Beach Energy Limited · ASX:BPT
Beach Energy — Investor Presentation (April 2011)
68 slides from Beach Energy's investor presentation, Apr 5, 2011
Slide 1: Investor Morning, Sydney 6 April 2011
Beach Energy Limited For personal use only ‘Investor Morning’ Sydney - 6 April 2011 Beach Energy Limited, Investor Morning – 6 April 2011 Slide 1
Slide 2: Welcome
For personal use only Welcome Chris Jamieson Investor Relations Manager Beach Energy Limited, Investor Morning – 6 April 2011 Slide 2
Slide 3: Welcome and housekeeping
Welcome and housekeeping Time Topic Presenter For personal use only 8:30-9:00 am Registration 9:00-9:05am Welcome Chris Jamieson 9:05-9:25am Strategic overview Reg Nelson 9:25-9:40am Operational overview Neil Gibbins 9:40-9:55am Positioned for growth in Eastern Australian gas markets Steve Masters 9
Slide 4: Strategic overview
For personal use only Strategic overview Reg Nelson Managing Director Beach Energy Limited, Investor Morning – 6 April 2011 Slide 4
Slide 5: Compliance statements
Compliance statements For personal use only Disclaimer • This presentation contains forward looking statements that are subject to risk factors associated with oil, gas, geothermal and related businesses. It is believed that the expectations reflected in these statements are reasonable but they may
Slide 6: Beach Energy Limited - A unique value proposition
Beach Energy Limited - A unique value proposition For personal use only Beach Energy Limited, Investor Morning – 6 April 2011 Slide 6
Slide 7: Operational overview
For personal use only Operational overview Neil Gibbins Chief Operating Officer Beach Energy Limited, Investor Morning – 6 April 2011 Slide 7
Slide 8: Safety priority
Safety priority Safety takes precedence in all operations For personal use only • Low Supervision Classification for Production Operations (SA) by PIRSA • HSE Strategic Planning – 3 year plan • Continued support for APPEA Stand Together for Safety campaign • Over 18 months without a recordable injur
Slide 9: Key growth pillars
Key growth pillars For personal use only • High margin Cooper Basin: • Western Flank • Egypt: Material oil • Western Desert opportunities • Gulf of Suez • East African Rift: • Tanzania Large scale gas • Cooper Basin conventional resource to reserves • Cooper Basin shale and tight gas conversion oppo
Slide 10: Large Resource base to build Reserves
Large Resource base to build Reserves For personal use only 2P Reserves 2P Reserves & Contingent Resources 66 MMboe* 363 MMboe* 2P Reserves are a fraction of the total resource base Cooper / Eromanga Other Cooper / Eromanga 2P Other Material resource additions likely for Cooper Basin gas activity *
Slide 11: Solid production platform
Solid production platform Beach Operated Western Flank Oil For personal use only • FY11 guidance of ~ 7 MMboe* Gross Expected Ultimate Recovery (MMbbl) 12 • Consistent Cooper Basin production performance 10 • Short-term opportunities for 8 production growth given: – Better land access for activities
Slide 12: A one in forty year flood event
A one in forty year flood event For personal use only Typical conditions 2010 flood event Anticipating better conditions for the Cooper Basin in 2011 Beach Energy Limited, Investor Morning – 6 April 2011 Slide 12
Slide 13: FY11 capital requirements
FY11 capital requirements HY11 FY11 Forecast For personal use only $million $million Development capital Cooper Basin 32.1 90.2 BMG 0.8 0.8 Egypt 0.8 5.7 Total development capital 33.7 96.7 Exploration capital Australasia 8.7 52.0 Unconventional 16.8 44.1 International and new ventures 6.8 19.1 Tota
Slide 14: Key catalysts for 2011
Key catalysts for 2011 For personal use only Multiple near-term catalysts with material re-rating potential Beach Energy Limited, Investor Morning – 6 April 2011 Slide 14
Slide 15: Positioned for growth in Eastern Australian gas markets
For personal use only Positioned for growth in Eastern Australian gas markets Steve Masters Chief Commercial Officer Beach Energy Limited, Investor Morning – 6 April 2011 Slide 15
Slide 16: Prolific acreage position
Prolific acreage position For personal use only Beach owns a strategic suite of assets and infrastructure, positioning it to supply gas for generations to come Beach Energy Limited, Investor Morning – 6 April 2011 Slide 16
Slide 17: Australian pipeline growth
Australian pipeline growth Pre - 1995 Post - 1995 For personal use only • Approx 10,500 km • Approx 20,000 km • Point-to-point pipelines • Interconnected pipelines • Majority government owned • Privatisation Source: APA investor presentation, April 2010 Beach Energy Limited, Investor Morning – 6 Apr
