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CARNARVON PETROLEUM

CARNARVON PETROLEUM. Investor Presentation July 2001. Carnarvon History. Incorporated in 1983 as Orca Petroleum and adopted its present name in 1992 No production assets previously Unsuccessful wildcat drilling programs Significant exploration expenditure yielded no profits

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CARNARVON PETROLEUM

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  1. CARNARVON PETROLEUM InvestorPresentation July 2001

  2. Carnarvon History • Incorporated in 1983 as Orca Petroleum and adopted its present name in 1992 • No production assets previously • Unsuccessful wildcat drilling programs • Significant exploration expenditure yielded no profits • Sold Perth Basin permits to AusAm Resources in 2000 at a small profit • Currently marketing Carnarvon Basin permits for sale

  3. The New Carnarvon • New Board of Directors • Ken Tregonning (Managing Director) • David Orth (Executive Director) • George White (Non Executive Director) • Neil Fearis (Non Executive Director) • Acquisition of oil and gas production property in Thailand • Revenue stream in place • Significant development potential

  4. Key Features • Undervalued market capitalization • Oil and gas reserves in Thailand, PNG and Australia • Thailand oil and gas production SW1A JV • New, internationally-recognised, technical management • Innovative techniques to optimise under-performing assets • Up-side from existing assets (SW1A, PNG) and new ventures

  5. Business Concept • Identify, evaluate and access undervalued assets • Provide all requisite skills, expertise and resources for success • Maximise return for shareholders

  6. Business Plan • New focus and company since December 2000 • Structured growth with 5 year plan • Cashflow generating venture(s) • Low-cost brown-field acquisitions with exploration upside • Add value through technical excellence and innovation • Board reorganisation • Name change proposed • Relocation to Melbourne

  7. Executive Personnel Dr Ken Tregonning (BSc(Hons), PhD) –Managing Director • Two decadesinternational oil and gas experience, starting with Shell in Europe. Experience in S.E.Asia, Australasia, UK, Europe, USA etc. • Petroleum and reservoir engineering, economics and management • Former Executive Director of Australasian oil exploration company David Orth (BSc, DipGeoSci) – Executive Director • Twenty plus yearsinternational oil and gas experience with Amoco, BHPP & Triton in exploration, operations & management in Africa, UK, Middle East & South East Asia • Involved in discovery of 1 billion BOEs in Gabon, UK, M.East and PNG

  8. Future Upside • Extend successful drilling program in Thailand • High rates of return and rapid payback from existing discoveries • Significant upside: further drilling, firm oil prices & US$ income • Established strategic position in Thailand for additional ventures • Technological value adding • Marginal field development • Improved oil recovery (IOR) • Cost effective field management • Further asset acquisition • Proactive approach to existing portfolio

  9. High trading volumes with drilling activity Significant share price leverage Great sensitivity to: Incremental reserves Asset acquisition Drilling success Operational success Increase in market cap with success Market responds over time to small oil stocks that deliver Earnings Potential

  10. Returns to Carnarvon • Cumulative cash flow will greatly exceed investment amount • High Internal Rate of Return on investment • Maximise tax and capital efficiency

  11. Competitive Advantages • World class expertise in international oil industry • Access to state-of-the-art technology • Technical and cultural knowledge of Asia and Middle-East

  12. CARNARVON PORTFOLIO Assets and Opportunities

  13. Current Reserve Portfolio • Thailand, SW1A: • Oil reserves of 10 MMBO:Development drilling commences September 2001 • Current production rate 350 to 400 BOPD from 3 wells • Operator: Pacific Tiger Energy, Canadian listed company (PTE) • PNG, PPL157: • Reserves914 BCF (gas) & 46 MMBO in 3 gas/condensate fields • Australia, WA 254 P & AusAm: • Sage discovery 1-4 MMBO & Argos prospect • 11% equity in AusAm & royalty in Perth Basin permits

  14. Thailand • Thai deal comprises: • Wichian Buri Field • Si Thep Field • Na Sanun discovery • Expl. Res. Area • L44/43 application • Additional options: • Other untested zones • Open acreage

  15. Thailand • Excellent fiscal terms • Only 5% royalty • Tax losses of U$10m available • SW1A Concession: • Low cost producing oil field • 17MMBO upside • 10,000 BOPD upside • Additional opportunities being assessed

  16. SW1A Joint Venture • SW1A producing 400 BOPD from 3 wells • Carnarvon’s share 40% (Pacific Tiger hold 60%) • Drilling of development wells starting September 2001 • Increase production to 2,500 BOPD by June2002, >5,000 BOPD by Dec2003

  17. Current SW1A Potential • Two producing oil fields, Wichian Buri and Si Thep • Proved case: 5 MMBO reserves 2,500 BOPD, 6 year lifetime • Recent drilling added 200-300 BOPD from 2 wells • Field extension scenarios: • Base case(2P): 10 MMBO reserves, >5000 BOPD, 8 year lifetime • Upside(3P): 17 MMBO reserves, >7500 BOPD, 12 year lifetime

  18. Operating Cash Flow & Production Projections SW1A JV Base Case – Carnarvon 40%

  19. Comparative Market Value Enterprise Value $m Market Capitalisation $m Values as at March 2001 As at 31 March 2001

  20. Highlights • New board of directors • Underlying production asset • Market yet to understand the production and cashflow potential of the Thailand assets • Opportunity for share price re-rating through development well program • Increased oil production will provide Carnarvon with strong operating cash flows

  21. Contact Details Ken Tregonning Ph 03 9824 2104 David Orth Ph 03 9824 2104 Len Troncone Ph 08 9325 6344 Website : www.carnarvon.com.au

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