Speaker 1: Yelda, Welcome to Shared Lunch, brought to you by Shares's.
Speaker 1: My name is Dan Brown Skill. I'll be your host today.
Speaker 1: We're joined by Andrew Jeffries, the chief executive of Echelon
Speaker 1: Resources Limited, to talk about being a fossil fuel company
Speaker 1: and how it fits into the global energy transition. Before
Speaker 1: we get started, here's some important info.
Speaker 2: Investing involves the risk you might lose the money you
Speaker 2: start with. We recommend talking to a licensed financial advisor.
Speaker 2: We also recommend reading product disclosure documents before deciding to invest.
Speaker 2: Everything you're about to see and here is current at
Speaker 2: the time of recording.
Speaker 1: Andrew, Hello, thank you for coming.
Speaker 3: Jan thank you very much for inviting me.
Speaker 1: Hey, I was having a look at your share register
Speaker 1: the other day and it looks to me like Sharesy's
Speaker 1: users are approximately your fourth largest shareholder collectively. Is that right?
Speaker 3: Yep, that's about right. And they're also quite an interactive
Speaker 3: shareholder I think in terms of people are actually watching,
Speaker 3: you know, watching things and buying and selling the shares.
Speaker 1: So we're here in Wellington. Until recently you were an
Speaker 1: INSIDEX listed company called New Zealand Oil and Gas. You're
Speaker 1: still headquartered here in Wellington, but I think in May
Speaker 1: you shifted the company to the Australian Stock Exchange and
Speaker 1: rebranded as ischelon. Can you talk us through what motivated
Speaker 1: those twin decisions. I assume they're related, and they are
Speaker 1: related in a way. The fact is the so there
Speaker 1: was a couple of things that drove the timing. One
Speaker 1: was that we looked to move to the AX because look,
Speaker 1: exchanges are places where capital comes together to invest in things.
Speaker 1: The enz X tends to be has been quite successful
Speaker 1: in things like zero you know is becoming is quite
Speaker 1: a tech exchange. The AX is very much a resource exchange.
Speaker 1: There's obviously quite a large capital pool in Australia with
Speaker 1: their superannuation system. They tend to have a lot of
Speaker 1: mining and expiation companies, so there's capital available and people. Also,
Speaker 1: there's analysts and people who sort of understand our industry. So,
Speaker 1: for example, in New Zealand, we had no comparable companies,
Speaker 1: so I was the CEO of the largest and smallest
Speaker 1: listed oil and gas explorer, which is great, it's quite
Speaker 1: a fun anecdote, but the reality is that in Australia,
Speaker 1: I've got around about sixty five comparable companies so there's
Speaker 1: actually a pool of people who.
Speaker 3: Have a better understanding of the oil and gas industry.
Speaker 1: So there are just advantages to sitting alongside similar companies.
Speaker 1: You could be compared to each other. Analysts that understand
Speaker 1: one will understand another. That kind of thing.
Speaker 3: So as we go through the energy transition, that transition
Speaker 3: is going to need a lot of capital, and I
Speaker 3: think that the resource market that is the ASX will
Speaker 3: be one of the markets that provides the capital that
Speaker 3: builds the projects that do the mining and processing that
Speaker 3: will build all the machines that are going to make
Speaker 3: the transition work. So you know, we want to be
Speaker 3: very much part of that part of that scene. As
Speaker 3: we'll come to around the role in the name echelon,
Speaker 3: so we're a very science based, engineering based company, got
Speaker 3: a lot of geologists. Echelon is a term that they
Speaker 3: use for things that we may in a size order,
Speaker 3: So things like mountains, fault blocks, formations, geological formations are
Speaker 3: all referred to as on echelon. So it's got a
Speaker 3: it resonates to that piece. It's also about to me,
Speaker 3: it's about the you know, where we're putting our focus
Speaker 3: in terms of looking at where those rocks are. So
Speaker 3: we're looking at markets where we see that there will
Speaker 3: be demand growth, that there's a strong appetite for hydrocarbons,
Speaker 3: and so we're putting our putting our fit into those areas.
Speaker 3: The next thing is it's our values we like to look.
