BUSINESS PLAN - NOVEMBER 2009 REPORT by pyj86964

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									                                               ABN 24 119 737 772 



19 November 2009

                                        BUSINESS PLAN –
                                     NOVEMBER 2009 REPORT

The accompanying report sets out the status of Texon’s business in November 2009 and outlines the
progress made since the Company’s AGM in May 2009.

The main points are:

    •   Raised A$8.5M via Placement and Share Purchase Plan and as a result of which the Company
        now has 134.5 million issued shares;

    •   Production has increased with a higher proportion of oil;

    •   Administration overheads and operating costs have been reduced;

    •   9,500 gross ‘reservoir acres’ now under lease;

    •   3 more Leighton wells have been drilled;

    •   After drilling these wells, the Company still has 14 PUD and 10 PROB well locations on
        Leighton;

    •   Production in mid November is about 475 boepd to Texon;

    •   Acquired Leighton look-alikes – Mosman (1,434 acres) and Rockingham (1,835 acres) – giving
        2 more potential projects in the Leighton area;

    •   The fifth Leighton well was successfully drilled through the Eagle Ford Shale into the Edwards
        Limestone;

    •   The Eagle Ford Shale under Leighton, Mosman and Rockingham is now a material part of the
        Company’s upside portfolio;

    •   Identified Crescent Head as a possible further Olmos project for the Company;

    •   Cash as of October 2009 is A$8.4M;

    •   Substantially increased potential of 40 million boe to the Company in the projects summarized
        on Page 8 of the Report;

__________________________________________________________________________________________________
                                            Texon Petroleum Ltd
                               Level 9, 46 Edward Street, Brisbane, Qld 4000
                             Telephone: (07) 3211 1122 Fax: (07) 3211 0133
                                        www.texonpetroleum.com.au
                                                     Page -2-


     •   4 or 5 high impact wells planned for 2010;

     •   Possible work programme is set out on page 47 of the Report;


-ENDS-


For further information, please contact:
Dr John Armstrong
Chairman
Brisbane:        07 3211 1122

Or

Mr David Mason
Chief Executive Officer
Brisbane:        07 3211 1122
Houston:         +1 281 419 4976 (Houston is 16 hours behind Aust Eastern Standard time)


Glossary:
boe:      barrels of oil equivalent (including gas converted to oil equivalent barrels on basis of 6mcf to 1 barrel
          of oil equivalent)
boepd: barrels of oil equivalent (including gas converted to oil equivalent barrels on basis of 6mcf to 1 barrel
          of oil equivalent) per day
M:        Million
PUD:      Proved Undeveloped
PROB: Probable




__________________________________________________________________________________________________
                                            Texon Petroleum Ltd
                               Level 9, 46 Edward Street, Brisbane, Qld 4000
                             Telephone: (07) 3211 1122 Fax: (07) 3211 0133
                                        www.texonpetroleum.com.au
                                BUSINESS PLAN
                           ‐ NOVEMBER 2009 REPORT




Report for Shareholders, Investors and Analysts     November 2009
                          Purpose


•   to set out for shareholders and investors the progress made 
    since the May 2009 Business Plan

•   to illustrate the potential value of the various projects and 
    the Company

•   to outline the Company’s forward plan and possible project 
    timing




                             November 2009                           2
                           Important Statement

•   The information contained in this presentation concerning Texon Petroleum Ltd (Texon) is of 
    general background information about Texon's activities as at the date of the presentation –
    November 2009. 

•   The presentation contains certain statements (including projections, estimates, opinions and 
    forecasts) concerning the anticipated future performance of Texon and its operations 
    (Forward Looking Statements). None of these Forward Looking Statements is a guarantee or 
    representation as to future performance or any other future matters, which will be 
    influenced by a number of factors and subject to various uncertainties and contingencies, 
    many of which will be outside Texon's control. Accordingly, Texon's  actual results, 
    performance and prospects could differ substantially from that expressed in or implied by the 
    Forward Looking Statements. No representation or warranty is made as to the accuracy, 
    completeness or reliability of the information contained in this presentation.

