Beach Energy Limited · ASX:BPT
Beach Energy — H1 FY17 Earnings Presentation
35 slides from Beach Energy's earnings presentation, Feb 20, 2017
Slide 1: FY17 Half Year Results
BEACH ENERGY LIMITED FY17 HALF YEAR RESULTS 20 February 2017
Slide 2: Compliance statements
Compliance statements Disclaimer This presentation contains forward looking statements that are subject to risk factors associated with oil, gas and related businesses. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a variety of variable
Slide 3: Contents
Contents Overview Matt Kay, Chief Executive Officer 4 Financial Morné Engelbrecht, Chief Financial Officer 10 Operational Mike Dodd, Chief Operating Officer 16 Exploration and Jeff Schrull, Group Executive Exploration and Development 22 development Appendix 29 3
Slide 4: Overview
FY17 HALF YEAR RESULTS OVERVIEW Matt Kay – Chief Executive Officer BEACH ENERGY LIMITED
Slide 5: Half year results reinforce the Beach value proposition
Half year results reinforce the Beach value proposition Highly profitable base business Increasing drill bit activity Turnaround in HY NPAT to $103m, underlying NPAT +1,023% Up to 60 wells in FY17; 10 wells added for H2 FY17 Cash flow breakeven down 23% to US$20/bbl Birkhead oil discoveries
Slide 6: Delivering against strategic pillars
Delivering against strategic pillars Optimise core in the Cooper Basin Maintain financial strength Record HY production of 5.5 MMboe Cash flow breakeven down 23% to US$20/bbl Three play-extending oil discoveries HY operating cash flow up 19% to $154m Operated drilling increased to 18 wells
Slide 7: Operational results
Operational results Record production and increased guidance Record half year production and sales volumes Record Production Record Sales Volumes 88% drilling success rate from 24 wells +25% +22% Oil discoveries in under-explored play fairways 6.4 Beach Western Flank field costs down 26% to
Slide 8: East coast gas opportunity
East coast gas opportunity Additional drilling required to address market imbalances East coast gas supply and demand1 Beach delivering on gas strategy Growing operated gas business – Improved commercial arrangements – Compression to sustain maximum production – Surplus gas for spot market in H2 F
Slide 9: Inorganic growth
Inorganic growth Opportunities progressing in a disciplined manner Clearly defined growth strategy underpinned by robust core base business Strategy Demonstrated progress via Drillsearch merger and farm-in activity Focused on opportunities with similar risk profile to base business Strict, r
Slide 10: Financial
FY17 HALF YEAR RESULTS FINANCIAL Morné Engelbrecht – Chief Financial Officer BEACH ENERGY LIMITED
Slide 11: Financial overview
Financial overview Strong improvements in profitability and cash flow Sales Revenue NPAT EBITDA $344 million $103 million $224 million +27% +$703 million +153% Operating Cash Flow Net Cash Interim Dividend $154 million $148 million 1 cent fully franked +19% +202% +1.0 cps 11
Slide 12: Financial overview
Financial overview Business leveraged to higher volumes and oil price recovery $ million H1 FY16 H1 FY17 Change Record sales volumes Production (MMboe) 4.5 5.5 +22% Higher realised prices Sales volumes (MMboe) 5.1 6.4 +25% Lower operating costs on a $/boe basis Average realised oil price (A$/b
Slide 13: Gross profit
Gross profit Record sales volumes and modestly higher prices $ million 160 4.7 0.5 1.4 26.1 8.9 Net third Gas / ethane 10.2 Inventory party prices 16.0 120 Depreciation 84.4 purchases $/GJ FX rates 103.5 Oil and H1 FY16 $6.05 Volume / A$/US$ Cash liquids prices H1 FY17 $5.95 H1 FY16 0.723 mix produc
Slide 14: Turnaround in Underlying NPAT
Turnaround in Underlying NPAT Robust business model and disciplined cost focus Underlying NPAT A$/bbl Significant increase in NPAT to $103 million and Underlying NPAT Brent oil $ million to $89 million (+1,023%) 140 100 Gross Profit improvement of 309% driving NPAT performance +1,023% Results
Slide 15: Robust funding position
Robust funding position Generating free cash flow while investing for growth Record cash flow post oil price boom period H1 FY17 Cash Sources and Uses – Up 19% to $154 million Operating cash flow – Net cash up 202% to $148 million $154 million Available liquidity of $648 million – $298 million c
Slide 16: Operational
FY17 HALF YEAR RESULTS Operational Mike Dodd – Chief Operating Officer BEACH ENERGY LIMITED
Slide 17: Production
Production Record half year production and increased full year guidance Record half year production Actual and Forecast Production (MMboe) – Up 22% to 5.5 MMboe 10.3 – 10.7 9.7 Gas* (H2) – 56% oil; 44% gas and gas liquids 2.4 – 2.6 9.1 (14-15 Operated production now >50% of total production (H1
Slide 18: Drilling activity
Drilling activity Play-extending Western Flank oil discoveries Overall success rate of 88% from 24 wells; 60% exploration success rate Increased drilling activity in high-returning Western Flank acreage Play-extending Birkhead and Poolowanna discoveries (Kangaroo-1, Osmanli-1, September-1) S
