JRI Fireside chat with Scott Macmillan Tues. Nov 28 @ 9:00 Perth/12:00 Sydney, page-220

Thanks Matt, great stuff.

My notes (lengthy, sorry), just a rough guide and not 100% accurate. Holders should confirm when video is posted.

Update from M1?
Waiting on saturation data. Parked for now and concentrating on operational.

Will we get prelim net pay?
Yes, will include M2. Full suite of mud gas data from Dande to TD. Have porosity, gas saturation and permeability. Cutoffs from one basin don’t necessarily apply to another. Numbers will be conservative.

SWC samples condition?
Fractured in some reservoir plugs. Most focused on shale sections. Maybe 8 or 9 reservoir samples over the 1000m interval. Not really representative. Will have to cut hole core to get better picture from lab for better understanding of rock properties and poro/perm.

Approach to data publication?
Think we’ve published more than most companies. More detail than most may have caused more questions. Only thing not put out is log data which is why drilling now. Won’t just put into public domain due to keeping commercial advantage. Not definitive as getting more data. May cut back on detail due to ‘bedwetting’ going on.

Seismic been accurate?
Yes. LA came in 2.8m low to prognosis, (very close). Transition from PA to UA has some difference. Strat work underway for more certainty.

Correlation? Faulting in section?
Correlation between M1 and M2.

LWD and wireline data?
LWD had resistivity and gamma ray to guide casing depths and real time TD decision. Not seen any water legs in UA or LA.
Wireline had gamma ray, neutron. Don’t have coverage all way to bottom, restrictions on borehole. Got pressure data and cleanup data from some fluids. Have water sample from PA. Tools are ready to go in sidetrack. Don’t have SP data or sidewall cores yet. NMR tool was planned to run prior to sample but failed twice. Found to be firing sequence issue not borehole or filter cake.

Pressure data.
From whole stack (LA, UA and PA). Got water gradient in PA and also residual gas present in pore space in lower concentration below net pay cutoff. Gas below PA is calculated as above cutoff. Got pressure data for gas legs in UA. Compartments in LA with shale pressure. Thermogenic. Data from mud gas will see whether PA gas is from separate source rock.

Any fluid contacts?
Not so far. Source rock capable of generating oil and gas. Heavier ends as it gets deeper. Want fluid sample from reservoir. Definitely liquids in basin from what we’ve seen. Little drier updip maybe due to charge coming from north. Multiple source rock sequences, charge history very complicated. Coals, lacustrine and some tending to marine signature. Some humic. Good problem to have as plenty of source rock.

Salinity- on site?
Doped the mud with a tracer. Have a salinity measurement also from PA water sample. Some discrepancies so off to lab for better idea.

M2 drill
Executed first 3400m exactly to plan. Then the overpressure gas seeping into wellbore, had to control the well. Had to weight up the mud extra 1.5lb per gallon. Top of PA were long way overweight. Wireline run had a large amount of trip gas, then cascaded. Then going for fluid sampling saw cable head tension start to drop. Pulled off with 1700lb of overpull, cable sticking and had to leave. Went to pipe, couple of wiper trips, pumped up 200l of formation water and filtrate. PA has around 18-20% porosity. Compromised everything above the overpressure for sampling. Then decided ST to stop before overpressure and complete logging. Data says we have gas in UA and LA in multiple reservoirs. It is overpressured gas that was encountered = good problem to have. Can design future wells for this.

Alternative location to test LA?
Plan is to go partly into LA to sample some reservoirs. Then run 7in liner and drill out in 6in hole with reset mud weight. Can test and evaluate in open hole in future. Current location is fine to do that.

At sidetrack- issues encountered and mitigating measures?
Got good data set for pressure, so mud weight is appropriate. Vertical ST so execution is easier. First attempt at kickoff worked vs four attempts at M1ST.
Brought in group from UK (Tullow) to assist. Wireline standoffs to keep cable central in borehole to stop getting stuck against wall. Easier, quicker than PCL. Trying to avoid pipe.
Wire should find natural path in borehole to help avoid washouts and ledges, pipe is rigid and forcing it down damages the tool.
FMR also useful data set that wasn’t in M1.
Moving tools from Gulf of Mexico, Aberdeen, Dubai. Limits to how much we can get.
Changed mud weight and chemistry to mitigate.

Out of 10 for M2 borehole conditions?
Fine so far for ST. Started drilling out last weekend. Most of M2 borehole also fine. Wiper trips have caused some buildup.

Why drill so deep in LA?
Wanted to get reasonable sense of formation (over 2000m thick). Big playground. Had independent pore pressure modelling. Pressure higher than expected. Just had to deal with it. Final section to 3400m had failures so pressure monitoring wasn’t available.

Are all required tools working and ready?
All primary tools are there. CMR has backup which wasn’t available before. Quad combo fairly bulletproof. Redundancy for sampling, different primaries but no backups. Have plans in place if required.

