ASX ANNOUNCEMENT & PRESS RELEASE ASX CODE: CTP 11.06.27 TO: The Manager, Company Announcements ASX Limited CONTACT: John Heugh +61 8 9474 1444 CENTRAL PETROLEUM COMMENCES GLOBAL SEARCH FOR PEDIRKA BASIN UCG/GTL COMMERCIALISATION PARTNERS Petroleum and minerals explorer, Central Petroleum Ltd (ASX Code CTP-?Central? or ?CTP?) have pleasure in announcing that they have entered into a Deed of Cooperation with Allied Resource Partners Pty Ltd, (?ARP?) to oversee the sourcing of funding and technology for a series of underground coal gasification (?UCG?)/gas-to-liquids (?GTL?) Projects aimed at, inter alia, developing energy security for Australia in liquid transport fuels. Key Points: Exclusive agreement signed with Allied Resource Partners (?ARP?), a fully aligned commercialisation partner over part of Central?s permit and application areas in the Pedirka Basin covering coal deposits. ARP will instigate and oversee the global search for funding and technology partners for part of Central Petroleum?s coal assets located in the Northern Territory and South Australia. A rigourously prescriptive Request for Proposal (?RFP?) process will be used to bind commitments to the Project from already identified carefully selected major domestic and global petroleum and mining companies, sovereign funds, energy funds and investment funds. Compliant RFP respondents will be required to detail: i) their plans to explore for coal and potentially complete a Bankable Feasibility Study (?BFS?) in which Stage 1 output of a minimum of 60,000 barels per day (bpd) of ultra-clean fuels would be based on a yet to be drilled minimum JORC compliant resource of 4 billion tonnes of accessible coal and; ii) their plans to commence construction of Stage 1 of the Project within 5 years. Compliant RFP respondents will also be required to detail their incremental expansion strategies to a potential rate of 3 million bpd, should exploration succeed in transforming a substantial portion of the current coal Exploration Target* of approximately 1,700 (?low?) to 2,500 (?high?) billion tonnes of coal into compliant JORC resources in a mix of Mining and Petroleum Act permits and applications. Note : * Coal tonnages where quoted are a viable ?Exploration Target? - AusIMM ? the potential quantity and grade of the coal is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a JORC Mineral Resource; exploration programmes are contingent on access, funding, force majeure, availability of rigs, crews and equipment and land access. An independent report on the Exploration Target tonnages is appended herewith. The Pedirka Basin ARP?s Chairman, Michael Doyle stated today that ?this inspirational, watershed agreement with CTP is aimed at creating significant and multi-generational benefits to Australia, including; liquid fuels self-security, taxation and royalty revenues, employment, and indigenous empowerment. These benefits combine to potentially make the Project of national and state significance?. The initial proposed development plan timelines are as follows: Request for Proposal (RFP) process initiated December half, 2011. Final consortia selected March quarter 2012. Bankable Feasibility Study (BFS) initiated June half, 2012, inclusive of a drilling programme aimed at a potential minimum JORC compliant 4 billion tonne resource of coal, suitable for UCG and capable of supporting a GTL plant. Construction Stage 1 commencing 3 to 5 years after contract signing ? estimated cost for the 60,000 bpd plant to be circa $7.5 billion. Potential to increase liquids output to 3 million bpd through modular plant expansions provided extensive drilling of coal exploration targets translates into JORC resources. The foregoing effort is predicated upon significant expenditure, exploration success, technical due diligence and other attendant requirements such as State and Federal support and legislative clarification. Whilst the tenements under scrutiny are highly prospective with coal intersections up to 35m in thickness, they remain sparsely drilled at this time, hence the exploration phase is critical to the long term success of the proposal. CTP and ARP jointly believe the deeper coal seams under 200-300m will be amenable to environmentally safe underground coal gasification (UCG) extraction techniques offering capital and operating cost benefits, compared to traditional open cut and underground coal mining. UCG is a way of gasifying coal underground by heating and then extracting the produced ?Syngas?, mostly a mixture of hydrogen and carbon monoxide?. At surface the Syngas can be converted to liquid fuels by the Fischer Tropsch process (GTL) and then readily transported to markets. Unlike coal seam gas extraction, (CSG), UCG does not rely on lowering the water table to drain the coal seams and does not rely upon ?fraccing? to release the gas. By reinjecting any CO2 or alternatively by using it in the production of methanol, another valuable liquid petrochemical, the UCG and GTL processes are capable of being engineered to produce a negligible carbon footprint. Because the coal seams in the Pedirka Basin are multi-layered and separated by layers of sandstone and shale, invasion of the associated overlying aquifers can be prevented by design engineering as well as comprehensive monitoring and combustion pressure control, a feature sadly lacking in many failed UCG trials historically. CTP?s