Beach Energy Limited · ASX:BPT
Beach Energy — Euroz Conference, Rottnest Island 2010
45 slides from Beach Energy's conference presentation, Mar 17, 2010
Slide 1: The road to future growth
Beach Energy Limited For personal use only The road to future growth Euroz Conference, Rottnest Island 17 March 2010 Reg Nelson Managing Director 1
Slide 2: 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 3: Today's presentation
Today’s presentation For personal use only Overview of Beach Positioning for long- Energy Limited term growth • Strategy • What • Base business • Where • Growth potential • How 3
Slide 4: A compelling value proposition
Beach Energy Limited (ASX : BPT): A compelling value proposition For personal use only • 2P reserves of 66 MMboe Strong base • Sustainable long-term oil and gas production business • FY 2010 production guidance of 8.0 MMboe • $118 million cash and zero debt* • Huge Cooper Basin shale gas resource po
Slide 5: Corporate framework
Corporate framework For personal use only • Consistent, targeted growth: – Long-term cash flow, production and reserves – Value driven investments • Thinking ahead of the pack: – Early entry, low risk, high return – Participation in emerging technologies and opportunities • Balanced portfolio: – 60:
Slide 6: Parallel pathway to growth
Parallel pathway to growth For personal use only Large project development Capital asset growth through resource play development Book gas (e.g., shale gas) Market recognition / deal flow reserves Proof of concept/ pilot plant Credible partners Revenue & asset growth Book gas through existing resour
Slide 7: Next two to five years
Next two to five years For personal use only Exploration Development Growth Growth Oil & gas discoveries in Develop large contingent Cooper with aim to add up to conventional gas resource of Aim: 20 MMboe new reserves approx. 500 PJ already booked in Cooper & elsewhere Double production & Develop op
Slide 8: Transformational opportunities
Transformational opportunities For personal use only Exploration Development Growth Growth Develop large Aim: Oil exploration in Cooper and unconventional gas in contingent shale gas resource in Cooper Transform via Cooper & other Australasian basins large Identify production discoveries assets with
Slide 9: Reserves & resources snapshot: June 2009
Reserves & resources snapshot: 30 June 2009 For personal use only 2P Reserves: 2P Reserves & Contingent 66 MMboe Resources: 359 MMboe 2P Reserves are a fraction of the total resource base Cooper / Eromanga Gippsland Egypt Cooper / Eromanga 2P Gippsland Other A solid and enviable base from which to g
Slide 10: Reserves and production
Reserves and production For personal use only Production 2P Reserves 10 160 9 140 8 120 7 100 6 MMboe MMboe 5 80 4 60 3 40 2 20 1 0 0 FY 2007 FY2008 FY 2009 FY 2010 FY 2006 FY2007 FY 2008 FY 2009 est. Gas & Gas Liquids Oil Gas & Gas Liquids Oil • Consistent production performance: • Solid reserves g
Slide 11: Overview of financial position
Overview of financial position For personal use only HY09 - a steady result with our eye on the future HY09 FY09 Net cash on hand $118 million $136 million Production volume 4.0 MMboe 9.6 MMboe Sales revenue $259 million $581 million Cash flow from operations $22 million $173 million Net profit afte
Slide 12: The 'base business': Cooper Basin production, development & exploration
The ‘base business’: Cooper Basin production, development & exploration For personal use only • Cooper Basin is a key supplier of onshore oil and gas to eastern Australian markets: – Diversified asset, product and market mix • Beach participates in approximately 300 exploration and production licens
Slide 13: The 'base business': Conventional Cooper Basin oil & gas
The ‘base business’: Conventional Cooper Basin oil & gas For personal use only Cooper Basin Oil Cooper Basin Gas 2P reserves 14.3 MMbbl 2P reserves 228 PJ & 7.4 MMboe • Comprised of three key areas: • Gas & ethane contracts with major – Western flank (Beach operated) retailers and end consumers – Ce
Slide 14: The 'base business' - Gulf of Suez: First oil within months
The ‘base business’ - Gulf of Suez: First oil within months 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 Q3 2010 from near shore fields • Seeking new
Slide 15: Gulf of Suez oil fields
Gulf of Suez oil fields For personal use only 15 15
Slide 16: North Shadwan oil fields
North Shadwan oil fields For personal use only 16
Slide 17: North Shadwan: Near shore fields conceptual development
North Shadwan: Near shore fields conceptual development For personal use only To Ghara Facilities GH-377 Field 2 wells to be drilled from onshore GH-385 Field 4 wells to be drilled from onshore 17
Slide 18: Finding more oil in Egypt
Finding more oil in Egypt For personal use only • Highly prospective region • Long established industry - favourable legislative & fiscal regime • Home to giant oil fields (500 - 800 MMbbl) such as Morgan, July & Ramadan • Extensive infrastructure • Low cost • Large opportunity deal flow 18
