Central Petroleum Limited (CTP) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I have great pleasure in welcoming you to the 2020 Annual General Meeting of Central Petroleum Limited. My name is Wrix Gasteen, and I have the honor of being Chairman of Central Petroleum. I'll be chairing the meeting today in accordance with the company's constitution. Now given the extraordinary circumstances created by the global pandemic, in accordance with the Corporations Act, today's AGM is being held for the first time as a virtual meeting. Now this is not at all our preference, but our management and our Board genuinely miss meeting with you all personally, as we've done in past years, but such is the life in the times of COVID-19. Now before commencing the meeting and in the spirit of reconciliation, we acknowledge the traditional custodians of our country throughout Australia and their connections to land, sea and community. We pay our respect to their elders past and present and extend that respect to all Aboriginal and Torres Strait Islander Peoples today. As it's now just after 10 am, and I'm informed by the company's secretary that a quorum is present, I declare the Annual General Meeting properly constituted and open. Now as this is the first time we've had a virtual meeting, there are a number of process matters, which I'd like to bring to your attention. Firstly, your questions can be submitted at any time. [Operator Instructions] Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. At the relevant time, Central's Chief Financial Officer, Damian Galvin will be reading out the questions that you've submitted for the appropriate person to answer. Please also note that your questions may be moderated or if we receive multiple questions under one topic, they may be amalgamated together. And finally, due to time constraints, we may run out of time to answer all your questions. And if this happens, we will answer them in due course via either e-mail or posting responses on our website. Our voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, I will shortly open voting for all the resolutions. At that time, you'll be eligible to vote at this meeting. A new polling icon will appear. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit the submit or enter button as the vote is automatically recorded. You do, however, have the ability to change your vote online at any time up until I declare the voting closed towards the end of the meeting. Now importantly, should you require any technical assistance with this technology please feel free to call Computer Investor Services on the number listed on your screen, and you'll be linked straight into Computershare's help desk to provide you with any assistance you need. I now declare voting open on all items of business. Now you'll note that the polling icon will soon appear on your screen. Please submit your votes at any time. I'll give reminders to vote after every resolution, and I'll give you warning before I move to close the voting. Ladies and gentlemen, today, our Board members are participating from locations all around Australia. Firstly, let me introduce you to our Board members: Leon Devaney, our Managing Director; Stuart Baker, our non-Executive Director; Kathy Hirschfeld, who's been a Non-Executive Director and recently appointed Dr. Agu Kantsler and Mick McCormick. Dr. Julian Fowles, a director appointed in 2019 recently resigned to take up a position as Managing Director of Karoon Energy, and we wish him all the very best. In addition to our Board, I would also like to introduce to you a special member of our Risk and Sustainability Committee, Mr. Bob Liddle. Bob was first engaged by Central Petroleum as a consultant over 15 years ago. Born in Hatches Creek and a member of the Arunta tribe of Ella Springs, he has played a key role as an adviser in the negotiations for oil and gas fields in the Northern Territory and in maintaining local relationships for Central. Bob is an Aboriginal elder, who has the full respect of the traditional owners from the areas where we operate in the NT. Also present is Mr. Daniel White, our company secretary. And in addition to the Board, also in attendance from Central's executive team are Chief Financial Officer, Damian Galvin; and General Manager, Exploration, Dr. Duncan Lockhart. Now I'd also like to introduce you to Mr. Tim Allman, our auditor from Pricewaterhousecoopers; and Mr. Lewis Brimelow, Relationship Manager at Computershare, the company's share registry. Ladies and gentlemen, now that we finished all our introductions, I'll present my Chairman's address. At the Annual General Meeting in November last year, no one could have predicted within the next quarter that the world and all of our lives will become so seriously impacted by a global pandemic. For Central, this year has highlighted the importance of having the stability, the financial strength and the agility to be able to ride out the downturn caused by the pandemic and then to have the resilience to refocus on growth and grasp new opportunities as they arise. Amongst these new opportunities is the opportunity to participate as a foundation customer of the proposed Amadeus to Moomba Gas Pipeline, AMGP. Alongside Macquarie and the Australian Gas Infrastructure Group, AGIG, and to play a significant role in progressing its development and supplying gas to Southeastern Australian domestic markets in 2024. Completion of the AMGP would be a game changer for Central, providing a shorter, more direct route with fewer bottlenecks to deliver our gas to the much larger Southeastern Australian market. It will provide a catalyst for the Amadeus Basin to become an increasingly important part of the solution for Southeastern Australia's looming gas shortage. It's easy to be distracted by the current weakness in spot gas prices, although they are now on the rise again. But forecasts indicate that Southern Australia will see a major and continuing gas shortage from 2023 as supplies continue to decline from the 50-year-old Bass Strait fields exacerbated by the planned closure progressively of coal-fired power stations, the first of which is Liddell in New South Wales. Central's next phase of sales growth will target this market supply opportunity. In the context of current market factors and the proposed Amadeus to Moomba gas pipeline, Central's previously announced growth strategies remain unchanged. First, progress the Range Coal Seam gas project to final investment decision by the end of 2021. This is a relatively low-risk opportunity to double our gas reserves and production capacity in the highly developed Surat Basin in Queensland. With 135 petajoules net for Central of 2C resource, it's a great opportunity. Developing range is at the top of our priority list. Second, progress the farm-out of the producing assets at Mereenie, Palm Valley and Dingo to fund Central's 2021 Amadeus exploration program. These exploration opportunities represent our most promising prospects in the basin, targeting proven hydrocarbon bearing formations, which can be efficiently tied into the existing infrastructure. Only yesterday, we announced that a preferred bidder had been chosen and an exclusivity period granted to enable the preferred bidder to conduct final due diligence before making their binding offer. Third, complete the Dukas exploration well, which could provide in itself a huge new resource for southern markets. We also continue to work on other large sub-salt leads in the basin. The value of our producing assets and growth potential is clear. And our challenge for 2021 will be to deliver these key growth projects along with a final investment decision for the Amadeus to Moomba gas pipeline. At the same time as these growth strategies are being implemented, we will continue, as always, to build on the relationships we have established with our valued stakeholders. As a company focused entirely on regional Australia, we will continue to deliver on our buy local and employee local policy to provide employment and business opportunities for the communities and traditional owners in the areas where we operate. This has been -- there has been a continuing discussion about the gas growth story. And the role of natural gas can play as global economies transition from coal to renewable energy sources. We believe that our gas has an important role to play in reducing emissions while maintaining the stability and reliability of energy generation through this transition period. Australia's Chief Scientist, Alan Finkel, has stated that Australia's electricity supply will remain dependent on complementary gas power for up to 30 years as the nation's grids make the transition to 0 net emissions and renewable energy. Consistent with the federal government's recently announced energy plan, we at Central are continuing investment in exploration and growth projects and commit to a pipeline infrastructure, which will assist in this transition process. Central recognizes that climate change is a significant environmental, social and business issue. For us, the carbon emissions from our operations in the Amadeus Basin remains small. Our natural gas contains extremely low levels of CO2 compared with gas resources in other basins. We use conventional drilling techniques to extract our gas and our planned development and exploration programs do not require any fracking. Our strategy for success has included rebuilding a Board with the right balance of skills, experience and vision to deliver on our plans. Importantly, in the last 6 months, we have added 2 very experienced professionals to our Board, former Woodside, Executive Vice President of Exploration, Dr. Agu Kantsler Kansler; and former APA Group Managing Director, Mick McCormick. At the same time, I wish to thank Dr. Julian Fowles for his contribution as a director over the past 16 months. As said previously, Julian has taken up a new position as Managing Director, and we certainly do wish him well in that new role. Ladies and gentlemen, following my appointment as Chairman in September of 2019, my role was to step up from being a Non-Executive director to bring stability to the company, to focus the company on successfully executing its growth strategies and to rebuild the Board. I'm pleased to say that thanks to the efforts of the management team, my fellow directors and our very committed staff, we have remained on track to achieve this despite the impact of COVID. I am announcing today, however, that this will be my last AGM as Chairman. I will remain as Chairman as we take several critical pieces of current business through to their final investment decision point in 2021 but will step down as once this has occurred. In closing, our good news story for 2020 has been our resilience in the face of COVID-19 and the posting despite cohort of a maiden full year profit, our first. I am confident that the value of our asset portfolio in the Northern Territory in Queensland will become more widely apparent in 2021 as we deliver on project milestones. Finally, I wish to thank all our shareholders for their continued support of the Board and our management and the traditional owners of the land on which we operate for continuing to work so constructively with us. Thank you, ladies and gentlemen. Before introducing Leon Devaney to give his Managing Director's presentation, I'd like to play you a 3-minute video. It's entitled this is central 2020. [Presentation]