•   This presentation is not advice to investors or potential investors and should not be relied 
    upon as such as it does not take into account the investment objectives, financial situation or 
    needs of any particular investor. 



                                           November 2009                                               3
                                   Capital Structure



              • No of Shares on Issue :                        134.5 million
              • Share Price (1)                         :      27  cents
              • Market Cap (1)                          :      A$36 million
              • Debt                                    :      Nil
              • Unlisted Options                        :      19.25 million
              • Cash (30 Sept 09)                       :      A$10.1 million *



--------------------------------------------------------------------------------------------------------
(1)
      18 November 2009                          * A$8.4 million at 31/10/09


                                              November 2009                                                4
Share Price and Volume




         November 2009   5
                                                         Assets


                                 Leighton                  Mosman                   Rockingham
              100%                                                                               Crescent Head
            WI in new                                                                                 and
             Leases                                                                                  Other
                                                                                                   Prospects


                                                   Olmos & Eagle Ford
Exclusive
Prospect                                                                                                    Lower Risk
 Access                                                                                                        Gas
                                                                                                            Prospects




150 3D
Seismic
Surveys


                                                                                                           Maroubra /
                                                                                                          Scarborough

       Big
       PGA
       Area                                  Leighton Oil Storage and Processing Facility


                         Track
                        Record                                                      Cash
                                            Production           Reserves




                                                         November 2009                                                   6
                Messages

• Reserves                ‐      Increasing
• Production              ‐      Up
• Cashflow                ‐      Improved
• Tech Track Record       ‐      80% Success
• Materiality             ‐      Higher Threshold
• PGA Area                ‐      Bigger
• 3D Seismic              ‐      150 Surveys
• New Leases              ‐      100% ‐ Deal Maker
• Oil vs Gas              ‐      More Oil
• High Impact Wells       ‐      4/5 Targeted for 2010

                      November 2009                      7
                   Projects – Potential to Texon


                                               Oil            Gas          Status
                                             (mmbbl)         (bcf)

Olmos (Leighton/Mosman/Rockingham)               3               18    Leased

Eagle Ford (Leighton/Mosman/Rockingham)         6.5              90    Leased

Maroubra / Scarborough                           ‐               54    Leased

Crescent Head (Olmos)                            ‐               23    To be leased

Low Risk Gas                                     ‐               8     Mostly Leased

                                                9.5              193



                                                      41 mmboe



                                     November 2009                                     8
                    Key Business Potential Value Adds 
                    through Year End 2010

• Leighton 70‐100% WI                    ‐   partial sale of equity to reduce Texon’s WI to 50%
                                         ‐   additional production wells

• Eagle Ford horizontal well             ‐   to enhance value of Texon’s Eagle Ford holdings

• Mosman #1 (Olmos and Eagle Ford)       ‐   second project like Leighton

• Rockingham #1 (Olmos and Eagle Ford)   ‐   third project like Leighton

• Maroubra or Scarborough well           ‐   potentially high rate well with upside

• Crescent Head                          ‐   To be leased / possible new Olmos project

• Other Projects                         ‐   Map and lease / to acquire new high upside areas

• Frio                                   ‐   sale




                                      November 2009                                               9
         Wells ‐ Track Record ‐ First 2 Years 


 •   THE TEAM + TECHNOLOGY WORK                                  80% 
                                                               Technical 
                  Reservoir                                     Success 
                   Target                      Result            Rate

                   Olmos                      5 out of 5

Materiality        Wilcox                     0 out of 1
                   Yegua                      3 out of 4
                                                           Acceptable prospects 
                    Frio                      7 out of 7   must now satisfy same 
                                                           technical criteria but 
                                                           also raised materiality 
                    Total                 15 out of 17     “bar” (i.e. Reserves and 
                                                           Initial Production Rate)




                              November 2009                                      10
                   Learnings




For prospects to be acceptable to TXN, they must satisfy 
the same Technical criteria (as for 80% track record), 
but with increased materiality
re Reserves and Initial Production Rate
to provide commercially satisfactory Returns
and economic value to the Owners of the Company.