Slide 19: The 'base business' - Gippsland Basin: Maximising economic potential
The ‘base business’ - Gippsland Basin: Maximising economic potential For personal use only • Reserves still under review • Gas development potential still remains • Exploration upside exists for oil & gas • FPSO contract up for renewal January 2012 • Basker-5 workover may have positive impact on res
Slide 20: Expanding the base business: Positioning for long-term Australian gas supply
Expanding the base business: Positioning for long-term Australian gas supply For personal use only • Beach is seeking to grow its base gas business in eastern Australian markets from the Cooper Basin • Good long-term growth opportunities for eastern Australian gas resources: – Strong projected domes
Slide 21: Cooper Basin: Significant shale gas potential
Cooper Basin: Significant shale gas potential For personal use only • Early identification of Cooper Basin shale gas potential • Captured prospective acreage with high equity participation • Huge resource potential: – Comparable to combined NSW and Queensland coal seam gas volume • Access to multipl
Slide 22: Nappamerri Trough: Potential gas in place greater than Tcf
Nappamerri Trough: Potential gas in place greater than 200 Tcf For personal use only • Extensive and thick shale packages • Similar properties to the best US shale plays • Nappamerri Trough total area ~ 10,000 km2 • Potential gas in place 20 – 100 Bcf/km2 • Beach has high equity participation in key
Slide 23: Why the Nappamerri Trough?
Why the Nappamerri Trough? For personal use only Geological properties Thick shale sequence 150m thick over 10,000 km2 Organically rich 5% Total Organic Carbon (TOC) Gas prone Proven Thermally mature Proven Overpressure Proven Tight gas sands Potential upside Mechanical properties Suitability for fr
Slide 24: Hydraulic fracturing - tried and tested
Hydraulic fracturing - tried and tested For personal use only • Hydraulic fracturing has been used by the industry since the 1940’s • The process has become a key element of natural gas development worldwide • The process is already successfully used in the Cooper Basin • The process is used in near
Slide 25: Cooper Basin shale gas: Indicative shale gas development timeline
Cooper Basin shale gas: Indicative shale gas development timeline For personal use only Pilot BOOK FIRST GAS Holdfast-1 production Pilot SALES Design pilot BOOK GAS GAS vertical well development production RESOURCE RESERVE exploration well Q2 well Drill Q2 2011 Q4 2010/ Frac Q4 2011 Commence Q3 2010
Slide 26: Nappamerri Trough: Geographical context vs US basins
Nappamerri Trough: Geographical context vs US basins For personal use only Cooper Basin Nappamerri Trough 26
Slide 27: US technology improvements drive down costs: e.g. Bakken Shale
US technology improvements drive down costs: e.g. - Bakken Shale For personal use only • Technology advancements in Bakken Shale (oil), North Dakota multi – stage frac completions is driving efficiencies in US oil 40 & gas developments 35 30 • Key advancements are particularly associated with 25 lon
Slide 28: Cooper Basin shale gas: Similar to best US plays
Cooper Basin shale gas: Similar to best US plays For personal use only Parameter Cooper Basin Barnett Haynesville Nappamerri (Texas) (Louisiana) Trough Depth (ft) 9500 - 11500’ 5400 - 9600‟ 10000 -13000‟ Thickness (ft) 400 - 500’ 250 - 500‟ 200 – 300‟ Petrology Siliceous Siliceous Argillaceous Mudst
Slide 29: Multiple long-term shale gas market options
Multiple long-term shale gas market options For personal use only • Good prospects to increase Existing Cooper Basin supply over time customers – extension contracts • New domestic gas supply Existing opportunities include: customers – Export LNG incremental – Power generation contracts – Feedstock
Slide 30: When will Cooper Basin shale gas value recognition occur?
When will Cooper Basin shale gas value recognition occur? For personal use only Some recent US shale gas transactions Deal Location Date Value Mitsui - Anadarko Marcellus Feb 10 US$1.4b Total - Chesapeake Barnett Jan 10 US$2.25b ExxonMobil – XTO Energy Included 1 million Dec 09 US$41b acres of vario
Slide 31: Some other long-term growth opportunities: 'Big oil' and 'big gas'
Some other long-term growth opportunities: ‘Big oil’ and ‘big gas’ For personal use only Papua New Guinea Tanzania Australia New Zealand 31
Slide 32: Tanzania - East African Rift: An emerging 'big oil' province
Tanzania - East African Rift: An emerging ‘big oil’ province For personal use only • Beach 100% • Under - explored, high potential region • Significant success in nearby analogous areas (Uganda) • Recent M&A activity in Uganda highlights regional potential • Potential for large (> 200+ MMbbl) discov
Slide 33: Two rift systems of comparable size – And potential?
