Central Petroleum Limited (CTP) Earnings Call Transcript & Summary

Welcome to the 2022 Annual General Meeting of Central Petroleum Limited. I'm Mick McCormack, and I'm the Chair of Central Petroleum Limited. I will be chairing this meeting today in accordance with the company's constitution. In accordance with the Corporations Act, today's AGM is being held in-person here at the Christie Centre and -- in Brisbane and as a virtual online meeting by the Computershare meeting platform. First up, we'd like to acknowledge the traditional owners of land, on which we meet and pay our respects to elders past, present and emerging. And before we start our official proceedings, for those in attendance here at the Christie Centre, may -- I'll ask you to please note the emergency exit for this room is by the door on my right. Please note the basic fire and evacuation -- on the screen. In the event of emergency, please follow the directions of the Christie Conference Centre staff. I also wish to advise all attendees that these proceedings are being audio recorded. It is now 10:00 a.m., and I have been informed by the company Secretary that a quorum is present, so I declare the Annual General Meeting properly constituted and open. As this meeting is being held both in-person and virtually, there are a number of process matters, which I'd like to bring to your attention. Firstly, for those shareholders and proxy holders who are online, your questions can be submitted at any time. To ask a question, you can submit it on online or by telephone. To ask a question, select the Q&A icon, type your question into the text box. Once you have finished typing, please hit the Send button. 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 submitted online. Please also note that your questions may be moderated or, if we receive multiple questions on the same topic, amalgamated together. For those shareholders online who wish to ask a verbal question, please follow the instructions written below the broadcast. For those in attendance here at the Christie Centre, you will be afforded the opportunity to ask questions and ask that. At the appropriate time, you direct your questions to me. Accordingly, after each item is read out, I will invite comments from the floor. However, please note, I will be limiting questions to the item of business being considered. I would ask that you state your name for the record when you address the meeting. On conclusion of the meeting formality, shareholders will also be given the opportunity to ask additional questions of the Board and the company's senior executives. Finally, due to time constraints, we may run out of time to answer all your questions. If this happens, we will answer them in due course by e-mail and posting responses on our website. Voting today will be conducted by a way of a poll on all items of business. Online voting, in order to provide online attendees with enough time to vote, I will shortly open voting on all resolutions. At that time, if you are eligible to vote at this meeting, press the Vote icon, and all resolutions will be activated with voting options. To cast your vote, simply select one of the options. There is no need to hit a Submit or Enter button as the vote is automatically recorded. You'll receive a vote confirmation notification on your screen. You do, however, have the ability to change your vote online up until the time I declare voting closed. In-person voting for shareholders and proxy holders in attendance here at the Christie Centre, when you registered at the attendance desk this morning, you should have received a card from Computershare. Shareholders and proxy holders holding a blue card can vote and speak at the meeting. Shareholders holding a green card are not eligible to vote, but can speak at the meeting. And visitors holding a yellow card are not eligible to vote or speak at the meeting. If there is anyone present who is eligible to vote, but has not received a blue card, please see a representative of Computershare now. On the reverse of your blue admission card is your voting and paper instructions. I will now go through the procedures for filling in the voting papers for those shareholders here at the Christie Centre. Proxy holders have attached to their admission card a summary of proxy votes, which details the voting instructions for business items on the appointment documents in your favor. By completing the voting paper, when instructed to vote in a particular manner, you are deemed to have voted in accordance with those instructions. In respect of any open votes, a proxy holder may be entitled to cast, you need to mark a box beside the motion to indicate how you wish to cast your vote, your open votes. Proxy holders should refer to the summary of proxy votes form, attest your voting paper for further information. Shareholders also need to mark a box beside the motion to indicate how you wish to cast your votes. Please ensure you print your name where indicated and sign the voting paper. When you have finished filling in your voting paper, please lodge it in a ballot box to ensure your votes are counted. In respect of voting at today's meeting, on a poll, each member online or present in-person or their proxy, attorney or corporate representative has one vote for each shareholder. Only one vote is allowed per joint holding. If more than one joint holder tenders a vote of the member named first in the register must be accepted to the exclusion of all others. If a proxy has been directed to vote in a particular manner, if the proxy is entitled to vote, he or she must vote in accordance with the direction. And for some items of business, certain votes may be disregarded, as explained in the voting exclusion statement in the notice of meeting. The persons entitled to vote on the poll are all shareholders, representatives and attorneys of shareholders and proxy holders who hold blue admission cards or duly attend online. The order of business will be that I will read out each item of business, in turn take questions on that item of business. And for those here in-person, I will then defer voting until the end of the meeting, at which time I'll explain the voting