                       November 2009                        11
                Oil Price



Actual Prices




                                2010‐14 Average: US$88/bbl




                November 2009                                12
                Gas Price



Actual Prices


                                 2010-14 Average: US$7/mcf




                 November 2009                               13
                           Reserves




                                                                       *




                                                                                      Probable
                                                                                      Gas
*   Includes first two Leighton wells (Peeler #1 and Tyler Ranch #1) and 12 proved 
    undeveloped locations at Leighton.                                                Oil


                                 November 2009                                              14
              Production




 Quarterly 
 Average 
Production
  (boepd)




                                Gas
                                Oil


                November 2009         15
Increased Oil Production and Revenue 




                 November 2009          16
                  Gas Marketing ‐ Leighton


Gas Pipeline           :     crosses Leighton field

Capacity               :     20 MMCF/D

Heating Value of gas   :     1300 BTU/SCF

Henry Hub Gas Price    :     e.g. US$4/mmbtu, Leighton gas valued 
                             at US$5.59/mcf 

Marketing              :     Laser Midstream, a south Texas marketing company 




                                November 2009                                17
                    Oil Marketing ‐ Leighton



Storage               :     Oil Tanks – 2,400bbl capacity

Transported           :     Road Tanker

Cost of Transport     :     US$1.54 per barrel 

Sold to               :     Gulfmark and Flint  Hills Refinery 




                                 November 2009                    18
                          Revenue ‐ Cost ‐ Margin 



                                                    US$ / boe
                                         2008                      2009
                                      (Full Year)               (1st 3 Qtrs)
Revenue                                  50.8                      30.8

Cost             Admin + Corp           (16.8)                    (13.2)

                 Opex                    (8.9)                     (6.6)

Overall Margin                           25.1                      11.0




                                November 2009                                  19
           Data and Prospects 




•   Enlarged Prospect Generation Area

•   150 3D Seismic Surveys – 16,000 sqkm

•   Exclusive access to all prospects generated 
    by Wandoo until 2014




                  November 2009                    20
Enlarged PGA Area 




      November 2009   21
                           Leased Holdings * 

                      Reservoir                   Gross Reservoir
                       Target                        Acres (2)
              Eagle Ford                                 4,549


              Olmos (1)                                  3,000


              Wilcox                                     1,450


              Yegua / Other                               551


                                   Total:                9,550


--------------------------------------------------------------------------------
*     Gross acreage by reservoir target and where Texon has WI of 70‐100%
(1)
      These 3,000 acres where the Olmos is the target are also part of the Eagle Ford acreage
(2)
      Reservoir acres are the number of acres below which the nominated reservoir is the target


                                        November 2009                                             22
            Leighton ‐ Mosman ‐ Rockingham


                                              Leighton Field
                                                1,280 acres


Mosman Prospect
  1,434 acres


                                             Total Acres = 4,549
  Rockingham 
    Prospect
   1,835 acres
                                   A.W.P.
                                   Field



                         November 2009                             23
                                Leighton - Mosman - Rockingham
                                              Olmos / Eagle Ford

OLMOS                   EAGLE FORD 
Vertical Drilling       Horizontal Drilling


N                                                      S

                                                                   Olmos
                                                                   Texon Position (70% WI):
                                                                    Gross Acreage:            3,000 acres
    Wilcox                                                          Projects (40 ac/well):    74 wells
                                                                    TXN Resource Potential:   6 mmboe


     Olmos
                                                                   Eagle Ford:
                                                                   Texon Position (70% WI):
     Austin Chalk                                                   Gross Acreage:            4,549 acres
                                                                    Projects:                 45 wells
     Eagle Ford Shale
                                                                    TXN Resource Potential:   129 bcf
                                                                                              (21.5mmboe)


      Edwards Lime




                                                 November 2009                                              24
               Leighton – Possibly 31 Wells

                                                                                  Texon 70%:




                    Sa
                      les
                                                                                  830.4 acres




                          G
                            as
                                Pi
                                  pe
                                                                                  Texon 100%:




                                 lin
                                       e
                                                                                   449.6 acres
5 PDP                                                                Possible
                                              Sales Meter            Leighton     Total: 1,280
14 PUD                                      Peeler #1                  Field         acres
10 PROB                                                     Peeler
                                                             Oil
                                                                      Outline
                                               Tyler
                    Tyler Ranch #2              Oil         Tanks
2 Other                                        Tanks



                   Tyler Ranch #1
                                                                       31 total possible
                                                                         well locations
          Tyler Ranch #4                                             (in line with 40 acre
                                                                        well spacing in 
                                                                          nearby field)

                                                   Tyler Ranch #3



                                           November 2009                                         25
                                     Leighton ‐ Olmos 


                                                                                               Texon’s 
  Acres          Texon                                                          Further       Potential 
                 WI %                     Well Locations                        Drilling      mmboe (1)
                               PDP        PUD       PROB          OTHER
      830          70            5        11          4              0              2010         1.6


      450         100            0         3          6              2              2010        0.9 (2)

                                                                                    Total:       2.5



                                                          PDP:           Proved Developed Producing
                                                          PUD:           Proved Undeveloped
                                                          PROB:          Probable

-----------------------------------                       NPV 7 ½ = A$23/boe
(1)    Assuming 40 acre well spacing
(2)    at 70% WI                                          At 80% Nymex (Oct  09) and exch rate:  90¢


                                           November 2009                                                   26
          Leighton – Olmos & Eagle Ford



Monetize Texon’s Leighton 70% WI in 830 acres and 100% 
WI in 450 acres:


      ‐     partial sale of Working Interest 
      ‐     additional Olmos production wells
      ‐     possible Eagle Ford horizontal well 




                       November 2009                      27
                             Eagle Ford Shale

•   Eagle Ford Shale is a highly calcareous organic gas and oil target at a total 
    vertical depths of approx 11,000 to 11,700 ft

•   A number of majors are now targeting the Eagle Ford Shale prospects:
     – Petrohawk (210,000 acres)
     – Conoco/Phillips (300,000 acres)
     – Murphy Oil (100,000+  acres)
     – Pioneer Natural Resources (310,000 acres)

•   Liquids rich gas in Texon lease area

•   Well initial rates   ‐    4‐8 mmcfgpd
                         ‐    200‐500 bopd

•   Resource potential to Texon ‐ large


                                                                                     28
                                    November 2009
                                   Eagle Ford Shale ‐ Fairway
                                                                                     • Emerging
                                                                   • Liquids rich resource play‐ repeatable drilling
                                                            • Up to 32 mmboe gross potential on 4,500 ac lease hold
                                                                       • EFS Depth:  11,000‐11,700 feet
                                                                  • On trend with producing Eagle Ford wells   




                              HZ=Horizontal Wells




                                                                             Leighton/
                                                                             Mosman/
                                  Petrohawk                                 Rockingham
                                                    Antares Well
                                    Wells


                                                                                                                       29
Source:  Oil and Gas Investor; July 2009 p. 52             November 2009
                     Eagle Ford Shale – Company Holdings
The Eagle Ford Shale is an
emerging oil and gas play
which a number of major 
oil and gas companies are
targeting.




                                              Texon 
                                              Leases




                                                           30
                                     November 2009
      Eagle Ford Wells near 
Leighton ‐ Mosman ‐ Rockingham




              November 2009      31
                                Leighton – Eagle Ford Shale 




                                             Possible                          Texon’s 
                           Acres              Well             Drilling       Potential 
                                            Locations                         mmboe (2)
                           1,280               13 (1)         Possibly             6.2
                                                              H2/2010




-------------------------------------------------------            NPV 7½ = A$27/boe
(1)   Assuming 80 acre well spacing, 80% success                   At 80% Nymex (Oct  09) and exch rate:  90¢
(2)   At 70% WI

                                                         November 2009                                          32
           Leighton – Mosman – Rockingham
               Seismic Similarity ‐ Olmos
Leighton               Mosman               Rockingham




                       November 2009                     33
                                          Mosman 