Managing Director John Heugh noted ?CTP is now looking further afield to its immense untapped coal exploration potential to augment its already substantial petroleum exploration potential. Any active tenement holder possessing deep coal assets as CTP does, would find it incumbent upon them to scrutinise every possible method and means of exploiting those assets as soon as possible in the best interests of the Company and the nation.? CTP and ARP will require compliant RFP respondents to bear the entire BFS costs, which will allow CTP to concentrate its efforts and finances on its conventional and unconventional oil, gas and helium gas assets in Australia. ARP?s Joint Managing Director, David Shearwood, is quoted as saying ?The Stage 1 60,000 bpd project is estimated to cost approximately $7.5 billion and the eventual scale and estimated high margins of the Project are such that we expect a high level of interest. Our initial financial modelling indicates that Stage 1 will likely be expanded rapidly with each expansion likely to be 100% debt fundable due to their rapid payback periods and high margins.? The Project, if successful as envisaged, will help Australia become self-sufficient in liquid transport fuels, a National security imperative; Australia could indeed become an exporter of liquid fuels. Australia?s proximity to Asia lowers transportation costs and our location outside the Middle East reduces political risk. These advantages along with the ultra-clean nature of the product ensure sales prices achieved should be at a premium to benchmark prices for finished petroleum products such as diesel and jet fuel. Federal, Northern Territory and South Australian governments would benefit from development expenditure, construction and operating employment, royalties and taxes. Indigenous communities would benefit from extremely long term royalty income streams, training, employment and community development programmes which can support and positively impact the lives of current and future generations. The Project as envisaged would be environmentally sound and conform to best practices on many fronts; Liquid products planned will be ?ultra clean? due to extremely low contaminant levels especially sulphur which will produce substantial reductions in pollutants when compared to today?s generation of liquid transport fuels. Much of the CO2 emissions generated on site will be captured and stored and the remainder could be diverted to the production of methanol, another valuable petrochemical. There will be no ?fraccing? of coal seams There will be no draining of coal seams or lowering of the water table Combustion pressures and geological selection of appropriate coal seams will be carefully monitored to ensure no leakage into any possible overlying aquifers Remnant pillars will be carefully optimised to ensure no ground subsidence UCG Projects are ?Clean Coal? as they offer a major step towards reducing CO2 intensity of power generation and transport fuels. ARP?s Chairman, Michael Doyle commented ?UCG extraction does not employ the same technology methods as Coal Seam Methane or Coal Seam Gas. UCG does not require the lowering of the water table to drain coal seams, the use of fraccing techniques to rupture rock underground, or the use of carcinogenic chemicals. There is a groundswell of total misinformation in the market regarding these facts. UCG technology based projects are increasingly becoming mainstream and we expect many more to appear across the globe in the next decade. Current examples of UCG projects in existence and planned near term include; ? Yerostigaz, 50 years of UCG for power generation in Uzbekistan (now majority owned by Linc Energy Limited, of Australia); ? Chinchilla, 10 years of UCG operation in Queensland Australia, including 3 years of liquids production (100% Linc Energy). ? Eskom, the South African government?s power utility has been conducting UCG trials for many years and is presently co-firing a power station with UCG derived Syngas as well as coal. ? Eskom have announced its intention to develop a 2,100 MW 100% UCG fired power station in South Africa. ? Linc Energy plans multiple UCG/GTL projects (power generation and liquids production) starting with Wyoming in the December half 2011 and rolling out other UCG projects across coal assets in Alaska, Australia and Asia.? In concluding, David Shearwood stated, ?ARP is pleased to be working with CTP who over a decade ago set about exploring Australia?s remote interior in a brilliant forward looking counter cyclical strategy. CTP has discovered oil shows in areas never before explored as well as the enormous coal exploration target which now underpin the UCG effort. ARP is dedicated to supporting CTP?s ambition to commercialise and then expand its UCG assets in the Pedirka Basin of Australia. The robust RFP process will help identify the best mix of technical and financial partners for the Project. .? The area covered by the CTP-ARP Agreement consists of EPs 93, 105 & 107 as well as PELA 77 or those areas of mining interests held by CTP co-incident with these permits and applications. About Allied Resource Partners Pty Ltd (ARP) ARP?s Chairman, Michael Doyle is a specialist in investment banking, corporate finance, project and infrastructure financing. He has worked on toll roads, project financing, coal acquisitions and heavy industry in Australia