Speaker 3: We have a pretty rigorous scientific team. It's not huge,
Speaker 3: we're not a big organization. We've got twenty people, but
Speaker 3: we put some real rigor into our science, and we
Speaker 3: have some very robust and experienced engineers as well. So
Speaker 3: we feel that we're in an operational in terms of
Speaker 3: the experience, and certainly, having worked globally and I have
Speaker 3: worked with super majors and the next step down, next
Speaker 3: level down companies, I don't think I have ever had
Speaker 3: as experienced and as motivated team as I've got here.
Speaker 1: You mentioned in there about wanting to be more focused
Speaker 1: on the markets where there is more demand and more
Speaker 1: work to do. There's been a lot of talk recently
Speaker 1: about how New Zealand labor government banned oil and gas
Speaker 1: exploration in twenty eighteen, and it seems like there's been
Speaker 1: a sense from and he's like yours, that there's not
Speaker 1: that much work for you to do here. In New Zealand.
Speaker 1: Now is that the case and was that a factor
Speaker 1: in the move?
Speaker 3: Well, there's there's a couple of different sides to that.
Speaker 3: On the one side, there is certainly a lot of
Speaker 3: prospectivity in New Zealand. New Zealand has been underappreciated as
Speaker 3: an exploration venue, mainly because it's what we call a
Speaker 3: gassy province.
Speaker 1: It doesn't sound good, Well, it's a gassy province.
Speaker 3: In the past that wasn't good because it was a
Speaker 3: long way from things and it was predominantly gas that
Speaker 3: you found. So Maui was a great case in point.
Speaker 3: It was at the time of its discovery it was
Speaker 3: the world's largest offshore gas field, but nobody really knew
Speaker 3: what to do with it, and it took a decade
Speaker 3: or so. I think it was discovered, I think in
Speaker 3: about sixty eight, and it was about the end of
Speaker 3: the I think it was about nineteen eighty that it
Speaker 3: actually produced.
Speaker 1: People still wanted oil back.
Speaker 3: People still wanted oil back then it's much easier to transport. Well,
Speaker 3: the world's moved on, and now actually the world is
Speaker 3: keen on gas and a lot of countries are trying
Speaker 3: to reduce their use of coal, in particular by utilizing gas,
Speaker 3: so it's actually a being a gassy province is no
Speaker 3: longer a bad thing. So we've got twenty one sedimentary
Speaker 3: basins in New Zealand. New Zealand's the fifth largest continental
Speaker 3: mass in the world. It's most of it's underwater. We've
Speaker 3: got a huge continental area and of those twenty one basins,
Speaker 3: we've had wells drilled in five and four of them
Speaker 3: have had hydrocarbons in them. Now you say, well, you've
Speaker 3: drilled those basins and you haven't found anything. It took
Speaker 3: thirty eight wells to find the North Sea. And think
Speaker 3: you would have a hard time putting a well in
Speaker 3: the North Sea without hitting something when you look at it.
Speaker 3: But the reality is that exploration is a numbers game
Speaker 3: and you do end up with a lot of unsuccessful
Speaker 3: wells before you get success. So there is prospectivity. New
Speaker 3: Zealand is very under explored. Even the Taranaki Basin is
Speaker 3: under explored in global terms. The other basins Canterbury Great
Speaker 3: South Basin even more so. They've barely been scratched, So
Speaker 3: there is prospectivity there. On the flip side, it's the
Speaker 3: oil and gas industry is like any heavy industry, is
Speaker 3: not property development. We do not come in and do
Speaker 3: something and sell it on and make a big make
Speaker 3: big bucks and with not a care. We come in
Speaker 3: and you become involved in a country. You spend tens
Speaker 3: of millions of dollars obtaining seismic to spend hundreds of
Speaker 3: millions of dollars doing wells, most of which are going
Speaker 3: to be unsuccessful. To spend billions and billions of dollars
Speaker 3: developing infrastructure to then produce those hydrocarbons and to sell
Speaker 3: them all at the same time as with the government
Speaker 3: owning the resource. So at no time does the does
Speaker 3: your oil and gas company own the resource. It's actually
Speaker 3: the country owns the resource. It can't be moved. You
Speaker 3: can't offshore it because it's once you know it is
Speaker 3: where it is. So you then develop a you know,
Speaker 3: you develop a multi decade or relationship with the government
Speaker 3: and with a country, and you know that sort of
Speaker 3: thing requires a lot of certainty. So for investors to
Speaker 3: come in and put the money up to do the
Speaker 3: expiration requires certainty. So the the and I think that's
Speaker 3: very long answer to your question. But the offshore ban,
Speaker 3: while yeah, at the time not a lot of wells
Speaker 3: had been were being drilled. We just had a big
Speaker 3: price crash in the twenty fifteen, so not a lot
Speaker 3: of wells were being drilled. The reality was that it
Speaker 3: was like putting a big signpost in your front lawn
Speaker 3: saying bugger off, we're not interested in having you here.