Slide 18: Eastern Australian gas markets are growing
Eastern Australian gas markets are growing • Current domestic gas demand For personal use only ~ 700 PJ per annum: – ~ 100 PJ from Cooper Basin • Domestic gas demand expected to grow to ~ 1100 PJ by 2025*: – Driven by power generation – Higher demand scenarios possible • Gladstone based LNG projects
Slide 19: Excellent prospects to increase Cooper Basin supply
Excellent prospects to increase Cooper Basin supply Uncontracted Demand by Country - Based on For personal use only Likely Supply • Strong predicted growth in Eastern 100 Australian gas demand 80 60 • Strong predicted growth in Asian LNG mtpa 40 demand 20 • Excellent channels to markets 0 2010 2011
Slide 20: Excellent prospects to increase East Coast gas supply
Excellent prospects to increase East Coast gas supply For personal use only • Strong existing customer Existing relationships customers – extension • Developing new customers and contracts opportunities Existing customers – • Cooper Basin is likely to become Export LNG incremental contracts increasi
Slide 21: The impact of eastern Australian LNG projects
The impact of eastern Australian LNG projects For personal use only Australian East Coast 2P Reserves* • Two projects have achieved FID committing > 16 mtpa capacity 7.0% BG Group 2.3% 18.7% Santos / PETRONAS 4.2% • BG Group has recently / TOTAL / Kogas Origin Energy announced it is marketing for 9.
Slide 22: Beach is an attractive supply option for gas customers
Beach is an attractive supply option for gas customers For personal use only • Growing Cooper Basin reserves and contingent resources base • Opportunities to add to reserves and resources in other basins close to markets • Potential to develop scalable gas developments to suit various customer requi
Slide 23: SACB/SWQ JV – Significant long-term resource potential
For personal use only SACB/SWQ JV – Significant long-term resource potential Gordon Moseby General Manager - Business Review and Planning Beach Energy Limited, Investor Morning – 6 April 2011 Slide 23
Slide 24: SACB/SWQ JV – Its importance to Beach
SACB/SWQ JV – Its importance to Beach • Equity interests of approximately For personal use only 20% for the SACB JV and 23% for the SWQ JV • A significant land holding of 26,800 km2 • Situated in a proven and prolific basin • Cooper Basin cumulative gross production to date of approximately 6 Tcf •
Slide 25: SACB/SWQ JV – Its importance to Beach
SACB/SWQ JV – Its importance to Beach For personal use only • A diversified product stream delivering gas, gas liquids and oil to multiple markets • Synergies with other Beach operational areas • Significant infrastructure made up of: – Wells accessing Permian strata – Gathering systems across the t
Slide 26: SACB/SWQ JV – Ultimate potential is significant
SACB/SWQ JV – Ultimate potential is significant For personal use only Source: Santos Remaining gross unrisked resource potential of over 4 billion barrels of oil equivalent Beach Energy Limited, Investor Morning – 6 April 2011 Slide 26
Slide 27: SACB/SWQ JV – Resource to reserves conversion
SACB/SWQ JV – Resource to reserves conversion For personal use only • Current 2P reserves of 63 MMboe* • 2C resources of 262 MMboe* • Resource to reserves conversion of 12.0 MMboe (net to Beach) recently announcement by Santos • Implies a 170% 2P reserves replacement ratio for FY11 * As at 30 June 2
Slide 28: SACB/SWQ JV – Resource conversion drivers
SACB/SWQ JV – Resource conversion drivers Resource to reserves conversion For personal use only driven by: • Infill drilling (denser well spacing) • More focused fraccing of individual zones • Multiple wells per pad delivering lower unit costs • More efficient wellbore hydraulics => lower abandonmen
Slide 29: SACB/SWQ JV - GLNG Project supply opportunity
SACB/SWQ JV - GLNG Project supply opportunity For personal use only • Discussions ongoing between SACB JV and Santos for the supply of 750 PJ to Santos’ GLNG Project*: – Beach’s share of supply would be ~ 152 PJ – 15 year contract - proposed to commence in 2014 – Oil-linked gas pricing • Highlights
Slide 30: SACB/SWQ JV - Summary
SACB/SWQ JV - Summary For personal use only • Significant remaining resource potential • New technology is unlocking this potential • Reserves growth significantly exceeds current production levels • Proposed GLNG contract would underpin gas production until 2030 • Continued long-term growth is fore
Slide 31: Questions?
