 I am pleased to report that once again Australian Worldwide Exploration Ltd (AWE) has delivered outstanding operating and financial results. While the company has clearly benefited from unprecedented high international oil prices, such performance cannot be achieved without excellent people and commitment to technical and commercial discipline.
Throughout its 11-year history, AWE has concentrated on the commercialisation of assets which provide long-term profitable outcomes for the company and its shareholders. The four cornerstone oil and gas projects which have been developed and brought into production over the last three years are now all operating at design capacity and at or above reservoir expectations. The Tui oil fields in New Zealand have made an exceptional contribution in the last year with reserves increased from 28 million to 50 million barrels and production in the first year significantly exceeding forecast. BassGas is now operating at full liquids recovery capacity and meeting contractual gas obligations; Casino continues to perform consistently and efficiently while Cliff Head oil production has been in line with budget. It is encouraging that good additional potential exists adjacent to most of these developments and AWE remains committed to sustaining its impressive performance and actively pursuing growth opportunities through exploration and selective corporate activity. The recently completed merger with ARC Energy will also add production and cash flow from combined increased equity in BassGas and Cliff Head as well as contributions from the onshore Perth basin.
 Although the commercial results of the exploration drilling programme during the last twelve months did not match the company’s historical performance, two potentially significant gas discoveries have been made at Lengo-1 in Indonesia and most recently, Netherby-1 in the Otway basin and shows were encountered in several other wells, which augurs well for follow-up prospects. To complement its existing portfolio, the company is actively pursuing the consolidation of its acreage position in the East Java basin in Indonesia and the ARC merger offers added exposure to interesting possibilities in Yemen as well as near field activity in the onshore Perth basin. Increased focus on accessing and reviewing opportunities in Australasia and internationally has resulted in experienced geoscience and business development resources being added to the AWE team.
Financially it has been a great year: above forecast net production which totalled almost ten million oil equivalent barrels and high oil prices generated record revenues of $821 million, profit before tax of $504 million and bottom line earnings after tax of $264 million, equating to 58 cents per share, all significantly above previous years. From a balance sheet and cash perspective, AWE is in excellent shape – after fully repaying debt and completing the ARC merger with cash, the company remains well positioned to pursue continuing exploration programmes as well as consider suitable acquisition opportunities to deliver increasing shareholder value. During the year, the AWE share price reached another record high of $4.71 and by year-end, the annual compound shareholder return over the last three years had averaged 27%.
 AWE is also pleased to report for the first time on our pursuit of sustainable business practices and our role in society by managing environmental and social impacts while remaining economically viable. The success of AWE depends on us conducting business in an ethically sound manner, engaging with external stakeholders and monitoring and managing our ecological footprint. We are committed to communicating with our stakeholders on this growing issue and this year’s annual report includes a more detailed Sustainability Report. In subsequent years, we will strive to continually be transparent in this reporting whilst we improve our performance and meet appropriate sustainability targets.
The AWE Board continues to work diligently in the best interests of shareholders with a strong focus on performance as well as governance and I thank my fellow directors for their contribution. I also congratulate Bruce Wood on his first year as Managing Director – it has been a very successful year and the transition from Bruce Phillips has been managed smoothly. With the four cornerstone assets now in continuous production mode, the challenge to build the company to even greater heights is being addressed by the Board, the leadership team and the AWE staff, all of whom have demonstrated their capability to achieve such objectives.
Bruce G. McKay
Chairman |