Speaker 3: What then unfolded so and we knew about this, We
Speaker 3: had experience of this. We had a block off Canterbury
Speaker 3: that had a prospect, the Bark Prospect that we did
Speaker 3: a report on public report on showing the impact that
Speaker 3: it would have, which was several thousand jobs export industry.
Speaker 3: You would have got all the southern dairies off coal,
Speaker 3: you know, it would have been a You would have
Speaker 3: produced around about a billion dollars a year in tax revenue,
Speaker 3: so about enough to run a DHB. We had that block.
Speaker 3: We were lining up with some international partners to come
Speaker 3: and get that. One of those wells stuck in it,
Speaker 3: and within a week those international partners have gone and
Speaker 3: they have not they are not coming back. So if
Speaker 3: they haven't come back at the.
Speaker 1: Point, so you did have permission to explore there and
Speaker 1: work there.
Speaker 3: Even though we did have we had a we were
Speaker 3: coming up to a block decision and the you know
Speaker 3: there just wasn't wasn't a great deal. Companies can look through,
Speaker 3: you know, if they see a government setting that says
Speaker 3: we don't want you around, they can see through that.
Speaker 3: They can go and spend that hundred million dollars on
Speaker 3: an exploration. Well, but then you've got to develop, You've
Speaker 3: got that long relationship you've got to have with the country,
Speaker 3: and if you're not welcome, well you're not welcome. So
Speaker 3: so there is a Look, it's been very well, you know,
Speaker 3: it's it's been great to see the offshore ban reversed.
Speaker 3: The problem is that now with the Labor government saying
Speaker 3: they're just going to whack it back in again. You know,
Speaker 3: what do you do as an international investor, what do
Speaker 3: you do? Will you probably say I'm going to go
Speaker 3: and spend my money somewhere else. So interestingly enough, at
Speaker 3: the moment, the country with the highest offshore capital spend
Speaker 3: in the next this coming year will be Norway, which
Speaker 3: has a very welcoming exploration regime. Look, it's got very
Speaker 3: high tax, it's quite prospective place, so people do explore
Speaker 3: and find things. When they produce, they actually have a
Speaker 3: very high tax regime, but companies don't mind that because
Speaker 3: the risky part is the expiration. So the expiration is
Speaker 3: supported very strongly by the Norwegian government and has been
Speaker 3: for decades. So they've had a very stable regime similar too.
Speaker 3: Up until the offshore band. We would go around the
Speaker 3: world and say to people how similar the Norwegian and
Speaker 3: the New Zealand regime were in many ways in terms
Speaker 3: of stability. So yeah, it's a it's a difficult time
Speaker 3: and it's one of the reasons why we've also looked
Speaker 3: at and invested outside of New Zealand.
Speaker 1: What would it take to bring you back?
Speaker 3: Look, Norway is a pretty good example, you know, there
Speaker 3: is a The Norwegian government actually do support exploration quite strongly,
Speaker 3: not just in terms of waving a flag and you know,
Speaker 3: buying you buying lunches or or whatever. You know, it's real,
Speaker 3: it's real inducements to do exploration and I think.
Speaker 1: Support it across the political spectrum.