procedure for the poll to be conducted for the resolutions on Items 2 through to 7 using a blue voting card. Importantly, should you require assistance with the technology, please call Computershare Investor Services on (613) 9415-4024. If you require any assistance here at the Christie Centre, please raise your hand. I now declare voting open on all items of business. For those online, please submit your votes at any time. I will give reminders to vote after every resolution, and I will give you a warning before I move to close voting. Firstly, let me introduce you to our Board members. Leon Devaney is our Managing Director; and our Non-Executive Directors, Stephen Gardiner, Troy Harry, Kathy Hirschfeld and Agu Kantsler. In addition to our Board, I'd like to introduce you to a member of our Risk and Sustainability Committee, Mr. Bob Liddle. Bob was first engaged by Central Petroleum as a consultant over 16 years ago. Born in Hatches Creek and a member of the Arrernte tribe of Alice Springs, he has played a key role as an adviser in the negotiations for oil and gas fields in the Northern Territory and maintaining local relationships for Central. Bob is an Aboriginal elder who is respected by the traditional owners in the areas in which we operate in the Northern Territory. Also present is our company Secretary, Daniel White. In addition to the Board, also in attendance from Central's executive team, Chief Financial Officer, Damian Galvin; Chief Operating Officer, Ross Evans; and Chief Commercial Officer, Jonathan Snape. I would also like to introduce you to Mr. Marcus Goddard, our auditor from PricewaterhouseCoopers, who is attending the meeting virtually; and Mr. David Maffescioni, General Manager of Computershare, the company's share registry. [Technical Difficulty] that it has been natural gas, which has ultimately filled in supply gaps and so has kept and will continue to keep the lights on, demonstrating the critical role that gas will continue to play as the world transitions to a lower carbon future. There's been a lot of political noise around gas following the window energy turmoil, driven by the shortage of coal-fired electricity. There's been talk of price caps and domestic reservations, but clearly, the best way to reduce price pressure is simply to increase supply, something that has been clearly lacking in Victoria and New South Wales in the last decade, and as these states who somewhat ironically are the loudest proponents of federal government intervention. From May this year, Central and its partners were able to supply gas into the critically short East Coast markets through newly secured transportation arrangements. These market dynamics prompted us to reassess our capital allocation priorities, replacing the Dingo exploration well with high-value projects, which we hope will increase near-term production capacity from our existing fields. Central is well positioned to increase supply into these strong markets. We expect to be supplying gas from the new Palm Valley 12 well this quarter and are working with our joint venture partners to bring on more capacity at Mereenie next year. These new wells will provide near-term revenues and provide additional supply to East Coast customers. Potentially far greater value, however, could be derived from the 3-well exploration program starting next year with Santos and Peak Helium as we pursue helium, natural gas and naturally occurring hydrogen beneath the sub-salt seals of the Amadeus Basin. These targets have attracted international interest and could open a valuable new province in the Amadeus Basin. However, on the downside in this rising gas market and despite having ample supplies of gas and a raft of exploration opportunities, our share prices has slipped on the back of the disappointing results from our exploration program. This has prompted the Central Board to commission a thorough strategic review to identify a path to realizing value for our shareholders from our diverse portfolio. To this end, we are working with RBC Capital to assess various alternatives and everything is on the table, so to speak, ranging from asset sales and new partnerships to acquisitions and restructuring. Nothing has been ruled out, so to speak, and this work will continue in the background over at least the next few months. We will provide updates when we have any definite outcomes. But be assured, our Board is focused on realizing the value of our portfolio of assets, which we believe isn't being recognized by the market. In the meantime, it's business as usual as we focus on increasing production capacity from our proven existing fields and the potentially company-changing sub-salt exploration. As I look back, it's been a year of very significant activity, and we could not have drilled the wells without the support of our local stakeholders. We thank the landowners and traditional owners of the land on which we operate. We value these relationships and continue to provide employment and business opportunities locally while respecting and protecting the local environment. I thank my colleagues on the Board, our CEO, Leon Devaney, and all his staff at Central who have contributed to our resilience as we continue to work hard to build a stronger company. Regarding your Board, Stuart Baker stepped down in August this year, and I thank him for his contribution since 2018. We welcome Troy Harry to the Board as a director, and Troy brings with him significant experience in equity markets and investment generally. All up, we see our portfolio as being increasingly valuable in a tightening gas market and with rising interest in helium and hydrogen projects. Central is well placed to contribute to Australia's energy security in coming years, and I wish to assure you that we are firmly focused on realizing the value of our portfolio for shareholders. With that, thank you. And ladies and gentlemen, I'd now like to introduce you to Leon Devaney, who will present his Managing Director's presentation. If at any time you have a question, before Leon Devaney's presentation, please submit it online, and Leon will provide answers after he has concluded his presentation as I will. Thank you, Leon.