Well, ladies and gentlemen, I hope you've enjoyed that video. This is Central 2020. Now let me introduce you to Leon Devaney, who will present his Managing Director's report to us all. Now if at any time you have a question for Leon about his presentation, please submit it online, and Leon will provide the answer after he has concluded his presentation.

Good morning. I'm Leon Devaney, the CEO and Managing Director of Central Petroleum. Before jumping into today's presentation, let me set the scene for what has been an unexpected and very challenging year for the energy sector. Central had great momentum going into last year's AGM. At that time, we had record sales and a very ambitious growth strategy for 2020, which included 5 exploration wells, a final investment decision for the Range Gas Project in a major farm-out process. As we enter 2020, however, things changed quickly and dramatically. The global energy market crashed to historic lows and an emerging COVID pandemic created high levels of market and operating uncertainty. It was a surreal and difficult time for everyone. In response to these dynamics, Central took a prudent yet balanced approach to cost and expenditures. This meant we slowed and, in some cases, paused growth to be fiscally prudent or simply as a practical outcome of operating in a post-COVID world. Today, I'm very pleased with how Central is emerging from these challenging times. Our operations and capital structure have proven resilient. Importantly, this means we are now back into full growth mode. And with the addition of projects like the proposed Moomba pipeline, our strategy is as bold and company changing as it has ever been. As we go through today's presentation, I think our shareholders can take a lot of comfort in how their company has weathered 2020 and how it has now positioned itself to move forward. On that note, let's move into the presentation. This is our company snapshot slide, which I'm sure many of you are familiar with. I'd highlight that last financial year, we reported record sales at 12.3 petajoules equivalent with $65 million in revenue. This resulted in a maiden full year profit of $5.4 million. Central has been around for 14 years as a listed company, so reporting a full year profit for the first time in the middle of a major market downturn is a great milestone and shows we are moving in the right direction. Our net debt has now been lowered over the past couple of years to 34%. And following an upgrade earlier this year, we have a solid reserve base that includes 155 petajoules of 2P gas reserves. As you can see in the chart in the top right, however, our share price performance over the past 12 months hasn't benefited from these financial achievements but has really been driven by global markets and sector uncertainty. It has tracked the steep decline in the broader energy sector as well as our peer group, although we have seen some share price support as we return our focus back on to growth. Central now has a great balance of solid cash flow and a variety of big growth opportunities, which I cover in this next slide. This slide looks a little simplistic, but the strategy and the work behind it has been deliberate and hard thought. Central now has what I think is a very unique balance of cash flow and growth. We have solid operations generating free cash flow that provides downside protection, but we also have great growth prospects that include a lower-risk CSG project approaching FID, basin-wide conventional exploration and a multi-TCF subsalt prospects, providing plenty of busky. Looking forward, we want to expand on these activities through the right blend of financial strength and quality assets. Let's start with a look at our production assets, which have really been put to the test this year under very difficult operating and market conditions. Central is the largest onshore gas producer in the Northern Territory, operating 3 producing fields with a combined installed plant capacity of 45 TJs per day net to Central. We have a 50% interest in the Mereenie oil and gas field with our joint venture partner, Macquarie. And it remains our largest asset with our share of production, totaling 1.4 petajoules equivalent last quarter, 92% of that through gas sales. Central also own 100% share of the Palm Valley and Dingo gas fields. Last quarter, these fields produced a combined 1.2 petajoules of gas. Both Mereenie and Palm Valley have been producing reliably for decades. I'll also add that Central acquired all 3 fields in 2014, 2015, which was before the Northern Gas Pipeline, or NGP, was built. And they are now proving to be high-quality investments with great running room through potential reserve adds in brownfield economics. If we look at the performance of our operating assets over the past few years, we see consistent and significant growth. The catalyst for this has been the Northern Gas Pipeline, which in January 2019, connected the Northern Territory to the East Coast market for the first time. We had record annual sales volumes and revenues in fiscal year 2020 that were triple of what we reported in 2017 as well as strong field performance that supported a 16% reserve upgrade earlier this year. It is a similar story with EBITDAX, which has grown to almost $35 million in fiscal year 2020. This is a significant result when you consider our market cap is currently around $90 million. What really makes the performance of our operating assets so valuable though, is that it gives Central the opportunity and flexibility to fund future growth. Free cash flow from operations allow us to maintain exploration capabilities and initiate projects like Range in the Moomba pipeline. In addition, we have the option to monetize the value we created in these assets to fund major new growth and diversification. Central's strategy to invest in operating assets 6 years ago in order to complement growth is now really paying off. Whilst full year results show a very smooth growth trend, it is worth looking at sales on a quarterly basis, where the impact from key drivers becomes much more visible. This chart shows gas sales by quarter for the past