SN Euroz Presentation

I was fortunate enough to listen to SN presentation today. Very impressive. Spoke for the full hour. My notes are below:-

• STX focus is on the next phase of STX evolution, from explorer to producer. That transition for a small company is very rare, generally you see consolidation. We could see some excitement later this year in the registrar.
• Start date for campaign: Conductor is being installed (40 of the 94m in so far). All going well. WE3 being drilled on a farm, who are supportive. Local company, selling to local producers, selling fertilizers etc to local community etc is for the benefit of WA people therefore no issues (WE4 on crown land so diff story).
• Nev will be back towards the end of the year
• 6-7tcf of gas estimates from independent review in Permian gas play.
• Initial Phase 1 tranche of gas 50TJ/d will allow us to invest into Phase 2 (100-200 Tj/d of processing capacity) which is dependent on JV participation or we uncover the significant resources we have in SE. Looking to pipeline processing capable of injecting 316Tj/d.
• Gas contract – WES, really supportive gas contract, yes a honeymoon price slightly less than market price however that contract has a narrowing supply date on it, we can deliver on gas on that contract on day 1. Unique contract and really supportive of project delivery in particular with all the moving parts to this project.
• FID finance – CFO running that for us, identified a few high quality institutional lenders. Gas price is stable, annuity linked, attracts high quality funding.
• Investment Decision: FID to first gas is 12 (or so) months. That is very quick speed for an O&G in Australia. High quality small organization that is capable of delivering on this key milestone. Not relying on large consultants or contractors has been key to this. In house commercial and legal teams ability to enter into complex partnerships like the one with AGIG.
• Gas marketing book of over 300PJ already with most looking for 20-25pj/d. Range for AGIG in its pricing was very defined, which allows STX to narrow down its cost of supply and commercial arrangement.
• 22mio of cash on hand, right now with FID we feel well funded, there is a debt proportion we will look to bring in after that.
• Rig upgrades completed, civils nearing completion, covid plan in place and mobilization readiness has commenced. There is a small level of expertise onshore here in Australia, as a result all drillers coming out of SA and QLD. They are about to take a 2 week holiday here in Perth. We are seeing an influx of talented individuals who are planning on moving to WA on a more permeant basis. All well site geos based in WA, therefore will be seamless and therefore no requirement to pass quarantine.
• WE3 will begin in very early September. WE4 no defined date, still going through EP permit. Back off farm onto crown land and hence why timed as they are.
• HC will have its own dedicated flow test in WE4. WE4 will also bring Wagina into the development program. WE3 not expecting to hit wagina – which would be a negative position correlation to our modelling. Worst case we do hit wagina, which would mean we would have to take further look at our modelling.
• The ultimate recovery from WE 2,3 4 and 5 is more than what is required for phase 1 development and could produce for a very long period of time. Therefore not expecting further well requirement to complete phase 1.
• Lots of technical/geometry discussion – went into detail explaining why the geological formations in Waitsia and WE extend deep into the tough
• SE – is connected to WE. The chance of stx finding the identical geometry is very high and already looking to upgrade the COS and that is only based on the first data seen. Very consistent sheet sand mapped all the way along the trough. Talked more about the geological evolution and and in addition to the data processed currently, feel very confident in SE. HC, Kingia, wagina are all prevelant going further into the trough.
• First version of Trieste Seismic confirms that SE is large. Structure continues further to the south than what has been mapped. Depth is similar to WE, discontinuous but appreciable amplitude responses – diagnostic of hydrocarbons and porosity. Further processed volumes of triste will be to advance its interpretation in the coming weeks. If the continued work on the Trieste seismic delineates a high quality target, you might see a SE well in 2021. Balancing certainty with urgency, will need to make sure it is completed as a producer and tied into the plant.
• He also talked to walerying, demand and supply, NWS, pricing, WA gas prices, explained why WGO independent report had its faults. Talked to the reasoning why STX focus on WA domestic, see demand now and continuing to rise, reliable customers, structural advantage in location, premier support etc.
• Bring it all together – on a delivered basis, about 50% cheaper than our next competitor, that is even without FEED complete, which provides upside.

Very impressive presentation, covered it all. Feel free to add to this others that also present.

Buckle up, things are about to ramp up.