Great. Thank you, Mick. My glass is on here for the first time. And good morning. Special thanks to all of our shareholders and in particular to those who have made the journey down here today. We do appreciate that. I'd like to start by describing this year as a rollercoaster. It went quickly, we moved the company forward with a lot of achievements, and we weathered a few setbacks and challenges along the way. All of this occurred within a very volatile landscape, where high energy prices have become a political issue. Climate change policies are creating investment uncertainty and growing regulations slowing the delivery of gas into a market that is desperate for new gas supply. We're also here today with our share price in the single digits, and I'm sure you're all aware of that. I share your concerns that this valuation does not fully reflect the portfolio or the potential of the company. As Mick mentioned, this is something we're focused on addressing with the current strategic review, a key part of this effort. If we move now to looking at the year-end review, the past year, I am proud of what we've been able to achieve and what we've been able to accomplish. One of the major achievements was the farm-out of our sub-salt permits to fund 2 new exploration wells next year. This transaction diversifies our exploration activities into helium and expands our sub-salt exploration activity from 1 well at Dukas into 3 wells. Our underlying gross field production was steady, driving a solid financial performance. We booked a profit of $37 million on the sale of 50% of our producing assets, which crystallized a return on equity after debt service of over 33% per annum, which isn't too bad. We also reduced and extended our debt, which in previous years has been an issue and something that we've been working to pare down, and we've been able to do that. And the extension has been a critical outcome for us, particularly given the shrinking number of domestic debt providers. And finally, we successfully capitalized on a strong rally in the spot price -- pipeline transportation just in time for the winter peak. But the year wasn't without significant setbacks and challenges. We continue to see cost pressures across the business, both in operations and in particular during our exploration drilling program. We faced difficult drilling conditions at Palm Valley 12 well location, impacting both our schedule and our budgets. We made the decision to drop 2 deep exploration targets, which was obviously disappointing, but -- at Palm Valley and Dingo and reallocate those capitals towards producing investments. We're also not successful with our Palm Valley P3 appraisal lateral. However, the fallback P1 lateral did produce gas flows that were indicative of good exploration wells. So we believe that well has been salvaged and will turn out to be a real positive investment for us. At Range, and I'm sure many of you are interested to understand where that project is currently at, our path to a final investment decision has been slow, as technical results indicate that permeability is complex and highly variable across the permit. We also had some EHS incidents during the Palm Valley 12 drilling program. These are relatively minor, but they do highlight just how important safe and responsible operations are to our business in delivering gas and oil to our customers. And finally, aggressive climate change policies are creating noticeable headwinds for the oil and gas sector, both in terms of project delivery, operations and in particular and in growing issue is the confidence in the domestic gas market. I'll cover all these topics more in the presentation, but I thought this is a good starting point and a bit of a highlight for what is to come as we progress forward. Let's start with the operations. Gross production from Mereenie, Palm Valley and Dingo was consistent with last year. We booked $42 million in revenue in fiscal year '22 with a realized gas price that was 15% higher than the previous year, reflecting some of the strong markets that we saw over the course of the middle of the year. The sale of half our operating assets generated $36 million in profit on assets that were only acquired 6 years earlier. Again, this equates to a return on equity after debt service of over 33%. Our ongoing performance out at our fields reflects our operating team who have been dedicated to the safe and responsible supply of gas to our customers, both throughout the pandemic, but also importantly, throughout our recent drilling program, which is not an easy task. Rising gas prices have also been in the spotlight recently. These higher prices are just starting to flow through to our financials and help offset the various operating challenges that we feel throughout the industry, including resource constraints, supply chain disruptions, cost inflation and expanding regulations that ultimately delay the supply of new gas to market. Moving on to our capital strategy. In terms of capital strategy, we reduced our loan balance to $31 million following the partial asset sale, with net debt at a manageable $15 million at the end of September. We also extended our debt facility for 3 years to 2025. This was a critical achievement as debt funding for oil and gas projects is becoming increasingly difficult capital to source, with domestic banks simply refusing to take on new oil and gas projects regardless of credit quality. This is something we haven't seen in the past, and it's something that we think is going to be an emerging issue as we move forward. At the end of September, we had $11 million of the free carry balance remaining from our asset sale that is available to invest in certain future exploration and development. This money is expected to fund the balance of the Palm Valley 12 well that we're just ramping up as well as other development projects like our recompletions, proposed development wells and the flare gas recovery project at Mereenie, which I'll talk more to later. As we move to gas markets, and certainly, this is a topic that has gotten a lot of press recently. The chart that you see here shows a year-to-date price spot gas prices in Sydney and Brisbane over the course of the year. Conflict in Europe, combined with outages in coal-fired generation over the winter, has a significant midyear rally in domestic spot gas prices. The extraordinary prices, however, had proven to be temporary, falling sharply in August, as you can see in this chart. The conflict in Europe, however, is continuing to put upward pressure on the spot market, which is still trending at around $20 per gigajoule. It's interesting to note that is about $10 or double what they were in the first half of the year. That is a substantial increase in the gas market pricing, particularly when you consider most of our term contracts and our financials are based on those lower numbers prior to the run-up in the spot price. I'd like to also note that most of our sales are under fixed price term contracts. This means that they will be rolling off over the next 3 years, and it is at this time that we will have the opportunity to recontract at higher prices. The full impact of these higher prices will therefore only become visible as we move and recontract over those future years. Having said that, we've started to see the impact of high spot gas prices in our last quarterly result, where the average portfolio price for oil and gas increased by 20% compared to the prior year at $8.12 per gigajoule of oil equivalent. So a substantial increase just in this last quarter, and that is the start of what we're seeing when these higher gas prices flow through to our financials. This increase in the last quarter was made possible by commercial arrangements we put in place earlier in this year to sell nonfirm production into the East Coast spot market. And this was just in time to capitalize on the extraordinary midyear price rally that you do see in this chart. And I would like to thank our commercial team for that hard work. That was a very difficult thing to put in place. We had been trying for a number of years. They successfully did it, and the timing couldn't have been better. Over about 4 months, Central sold 170 TJs of spot gas at that time, generating $3.4 million in revenue from it at an average price of over $30 per gigajoule. So it's a substantial activity, a substantial opportunity for us to increase our gas price and our revenues as we move forward. It's probably also worth mentioning the Northern Gas Pipeline. Obviously, that has been shut in since September and is temporarily stopping our ability to sell gas into the East Coast market and in particular into the East Coast spot market, which as you've seen is still at very elevated prices. We understand that the NGP could return to service within the next few months. In the interim, obviously, we're going to be working very hard to place all of our excess production into the Northern Territory who customers, both on a term and spot basis, desperately require gas as that supply from Blacktip offshore has been declining. Okay. Now on to a very topical subject, climate change and regulatory risk. Central take climate change and the associated impacts of climate change very seriously. This is why we are proactively progressing projects like our flare gas recovery project that will reduce carbon emissions at