Slide 19: Cost savings
Cost savings World-class cash flow breakeven of US$20/bbl A$/bbl US$/bbl A$/boe 40 25% 4 23% Operated field costs - 26% Cash flow breakeven1 Western Flank3 Reduced fixed expenditure 35 27 26 Renegotiated contracts 3.6 Operating and cost 20 2.7 efficiencies Reduced reliance on 0 contractors 0
Slide 20: Cooper Basin JV cost savings
Cooper Basin JV cost savings Broad ranging initiatives now evident in results Well cost efficiencies $m/well Drilling Costs1 Days Drill Durations2 10.0 25 33% 35% 8.6 24 Full review and refinement of service scopes 5.6 16 0.0 0 Renegotiated contractor arrangements and rates Dec-15 Dec-16 CY15 CY
Slide 21: Capital expenditure guidance
Capital expenditure guidance Expanded drilling program to be delivered at a lower overall cost $184 million $170 – 185 million Discretionary expenditure High-graded projects; NPV positive; near- term line of sight to financial return; capital allocation requirements met; deferrable at 110 – 120 lowe
Slide 22: Exploration and Development
FY17 HALF YEAR RESULTS EXPLORATION AND DEVELOPMENT Jeff Schrull – Group Executive Exploration and Development BEACH ENERGY LIMITED
Slide 23: Gas exploration
Gas exploration Significant untapped exploration potential Extensive Southwest Patchawarra (SWP) and Permian Edge (PE) play fairways – ~1,300 km2 under-explored PE fairway Two SWP discoveries in H1 FY17; two H2 FY17 exploration wells to be drilled – Success using refined isopachous mapping techn
Slide 24: Gas appraisal and development
Gas appraisal and development Middleton compression to sustain production Middleton compression project to be completed by end Q3 FY17 Optimising production infrastructure4 Will enable 25 MMscfd raw gas capacity to be reached and maintained – ~20 MMscfd net gas / liquids production Ralgnal, Comp
Slide 25: Oil exploration
Oil exploration Long-term running room from extensive play fairways Extensive under-developed Namur and Birkhead play fairways (~13,500 km2) Seven exploration wells in H2 FY17 Kangaroo-1 follow-up wells in ex PEL 91 to calibrate predictive reservoir models – Successful outcomes to support hori
Slide 26: Oil appraisal and development
Oil appraisal and development Targeting new reserves from existing fields Extensive, proven oil fairway with untapped reserve potential in Kangaroo-1 existing fields on EPT at ~220 bopd flow Horizontal drilling pilots under review for the McKinlay reservoir – Second stage of Bauer Field developm
Slide 27: Key Highlights
FY17 HALF YEAR RESULTS KEY HIGHLIGHTS Matt Kay – Chief Executive Officer BEACH ENERGY LIMITED
Slide 28: Half year results reinforce the Beach value proposition
Half year results reinforce the Beach value proposition Highly profitable base business Increasing drill bit activity Turnaround in HY NPAT to $103m, underlying NPAT +1,023% Up to 60 wells in FY17; 10 wells added for H2 FY17 Cash flow breakeven down 23% to US$20/bbl Birkhead oil discoveries
Slide 29: Appendix
FY17 HALF YEAR RESULTS APPENDIX BEACH ENERGY LIMITED
Slide 30: Significant items
Significant items Reconciliation of Net Profit After Tax to Underlying Net Profit After Tax Comparison of underlying profit Movement H1 FY16 H1 FY17 ($m) from PCP Net profit / (loss) after tax (600.1) 103.4 703.5 Remove merger costs 1.5 – (1.5) Remove asset sales – (52.9) (52.9) Remove unrealised
Slide 31: FY17 operated drilling increased to 18 wells (+5)
FY17 operated drilling increased to 18 wells (+5) Permit Well Timing Target Rationale Result1 Hanson-4 Q1 Namur • Development well to support facility expansion Success: C&S Stunsail-3 Q1 Namur • Development well; part of low cost, full field development plan Success: C&S Kangaroo-1 Q2 Birkhead
Slide 32: Record half year production
Record half year production Area H1 FY16 H1 FY17 Change Oil (kbbl) Cooper / Eromanga basins 2,187 3,095 42% Egypt 87 – (100%) Total oil 2,274 3,095 36% Sales gas and ethane (PJ) Cooper Basin 10.9 11.5 5% Egypt 0.2 – (100%) LPG (kt) Cooper Basin 21.8 27.2 25% Condensate (kbbl) Cooper Basin 177 238 35
Slide 33: FY17 capital expenditure program
FY17 capital expenditure program Capital Expenditure $ million Wells H2 FY17 Activities Exp. App/Dev Western Flank Operated Oil • Bauer facility expansion • Kangaroo production facility Ex PEL 91 35 – 40 6 4 • Birkhead (2) and Patchawarra (1) exploration wells • Two Pennington development wells Ex P
Slide 34: Cooper Basin acreage
Cooper Basin acreage Western Flank Gas and Gas Liquids Ex PEL 106 (100%*) - Middleton facility Ex PEL 513 (40%) Ex PEL 101 (80%*) Western Flank Oil Ex PEL 91 (100%*) - Bauer Field Ex PEL 92 (75%*) Ex PEL 104 / 111 (40%) Cooper Basin Joint Ventures PEL 182 (43%) Oil and gas exploration and production
Slide 35: Investor Relations
FY17 HALF YEAR RESULTS BEACH ENERGY LIMITED Investor Relations 25 Conyngham Street, Glenside SA 5065 Derek Piper Tel: +61 8 8338 2833 Investor Relations Manager Fax: +61 8 8338 2336 Tel: +61 8 8338 2833 www.beachenergy.com.au