couple of years. You can see the big impact the NGP had on firm gas sales from the start of 2019. And you can also see the equally sudden drop in non-firm sales resulting from the market downturn from the start of 2020. Today, our focus is to quickly return gas sales back to 2019 levels of around 12 petajoules per year. To drive this outcome, we are investing in a program of 4 recompletions and 2 crestal development wells at Mereenie, which will increase field capacity from 2021. Combined with an improving gas market during this time, we expect to close the gap with 2019 sales volumes within the next 12 to 18 months with further growth in gas sales coming through our exploration and new projects. One of the key reasons Central has been able to weather COVID disruptions and a major market downturn is that our contracting strategy is based on long-term firm gas sales with take-or-pay commitments in fixed CPI-linked pricing. This contracting structure significantly reduces volatility in demand and gas prices. As this chart shows, most of our current sales are under firm contracts through 2021 and following a recently announced new gas sale agreement, our uncontracted position is further reduced in 2022 and 2023. This contracted position provides solid near-term revenue support, whilst at the same time, allowing us the opportunity to take advantage of price increases as domestic gas markets rebound. We continue to be active marketing gas, particularly non-firm sales where the price makes sense. The spot gas market has recovered a little from its lows earlier this year, but as I've said before, I do not think current spot prices are anywhere close to sustainable in the medium to long term, which is view shared by many producers and market analysts. Our view is that we will see an improving gas market in 2021 and with the market recovering from 2022. I also think the East Coast gas market correction could overshoot given the severe pullback in exploration and appraisal investment, we are currently seeing in the sector. That means the timing for our various growth strategies are well positioned to capitalize on a strong market recovery over the next few years. All right. Let's take a quick look at our debt, which we used to acquire our operating assets. Our debt facility is currently about $70 million, with debt service well covered by operating cash flows even during this market downturn. You can see in the last bullet, our debt is very efficiently priced considering our size. So from a capital structuring perspective, it has been fantastic. As recently announced, we did extend this facility to September 2022. This is a great result for Central with the facility now much better aligned with the final investment decision at our Range Gas Project in late 2021. For those concerned about debt during a market downturn, Central has consistently demonstrated a smart yet prudent use of low-cost debt capital given the operating performance of our assets. I would also note that our sales are currently over 3x what was contracted when we first structured the facility back in 2014, 2015. Having said that, we are focused on debt reduction, and we will continue to pay down debt at a steady rate. One thing worth clarifying, though, at this point is what happens if we sell down part of our operating assets under the farm-out process. The answer is that we expect to use a portion of the sale proceeds to pay down debt by a pro rata amount. For example, if we sell down 50% of our operating assets, we expect to prepay around 50% of our outstanding debt. Moving up the activity pyramid to developments. Let's have a look at our Range Gas Project. This is a really exciting growth story for Central. We are awarded the Range permit in 2018 and went on to fully fund exploration through a 50-50 farm-out with our joint venture partner Incitec. We had very good technical success from our exploration program in 2019. The results exceeded our expectations, allowing us to book development pending 2C resources of 135 petajoules net to Central. We decided to pause Range activities in March this year because of the COVID pandemic and market downturn. Whilst the pause was disappointing, it was appropriate for Central under the circumstances. In recent months, however, the outlook for energy markets have stabilized. Forecast and our own internal marketing activity continues to indicate strong demand for new domestic term gas supplies. We have also recently created some financial flexibility by extending our debt facility and signing a new gas sale agreement. All of this allows us to restart the Range project, which is exciting. The immediate work will include a 3-well appraisal pilot program, which is planned for the first half of 2021, along with obtaining the necessary approvals and permits for project development. We are also considering alternative delivery strategies for surface facilities and pipelines, including joint venture development, third-party build, own, operate options or even tolling. Obviously, maximizing project value, managing risk and optimizing timing all play a role in these considerations. We anticipate getting to FID in about 12 months, so around this time next year, I hope to be talking about the development phase for this exciting project. If that is the case, development could commence immediately after FID. This would allow for first gas production in 2023, which we think is a great time for new gas supply to be entering the East Coast market. It's still early in the project, but this is a major growth opportunity for Central. To put it into perspective, our share of a successful Range project would nearly double our current 2P reserves as well as annual gas sales and revenue. With Range now progressing toward FID, I think the significance of this project for Central will start to become more visible over the course of 2021. Okay. Moving up the pyramid. Let's take a look at the Amadeus exploration program we are planning for 2021. This program is focused on drilling 3 prospects being Palm Valley Deep, Dingo Deep and Orange, which are located at B, C and D in the map. These targets have over 500 