Mereenie by 25% when commissioned next year. In addition, our focus on producing gas as a low-carbon transition fuel. [Technical Difficulty] Over the past 5 years, there has been a growing campaign to demonize the gas sector, both from certain parts of government, from climate activists, invested interests. All of this is designed to force the unrealistic transition to renewable energy in a time frame that we don't believe is in the best interest of Australia. This movement has now leveraged the widespread concerns about high energy prices, which are largely caused by that European conflict in order to make domestic gas markets overtly political, with extreme policies like mandatory price caps now under consideration. And that's something I never thought I'd be up here talking about. It's a very big jump for a country like Australia with a market system to be talking about that. And obviously, there's a lot of issues around that particular policy being floated. The many obvious issues associated with direct market intervention, one of them is that regulation introduced to mitigate short-term price shocks tends to become permanent legislation. And this has a massive impact on unintended consequences throughout the market over the medium and long term. And what I can say is that regulations like that will ultimately serve to reduce the supply of gas into the market at a time when a functioning domestic gas market desperately needs more gas supply. We'll continue to proactively manage the business through this fluid regulatory landscape. And I'll highlight that the global gas market fundamentals remain strong with affordable and reliable energy and necessity for millions of residents and businesses across Australia. Moving on to our drilling program, which we've just completed with our Palm Valley 12 well. I'll be honest, not reaching the deep exploration targets at Palm Valley and Dingo was very disappointing. And it's something that myself, the management team, the exploration group were very interested to get to and to test. We think there's a lot of potential in those deep targets. But it was also a necessary change, given the extreme subsurface conditions that we had at that Palm Valley 12 crestal location and considering our obviously constrained capital resources. Our decision to pivot toward production was not initially successful in the P3 formation, but we had successful gas flows from the shallower P1 formation, which were generally in line with pre-drill targets. Having PV12 production well as a fallback to our exploration program proved to be a successful risk mitigation strategy that will now increase production into a very strong East Coast gas market in the short term. Moving to Range. Over the past year, we delivered 2 step-out pilot wells at Range, which were put on an extended dewatering test. We also arranged a data swap with surrounding permits. The data acquired through this swap, along with our ongoing pilot test results, are now being integrated into a detailed regional subsurface model, which will improve our technical understanding of the Range permit. Whilst we have not yet completed this modeling work, the preliminary indications are that permeability, which is a key driver in the production profile and the water production profile in the permit, across the permit is much more variable than what our exploration results had initially suggested. More predictable and uniform distribution of permeability across the permit would have allowed for a single-phased appraisal program and an early final investment decision. And this is what we were hoping for when we started out on the appraisal program. Unfortunately, when we sit here today and looking at all the technical information we have, it appears that the permit, that Range is a much more complex field and that accelerating a financial investment decision is more difficult based on what we know right now. On the plus side, strong gas prices do provide a very big boost to the economics for the Range project. And we are working very closely with our joint venture partner, Incitec Pivot, to ensure that we move this project forward towards development as quickly as possible. We'll be keeping shareholders in the market updated as that joint venture decision is made and we understand and we have some clarity about how we're going to progress Range going forward. Okay. Moving on to something that we think is one of the most significant achievements of the past year, and this is our farm-out to Peak Helium. This farm-out will expand our sub-salt exploration from 1 well at Dukas. And when we were sitting here last year, we were talking about having a 1-well Dukas program and quite excited about that potential. This farm-out increases that to 3 wells. And it also includes a real focus on helium. So we now have included Mt Kitty and Mahler along with Dukas. That program is going to be kicking off next year, and it's incredibly exciting. It's a multi-TCF program targeting gas, helium and potentially hydrogen. It diversifies our exploration, and it provides more opportunities for a company-changing discovery in the near term. The program is in full swing with drilling to commence next year. At this point, the joint venture is progressing approvals well designed and evaluating drilling rigs. Completion of the farm-out, as you know, has been extended a number of times in order to facilitate regulatory matters such as stamp duty assessment. We don't see any critical issues at this time in completing the remaining CPs. And recent progress suggests that the transaction should reach completion in the short term. In addition to our 3-well sub-salt drilling program that I've just talked about, we are also pursuing farm-out opportunities for the Zevon prospect where we hold 100% interest. Zevon has the potential to be a very large sub-salt target based on our play-based mapping. So we're hoping to progress seismic with an aligned partner as soon as possible with the goal of identifying a drillable location and moving that prospect into something where we can drill in the near term. Moving on to our map of activities. Here we go. You would have seen this map. It's been updated. In summary, we are connecting the Palm Valley 12 well that we've just drilled into our production facilities as quickly as possible to increase sales. As I talked about before, selling into the very high price spot market has a material impact on our financials. That's something we want to take advantage of. So we are accelerating those activities and trying to get it on production as quickly as we can. Palm Valley 12 combined with our plans for up to 6 rig completions and 2 development wells at the Mereenie field next year. We are well positioned to deliver increased production into what we believe will be a domestic gas market that continues to be short on reliable term gas supply for the foreseeable future. [Technical Difficulty] Approaching activity with these joint ventures is ramping up, with rig selection, a critical decision that will be driving our drilling schedules. So as we get through assessing and evaluating and selecting drilling rigs, that will then flow into drilling schedules and timing for each of the 3 wells. We'll obviously communicate that to the market as soon as we get some clarity on it. But we do anticipate that drilling will commence next year. And finally, we are looking actively at farming out the Zevon permit to progress seismic and ultimately find a drilling location for that prospect as well as Mamlambo, which we think is a very attractive permit. It's a low entry cost in terms of drilling, it's shallow, and it could open up a very significant oil province in the western part of our permits. So that's something we are also trying to progress at this time with some intent. Okay. We'll move to the year ahead, and I use this slide as really a wrap up. I'd like to take this opportunity to thank all of our employees, our joint venture partners, traditional owners and the communities in which we operate, along with all of our stakeholders for their continued effort and support. Our many accomplishments over the past year now position Central to benefit from strong gas markets and major near-term sub-salt exploration. At the same time, I recognize that we didn't achieve some of our objectives last year, including the testing of the PV Deep and the Dingo Deep exploration targets. Our appraisal of the Range is also taking much longer than anticipated. And our sector is facing significant uncertainties. Natural gas is considered by some to be a threat rather than an ally in the transition to a lower carbon future. Importantly, I share your concerns that the share price does not fully reflect the potential we see in our company, and management is fully committed to doing what needs to be done to address that. Operationally, this includes continuing to safely deliver reliable gas supplies to our customers. Technically, this includes delivering successful results from our upcoming exploration and appraisal programs. Corporately, this means keeping escalating costs under control, managing our capital and delivering new growth opportunities through farm-outs. In wrapping up, I'd like to thank you, our shareholders, in advance for supporting Central over the next year as we focus on delivering these very important and clear objectives. Thank you very much.