                                           Possible                                Texon’s 
                          Acres             Well          Texon       Drilling    Potential 
                                          Locations        WI%                     mmboe
 Olmos                     720              18 (1)            100    Q2/2010       1.5 (2)
                                                                     (vertical 
                                                                       well)

 Eagle Ford               1,434             14 (3)            100    Q2/2010       6.7 (4)
                                                                     (deepen 
                                                                      vertical 
                                                                    Olmos well)
                                                                      Total:         8.2


-------------------------------------------------
(1)   Assuming 40 acre well spacing
(2)   at 70% WI
(3)   80 acre well spacing, 80% success
(4)   At 70% WI



                                              November 2009                                    34
                                          Rockingham 

                                           Possible                              Texon’s 
                          Acres             Well          Texon     Drilling    Potential 
                                          Locations        WI%                   mmboe
 Olmos                    1,000             25 (1)         100     Q2/2010       2.1 (2)
                                                                   (Vertical 
                                                                     Well)

 Eagle Ford               1,835             18 (3)         100     Q2/2010       8.6 (4)
                                                                   (deepen 
                                                                    vertical 
                                                                  Olmos well)
                                                                    Total:        10.7



--------------------------------------------------
(1)   Assuming 40 acre well spacing
(2)   at 70% WI
(3)   80 acre well spacing, 80% success
(4)   At 70% WI


                                               November 2009                                 35
      Lennox ‐ Nambucca ‐ Iluka

Avoca discovery (27ac)                      Nambucca (18ac)
     990 mcfgd                                0.5 – 0.6 bcf
      + 13 bopd

                                   1.3 mi




 Lennox (66ac)
  1.3 – 1.6 bcf


                                     Iluka (32ac)
                                     0.5 ‐ 0.8 bcf
       Old produced 
       well only partially            1.4 mi
       drained area




                             November 2009                    36
                                Pebbly
           • 1‐2 Bcf / well
           • Well Depth:  2,300 m
           • Channel sand

                                               Proposed
                                          B    location   B’
B




Proposed
location




             B’


                               November 2009                   37
                                         Sunshine
                • 2‐6 Bcf / well
                • Well Depth:  3,500 m                   A
                                                             Proposed
                                                                         A’

                • Offset Wilcox production                   locations



                                         A’

    Proposed
    locations


A



                              Possible
                              drained 
                                area
                   Old well




                                         November 2009                        38
                             Lower Risk Gas Prospects
                                (Retain 50% WI) 
                                                                                                    Analogous 
                                                                                                      Wells 
                                                                                                      Initial 
               Reservoir   Status      Possible      Texon          Drilling      Texon’s            Prodn or 
                                        Well       Current WI      Targeted      Potential (1)      Test Rate 
                                      Locations        %              For         mmboe              (boepd)
Lennox          Yegua      Leased         1           100            2010            0.08              160
Nambucca        Yegua      Leased         1           100         Subject to         0.04              160
                                                                   Lennox
Iluka           Yegua      Leased         1           100         Subject to         0.04              160
                                                                   Lennox
Pebbly          Wilcox     Not yet        3           100            2010            0.25              160
                           Leased
Sunshine        Wilcox     Leased         3           100            2010             0.8              650
                                          9                                           1.2


-------------------
(1)
      50% WI                                           NPV 7½ = A$23/boe
                                                       At 80% Nymex (Oct  09) and exch rate:  90¢


                                           November 2009                                                         39
                             Crescent Head 

                                                Proposed
                         C               C’     location   C




Proposed
location




           C’


• 5 Bcf
• Well Depth:  13,500’
• Olmos sand
                                November 2009                  40
Crescent Head ‐ Upside




         November 2009   41
                              Maroubra Prospect

                              • Maroubra:  80‐200 Bcf
                              • Well Depth: 4,600 m
                              • Stacked Wilcox Objectives              On trend 
          Maroubra Prospect
                              • 3D Direct Hydrocarbon Indicators    productive well 
                                                                     IP: 9 mmcfpd
                                                                    Distance ~8 km