petajoules of potential recoverable resource. On a risk basis, we estimate the target recoverable resource to be more than double our existing 2P reserves. Further, because these are near or in existing fields, their development can benefit from brownfield economics resulting in lower costs to develop in higher value. These exploration wells will also be able to produce gas from our currently producing formations at Palm Valley and Dingo, meaning they have a lower risk investment profile with high upside. This is a significant program for Central, which we are planning to fund through a partial sell-down of our operating assets. Central has created a lot of value in these operating assets since acquiring them and crystallizing some of this value uplift through a partial sale in order to fund new growth could be value accretive to shareholders. As recently announced, our process for that partial sale is well advanced. The process was a bit delayed by COVID and market uncertainty. However, we are now moving into a final due diligence phase and a period of exclusivity with a preferred partner. I want to emphasize that the transaction is still indicative and may not ultimately be completed. But it is an encouraging step forward in the process and one we think could achieve our corporate objectives and become value accretive for shareholders. Outside the exploration program next year, we are chasing multi-TCF subsell targets, both at Dukas under a JV with Santos as well as a possible target called Zevon, in which we hold 100% interest. These are shown as E and F in the map. With respect to Dukas, the JV is working to get this prospect drilled in the front half of 2022. Central will continue to try and accelerate this program, but we are working within a JV where Central is not the operator. The immediate task at this point is to finalize a preferred drilling approach that will maximize this company changing exploration opportunity. In respect to Zevon, this is less mature, but potentially a massive target, maybe 5x bigger than Dukas, which is why it is so interesting to us. We need to do seismic to define the Zevon target further. But ideally, we might be able to align Zevon activity with the Dukas program such as they can both share a specialized drill rig in 2022. These are all great opportunities for step changes in organic growth, and we'll keep shareholders informed as these exciting exploration programs progress. Let's now take a look at the top of our activity pyramid, that being basin-wide exploration and the Amadeus and how it provides major organic growth opportunities for Central. The Amadeus Basin has been a proven source of oil and gas for decades. But because of its historical lack of market access, it is underexplored and continues to fly under the radar. The Amadeus Basin however is unique in that it offers a significant underexplored onshore opportunity for substantial conventional gas production that can supply the East Coast. Part of our forward vision is to get a pipeline built that would connect the Amadeus basin directly to the Moomba gas supply hub. This would open up the Amadeus Basin in a way that is far more significant than what we saw with the NGP. Governments and markets are looking for significant new supplies of cost competitive gas for the East Coast market, and I believe the Amadeus Basin can emerge over the next couple of years as a clear winner from these future market dynamics with Central in pole position. There's been a lot of discussion around the recently announced federal energy plan, which appears to have good support. The plan promotes gas as a transition path to renewables, a gas-fired economic recovery and investment in gas supply hubs to improve market liquidity. Importantly, for us, it focuses on large emerging gas basins for new supply and new pipelines for efficient gas delivery. The Amadeus Basin with a new pipeline direct to Moomba has a great opportunity to step up and become a major part of the East Coast gas market moving forward. Something that isn't as well-known is that the Amadeus Basin has enormous potential to supply the East Coast market. This map from Energy Quest shows that the Amadeus Basin has 1 of the largest estimated total resource positions at 53 Tcf. You can see this puts us alongside some of the biggest and most promoted basins connected to the East Coast at the moment. What makes the Amadeus Basin particularly unique is that has 30 years of proven commercial production. It has 200 petajoules of existing uncontracted 2P gas reserves. It remains highly underexplored, and it is heavily gas firm. It also has a broad mix of conventional targets, combined with large unconventional upside. Given its size and the opportunity for it to be connected directly to Moomba, the Amadeus Basin should be the emerging basin to watch over the coming years. Let's put the potential of the Amadeus Basin into a bit more context. This slide shows the maturity funnel for defined gas opportunities that we have so far identified within our Amadeus permits. Each bubble represents a defined gas opportunity with the size of the bubble relative to the unrisked prospective resource. The left side of the funnel is less mature. In other words, it is more risky. As exploration work is completed, it becomes more mature or less risky and progresses through the funnel to the right. There are a couple of things to highlight. First, you'll see a number of less mature but very big multi-TCF targets. Many of these are large subsalt plays like Dukas. One subsalt target called Zevon is potentially so large we had to scale it down by a factor of 4 for this particular chart. The smaller opportunities scattered throughout the funnel tend to be smaller conventional targets. But don't let the scale fool you. These are still very significant in size, particularly for a company like Central. The other interesting part of this slide is that it shows just how much exploration potential Central has in the Amadeus Basin. We have so far defined 69 gas targets with over 20 TCF of potential gas. That is an average of well over 250 Bcf of gas per target. That means the average