Thanks so much for that, Leon. With that... [Technical Difficulty] So PV12 with basically a standard gas production well. [Technical Difficulty] Really the critical thing in aggregating commercial quantities of helium is going to be the seal. The sub-salt prospects that we're targeting, that salt is really the ideal seal to trap commercial quantities of helium. We don't have that same salt seal at the Palm Valley or Mereenie or Dingo prospects. Those are more conventional reservoirs, so we don't have that sort of same opportunity for the concentration. Really, the sub-salt targets are located at Zevon, Dukas, Mt Magee and Mahler at this point. And I'll just add that naturally occurring helium and hydrogen is fairly very rare. So that's why the excitement that our prospects is there. Question? Okay. Must have been very good presentation, Leon. One question online.

I do have one here, Mick, from a shareholder. He asks, when the NGP -- when is the NGP pipeline going to be operational so that Central can sell more gas? And how sure is the management in the timing of the reopening.

Everything being equal, it should be opened early next year. We're hopeful it may be opened next month. But unfortunately, that is something out of our hands. And I will make a comment that, that's what happens when you have pretty silly Northern Territory policy going back to Adam Giles in my former life at APA. We did offer to build that pipeline and charge less than the current tariffs for that pipeline to bring gas all the way from effectively Darwin to Brisbane. But anyway, that's the [ winge ] I'll always have. So what's happened? We've got a pipeline there that the owners, Jemena, will say that due to low gas flows, it's not working, can't operate, which is true, technically true, but the pipeline was very poorly designed in the first place. So unfortunately, where -- it's out of our hands. We hope it's -- in December next month, probably in the early new year, I would say, but I'm hopeful I'll be proven wrong. Because as soon as that pipeline is open, as Leon said in his presentation, the sooner we can start selling our gas into the East Coast markets.

Another question here, Mick. How is the value created by the sale of the producing assets, which is such a great return? How is that value seen by shareholders? This is the sale last year.

Sorry, the -- we're talking about a strategic review or the...

I think the sale that we finished last year.

That was simply a strategy, and it was a very solid, sound strategy. Sell the assets or partly thereof to fund further exploration activity. And exploration activity, as we all know, is extremely risky. And as we Leon has said and myself in our presentations, that yes, that is funded exploration activity, which unfortunately hasn't delivered the results we would have liked. But strategically, the Board is of the very strong view that was a robust strategy.

Yes. The other thing I would add to that is that was -- part of the funding was towards exploration. But there is a significant part of funding release from that sale that went towards production increases. We're going to be funding -- using that funding for the recompletions that are coming up. We've invested that in production adds at Mereenie. So down the road, when we have higher production and sales and revenue, part of that will be from the benefit of the sale of the assets that we did see, and we reinvested it back into the field. The other thing that I think is important to note is we did pay down about half of our debt. So if you recall, we had -- debt at one point was at $90 million. We brought that down towards below $70 million. We're sitting here today with about $30 million in debt. That reduction in debt obviously reduces our debt service costs and does help the company both in terms of gearing and after-debt cash flows.

Thanks, Mick. One more question. This is asked, with such an uncertain environment for new project development and such a great environment for sales of gas, shouldn't the company focus entirely on production as opposed to exploration. As a developer of new projects, I'm concerned we are subscale, particularly without access to finance.

Absolutely agree. And that's in part the reason that the Board is conducting a strategic review. The reality is that Central has some very strong robust producing assets. In addition, we've got some very prospective exploration acreage. And there is somewhat of a dichotomy between how the value is realized in that. So that's the reason we're exploring all options to ensure that the sum of the parts of the assets, so to speak, is greater than what's being recognized by the market currently.

[indiscernible]

It's purely -- technically, it was designed with a nitrogen extraction unit at the front end of it, that's in the inlet. But it was designed for a minimum flow of about 15 -- well, the 15 terajoules, 5 or 10?

15 to 20.

15 to 20 which deaf and dumb dog would know that the better design would be to have a nitrogen extraction plant that would operate at any flow rate. So that's the issue. It's poorly designed and poorly watered. And now everyone pays for it. The company and the Board gets sick of my whining about that, but anyway.

We'll move on to the business of the meeting now. The purpose of today's meeting is to deal with the formal business, as set out in the notice of Annual General Meeting dated 7 October 2022. As shareholders, you have all received the notice of meeting. If there are no objections and in an effort to expedite proceedings, I move that the notice of meeting be 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 ended June 30, 2022, and 11 individual resolutions. The minutes of the previous meeting of shareholders held on November 10, 2021, are available by request from the company Secretary, Mr. White at the conclusion of the meeting or by e-mailing [email protected]. Proxies. Based on Item 2, proxies and direct votes have been received from 210 shareholders, representing 145,265,021 shares, which is 19.93% of the company's issued capital. All proxies and direct votes have been received by and validated by Computershare. As Chair of the meeting, I advise that I intend to vote all undirected proxies to me in favor of Items 2 through to 7. As discussed earlier, we will conduct a poll on Items 2 through 7, and I appoint Mr. Maffescioni of Computershare as Returning Officer and to conduct the poll and to report to me the results of the poll. Mr. Maffescioni will have power to [ call up ] his agents, members of his staff and other company representatives. The first item of business of the meeting is to receive and consider the annual financial report of the company. I now table the financial report or Damian is going to -- Daniel or someone is going to table it. Someone has got one. I'll get one from back package if anyone -- together with the director's declaration, the directors' report and the auditor's report. This is an opportunity to ask questions of the company's auditors, PricewaterhouseCoopers, on the conduct of the audit as well. Marcus Goddard from PwC is available for responding to questions relating to the financial reports. So are there any questions relating to the financial statements?