Two rift systems of comparable size – And potential? For personal use only Gulf of Suez Lake Tanganyika 33 Source: Google Note: Maps depicted at approximate scale
Slide 34: Offshore 'big gas' opportunities
Offshore ‘big gas’ opportunities For personal use only Browse Basin Gulf of Papua Canterbury Basin • LNG supply potential from existing portfolio: – Burnside (multi-Tcf discovery made in 2009, Beach 7.34%) – Pandora (mean gas resource approx. 0.8 Tcf, Beach 6.36%) – Barque gas prospect (multi-Tcf po
Slide 35: Beach Energy
Beach Energy For personal use only • Sustainable underlying base business: – Long-life reserves – Long-term production and cash-flow – Asset, product and market diversity • Tangible growth potential targeting regionally specific opportunities: – Cooper Basin shale gas – Egypt – Game-changing explora
Slide 36: Reference Slides
For personal use only Reference Slides 36
Slide 37: Corporate strategy: double production and reserves within 2 - 5 years
Corporate strategy For personal use only Aim: To double production and reserves within 2 - 5 years Risk / Reward Timeframe: 2 – 5 years Timeframe: 5 – 10 years Low • Add up to 20 MMboe new reserves via • Continue Cooper exploration for oil and (60%) exploration unconventional gas • Develop contingen
Slide 38: Net profit
Net profit For personal use only HY09 HY08 $million $million Net profit after tax 33.9 127.5 Remove unrealised commodity hedge loss / (gain) 0.7 (76.4) Remove hedge book close out - 16.9 Remove share sales (11.6) - Remove investment mark to market (1.1) 3.0 Remove FX on Egypt acquisition - (43.9) Ta
Slide 39: Net profit
Net profit For personal use only Underlying net profit after tax comparison 90 80 $8.3 $13.7 $19.3 70 $39.2 Borrowing 60 expense Other expenses $50.8 and revenue 50 $m Tax 40 30 $25.5 20 Gross profit $25.3 million 10 total decrease 0 HY08 HY09 39
Slide 40: Gross profit
Gross profit For personal use only Gross profit comparison 140 $7.8 $11.8 $15.6 $74.5 120 $23.7 Inventory 3rd party 100 purchases Cash $84.1 production 80 costs Depreciation $m 60 $44.9 40 Sales revenue 20 $39.2 million total decrease 0 HY08 HY09 40
Slide 41: Sales revenue
Sales revenue For personal use only Sales Revenue Comparison 400 $12.1 $1.5 $13.6 350 $333.9 $17.4 Gas/ethane $54.1 Third party prices Liquids prices 300 purchases FX rates A$/GJ US$/boe 2008 $4.71 2008 $82 $259.4 AUD/USD 250 2009 $4.63 2009 $75 2008 $0.78 Volume / mix 2009 $0.87 $m 200 150 $74.5 mi
Slide 42: Sales revenue
Sales revenue For personal use only • Sales revenue $259 million – down 22%: Oil Price 120 – Lower oil price 100 – Lower BMG production 80 – Sale of Tipton West A$/bbl 60 – Softer demand from gas 40 customers 20 • HY09 average gas price - $4.63/GJ – down 2% 2005/06 2006/07 2007/08 2008/09 2009/10 (H
Slide 43: Cash flow
Cash flow For personal use only Continuing strong cash position HY09 HY08 $million $million Opening cash balance 136.2 376.5 Cash from operations 21.6 67.8 Exploration and development (96.2) (141.6) Egyptian acquisition - (120.8) Proceeds from asset sales 68.7 - Repayment of borrowings - (39.1) Net
Slide 44: Current financial risk management
Current financial risk management For personal use only Currency Collars & Collars & Period Ceilings Ceilings • US$108 million (A$120.0 $A million $US million million) in foreign exchange FY 2010 $40.0 $36.0 hedged FY 2011 $80.0 $72.0 Total Hedged $120.0 $108.0 • Aim to hedge 50% of net USD exposure
Slide 45: For personal use only
For personal use only 45
Beach Energy — Euroz Conference, Rottnest Island 2010 on 6ix