target has more potential gas than what Central currently has as 2P reserves. Many of these are positioned in the less mature part of the funnel, which reflects just how underexplored the basin is at this time. When we talk about emerging basins, the Amadeus should stand out. It is very large and underexplored with several proven hydrocarbon systems. This means there is a conveyor belt of gas exploration opportunities that could potentially play a major role in the future East Coast gas market. This slide lists a few attributes of the Amadeus Basin that might not be well known, but I think are important to consider in the context of a major future source of East Coast gas supply. As I mentioned earlier, the Amadeus Basin has decades of proven low-cost conventional gas production. It has a smaller surface footprint and lower water impact versus unconventional production. We don't have any fracking plan with our naturally fractured conventional reservoirs. Our gas composition has very low CO2 and so it has lower carbon intensity compared to other basins, which is a real advantage when we transition to a low-carbon emission energy supply in the future. We are also proud of our ability to provide local and indigenous employment in the remote communities in which we operate. All of these attributes set the Amadeus Basin apart as an emerging source of new East Coast gas supply. Now let's talk about the Moomba pipeline. Central recently entered into an MoU with Australian Gas Infrastructure Group and Macquarie for a proposed pipeline that would connect the Amadeus Basin directly to the Moomba gas supply hub. These are 2 highly competent and very capable parties that have joined Central to make this major piece of gas transportation infrastructure of reality. The proposed Moomba pipeline is a 950 kilometer, 16-inch diameter pipeline with capacity of 124 TJs a day or about 45 petajoules per year, and it can be expanded with compression. The project is already well defined with FID previously being completed by AGIG for the 2015 Northeast Gas Interconnect process that led to the NGP. It is a compelling piece of infrastructure and perfectly aligned with a federal energy plan that is seeking to promote new pipelines for efficient gas delivery. You would efficiently connect gas supply from the Northern Territory with customers in the southern part of the East Coast market, which is where new gas path is needed most. In doing so, it reduces the current path gas travels to Moomba by about half, resulting in a similar reduction in the cost of transportation for our gas into those southern markets. With existing uncontracted reserves in place, it is also one of the few major projects that can bring new cost-efficient gas supply to the market now. The reason the Moomba pipeline is so exciting for Central is that it would simply re-rate and accelerate exploration throughout the Amadeus Basin in a way far more dramatic than what we saw following completion of the NGP last year. If you think back to that maturity funnel chart, we have the potential to supply large volumes of gas to the East Coast market in the future. And this pipeline makes that possible in a very cost-efficient way. Obviously, we have a lot of work to do to get to a final investment decision, but the pipeline itself is well progressed, and commercially and politically, it makes enormous sense. We are currently talking to other Northern Territory gas producers about supplying additional foundation volume. If we're successful in these discussions, we would be targeting a final investment decision for the pipeline next year with commencement of the pipeline in 2024. Alternatively, we are progressing our Amadeus exploration program next year. With even moderate success, we would have enough foundation volume for a final investment decision on the pipeline. Given the time needed for exploration and appraisal work however, this path would probably take the final investment decision for the pipeline into 2022. This is a great opportunity for Central, and if we bring this to reality, we can fundamentally change Central and the East Coast gas market landscape. All right. I'd like to now start wrapping up this presentation by highlighting a few of Central's key achievements over a very challenging 12 months. I won't go through the whole list, but all things considered, I think it is a good list that positions us very well for a big year in 2021. In summary, our operating assets have performed very well. We posted solid financial results during a market downturn, and we proactively managed the business to navigate very difficult trading conditions. Having so far weathered the challenges of 2020, we are now fully focused on progressing growth in 2021. We have Dukas moving forward. The Range Gas Project restarted, exploration and the associated sell down process progressing well, and a new opportunity for growth through the proposed Moomba pipeline. This slide summarizes some of the anticipated news flow over the next year. Not surprisingly, 2021 is shaping up to be a huge year. We have drilling planned for Range, Mereenie and our exploration program. We are targeting a final investment decision for Range and possibly the Moomba pipeline. We are aiming to complete a partial sell-down of operating assets to release capital for our exploration program, and we will be continuing to identify new opportunities for growth into the future, both within the Amadeus Basin and elsewhere. There's a lot on the list for this next year, but I have confidence in our employees, our management team and in the Board to now deliver. In conclusion, shareholders can take a lot of comfort from how their company has performed over the past 12 months under extremely difficult conditions. We have growing momentum and a diverse set of great growth strategies being implemented. For a small-cap like Central, these are ambitious plans, but your company is well positioned to deliver on this potential for shareholders. I thank you for your attention and support, and I look forward to sharing our progress in celebrating our successes in 2021. Now let's turn it over back to Wrix.

