211
Caney Frac’d, producing 50-60 mcfg/day.Frac water returning, 2-3 months before flow rates determined.
Snell Heirs
7-13Snell Heirs
8-13Snell Heirs
2-19
Snell Heirs
3-19
Caney frac’d, producing 50-60 mcfg/day.Frac water returning, 2-3 months before flow rates determined.Woodford Shale to be perforated early February.
Caney frac’d, currently returning frac water, 2-3 months before flow rates determined.
To be dually completed in Woodford and Caney. Currently producing 400-500 mcfg/day from Woodford only.
Caney Frac’d, producing 200 mcfg/day.Frac water returning, 2-3 months before flow rates determined.
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UNCONVENTIONAL
WELL
CONVENTIONAL FORMATIONS STATUS
Feet Hydrocarbons
Formations Feet Hydrocarbons
Snell Heirs
4-1336 3 195
40
98
45
84
5
6
3
6
213
Caney, Woodford Frac’d, Frac water returning, 2-3 months before flow rates determined.
Snell Heirs
1-20Snell Heirs
4-19Snell Heirs
5-19
Snell Heirs
9-13
Caney frac’d, producing 450-750 mcfg/day.
Offset well to Snell Heirs 2-19 & producing 500 mcfg/day from Gilcrease.
Savannah Sandstone perforated and acidized,Production potential will be fully evaluated in coming weeks.
Offset well to Snell Heirs 3-19 & producing 300 mcfg/day from Red Fork.
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EXPLORATION DRILLING BLOW OUT
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DRILLING ON SNELL-HEIRS PROJECT
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THE BUSINESS CASE
• Caney & Woodford Shale similarities to successful Barnett Shale
• Based on stable gas prices not linked to oil price
• Snell-Heirs gas attracts a premium up to 25%, high BTU
• Rapid return on investment
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Parameter Barnett Shale
Geologic Age Mississippian
Thickness 200-300 feet
Depth 7,000-8,000 feet
Reservoir rock Organically-rich shale bituminous, calcareous
Total Organic Carbon 4.5% average
Vitrinite Reflectance Ro% = 1.00 to 2.00
Gas Shows on mud logs
Strong
Average Porosity Neutron/Density 15%
Resistivity Moderate to High
Gamma Ray Hot, highly Radioactive
Treatment Very large slick water and sand fracture treatments
Gas in Place SCF/ton 50-60 plus SCF/Ton
Production History Well Established
Caney Shale
Mississippian
130-150 feet
3300-3600 feet
Organically-rich shale bituminous, calcareous
4.95% in Snell #4-13
Ro%=1.44 Snell #4-13
Strong to Very Strong
Neutron/Density 15%
Moderate to High
Hot, highly Radioactive
Testing and evaluating acid treatments and slick water & sand fracture treatments
50-250 SCF/Ton
Very Early Stages
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PRODUCTION AT SNELL-HEIRS PROJECT
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ROBUST PROJECT ECONOMICS
• Successful well drilled, completed and bought into production for <$US.450m
• Offset wells accelerate production
• Completion to production in 120 days
• A 500mcfg/day well @ $US6/mcfg = circa $US.750m annual revenue
• Minimal capex with payback circa 7 months
• Minimal General & Administration costs < $US.400k p.a.
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THE NEXT 12 MONTHS
• Continued production from 5 Snell-Heirs wells in production
• Progressively bring the other 5 completed wells into production
• Drill 20 to 25 wells during calendar 2005
• Potential to drill horizontal wells
• Production flow rates will be established on portfolio of up to 30 wells within 12 months
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Well Analysis
Production – 500mcfg/day
Gas Price - $US6 + 20% premiumGross Daily Revenue $US3,600 Operating costs ($US300) Taxes ($US500) Royalties ($US900)Net daily back $US1,900
Annual net return per well $US700,000Cost of completed well $US450,000
Payback 235 days
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CAPITAL STRUCTURE
Shares Options
On Issue 49.250 19.482
Escrowed to 2006 (15.841) (16.982)Tradable 33.409 2.500
• Average weekly volume since listing of .750m shares
• $US50m market capitalization at current share price of $US1.05
• Number of shareholders doubled to +820 since listing
• Top 20 shareholders control +50%
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WHAT MAKES TOMAHAWK DIFFERENT?
• Multiple target formations = reduced exploration risk
• Experienced operator = reduced completion risk
• Access to extensive infrastructure = rapid path to revenue
• Tight capital structure = drilling results go straight to share price
• Acreage to allow drilling 2 wells a month for 5 years
• Enormous revenue potential, every successful well = $US.750m revenue p.a. = no shareholder dilution
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INVESTING IN TOMAHAWK
• Listed on main board of Australian Stock Exchange (ASX)
• Accounting Standards and Corporate Governance requirements on ASX in line with major western exchanges
• Most major US brokerages have access to ASX
• Recent independent research from major Australian brokerage (with office in New York) available today
• Office in Australia is more than happy to assist with enquiries
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FOR FURTHER DETAILS
Investor Relations OperationsAustralian Office US OfficeTony Brennan Rick HolcombChairman Executive DirectorE: [email protected]
E:[email protected]: +61 8 9267 4210 T:318 673 8285F:+61 8 92674210 F:318 673 8288
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Body Copy font is Verdana set at 32 in whiteA Focused play on the
Caney & Woodford Shales