and abroad. He is well connected in Asia having worked with Deutsche Bank, Merrill Lynch and private merchant banks in Hong Kong on numerous major cross-border transactions in the PRC and Asia. He holds a BA (Hons) from Sydney University. ARP?s Managing Director, David Shearwood, has extensive experience in mining engineering, funds management, as a resources analyst, in infrastructure and coal mining. He worked with Macquarie Bank?s infrastructure and specialised funds division as well as Westpac and QBE Insurance in their funds management divisions. He was a highly experienced stockbroker, a highly rated fund manager and has a BE Hons in Mining and an Order of Merit from the Australian Institute of Company Directors. He has been a director of Fat Prophets and most recently Chief Investment Officer of Atom Funds Management, one of the highest performing funds in Australia under David?s management. ARP is a developer of resource assets. They utilise their specialised and experienced team to identify lucrative environmentally sound projects, helping modest sized companies manage the financial and technical aspects of the project in partnership with various domestic and international resource project funders to the benefit of asset owners. ARP aims to be a pre-eminent independent developer of Australian Mineral, Metal, Resource and Energy assets. By combining the talent of some of the most senior resource experts in Australia, from all related disciplines (exploration, development, financing, promoting, infrastructure, project management and more) Allied Resource Partners is a single source in developing or acquiring a natural resource asset. Renowned international coal specialists McElroy Bryan Geological Services (MBGS) for example will work under the Allied Resource Partners? umbrella in the provision of geoscientific and geomechanical advice and analysis to Central?s UCG/GTL programme. Allied Resource Partners puts the myriad of consultants, suppliers and intermediaries under one roof ? allowing their client to deal with a single, well- resourced partner. This drastically reduces the project risk and margin leakage. One Partner, One Pricing Structure. ARP has aligned interests with their clients. Further information about ARP can be obtained from its website at: www.alliedresourcepartners.com.au Contact: Mr Michael Doyle Joint Managing Director E: [email protected] M: +61 432 335 266 Mr David Shearwood Joint Managing Director E: [email protected] M: +61 412 691 344 About Central Petroleum Ltd Central Petroleum is an ASX listed junior exploration and production company operating what is regarded as the biggest package of prospective acreage in Australia at approximately 70 million acres in a mix of petroleum and mining permits and applications. The Company gained admission to the Official List of the ASX on March 3rd 2006 with shares and options commencing to trade on Tuesday the 7th March 2006. The acreage has been assembled since 1997 when the Company was first formed as Merlin Synergy NL. The acreage includes the majority of the Pedirka Basin in the Northern Territory and in South Australia, the majority of the Amadeus Basin in the Northern Territory, all of the known Lander Trough in the Northern Territory and approximately 20,000 km2 of the Southern Georgina Basin. The Company was formed by Mr John Heugh and Mr Richard Faull in 1997 in a countercyclical strategy aimed at securing large acreage tracts with very large targets in prospective areas of strategically well placed parts of central Australia and later to examine potential for the monetization of gas resources via Gas to Liquids (GTL) Fischer Tropsch technology in the production of zero sulphur diesel, naphtha and jet fuel. John Heugh, the Company Managing Director has worked in exploration operations or in prospect development in 14 different basins in Australia and overseas with companies such as Ampol, Santos, Arco, Exxon, Pancontinental, Phoenix, Kufpec and others and was responsible for putting together the acreage package Central now operates. Central uses well-credentialled external service providers and consultancies to back up its in-house expertise and has an active forward looking programme to identify and fulfil its needs in additional staffing. John Heugh Managing Director Central Petroleum Limited For further information contact: John Heugh Tel: +61 8 9474 1444 or Robert Gordon Corporate Writers Tel: 0413 040 204 NOTICE: The participating interests of the relevant parties in the respective permits and permit applications which may be applicable to this announcement are: EP-82 (excluding the Central subsidiary Helium Australia Pty Ltd (?HEA?) and Oil & Gas Exploration Limited (?OGE?) (previously He Nuclear Ltd) Magee Prospect Block) - HEA 100% Magee Prospect Block, portion of EP 82 ? HEA 84.66% and OGE 15.34%. EP-93, EP-105, EP-106, EP-107,EP 115, EPA-92, EPA-129, EPA-131, EPA-132, EPA-133, EPA-137, EPA-147, EPA-149, EPA- 152, EPA-160, ATP-909, ATP-911, ATP-912 and PELA-77 - Central subsidiary Merlin Energy Pty Ltd 100% (?MEE?). The Simpson, Bejah, Dune and Pellinor Prospect Block portions within EP-97 ? MEE 80% and Rawson Resources Ltd 20%. EP-125 (excluding the Central subsidiary Ordiv Petroleum Pty Ltd (?ORP?) and OGE Mt Kitty Prospect Block) and EPA-124 ? ORP 100%. Mt Kitty Prospect Block, portion of EP 125 - ORP 75.41% and OGE 