Thank you, Leon. Damian, do we have any questions for Leon concerning his presentation?

There are a couple of questions here, Wrix. Let me read out the first one. Central is targeting a tripling of gas reserves from the Amadeus and Range projects and is pursuing other large exploration projects. What does the company see as the major drivers of increased demand that justify major capital expenditure on these projects?

Look, that's a good question. There's no doubt a lot of uncertainty in not only global, but domestic gas markets. We have been actively marketing out in the East Coast and talking to customers. And that marketing activity really illustrates that there's a shortfall or a need for term gas supply particularly from 2022. I think if you step back and you look at the structural shortfall in the East Coast from that period, particularly when you look at declining production out of the Bass Strait, I think there's market fundamentals that show that new gas supply is definitely going to be required in the East Coast when these growth projects come online. One of the key things for us is actually to ensure that our projects are cost competitive, that they're low cost producers, and that allows us to compete in any market dynamic. When we look at Range, we've got a great asset, and it's in the heart of the market on the East Coast. And when we look at our exploration, we're going to be taking advantage of brownfield economics, which, again, allow us to be very cost-competitive in the markets that we're targeting out of the Amadeus Basin. And I guess the last thing I'd highlight is that with any moderate success out of our exploration program, we really do think that we will get this Moomba pipeline across the line. And that opens up an entirely new market on the East Coast, where we believe there's going to be a real need for [ term ] gas supply from that 2024 period and beyond. And we can do it in a very cost-competitive way. So we should be an extremely viable source of new gas supply going into that East Coast market from that point in time.