Speaker 3: It does appear to be because we've had green governments
Speaker 3: and they still you know, they still support provide the
Speaker 3: same support. Their regime has not changed over the decades.
Speaker 3: The UK has a very similar you know, the geology
Speaker 3: doesn't sort of take any regard to geographical country boundaries.
Speaker 3: The geology is the same on the UK side of
Speaker 3: the North Sea. The UK over the last thirty years
Speaker 3: has played around with its tax system endlessly and they
Speaker 3: there's virtually no spend in the UK or expiration in
Speaker 3: the next year. So you've got Norway biggest spend ever
Speaker 3: and the UK with virtually none, right next to each other.
Speaker 3: Same geology, and that's just down to regulatory just down
Speaker 3: to regular tests.
Speaker 1: What you can explore, which parties support what yep? Okay,
Speaker 1: if you if the band hadn't been put in place,
Speaker 1: do you think you would have new wells up and running,
Speaker 1: a new site up and running today? What might an
Speaker 1: alternate reality look like?
Speaker 3: I think, Look, I think there is certainly one, at
Speaker 3: least I know of one and probably two prospects that
Speaker 3: would have been drilled. Would they have been online now,
Speaker 3: Probably not. You need quite a lot of infrastructure to
Speaker 3: put them online. Would they have been six years further
Speaker 3: down the track? Absolutely, So it's a game where you've
Speaker 3: got the oil and gas expiration game is a game
Speaker 3: where you've got to run to stand still, So you've
Speaker 3: always got to be drilling more wells because it's a
Speaker 3: depleting industry. I know, when I first embarked on my
Speaker 3: career in the early nineties in oil and gas, I
Speaker 3: had a lot of people say to me, well, we'll
Speaker 3: run out in two thousand and it didn't. You know,
Speaker 3: there's and I would imagine a lot of people. Even
Speaker 3: more people are probably getting the same message now. And
Speaker 3: I think we'll come to it potentially later on, but
Speaker 3: I think there is a large you know, we do
Speaker 3: need oil and gas in the system, gas in particular
Speaker 3: through the transition.
Speaker 1: Yeah, so I really wanted to ask you about this,
Speaker 1: and I think lots of OL viewers will be interested
Speaker 1: in this as well. Obviously lots of that are invested
Speaker 1: in you. But another thing shares these hears from its
Speaker 1: investors all the time is that they're really interested in
Speaker 1: ESG and impact investing. That's like a very popular genre.
Speaker 1: So it is interesting. I think being a fossil fuel company,
Speaker 1: you provide a service. People need that service, society needs
Speaker 1: that service. But perhaps sometimes you're painted as the villain.
Speaker 1: And you know, just last week, the UN was two
Speaker 1: weeks ago, maybe the UN Secretary General was in New
Speaker 1: Zealand and went on to the Pacific and people asked
Speaker 1: him about the ban of oil and gas exploration reversal,
Speaker 1: and he said, the only thing I can tell you
Speaker 1: is that any oil and gas that will be discovered
Speaker 1: from now, I am absolutely sure it will never be used.
Speaker 1: You're exploring new fields. You'd like to explore new fields.
Speaker 1: What is the UN Secretary General got wrong there? Why
Speaker 1: do people have this view when you have quite a
Speaker 1: different one.
Speaker 3: Yeah, Look, so there is notionally there are enough oil
Speaker 3: reserves if we you know, let's talk to the oil
Speaker 3: side of the story. First oil reserves in the world
Speaker 3: to meet potential future demand. Eighty percent of those oil
Speaker 3: reserves are in Venezuelan and bitchumen and Canadian oil sands. Now,
Speaker 3: both those resources are going to be very energy intensive
Speaker 3: and environmentally intensive to develop. So my question to people
Speaker 3: is is that really so assuming that you're happy to
Speaker 3: be covered by that the oil reserves are covered, we
Speaker 3: don't have to discover anymore. Are you happy that we
Speaker 3: produce those reserves because that's what you're going to have
Speaker 3: to be relying on, and that's going to be producing
Speaker 3: a lot more CO two because ultimately all of that
Speaker 3: energy that comes for processing has to come from from
Speaker 3: burning things at the temperatures that you need, and it's
Speaker 3: going to be very expensive oil so versus so. To
Speaker 3: put that into perspective, there's a thing called the energy
Speaker 3: return on investment for a barrel of oil. So that's
Speaker 3: how many barrels of oil you get out for every
Speaker 3: barrel of oil and energy that you put in. So
Speaker 3: and oil sands will give you and Venezuelan bitchmen will
Speaker 3: give you around about four or five barrels of oil
Speaker 3: out for every barrel of oil invested. Offshore oil and
Speaker 3: gas will give you around about somewhere between forty and
Speaker 3: eighty barrels of oil for every barrel of oil of
Speaker 3: energy invested.