For personal use only Questions? …..and then morning tea Beach Energy Limited, Investor Morning – 6 April 2011 Slide 31
Slide 32: The Cooper Basin shale gas potential
For personal use only The Cooper Basin shale gas potential Mark Pitkin Coordinator - Unconventional Resources Beach Energy Limited, Investor Morning – 6 April 2011 Slide 32
Slide 33: A commanding Cooper Basin shale gas acreage position
A commanding Cooper Basin shale gas acreage position • PEL-218 (Permian JV) potential shale gas in For personal use only place 40-80 Tcf • Similar properties to successful US shale plays • Encounter-1 drilled late 2010: – Target zone 30% thicker than anticipated – Gas saturated with no water through
Slide 34: The importance of REM section for shale & tight gas
The importance of REM section for shale & tight gas For personal use only • Thick target section • Gas charged • Over-pressured • Favourable mineralogy Key attributes confirmed to date provide significant encouragement Beach Energy Limited, Investor Morning – 6 April 2011 Slide 34
Slide 35: Nappamerri Trough – thick Early Permian shale sequence
Nappamerri Trough – thick Early Permian shale sequence Shale play: For personal use only • Roseneath 80-200 metre thick • Epsilon ~100 metre shale • Murteree ~80 metre thick Over-pressured tight gas play: • Epsilon – mid and basal zones sandier • Patchawarra – multiple sands Other tight gas in secti
Slide 36: Over-pressured at REM level
Over-pressured at REM level Normally pressured: For personal use only Pressure (psi) 0 0 2000 4000 6000 8000 10000 • Water gradient to surface • All Formations outside Trough • 0.43 psi/ft 1000 Over-pressured: Regional pressure data – over-pressures confined to • Exploration wells – in Trough Depth
Slide 37: Favourable mineralogy
Favourable mineralogy For personal use only 40-60% Clay: 100 0 Barnet Haynesville Eagle Ford Utica • Similar to Barnett and Haynesville Nappamerri 80 20 Barnet Eagle Ford 10-20% Carbonate: Haynesville Utica • Carbonate in the form of siderite Sil % 60 40 Nappamerri ica ys +o Cla the 25-50% Quartz: 4
Slide 38: Comparison to US plays
Comparison to US plays For personal use only Haynesville Parameter PEL 218 Permian REM Barnett (Texas) (Louisiana) Depth (metres) 2,900 – 3,500 1,650 – 3,000 3,050 – 3,950 Shale thickness 120 – 260 75 – 150 60 – 90 (metres) Total Organic Carbon 3–5 5 4 Av% Pressure Gradient 0.72 0.55 0.85 (psi/ft) G
Slide 39: Vertical well exploration program - key objectives
Vertical well exploration program - key objectives For personal use only Goals: • Determine gas in place volumes • Design fracture stimulation program • Understand gas flow potential • Book gas resource • Prioritise targets for development Importance of early coring effort: • Develop log-core correl
Slide 40: Key results from Encounter-1
Key results from Encounter-1 For personal use only • Target section thicker than expected at 393 metres and therefore more volume • Target section gas saturated and over-pressured • No water bearing permeable sections intersected in, above or below target zone • ‘Deep Basin’ gas potential confirmed
Slide 41: Shale drilling - Cost reduction driven by technology
Shale drilling - Cost reduction driven by technology For personal use only • Advancements in multi-stage fracture stimulation techniques has driven cost efficiencies in US oil and gas developments • Pad drilling is enabling further equipment cost efficiencies • Advances in technology are delivering:
Slide 42: Shale gas exploration – Stage indicative timeline
Shale gas exploration – Stage 1 indicative timeline For personal use only Proof of concept: 2010 – 2011 Drill and core Holdfast-1 & Fracture BOOK GAS Pilot Encounter-1 stimulate wells Flow test RESOURCE Production vertical ~ 8 zones/well Wells exploration wells Q4 2010/ Q2 2011 Q2 2011 Q2/Q3 2011 Q3
Slide 43: Next steps