Underlying is a loss, and yet you have a statutory profit. Is that because of the sales of...

Indeed, it is. And that's why it's -- the underlying takes out -- the old school takes out all the abnormals. I'm getting a nod from Damian there.

So when will the company be profitable?

Let's hope this year. We'll just see how it plays out.

I think one of the interesting aspects of that is that we expense all of our exploration expenditures. So a lot of companies would capitalize that on to their balance sheet and so it wouldn't affect their profit and loss. In our case, we expense all of that cost in the year that we do it. So because we have had some exploration this year with Palm Valley and we will also have some costs potentially coming through in the sub-salt areas, they tend to be quite lumpy numbers, and they can affect that statutory profit, which is why we tend to quote EBITDAX, for example, which excludes that exploration cost, which allows people to then see what the underlying result is. So I think when we talk about operating fields, I think they do operate profitably, even though we sort of got half of what we had in the previous years. But because we will be spending a fair bit on exploration, that will affect the bottom line. So I think statutory-wise, we will still show a loss, but you need to peel back that exploration expense to sort of see where the underlying operations really are.

Any other questions? Any online?

No.

Okay. There is no requirement for vote on the acceptance of the financial statements and reports. And as such, we now move to the first resolution of the day. This is Item 2, adoption of the remuneration report. The Corporations Act requires all listed companies to present their remuneration report for each financial year for adoption by shareholders at the company's Annual General Meeting. The report can be found within the director's report section of the annual report. This resolution of shareholders is advisory only and is not binding on the directors or the company, members of the key management personnel and their proxies and closely related parties who receive remuneration under the remuneration report are restricted from voting on this resolution. The resolution for Item 2 states that for the purposes of the Section 250R(2) of the Corporations Act and for all other purposes, approval was given for the adoption of the remuneration report as contained in the company's annual financial report for the financial year ended June 30, 2022. Is there any discussion, questions on this motion, please? Anything from online? I confirm that the company has received valid proxy votes and direct votes in relation to Item 2, and these are displayed on the screen. Would those online attendees now please cast their votes if you have not done so already? In-person voting on this resolution will be conducted at the end of the business of this meeting. Item 3, which we'll move to next, is the reelection of directors. There are 3 resolutions under this item of business, each dealing with the reelection of directors. Resolution 3a is the reelection of Director, Mr. Troy Harry. The resolution for Item 3a states that Troy Harry, a Director appointed by the Board since the last general meeting of the company, retires in accordance with the constitution and the ASX listing rules and, being legible, is reelected as a director. And Troy, could I ask you to say a few words to shareholders please to introduce yourself?

Good morning. My name is Troy Harry. I've been involved in investment markets for 30 years, initially in stock broking, then funds management and, for the past 12 years, as a private investor, just investing my own capital. Over this period, I've served on 7 ASX-listed company Boards.

Would those online attendees now please cast their votes, if not done so already? In-person voting on this resolution will be conducted at the end of the business of this meeting. Moving on to Resolution 3c is the reelection of Dr. Agu Kantsler. The resolution for Item 3c states that Agu Kantsler, a Director, retired by rotation in accordance with the constitution and the ASX listing rules and, being eligible, offers himself for reelection as a director and is reelected as a director. Agu, can you say a few words, please?

Thanks, Mick, and good morning, ladies and gentlemen. I am Agu Kantsler, as you know. And I've had about 45 years of experience in the upstream oil and gas industry. I trained as a geologist and did a postgraduate degree in petroleum geology. Then went on to work for 20 years for Shell International. And following that, I served on the management team of Woodside Energy for 15 years. Following that part of my career, amongst other things, since then, I've been a Director of Oil Search for over 12 years, a couple of other smaller general engineering companies. Along the way, with Woodside, especially, I was responsible for exploration, new business development, all the technical [ IT ] in the company, and I also looked after health, safety and security for a time. So I had a lot of exposure as well along the way with both Shell and Woodside to operations and project development. And being in a public listed company for 15 years, plus being on the Board of Oil Search, a company like Oil Search for over 12 years, I've got a lot of exposure to what [ Stephen ] has referred to as good governance. I think I can bring a lot of experience in that area to the Board. But I think the particular set of skills I bring to the Board are around understanding what the investment opportunities in front of the company really look like and what they potentially mean. And with that, I hope that you will support my candidacy for reelection to the Board. Thank you.

Great. Thanks, Agu. And I can again -- like the previous 2 directors putting themselves up for reelection. Agu's technical knowledge is, I think, pretty much without peer in the country, in my humble opinion. So we're very, very happy to have him. Any questions? You got that right. Same question, and I'll give you the same answer. And we will come back to that. I'm not being dismissive of you that -- we come back to...

[indiscernible]

Yes. No, I mean, we appreciate that, and I'll jump to what I'll say later on, and we'll repeat it. But the issue for the directors and particularly since I've been on the Board is that we're not able typically to go and buy shares on market, because there's always something that the company is doing that is market-sensitive, whether it's drilling PV12 or strategic reviews or whatever. So the only way that we can buy shares is by sacrificing our Board fees. And that's -- they're issued. So we are getting there. But we -- that's just a commercial practical reality that I can't go out tomorrow and buy any Central share even if I wanted to.