 Structure And 
Amplitude Map




                                                          Targets




                                             November 2009                      42
                                    High Upside Gas Projects 

                                                                                                                        Analogous 
                                                                                                                       Wells Initial 
                      Reservoir       Acres         Status       Possible      Texon       Drilling     Texon’s           Prodn
                                                                  Well        Current     Targeted      Potential      or Test Rate 
                                                                Locations      WI %          For         mmboe         (mmcfgpd)

  Maroubra             Wilcox          750          Leased         1 +          100                    3.5 – 8.8 (1)         9
                                                                                            One in
  Scarborough          Wilcox          600          Leased         1 +          100         2010       1.3 – 4.4 (1)         5


  Crescent Head        Olmos        Being            To be         1 +          100           ‐        0.3 – 7.5 (3)         5
                                   Mapped (2)       leased


                                                                                             Total:    5.10 ‐ 20.7


------------------------------------------------------------------------------------
(1)
      35% WI
(2)
      Not all of this area may prove to be prospective or available to be leased or be able to be leased.
(3)
      50% WI, upside 40 ft of pay, 2,000 acres
                                                                         NPV 7½ = A$20/boe
                                                                         At 80% Nymex (Oct  09) and exch rate:  90¢


                                                          November 2009                                                                 43
                         Olmos – Summary at 70% WI 


                                                                        Texon’s 
                Area                                      Possible     Potential 
               (Acres)     PDP   PUD     PROB     Other    Wells       (mmboe)
                                                                         40 Ac
Leighton       1,280        5    14       10       2         0            2.5


Mosman          720         ‐     ‐        ‐        ‐       18            1.5


Rockingham     1,000        ‐     ‐        ‐        ‐       25            2.1


     Totals:   3,000        5    14       10       2        43            6.1




                                                                Oil                  Gas
                                                             3 mmbbl                18 bcf

                                  November 2009                                              44
                              Eagle Ford – Summary at 70% WI 


                                                                                    Texon’s 
                                                      Area         Possible       Potential (1)
                                                     (Acres)        Wells          (mmboe)
           Leighton                                  1,280           13               6.2
           Mosman                                    1,434           14               6.7
           Rockingham                                1,835           18               8.6

                                           Totals:   4,549           45               21.5




                                                                                   Oil        Gas
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
(1)
                                                                               6.5 mmbbl     90 bcf
          WI 70%




                                                         November 2009                                45
                  Other Significant Upside ‐ Summary 

                                                                                                                                Texon
                                                               Reservoir                                            Texon      Potential
                                                                                                                    WI %       (mmboe)
Maroubra                                                           Wilcox                                               100    3.5 – 8.8 (1)
Scarborough                                                        Wilcox                                               100    1.3 – 4.4 (1)
Crescent Head                                                      Olmos                                    To be leased       0.3 – 7.5 (2)
                                                                                                              at 100%
Lower Risk Gas                                          Yegua / Wilcox                                                  100       1.2 (2)
                                                                                                                               6.3 – 21.9




‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐
(1)
          WI 35%
(2)
          WI 50%



                                                                                       November 2009                                           46
                                           Possible Work Programme
                                                2009                            2010                      2011
                                                Q4          Q1             Q2          Q3       Q4   Q1          Q2
Frio Sale                                        S

Leighton        ‐ Sell 30‐50% WI                               S
 “              ‐ Prod. Wells                                              W           W        W    W           W

 “              ‐ Eagle Ford Farmout                                 F
 “              ‐ Eagle Ford Well                                                           W
Mosman          ‐ Farmout                        F

 “              ‐ First Well                                         W
Rockingham      ‐ Leases                         L

 “              ‐ Farmout                              F
 “              ‐ First Well                                                     W
Low Risk Gas    ‐ Farmout                                  F

 “              ‐ Wells                                                                W

Maroubra / Scarborough      ‐ Farmout                                F

 “                          ‐ First Well                                               W

Crescent Head   ‐ Map / Lease / Farmout                            M/L/F




                                                                                                                      47
                                                           November 2009

								
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