Arrow Energy BBY Agriculture, Clean technology

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Arrow EnergyBBY Agriculture, Clean technology
Energy ConferenceShaun Scott CEO
AustraliaSeptember, 2008
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Arrow Energy Strategy

• Arrows strategy is clear
• Grow upstream production and reserves
• Improve margins through downstream exposure
• Build a substantial overseas business and
• Maintain a healthy financial position
• This guides all our actions as we strive to
  create shareholder value from our favoured asset
  position.

Maximising the value of our resources
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Arrow Energy Current Position

• A 2.3 Bn vertically integrated specialist Coal
  Seam Gas (CSG) company.
• Huge domestic acreage position over eastern
  Australian coal beds with
• 1,430 PJ of 2P reserves net to Arrow Energy
• 5,084 PJ of gross 3P reserves
• Rapidly growing upstream margins from integrated
  power and LNG projects.
• Wide portfolio of quality international
  exploration acreage and new business
  opportunities.
• Asia wide alliance with Shell - the Worlds
  second largest energy company.

Advantaged position in CBM
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Arrow Energy in Eastern Australia

• The largest CSG acreage position in eastern
  Australia 80,000 km2
• Differentiates Arrow Energy from competitors in
  Queensland CSG industry - no requirement to
  acquire additional acreage
• Over 90 of land still to be certified for
  reserves
• 90 million of exploration expenditure finding
  costs of 0.07/GJ

The reserves estimates used in this statement
and throughout this presentation were compiled by
Mr. John Hattner of Netherland, Sewell
Associated, Inc., Dallas, and Mr. Gregory Hueni
of MHA Petroleum Consultants, Inc., Colorado, and
are consistent with the definitions of proved,
probable, and possible hydrocarbon reserves that
appear in the Australian Stock Exchange (ASX)
Listing Rules. Mr. Hattner and Mr Hueni are
qualified in accordance with the requirements of
ASX listing rule 5.11 and consent to the use of
the reserve figures in the form and context in
which they appear in this announcement.
10 of acreage 5,084 3P Reserves Gross
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Arrow Energy Tenements
This page
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Arrow Energy Tenements
This page
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Arrow Energy - International
China Negotiating firm title on eight preliminary
agreements with major China energy players.
Agreements include new exploration, mine
de-gassing and farm-in to existing PSCs.
India Three licence blocks with estimated CSG
resources in excess of 10,000 PJ. Two wells of a
39 well program complete. Partnerships with GAIL
India Ltd and Tata Power Limited. Other
opportunities under review.
Vietnam PSC signed with State oil company as
partner. 8-well drilling program to begin in
October in an area known as the Hanoi Trough
Onshore PSC, a highly prospective CSG tenement
area in the Hanoi Basin.
Indonesia Two new PSC applications, two MOUs for
JVs with established companies and two pending
agreements with miners. Our partners include some
of Indonesias biggest oil and gas developers and
mining corporations.
Exposure to areas with high energy needs
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Full Year June 30, 2008 - Delivering
Grow upstream production and reserves Improve
margins through downstream exposure Build a
substantial overseas business Maintain a
healthy financial position

• Full year gas production up 57 at 16,265 TJ.
• 2P Reserves 99 at 1,430 PJ net to Arrow.

• Total Revenue up 306 at 118 million.
• EBITDA up 563 at 70 million.
• After tax earnings up 109 at 37 millon.

• Drilling has commenced in India and by year end
  in Vietnam and China.

• With proceeds from the Shell deal and the sale of
  the NQGP our current capital program is fully
  funded through to first LNG.

Transitioning to operating company
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Key Events in 2008

• Shell deal
• 30 of Australian tenements and 10 interest in
  International for up to US737 million
• Enertrade acquisition in joint venture with AGL
• Midstream and downstream infrastructure
• Gas sales agreements and merchant generation
  business
• Investment of 140 million net to Arrow
• Sale of North Queensland Gas Pipeline
• Sale to VFMC 102.5mm net proceeds to Arrow
  this will be a 2008/09 event