Okay. Thanks, [ Hamit ]. Another question. The annual report notes a key risk mitigation measure is ensuring our portfolio is robust in a potentially carbon constrained market. Does this mean capital expenditure and production plans are stress tested against a scenario in which global warming is limited to 1.5-degree Celsius? If yes, why was it not disclosed? And if not, how does the company ensure its portfolio is robust in a potentially carbon constrained market?

Yes. Another good question. Obviously, climate change is an important consideration for the business, particularly as we look at strategy and business decisions into the future. There is a lot of, I guess, uncertainty in terms of regulation, political community positioning for climate change. And obviously, this is a an evolving space. So it's very difficult for us to evaluate an expected future scenario at this particular time. What our focus is on is minimizing our impact on climate change. And we think we've got some excellent ways to do that. We've spent a lot of time and we will continue to do so to ensure that our carbon footprint and carbon emissions are as low as possible. But we also have some advantages. Our gas production out of the Amadeus is very low in CO2, which allows us to have a much lower relative emission footprint than compared to some other basins that are supplying the East Coast. And I think that's a real advantage when we start looking at moving into a future where we do start transitioning to a lower emission energy supply structure. So for us, I think it's ensuring that we are on that low-emission part of the spectrum. We continue to focus on that. And we make sure that we do have a competitive advantage against other supply sources in that space, and we think we've got the assets to be able to do that successfully.

Okay. And there's one more here. Leon, there's a couple of questions actually around asking for more detail on the Zevon prospect or lead. What more can you tell us on that?

So Zevon is a really interesting play for us. Obviously, it's 100% controlled by Central, which is fantastic. That allows us to control the pace of that activity, which is great. Incredibly large prospect, although I will highlight that it is much less mature than what we're looking at in Dukas. Our next step is to actually undertake seismic, so we can start getting better definition for that prospect. But it is on the surface, something that's incredibly exciting. We have had a lot of interest from other parties to farm into that, and that's something we're certainly looking at. It's a huge project and for a company like Central to tackle that by ourselves, we think there's some merit in bringing in somebody else to help progress that and mature it through that maturity funnel that we showed earlier in my presentation. At this point, we're still in the planning phases. We're still talking to parties about participating in it. We do want to progress it along. It is something that is active in our minds, and we are trying to work to move that forward. Ideally, we can tie it into drilling with Dukas in 2022. We have a lot of work to do to get to that point. It will be on the back end of Dukas. It will not be ahead of Dukas, but if we're able to do that, we can save a lot of money in sharing a drilling rig that's quite specialized for these types of exploration plays.

And there's a question here. With the intent for Zevon to be drilled prior to Dukas or after?

Well, the intent is to drill it before, but the reality is it will be after. We've got a lot of work to do, and we'll be going flat chat just to be able to get that drilled on the back end of the Dukas program. So certainly, that's -- the practical reality of it, it will be on the back end of Dukas if we're successful in keeping pace.

Okay. And there was one other question there, Leon, just come in around Dukas. There's been a couple of questions actually. This one in particular talks about us, is: We've previously committed to identifying a rig for Dukas by the end of 2020. However, the presentation suggests path forward won't be made until Q1 '21. Can you confirm the path forward timing? If there's a slippage, why is that the case?

Yes. There's no slippage. I think the joint venture technical group is working now on identifying and evaluating different approaches to that reapproach to Dukas well. That work will be going to the joint venture, I believe, this side of New Year's. Obviously, that then needs to go internally for approvals, for budgeting purposes and confirmation. That might slip it, given the holidays, into early part of 2021. It is not a slip of scope. We anticipate maintaining the same schedule that we had talked about previously. And as I mentioned before, Central is motivated to accelerate that schedule wherever possible.