Speaker 1: So is it fair to say where people are looking
Speaker 1: for oil, they're not necessarily looking for more oil net,
Speaker 1: they're looking for more efficient oil.
Speaker 3: To be honest, I would like to see a lot
Speaker 3: of the Venezuelan bitchmen and a lot of the Canadian
Speaker 3: oil sands stay right where they are.
Speaker 1: Because they're just going to have more emissions associated with
Speaker 1: them perl correct, are more efficient well correct, And then
Speaker 1: I guess going back to that idea of displacing dirtier energy,
Speaker 1: it's better that that is natural gas than it is
Speaker 1: coal or correct a diesel, which we briefly were burning
Speaker 1: in New Zealand the other day just some people's horror.
Speaker 3: And we are mostly burning coal. So look the So
Speaker 3: for the EV owners who are really wanting not to burn,
Speaker 3: not to produce emissions, they really should. Transpower's got a
Speaker 3: fantastic site that tells you at any given time in
Speaker 3: the day, what's producing the power. So if the coal
Speaker 3: fired power station is running, the reality is that you
Speaker 3: have a choice over when you plug your battery in.
Speaker 3: If you plug an in moll of power coal fired
Speaker 3: power stations running, you are the reason the coal fired
Speaker 3: power stations running. So those all of those electrons you're producing,
Speaker 3: it doesn't matter whether who you who you buy your
Speaker 3: power from. All the electrons that you're using are coming
Speaker 3: effectively coming from that coal fired power station. Because you
Speaker 3: are the marginal user.
Speaker 1: You're effectively running your tiesler on coal.
Speaker 3: You are effectively running the Tesla on coal, which is
Speaker 3: look and a lot of people if that's really the reason,
Speaker 3: have a have a bit of a look at that
Speaker 3: Transpower up and you can you can sort of time
Speaker 3: when you're when you're actually plugging in.
Speaker 1: Because a lot of the time, a lot of the time,
Speaker 1: we're not burning coal.
Speaker 3: At the moment with low lie hydro lake sets, unfortunately
Speaker 3: we're burning coal most of the time. But you're absolutely right,
Speaker 3: in normal hydrological year, we are incredibly renewable.
Speaker 1: I think you make a good case for exploration finding
Speaker 1: more more efficient forms of fossil fuels. But let me
Speaker 1: push back on that a little bit, because every time
Speaker 1: you find a more efficient well with cheaper, cleaner energy,
Speaker 1: that makes burning fossil fuels cheaper and cleaner, and therefore
Speaker 1: like reduces the incentive to invest in these big batteries
Speaker 1: that the tech's not quite there yet, but maybe people
Speaker 1: would invest more in the tech. I think some of
Speaker 1: the idea of the oil and gas ban was not
Speaker 1: that we don't need gas, but that by banning it,
Speaker 1: we would fast track the development of other technologies. Now
Speaker 1: that's obviously maybe not the smartest thing to do as
Speaker 1: a tiny country that isn't capable of developing those technologies.
Speaker 1: But on a global network scale, if you keep finding cheaper,
Speaker 1: more efficient forms of fossil fuels, won't that keep us
Speaker 1: on them for longer and delay the transition.