24.59%. EP-112, EP-118, EPA-111 and EPA-120 - FOG 100%. PEPA 18/08-9, PEPA 17/08-9 and PEPA 16/08-9 - Central subsidiary Merlin West Pty Ltd 100%. EPA-130 - MEE 55% and Great Southern Gas Ltd 45% EL-27094, EL-27095, EL-27096, EL-27097, EL-27098, EL-27099, EL-27100, EL-27101, EL-27102, EL-27103, EL-27104, EL-27105, EL-27106, EL-27107, EL-27108, EL-27109, EL-27110, EL-27114, EL-28095, EL-28096, EL-28097 and ELAs 28468 and 28472 - Central subsidiary Merlin Coal Pty Ltd 100%(?MEC?). General Disclaimer and explanation of terms: Potential volumetrics of gas or oil may be categorised as Undiscovered Gas or Oil Initially In Place (UGIIP or UOIIP) or Prospective Recoverable Oil or Gas in accordance with AAPG/SPE guidelines. Since oil via Gas to Liquids Processes (GTL) volumetrics may be derived from gas estimates the corresponding categorisation applies. Unless otherwise annotated any potential oil, gas or helium UGIIP or UOIIP figures are at ?high? estimate in accordance with the guidelines of the Society of Petroleum Engineers (SPE) as preferred by the ASX Limited but the ASX Limited takes no responsibility for such quoted figures. As new information comes to hand from data processing and new drilling and seismic information, preliminary results may be modified. Resources estimates, assessments of exploration results and other opinions expressed by CTP in this announcement or report have not been reviewed by relevant Joint Venture partners. Therefore those resource estimates, assessments of exploration results and opinions represent the views of Central only. Exploration programmes which may be referred to in this announcement or report have not been necessarily been approved by relevant Joint Venture partners and accordingly constitute a proposal only unless and until approved. All exploration is subject to contingent factors including but not limited to weather, availability of crews and equipment, funding, access rights and joint venture relationships. This document may contain forward-looking statements. Forward looking statements are only predictions and are subject to risks, uncertainties and assumptions which are outside the control of Central Petroleum. These risks, uncertainties and assumptions include (but are not limited to) commodity prices, currency fluctuations, economic and financial market conditions in various countries and regions, environmental risks and legislative, fiscal or regulatory developments, political risks, project delay or advancement, approvals and cost estimates. Actual values, results or events may be materially different to those expressed or implied in this document. Given these uncertainties, readers are cautioned not to place reliance on forward looking statements. Any forward looking statement in this document is valid only at the date of issue of this document. Subject to any continuing obligations under applicable law and the ASX Listing Rules, or any other Listing Rules or Financial Regulators? rules, Central Petroleum, its agents, directors, officers, employees, advisors and consultants do not undertake any obligation to update or revise any information or any of the forward looking statements in this document if events, conditions or circumstances change or that unexpected occurrences happen to affect such a statement. Sentences and phrases are forward looking statements when they include any tense from present to future or similar inflection words, such as (but not limited to) "believe," "estimate," "anticipate," "plan," "predict," "may," "hope," "can," "will," "should," "expect," "intend," "is designed to," "with the intent," "potential," the negative of these words or such other variations thereon or comparable terminology, may indicate forward looking statements. Competent Persons Statement Al Maynard & Associates Information in this announcement or attached report or notification which may relate to Exploration Results of coal tonnages in the Pedirka Basin is based on information compiled by Mr Allen Maynard, who is a Member of the Australian Institute of Geosciences (?AIG?) and a Corporate Member of the Australasian Institute of Mining & Metallurgy (?AusIMM?) and an independent consultant to the Company. Mr Maynard is the principal of Al Maynard & Associates Pty Ltd and has over 30 years of exploration and mining experience in a variety of mineral deposit styles. Mr Maynard has sufficient experience which is relevant to the styles of mineralisation and types of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ?Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves?. Mr Maynard consents to inclusion in this Report or announcement of the matters based on his information in the form and context in which it appears. JOINT MEDIA RELEASE World Class Clean Fuel Production Project in Central Australia Central Petroleum Limited (CTP - ASX listed) and Allied Resource Partners Pty Ltd (ARP) have today signed an agreement that works towards the establishment of a significant new Clean Fuel Production Project in the Pedirka Basin in Central Australia. The Project is underpinned by CTP?s recent discovery of a very large coal field in the Pedirka Basin, in south east Northern Territory and northern South Australia, which is estimated to contain a coal exploration target of thousands of billions of tonnes. The $7.5billion Pedirka Basin Clean Fuel Production Project intends to: Use Underground Coal Gasification (UCG) and Gas to Liquids (GTL) technologies to unlock energy from the vast ?stranded? coal deposits of the Pedirka Basin in the arid Simpson Desert; Convert these underground coal resources into environmentally friendly, ultra clean liquid fuels; Enable carbon capture and permanent underground storage (sequestering) of CO2; Create an economically and environmentally sustainable industry in Central Australia; generating infrastructure, investment, jobs, skills and economic growth; Support the development of long term revenue streams and Foundation programs in health, education, employment and training for local Indigenous communities; and Help secure Australia?s energy supply, with the potential to generate significant export revenue. David Shearwood, ARP Joint Managing Director stated: ?We have no doubt the global RFP process will attract a large number of potential project partners and consortia because the proposed project is world class in size, expected profitability and environmentally because it is a giant leap towards lower emission fuel. It has the potential to be expanded many fold with enormous benefits to Government, regional economies, Indigenous communities and Australia?s long term oil self sufficiency.? Bankable Feasibility Study Today?s announcement will commence the search for $300m in funding and technology partners for a Bankable Feasibility Study (BFS) from major global and Australian sources. Funders will be asked to formally respond to a Request for Proposal (RFP) process in the December half of 2011. The BFS will include an intensive exploration program; UCG / GTL Demonstration Plant and trials; obtaining relevant government licenses and approvals processes; and Engineering, Procurement, Construction Management (EPCM). Stage 1: Full Commercial Production It is anticipated that construction of Stage 1 (requiring investment of approximately $7.5 billion) will commence within 5 years of the signing of funding partners. Stage 1 aims to produce an estimated minimum 60,000 barrels per day (22 million barrels pa), which will be piped to Darwin for use in domestic markets and for export. At that rate, the Project aims to generate long-term revenue of over $6 million per day, at low operating costs and create up to 3,000 jobs during construction and 1,000- 1500 jobs once operational. Stage 2: Expansion Through Modularization Additional expansions are anticipated with Stage 2 using faster construction through modular plants and further pipelines. The Partners CTP is an ASX listed junior exploration and production company operating the largest holding of prospective onshore acreage in Australia totalling over 270,000 km2, c.70 million acres. CTP holds granted exploration tenements and tenement applications pending over the majority of the Pedirka Basin in south east Northern Territory and northern South Australia. More details on CTP are available here: http://www.centralpetroleum.com.au/. ARP is a new Australian company focused on developing high quality Australian energy and mining assets. With a highly experienced technical, legal and financial team, ARP provides a one stop solution for asset owners and asset funders. ARP sources capital (debt and equity) for owners; identifies quality assets - usually unheralded - for asset funders; and is capable of operating assets and related infrastructure. More details on ARP are available here: http://alliedresourcepartners.com.au/. Background on UCG / CTL Technology to Produce Ultra Clean Liquid Products The underground coal in the Pedirka Basin is suitable for extraction on site, via UCG technology - by heating the coal underground till it becomes a gas. UCG gas from coal will be piped from underground to the GTL plant where it will be cleaned prior to producing liquids. The refining process: Removes contaminants, particulants, sulphur and CO2; and Produces ultra clean liquid products including diesel with superior emissions properties compared with conventional diesel. Ultra clean diesel has almost zero sulphur; fewer emissions, particulants and contaminants; almost no aromatics; and delivers more power per volume than conventional diesel. Proven Technology UCG with subsequent GTL processing is successfully being operated by Linc Energy Limited at their Chinchilla facility in SE Queensland; and Eskom in South Africa is operating UCG for power generation. UCG technology enables extraction of coal?s energy in an environmentally sustainable way. While some waste CO2 will be produced on site, the project will enable carbon capture and permanent underground storage (sequestering) of CO2 during the UCG process. Waste CO2 could also be transported to old oil fields, for example the Cooper Basin, where the gas can be pumped underground to enhance oil recoveries whilst sequestering the CO2. Additional CO2 can also be removed through the production of methanol, a valuable petrochemical. Importantly, UCG does not employ the same technology as Coal Seam Methane extraction. UCG does not require: The water table to be lowered; Fracking of rock (forced rupturing); or The use of carcinogenic chemicals. Media Contact and Resources For media comment, please call David Shearwood, ARP Joint Managing Director, on 0412 691 344. Maps of CTP?s tenements can be downloaded here: http://www.centralpetroleum.com.au/. 27 June 2011
CTP Price at posting:
27.5¢ Sentiment: Buy Disclosure: Held