Next steps For personal use only With successful proof of concept: • Design pilot horizontal wells targeting highest yield zones in REM • Drill further vertical delineation wells across acreage • Expand production pilot to multiple wells • Seek to monetise early production via existing facilities •
Slide 44: Dominant Western Flank oil acreage position
For personal use only Dominant Western Flank oil acreage position Mike Dodd Exploration and Development Manager Beach Energy Limited, Investor Morning – 6 April 2011 Slide 44
Slide 45: Cooper Basin – Western Flank Oil
Cooper Basin – Western Flank Oil Western Flank oil is a core contributor For personal use only to Beach due to: • High net back per barrel • Beach holding strong equity positions • Quick drill and tie-in periods • Established infrastructure and surety of delivery • High flow rates from wells • Good
Slide 46: Impress Energy acquisition
Impress Energy acquisition For personal use only • Beach will have 100% ownership of Impress Energy through compulsory acquisition • Impress holds a 40% interest in highly prospective Western Flank oil acreage • On 21 February, Senex Energy (Operator) announced an upgrade to 2P reserves in the Growl
Slide 47: Western Flank Drilling Program
Western Flank Drilling Program Beach operated For personal use only • Five exploration wells in PEL 91 (Beach 40%) • Eleven wells in PEL 92 (Beach 75%), seven exploration and four development • Targeting exploration prospects of 0.5 - 5.5 million barrels of oil (gross) • Success at first two wells,
Slide 48: Namur Sandstone
Namur Sandstone PARSONS-1 Namur Sandstones plays: For personal use only • Widespread high net to gross braided channel environment • Subtle structures delineated on 3D seismic data • Very high permeability • Parsons-3 clean up flow 5,200 bopd Parsons-1 Namur Beach Energy Limited, Investor Morning –
Slide 49: Birkhead Formation Channel Sand
Birkhead Formation Channel Sand Growler 3 For personal use only Birkhead Sandstones plays: • Deposited in meandering channels • Do not necessarily rely on structural traps – can be extensive accumulations • Can be imaged on seismic data Beach Energy Limited, Investor Morning – 6 April 2011 Slide 49
Slide 50: Birkhead Formation Channel Sand
Birkhead Formation Channel Sand For personal use only Source – Senex, 2011 Birkhead channels can be imaged on seismic, significantly reducing risk Beach Energy Limited, Investor Morning – 6 April 2011 Slide 50
Slide 51: 2011 Drilling Program – Expected outcomes
2011 Drilling Program – Expected outcomes For personal use only Reserve additions • 6 million barrels of oil net to Beach • Increased pipeline capacity Beach operated production • 4,500+ barrels of oil per day net to Beach Non-operated production • 1,000+ barrels of oil per day net to Beach Oil prod
Slide 52: ‘Big oil’ potential, Tanzania
For personal use only ‘Big oil’ potential, Tanzania Danny Burns International and New Ventures Manager Beach Energy Limited, Investor Morning – 6 April 2011 Slide 52
Slide 53: Tanzania – Attracting the majors
Tanzania – Attracting the majors For personal use only • Various phases of exploration undertaken since 1952 with very few exploration wells drilled • Early wells drilled with poor quality or inadequate seismic control • Tanzania has now attracted attention of the large players, eg: – Shell – Statoi
Slide 54: Rift systems - Gulf of Suez vs Lake Tanganyika
Rift systems - Gulf of Suez vs Lake Tanganyika Gulf of Suez: Gulf of Suez Lake Tanganyika For personal use only • Rift valley system • Area approximately 9,000km2 • 800+ exploration wells drilled • 9.5 billion barrels of oil discovered Lake Tanganyika • Rift valley system • Area approximately 32,900
Slide 55: Rift systems - Lake Albert, Uganda
Rift systems - Lake Albert, Uganda • Tullow identified this East African rift For personal use only basin opportunity in 2001 • Lake Albert area approximately 5,300km2 • The Lake Albert rift basin is part of a string of Pliocene-Miocene age rift basins that cut through East Africa • Lake Albert char