Speaker 3: A Look, it's a very good point, Dan, and I
Speaker 3: think generally, in as humans have moved forward and not
Speaker 3: for yet, we are part of a very privileged group
Speaker 3: who enjoy a Western standard of living. There's a couple
Speaker 3: of billion people who don't have any any you know,
Speaker 3: who were cooking using stuff powered by dung or charcoal,
Speaker 3: which causes a lot of health problems as well as
Speaker 3: probably not being very efficient the you know. So we're
Speaker 3: speaking from that. From that end of things, human progress
Speaker 3: has generally been when things have gotten cheaper and better.
Speaker 3: So I'm very happy. Look, I will be ecstatic if
Speaker 3: technology comes along that puts me out of a job.
Speaker 3: I'm very happy all those folks in those startups that
Speaker 3: are developing fusion power or better batteries. You know, I
Speaker 3: am very happy bring it on, because I think that
Speaker 3: will be a really positive development for humanity. But you know,
Speaker 3: we shouldn't be pushing up the price of things simply
Speaker 3: to try to stimulate something that's you know, that's that's
Speaker 3: not You could do it more effectively, and one of
Speaker 3: the most effective ways of doing it would be to
Speaker 3: put a global price on carbon. You have, full stop.
Speaker 3: If we could have a global price on carbon. That
Speaker 3: would be and then everybody or governments would then say, look,
Speaker 3: we'll put the global price on carbon and will stop
Speaker 3: stuffing around with all the other settings. That would be
Speaker 3: phenomenal and we would embrace that as a I know
Speaker 3: most of the oil and gas industry folks that I
Speaker 3: talked to would absolutely love that because it would give
Speaker 3: you certainty, it would give a level playing field, you know,
Speaker 3: it would be it would be a really positive, positive thing.
Speaker 3: But saying that you will restrict the world from having
Speaker 3: access to a resource that they actually need and you
Speaker 3: will push up the world's prices for energy is a
Speaker 3: pretty hard thing to do, particularly to the people who
Speaker 3: you know, it is the poorest people who end up
Speaker 3: bearing the bearing the problem, which is.
Speaker 1: I guess you know what. We are to a certain
Speaker 1: degree witnessing here in New Zealand where we tried to
Speaker 1: push gas out of the system. It didn't work. We
Speaker 1: have some manufacturers shutting down. We're bringing it back into
Speaker 1: the system. Ultimately, we tried to make it move faster,
Speaker 1: we raise prices, but it didn't end up working. That's
Speaker 1: the sort of thing you're thinking about there, yep.
Speaker 3: And look, it's not it's not this is not a
Speaker 3: New Zealand a New Zealand thing. Australia has done very
Speaker 3: much the same thing on the East Coast of Australia.
Speaker 3: You're saying the same, you know, the same argument play out,
Speaker 3: and that will that is impacting their energy prices quite
Speaker 3: a lot as well. Now we happen to be you
Speaker 3: you know, you could argue that could be accused of
Speaker 3: profiteering from that by continuing by we've upped our investment
Speaker 3: in Central Australia, which is gas that's feeding into that
Speaker 3: East Coast market, feeds into the Northern term market, but
Speaker 3: also the East Coast market at the same time that
Speaker 3: is allowing us to drill more wells. We will try,
Speaker 3: you know, so we're trying to bring on more supply
Speaker 3: to meet that demand because the demand really has to
Speaker 3: be met otherwise you will shed demand and unfortunately you'll
Speaker 3: shed the people. It'll be the people who can't afford
Speaker 3: it that will end up not being able to pay all.
Speaker 3: Manufacturer is being forced off suore. So you know, both
Speaker 3: those things take away the jobs, they take away people's livelihoods,
Speaker 3: and I think that's not particularly not a fair way
Speaker 3: to play.
Speaker 1: So you've moved to the A SX, you're having a
Speaker 1: bit more of a focus on Australia. Can you talk
Speaker 1: us through just some of the projects, some of the
Speaker 1: stuff you're doing there, what the market opportunities and challenges
Speaker 1: look like in Australia and elsewhere.