All right. Thank you, Leon, and thank you, everyone, for those good questions. Now let's turn to the business of the meeting. Ladies and gentlemen, the purpose of today's meeting is to deal with the formal business as set out in the Notice of Annual Meeting dated 9th of October 2020. As shareholders, you have all received the Notice of Meeting. If there are no objections and in the effort to expedite proceedings, I'll move that the Notice of Meeting is taken as read. The items of business on the agenda are set out in the Notice of Annual General Meeting. These are represented by consideration of the financial report for the year ending 30th of June 2020 and 5 individual resolutions. At this point, please feel free to submit your questions on any of these items. However, please note, I'll be limiting questions to the items of business being considered. The minutes of the previous meeting of shareholders, which was held on the 7th of November 2019, have been signed by me as Chairman, and they are available on request from the company secretary, Mr. White, by e-mailing info@centralpetroleum.com.au. I should just advise that proxies based on item 2, both proxies and direct votes have been received from 364 shareholders representing 154,827,225 shares, which represent about just under 22% of the company's issued capital. All proxies and direct votes have been received. This is up until when the voting closed on Sunday. We'll be adding to this via your votes that are recorded today at this meeting. As Chair of the meeting, I advise that I intend to vote all undirected proxies in favor of items 2 through 5. Now as discussed earlier, we will conduct a poll on items 2 through 5, and I appoint Mr. Brimelow of Computershare as the returning Officer to conduct the poll and to report to me the results of the poll. Mr. Brimelow will have the power to [ call on ] his agents, members of his staff and other company representatives. Persons entitled to vote on this call are all shareholders, representatives and attorneys of shareholders and their proxyholders. For some items of business, certain votes will be disregarded, as explained in the voting exclusion statement of the Notice of Meeting. So let's turn to the first item, financial statements and reports. The first item of business of this meeting is to receive and consider the annual financial report of the company. I now table the financial report of the company for the year ending 30th of June 2020, together with the directors' declaration, the directors' report and the auditor's report. At this point, it's now an opportunity to ask questions of the company's auditors, PricewaterhouseCoopers on the conduct of the audit. And Mr. Tim Holman from PWC is available for responding to questions relating to these financial reports. Damian, do we have any questions for Tim?

I don't have any for the auditors at this time. There is one question on the accounts which we could address now if you like.

Yes, fine. Could you just read out the question, please?

Okay. There's a question from shareholders. The notice of the financial statements say that Central uses assumptions regarding future commodity prices and also the possible impact of climate risks when determining expected future cash flows. What long-term oil and gas price assumptions does Central use for impairment testing? And why is this not disclosed like many of its peers? What assumptions about the possible impact of climate risks does Central use? And which of the IEA's energy demand scenarios are those assumptions most closely aligned with?

Good question. And I'll pass this on to you, Damian, to answer.

Thanks, Wrix. Look, the impairment testing that we use, we base that on sales prices. We use existing contracts which are using our current contracted prices escalated for CPI as per the existing contract terms. Uncontracted gas sales are based on what we estimate to be the attainable gas prices, taking into account indicative customer proposals that we have received and continue to discuss with potential customers. For the crude oil, that's based on a midpoint of independent analyst forecasts of crude prices and long-term forecast average U.S. dollar exchange rates. And we try and take into account, obviously, any expected impact of climate change. Just for reference, we were using oil price in '21 of USD 45 per barrel. In the longer term, a couple of years down the track, it gets as high as $62 per barrel. In terms of the climate risk assumptions. Obviously, we're a relatively small supplier into the market, and therefore we tend to use our market soundings and other independent analysts' midpoints. And so we don't have any specific climate impact that we take into account.

Yes, we are a bit of a small company to handle a lot of these things. But certainly, our Board is very much focused on ensuring that we fulfill all the requirements that are necessary, and we are taking, as we go and look forward, the effects of climate change on the future of gas as a commodity. And we are really hopeful -- not only hopeful but quite excited by the plans of the federal government and also what the market is telling us about the prospects for our gas as we go through this, the period from 2020 through for the next few decades. There is no requirement for a vote on the acceptance of the financial statements and reports. And as such, we'll move to the first resolution of the day. That's item 2. Now item 2 is the remuneration report. The Corporations Act requires all listed companies to present their remuneration report for each financial year for adoption by shareholders of the companies at the Annual General meeting. The report can be found within the Directors section of the annual report. This resolution of shareholders is advisory only, and is not binding on the directors of the company. Members of the key management team and their proxies and closely related parties are restricted from voting on this resolution. The resolution for item 2 states that for the purposes of Section 250 R2 of the Corporations Act and for other purposes, approval is given for the adoption of the remuneration report as contained in the company's annual financial report for the financial year ended 30th of June 2020. Damian, do we have any questions coming to us concerning the remuneration report?

No, we don't.