Slide 56: Rift systems - Lake Tanganyika, Tanzania
Rift systems - Lake Tanganyika, Tanzania • Beach 100% For personal use only • Underexplored area with high potential • Lake Tanganyika South acreage is approximately 7,000 km2 • Potential for large (> 200 MMbbl) discoveries: – Natural oil seeps on Lake Tanganyika indicate a working petroleum system
Slide 57: Lake Tanganyika natural oil seeps
Lake Tanganyika natural oil seeps For personal use only Beach Energy Limited, Investor Morning – 6 April 2011 Slide 57
Slide 58: Lake Tanganyika South vs Lake Albert - Analogy
Lake Tanganyika South vs Lake Albert - Analogy Lake Tanganyika South Seismic Line – 2D Lake Albert Seismic Line – 3D For personal use only 1.5 sec - 2.0 sec - 2.5 sec - Deeper water in Lake Tanganyika Source: Beach Energy Ltd – Project Probe data Source: Tullow Oil plc – EAPCE, 2011 Beach Energy Lim
Slide 59: Lake Tanganyika South – play types
Lake Tanganyika South – play types For personal use only • Typical rift graben/half graben geometries • Seismic indicates large structures with bounding faults • Play types are: – Stratigraphic traps – Fault traps – Three way structured traps against basement – Anticlinal traps • These are similar t
Slide 60: Lake Tanganyika South – Beach exploration program
Lake Tanganyika South – Beach exploration program For personal use only • Eleven year PSA structured into phases of 4 + 4 + 3 years • Phase 1 minimum commitment expenditure of ~ US$7 million • One exploration well required in Phase 2 & Phase 3 Phase 1 planned exploration • Seismic reprocessing of pr
Slide 61: Egypt – Established and growing portfolio
For personal use only Egypt – Established and growing portfolio Simon Brealey Exploration New Ventures Beach Energy Limited, Investor Morning – 6 April 2011 Slide 61
Slide 62: Egypt overview
Egypt overview For personal use only • Beach interests range 15 – 22% • An established and growing portfolio • Exposure to prolific and emerging hydrocarbon basins: – Portfolio of near-term development & exploration opportunities • North Shadwan expected to produce first oil in 2011 • Abu Sennan* fo
Slide 63: Abu Sennan concession
Abu Sennan concession For personal use only • Beach 22%* • 3D seismic coverage over whole concession which has been the key to success for Apache in the surrounding tenements • Initial four well program underway, with the potential for at least ten wells • ZZ-4 well appraising the existing discovery
Slide 64: Gulf of Suez
Gulf of Suez For personal use only • Beach 20% interest • High potential Gulf of Suez acreage • Three existing oil discoveries: – NS 377 and 385 (‘near shore fields’) – NS 394 ‘Burtocal’ • First oil expected in 2011 • North Shadwan delays due to pipeline operator sign off on oil mix in pipeline • Ad
Slide 65: Mesaha concession
Mesaha concession For personal use only • Beach interest 15%* • One of the largest concession areas in Egypt at 57,000km2 • Wildcat basin with the right ingredients • Possible rift basin similar to Gulf of Suez/Lake Albert/Lake Tanganyika • Potential for very large oil fields (~ 100 MMbbl+) • 2D sei
Slide 66: Closing remarks
For personal use only Closing remarks Reg Nelson Managing Director Beach Energy Limited, Investor Morning – 6 April 2011 Slide 66
Slide 67: Strong and diverse growth potential
Strong and diverse growth potential For personal use only Current share price does not reflect Beach’s growth portfolio Beach Energy Limited, Investor Morning – 6 April 2011 Slide 67
Slide 68: Contact information
Contact information Beach Energy Limited – Head office For personal use only 25 Conyngham Street Glenside SA 5065 Tel: +61 8 8338 2833 Fax: +61 8 8338 2336 Website: www.beachenergy.com.au Chris Jamieson Investor Relations Manager Tel: +61 8 8338 2833 Mob: +61 8 (0)487 173 244 Email: chris.jamieson@b