Speaker 3: Sure. Look, we've got so we've been investing in Australia
Speaker 3: over the last three or so years. We've been bought
Speaker 3: into the Armada, a space in which is right smack
Speaker 3: in the center of the We've got a couple of
Speaker 3: gas fields there. We've drilled a we drilled a well
Speaker 3: in a couple of years ago. That's been it's been
Speaker 3: a solid producer in a field called Palm Valley. We're
Speaker 3: about to drill a couple of wells in the Marini
Speaker 3: field in the towards probably a start very first part
Speaker 3: of next year. That we're looking forward to providing extra
Speaker 3: volumes into that Northern Territory market. The Northern Territory market.
Speaker 3: So one of the reasons our production has been flat
Speaker 3: for the last year has been because the Northern Territory
Speaker 3: has been suffering a gas shortfall which has interfered with
Speaker 3: the with the flow of gas across into the East
Speaker 3: Coast of Australia, so we've we've managed to mitigate that,
Speaker 3: but it has impacted our production in the last year.
Speaker 3: But we're looking forward to we're going to put more
Speaker 3: gas and we've just done it. Had a long term
Speaker 3: contract signed with the Northern Territory government and a Rare
Speaker 3: Earth's miner to put gas into that Northern Territory market
Speaker 3: for the next over the next six years. So we'll
Speaker 3: be investing in additional wells and we're looking forward to
Speaker 3: bringing some more gas into that market.
Speaker 1: What causes the gas short for is that just lessened
Speaker 1: the ground so they had difficulty. So they had a
Speaker 1: field up in Western Australia that feeds across into the
Speaker 1: Northern Territory had a problem has had a problem with
Speaker 1: one of its wells, and that's simply meant there's less
Speaker 1: gas going into the market than was expected. So it's
Speaker 1: the sort of thing that can happen if you become
Speaker 1: reliant on only.
Speaker 3: A few sources of sources of fuel.
Speaker 1: At a similar thing in New Zealand, haven't we where
Speaker 1: the existing wells haven't produced quite as much as we
Speaker 1: thought they would or just added to the jury crunch yep.
Speaker 3: And look, we've been a part of that. So we
Speaker 3: have continued to invest in New zeald where by no
Speaker 3: means turning our back on New Zealand, and we are based.
Speaker 3: We're based in New Zealand for a start, and that's
Speaker 3: not that's not changing. We invested in the Coupe gas field.
Speaker 3: We drilled the well. It was also it was one
Speaker 3: of those disappointing wells. Hoping that we can get something,
Speaker 3: you know, get more out of it over time. There's
Speaker 3: some things we can do with it. But the long
Speaker 3: and the short is Coupe gas Field has been a
Speaker 3: fantastic field over its life. It's it's reserved bases doubled
Speaker 3: over its field life without putting any new wells in.
Speaker 3: So it's been a you know, that's a that's a
Speaker 3: great field to have. It's been producing a lot of
Speaker 3: the LPG that New Zealanders used for barbecuing and down
Speaker 3: south for heating comes from the Coupe field. And look,
Speaker 3: we drilled one well. And that can happen when you're
Speaker 3: you're dealing with mother nature your drill and it's and
Speaker 3: you get a disappointing result. It's one of the reasons
Speaker 3: why there is a need to make reasonable returns from
Speaker 3: the wells that do work. Is because and sometimes those
Speaker 3: returns may seem unreasonable, but that's only because you don't
Speaker 3: factor in all the other wells that don't work. And
Speaker 3: it is just a it's a function of the business
Speaker 3: that one well. It's a data point, it's not you know,
Speaker 3: it doesn't write a field off. So now we've just
Speaker 3: got to circle the wagons and figure out what we
Speaker 3: do next.
Speaker 1: Let me ask you about ESG investing. I feel like
Speaker 1: that's become really big over the past couple of decades,
Speaker 1: and almost every fund has some sort of ESG criteria
Speaker 1: they look at. It differs between funds. What is that
Speaker 1: like for you as a fossil fuel company? Has it
Speaker 1: changed the type of investors that are interested in you?
Speaker 1: What is it like being a listed natural gas company
Speaker 1: in the era of ESG?
Speaker 3: How is that for you? I think, Look, I think
Speaker 3: it's currently we've gone through a period where it's been
Speaker 3: viewed pretty negatively.
Speaker 1: The fossil fuels.