[indiscernible]

Well, again, there's things in the background here that if we announce something in 2 weeks' time, I'd get shot by ASIC for trading on inside information. So I'm not suggesting I'm announcing anything in 2 weeks' time, but everything that Central does, because it's such a small company, is significant. And that's just a -- no one is on the docket, but that's just the reality that we face. And if nothing else happens over the next couple of years, you'll see all the directors, including myself, will have at least their directors' fees in Central shares, which they have paid for. Stephen and I both sacrificed salary last year to take up shares. So we are shareholders now. And I think we're both elected to take up shares again if approved by shareholders this financial year as well. And that will be through salary Central pays.

[indiscernible]

And I don't argue the point, but we are buying shares. Okay. I can get -- I get whatever I get.

[indiscernible]

No, we're on foregoing pay.

[indiscernible]

No, no. But after that, I pay for them.

[indiscernible]

Last year, I don't know, I think I get paid $160,000, but that was...

25%.

I got -- actually I got $100,000 or $110,000, but I was paid 100-and-something in cash. And the other was sacrificed to have shares issued. So we -- I bought shares. Just I haven't been on market. And I think I've paid 50% premium, I don't know, that issued $0.11 or $0.12. Absolutely. Absolutely. There's no [ massive ] point. There's absolutely -- we are paying for those shares. They're not given to us.

All right. With that, I confirm that the company has received ballot proxy votes and direct votes in relation to Item 4, and these are displayed on the screen. Would those attendees now please cast their votes if you've not done so already. In-person voting on this resolution will be conducted at the end of the meeting. Sorry, 3c on that. Okay. Item 4, approval of future issues under Employee Rights Plan. The resolution for Item 4 states that for the purposes of ASX Listing Rule 7.1 and in accordance with ASX Listing Rule 7.2, exception 13, and for all other purposes, the issue of securities under the company's Employee Rights Plan on the terms and conditions set out in the explanatory statement is approved. Is there any discussion on this motion please?

[indiscernible] the operator, you're producing assets.

Yes, we are.

Even though, you've less than 50% interest.

Well, you can be operator irrespective of what your interest is.

Sure. I get that. But do you then -- in your annual report, this $5 million in executive and nonexec fees, are you proportioning some of those expenses to the joint venture?

Yes, absolutely. Damian, any questions online there in respect to Item 4?

There is one question just more generally, Mick, in relation to director shareholdings, asking what proportion of the company, other than Mr. Harry's holdings, is owned by the directors. And I think that's a number we probably don't have to hand, but I can calculate it from the annual report. So maybe give me notice and carry on, I can answer that in a few moments.

It will be minor. But yes, we won't come back to that. If you can pull your calculator out. In respect of Item 4, I confirm that the company has received valid proxy votes and direct votes in relation to Item 4, and these are displayed on the screen. Would those online attendees now please cast their votes if you've not done so already? In-person voting on this resolution will be conducted at the end of this meeting. Item 5, issue of share rights to nonexecutive directors, which was the matter we were just discussing. There are 4 resolutions under this item of business, each dealing with the issue of share rights to nonexecutive directors. By way of explanation, similar to the process we undertook at last year's AGM, this resolution seeks to approve the issue of share rights to nonexecutive directors who elect to sacrifice up to 25% of their 2023 financial year base fees inclusive of superannuation but excluding committee fees, in order to receive an equivalent value in the form of share rights issued under the company's Employee Rights Plan. This, in turn, is to enable the nonexecutive directors to progressively share in the growth and sustained value of Central by acquiring a shareholder in the company with a value equal to their total annual base fee remuneration plus superannuation. Over the years, it's been somewhat problematic for those directors like myself who whilst wanting to buy shares in the company have been unable to do so because we are in possession of market-sensitive information. If any of the resolutions in Item 4a to 4d are not passed, the company will not be able to proceed to issue the share rights in respect of the relevant director, and the financial year '23 base fee will be fully paid in cash. Are there any questions on the resolution to issue share rights to nonexecutive directors?

I might just -- I have done a quick calculation on a previous question, Mick, and I think the percentage is less than 1%.

I would expect that to be the case. You've got no question, Damian?

No other questions.

Right. The approval of issue of share rights to myself, this resolution relates to myself a lot. Would Kathy Hirschfeld Chair the meeting for the resolution?

Thank you, Mick. Ladies and gentlemen, the resolution for Item 5A states that for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval be given for the grant of a number of share rights determined in accordance with the formula outlined in the explanatory statement to Michael Joseph McCormack or his nominees under the company's Employee Rights Plan and otherwise on the terms and conditions set out in the explanatory statement. Is there any discussion on the motion? I confirm that the company has received valid proxy votes and direct votes in relation to Item 5A, and these are displayed on the screen. Would those online attendees now please cast their votes if you have not done so already? In-person voting on this resolution will be conducted at the end of the business of the meeting.