Assuming worst case (no sample) what is contingency?
Can run the 7in and perforate and cased hole sampling. Have tools for that. Could also perf and flow test, conventional DST. Won’t get LWD, would have to mobilise from somewhere, time and cost worse than liner and cased hole. Have tools at well site for 6in hole if needed (slimline). Tight fit, not ideal but can be done just more risky.
Cased hole sampling can be done immediately if needed. If we can flow test it, it will flow.

Measures to reduce damage to tools?
Have formation pressures and fluid sampling tools. Have SWC tools also (2 types). Good sonic data. Enough redundancy. Main thing is to have appropriate overbalance and more vertical borehole and wireline standoffs arriving next 2 days (in time for wireline runs).

Prioritizing sample retrieval?
Changed order to run tools. Sampling is run 2 after basic data (was run 4 in M2). Tools in hole earlier. Reduced wiper trips and internal borehole conditions, mud weight.

Minimum sampling amount?
As long as it’s representative. In bottle sizes, just need 1 but typically redundant samples. Want at least 1 set each from UA and LA. Depending on conditions can continue for more samples.

Lab location?
Combination of Aberdeen, Norway (core analysis) and Houston (Geochem).

*Independent QA/QC on site checking everything.

Discovery – can analysis be done on site?
Once clean up and get representative fluid sample can see composition. Will be able to get CGR. Can blow it down into another chamber to get liquids ‘little trophy at the end’. Not full compositional analysis but can get C1-C5+. Can tell primary phases – condensate etc. Beyond that to lab for full compositional analysis.

Net pay announced?
Will be part of discovery announcement as per rules but will be a conservative number. Numbers will go up with further information.

Flow test next year?
Will be Q2 after wet, have to order long leads etc. Contracts etc. to mobilise equipment. Proposed to consolidate all equipment at a couple of ports for easier collection. With multi-year and multi-well campaigns there is incentive for companies to do this.

Checklist for IVZ to choose a partner?
Production, operate, development or monetise entirely? There is cases for all options. Deeper you go in appraisal, the higher the value curve. Combination of value and risk for a partner. At a minimum our speed and agility sees IVZ continue to operate through appraisal phase over next couple of years. Bigger partner will help leverage deals with suppliers, service companies etc. A lot of risk off table. Looks like we have a very nice discovery on our hands from UA and LA. Haven’t talked about other prospects yet. Licensing gives options with parts of basin vs whole amount.

Any farmout activity/increased interest?
Shut data room. Didn’t want distraction for technical team. Farm out process is intensive, had to update with M1 data. Still have ongoing enquiries but stopped until ready to do it. Build out technical team when ready. Very intensive and time consuming.

Has approach to future targets changed based on increased knowledge?
Strategy and goals haven’t changed. Trying to get to monetization very early on. Looking at early pilot scheme for proof of concept.
Next drill, maybe test East targets, final data package almost ready. Can start interpretation.  Or test basin margin. Will decide based on new seismic data.
Next plan for Mukuyu is 3D.
Changes to team, new drilling manager is world class (Ryan Singh?) His ideas for future setup. More efficient. Well design etc. will change a bit also.
Overall plan still same.

6in in part of current campaign?
Unlikely. Coming back to M2 next year, more efficient then. To drill now have to P&A for that section. Log data is enough now. Cheaper and more efficient to do it next year from bottom up.

Rig contract?
News on that very shortly. Rig can get to over 4000m in 6in so no issues with rig.

Well design?
Couple of months. Moving to rotary steerers instead of mud motors, much better. Build well pad in 6 months. Approvals to drill wells anywhere on license. Securing Exalo rig gives flexibility, cheap standby rates better than demob. Exalo see long term work.

Bigger campaigns?
Discovery will unlock range of funding options. Want to drive value of company up. Also better from planning and operational perspective. Extend east of Mukuyu or open basin margin as well as appraise Mukuyu. Drill to prove continuation or step out as far as possible to prove other fault blocks? Integrating M2 with seismic will assist decision. Plan one exploration well and three wells in Mukuyu over next 2 years. Also looking to weatherproof to continue in wet season.

Next financing?
Post-success from M2, assume value goes up significantly. Have other funding methods. Southern African banks lining up. Repsective offtakers wanting feedstock and power. Can be pre-payment or debt financing. Very conscious of dilution as largest shareholder. Will explore those options and take best route. Farm out before M1 would be at the mercy of another company. Annoyed with dilution and Aus capital markets. May be done in stages or tranches and build value.

Final
Good to have overpressured gas in Lower Angwa. Take comfort that we've seen hydrocarbons. Seeing it in CFA, executing sidetrack with appropriate conditions and mud weight. Should get result everyone's waiting for. Frontier drilling in an undrilled basin is a very rare thing. Hasn't happened on the ASX for decades.