Speaker 3: Fossil fuels so also by the investing community. The look
Speaker 3: but it's one of those trends sort of the you knows.
Speaker 3: As we've talked about we see ourselves as actually pivotal
Speaker 3: in making transition work, and I think that will that
Speaker 3: is starting to become a bit better recognized. As that
Speaker 3: becomes better recognized, I'm hoping that some of those funds
Speaker 3: will start to say, actually, you know, if we really
Speaker 3: want renewables to work, we're going to have to We're
Speaker 3: going to invest in these folks as well. In the meantime,
Speaker 3: we've been mainly the more retail shareholders who have who
Speaker 3: have looked at us and gone, right, well, I can see.
Speaker 3: I mean, if you'd invested in New Zealand oil and
Speaker 3: Gas over the last year, you would have had a
Speaker 3: twelve percent cash yield because we've had four point four
Speaker 3: and a half sense of dividend. Just recently announced the
Speaker 3: one and a half cent dividend at the end of
Speaker 3: the financial year. What do they say? It's the short
Speaker 3: term it's a voting machine in the markets, and long
Speaker 3: term it's a weighing machine. I think I'm hoping that
Speaker 3: the results that we get actually will in the longer
Speaker 3: term folks. Folks will look at it and say, right, well,
Speaker 3: this is the place that we should invest because we're
Speaker 3: part of the transition.
Speaker 1: One part of the ESG metrics I guess are about
Speaker 1: sort of the ethics or about climate outcomes. But another
Speaker 1: part people talk about just risk that don't want to
Speaker 1: be left with stranded assets. What's your strategy for avoiding
Speaker 1: stranded assets or being caught out in the transition? Would
Speaker 1: you look at going to renewables or what kind of
Speaker 1: runway do you think you have?
Speaker 3: Look, we've tended to focus on assets where we can
Speaker 3: invest and get results sooner rather than later, which puts
Speaker 3: you into putting wells into existing fields, increasing reserves in
Speaker 3: existing fields that are connected to markets where you're not
Speaker 3: having to put in the long term, decades long investment,
Speaker 3: and then relying on a market being there in twenty
Speaker 3: years time. So we're very much investing in a way
Speaker 3: that says we'll know we'll be producing that gas in
Speaker 3: a year's time and putting it into a market that
Speaker 3: we know is there and we know its healthy. I
Speaker 3: think some of the strategic planners bigger in bigger companies
Speaker 3: would definitely you'd start to worry if you were looking
Speaker 3: at a project that was twenty years in the making,
Speaker 3: would you do that? Ultimately comes down to what your
Speaker 3: shareholders want. If you've got shareholders who want to put
Speaker 3: the money in, well, then away you go. But from
Speaker 3: our perspective, we've very much focused on things that are
Speaker 3: near a term and then look, we'll see, We'll wait
Speaker 3: and see. I think there's a new Zealand gas market
Speaker 3: is obviously going to be around for another few decades,
Speaker 3: the Australian gas market probably for longer still, so that
Speaker 3: exceeds any reserves life that we've got at the moment.
Speaker 3: So that's really been the way we've dealt with that well.
Speaker 1: Andrew, thanks for coming on. I think you have just
Speaker 1: reported your financial results.
Speaker 3: When was there, Look, it was last week we reported
Speaker 3: our financial results. We've got some good numbers, you know,
Speaker 3: the building the business is building along quite well. We're
Speaker 3: in some good markets, we've got some good long term contracts.
Speaker 3: We're drilling some else in the next year. So you know,
Speaker 3: I'd recommend anybody who wants to could certainly have look
Speaker 3: at our at our website www. Dot Echelon Resources dot
Speaker 3: com and you know, have a look at the have
Speaker 3: a look at the results.
Speaker 1: Thank you for coming on.
Speaker 3: It's great to chat and look to any of those
Speaker 3: folks out there, you know, very happy. I think to
Speaker 3: have shareholder questions and things at our AGM. Very happy,
Speaker 3: happy to be interactive, and it's great to see people
Speaker 3: investing and to see shares is providing a platform brilliant
Speaker 3: to come and have a chat.
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