Thanks, Kathy. Moving on to Item 5B, approval of the issue of share rights to Mr. Stephen Gardiner. The resolution for Item 5b states that for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval be given for the grant of a number of share rights determined in accordance with the formula outlined in the explanatory statement to Stephen Gardiner or his nominee under the company's Employee Rights Plan and otherwise on the terms and conditions set out in the explanatory statement. Is there any discussion or questions on this motion? I confirm that the company has received valid proxy votes and direct votes in relation to Item 5b, and these are the spade on the screen. Would those online attendees now please cast their votes if you've not done so already? In-person voting on this resolution will be conducted at the end of the business of this meeting. Moving on to Item 5c, the approval of the issue of share rights to Ms Katherine Hirschfeld AM. The resolution for Item 5c states that for the purpose of ASX Listing Rule 10.14 and for all other purposes, approval be given for the grant of a number of share rights determined in accordance with the formula outlined in the explanatory statement to Ms. Katherine Hirschfeld AM or her nominees under the company's Employee Rights Plan and otherwise on the terms and conditions set out in the explanatory statement. Are there any discussions, questions on that? I confirm that the company has received valid proxy votes and direct votes in relation to Item 5c, and these are displayed on the screen. Would those online attendees now please cast their votes if you've not done so already? In-person voting on this resolution will be conducted at the end of the business of this meeting. Moving on to Item 5d, approval of the issue of share rights to Dr. Agu Kantsler. The resolution for Item 5d states that for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval be given for the grant of a number of share rights determined in accordance with the formula outlined in the explanatory statement to Agu Kantsler or his nominees under the company's Employee Rights Plan and otherwise on the terms and conditions set out in explanatory statement. Is there any discussion on this motion? I confirm that the company has received valid proxy votes and direct votes in relation to Item 5d, and these are displayed on the screen. Would those online attendees now please cast their votes to the resolution if you have not done so already? In-person voting on this resolution will be conducted at the end of the business of this meeting. Moving on to Item 6, equity grants to Managing Director. The resolution for Item 6 states that for the purposes of ASX Listing Rule 10.14 and for all other purposes, the issue of up to 3,160,353 share rights to Leon Devaney or his nominee under the company's Employee Rights Plan and otherwise on the terms and conditions set out in the explanatory statement is approved. Is there any discussion on this motion?

What's the real conditions on it?

On...

[indiscernible]

What are the hurdles? Well, it's all part of the remuneration plan. The hurdles that cover Leon, they've been documented in the annual report. Last year, they were around the producing assets as in growing the production capability, focus on cost as in reducing costs for those. There was no award at all for the drilling program because it was just not successful. So -- and out of 100%, I think the Board awarded Leon about 62% or something there. So he foregone about what 38%. And the executive incentive plan, as we put to the Board last year, was a new plan that had been well and truly worked over by experts, consultants in the field. It amalgamated a short- and long-term plan over 3 years. And it was all about incentivizing management to get on and grow the value of the company. That said, some aspects of the company's performance hasn't been achieved, and that's the reason, to some extent, Leon has being marked down.

So in percentage-wise, how much more does he have to do to achieve those grants? Like 20%, 50%?

These will be granted. This is based on '22, the performance for FY '22. So this is what he has earned for what he has done, and indeed, management in financial year '22.

So we're just ticking off previous...

You're just ticking the results, yes. But thanks for asking. Remuneration is an art and a science in which the management might want to be a -- an art. Damian, you've got no question on that?

Okay, I confirm that the company has received valid proxy votes and direct votes in relation to Item 6, and these are displayed on the screen. Would those online attendees now please cast their votes to the resolution if you've not done so already? In-person voting on this resolution will be conducted at the end of the business of this meeting. And moving on to Resolution 7, adopting the new constitution and repealing the old constitution. The resolution for Item 7 states that the new constitution of the company, as tabled at the Annual General Meeting and signed by the Chair for the purpose of identification, other than Rule 85, proportional takeover approval, is approved and adopted as the constitution of the company in substitution for and to the exclusion of the current constitution of the company with effect from the close of the Annual General Meeting. Is there any discussion on this motion? Go ahead.

[indiscernible]

Look, effectively, what we're doing is there's nothing untoward here. The constitution, as it's written, is dated and we're just bringing it up to speed. But do you want to just give us...

Optional.

Yes. Just -- there's nothing. The change in constitution is always difficult, but it's just simply...

It's just updating...

Go ahead.

No material change in terms of how the company operates? The current constitution was put in place before the company listed in early 2006. Many things have changed and improved over that time in terms of process. Also, it had the recent changes to allowing electronic service of notices, and there's been [indiscernible] updates that's allowing up to 4 holders being named joint holders. So a little bit tweaks along the way with technology improving. As we operate as a company, we're still operating, business is normal. Nothing has changed there from that point of view.

And that's also between the work on the new constitution has been performed by one of our better named lawyers, [indiscernible]. So yes, it's -- I'll call it a [indiscernible]. But I confirm that the company has received valid proxy votes and direct votes in relation to Item 7, and these are displayed on the screen. Would those online attendees now please cast their votes to the resolution if they've not done so already? In-person voting on this resolution will be conducted at the end of the business of this meeting. As this was the final resolution, we will now conduct the poll on Items 2 through 7, details of which are contained online or on your blue admission card. If there's any person present who believes they are entitled to vote, but has not registered to vote, would you please raise your hand for assistance? I would like to advise that voting on all resolutions will close shortly. I'll now pause for our shareholders and proxy holders to finalize their votes online and in-person. So please complete your voting now. [Voting]

I think that's a lot. But please can you raise your hand if anybody needs any more time? I think we're all done. Ladies and gentlemen, Mr. Maffescioni has signaled to me that all required voting papers have been collected and sufficient time has been to -- committed to our online voting. So I now declare voting closed for the poll for Items 2 through 7. The results of the voting will be notified to the ASX in accordance with the Corporations Act and the ASX Listing Rules stated today. And ladies and gentlemen, that now concludes today's formalities. I would like to thank you very much for your attendance and interest in the company. Thank you for your questions. And invite those here at the Christie Centre to join the board and the company's senior executives for refreshments outside and an opportunity to ask any other questions that you may have on the company. Also like to thank those who attended online, who are encouraged to ask any further questions via the company's website or e-mailing [email protected]. With that, thank you very much, and have a very good day.