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Key Events in 2008

• Braemar 2
• Joint venture with ERM (450MW power station)
• Gas sales agreement to supply 11.5 PJ p.a. of gas
  over a 12 year period
• Brings total net generation capacity to 370 MW
• GSA with Incitec Pivot Ammonium Nitrate Plant
• Supply of 7 PJ p.a. of low pressure gas over a
  period of 15 years with first gas supply expected
  in 1st Qtr 2010
• Internationally
• Signed PSC in Vietnam
• Commenced 39 well drilling program in India

Activities in line with strategy to grow margins
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Increasing Reserves

• Continuing a significant exploration and appraise
  campaign to prove up 2,000PJ of 2P reserves net
  to Arrow by year end.
• Currently have sufficient un-contracted reserves
  to meet the requirements of the Gladstone LNG
  project first 1.5 mtpa train.
• Our finding costs for net 2P reserves are less
  than 7 cents/GJ.
• Commencing concentrated exploitation of the
  Taroom coal seams in the Surat - significant cost
  benefits of tying into existing gathering
  infrastructure.

Reserves certification on only 10 of acreage
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Net 2P Reserves (PJ)
Net Full Year Production
Uncontracted Gas - 966 PJ Gross 1,560PJ
Gross uncontracted gas of 1,560PJ
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Exploration Activity East Coast
Significant potential indicated
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Gas Production - Utilisation
2009/10 Forecast
2006/07
2006/07
Growing gas realisations through downstream
exposure - 06/07 2, 07/08 32 growing to 46
09/10
Industrial Sales
3rd Party Generators
System Use
Daandine PS
Braemar 2 PS
2007/08
Daandine PS
Industrial Sales
Townsville PS
3rd Party Generators
Enertrade Acquisition
Braemar 2 Incitec AN Plant
System Use
Townsville PS
Arrow Ventures
Daandine PS
61 of 07/08 gas production sold to 3rd parties
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Revenue - 118 million
mm
3.42 /GJ
ca.7.00/GJ Gas realisation
50.36 /MWH
One off non recurring
Sundry operating income
2.13 /GJ
Interest, FX Gains Derivatives
32.75 /MWH
2007
2008
2007
2008
2008
2007
2008
Other
These are directly related to our electricity
generation and supply activities
Enertrade acquisition allowed the conversion of
foundation gas contracts with Enertrade into
Electricity offtake and direct gas supply
contracts with industrial users.
Total revenue increased by 311
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Arrow Energy the year ahead

• Braemar 2 power station in service by mid 2009.
• Reserves additions target.
• Continuance of India drilling campaign and
  commencement of appraisal drilling in Vietnam and
  China
• Progressing the LNG gas monetisation strategy.
• With proceeds from the Shell deal and the sale of
  the NQGP our current capital program is fully
  funded through to first LNG.

Activities in line with strategy to grow margins
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Supplying Gas to Gladstone LNG
Central Queensland Gas Pipeline - 440Km high
pressure pipeline development rights jointly
owned with AGL investment ca. 475mm.
Arrow also investigating option of a Surat Basin
to Gladstone pipeline around 450Km investment
ca. 500mm.
Pipelines provides access to large resource
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Target Production Build
Delivery of planned activities 130PJ in 2012
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Financial Outcomes Significant

• Execution of our Gladstone LNG Plans and
  resulting margin enhancement leads to 2013
  Australian domestic financial outcomes of
• Revenue in the range of 1.2Bn 1.7Bn
• EBITDA in the range of 600mm 850mm
• International contribution will be upside to
  these estimates.

Assuming oil prices between US80 US120/bbl
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Disclaimer Important Notice
The information in this presentation is not an
offer or recommendation to purchase or subscribe
for securities in Arrow Energy Limited or to
retain any securities currently being held does
not take into account the potential and current
individual investment objectives or the financial
situation of investors was prepared with due care
and attention and is current at the date of the
presentation This presentation contains forward
looking statements that are subject to risk
factors associated with the gas and energy
industry. It is believed that the expectations
reflected in these statements are reasonable, but
they may be affected by a range of variables
which could cause actual results or trends to
differ materially, including but not limited to
price and currency fluctuations, geotechnical
factors, drilling and production results,
development progress, operating results, reserve
estimates, legislative, fiscal and regulatory
developments, economic and financial markets
conditions in various countries, approvals and
cost estimates. All references to dollars, cents
or in this document are to Australian currency,
unless otherwise stated.
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