Beach Energy Limited · ASX:BPT
Beach Energy — Corporate Update (June 2024)
40 slides from Beach Energy's corporate update, Jun 18, 2024
Slide 1: Strategic Review Outcomes
Strategic Review Outcomes 18 June 2024 Waitsia Gas Plant construction, Western Australia
Slide 2: Compliance statements
Compliance statements Disclaimer Assumptions This presentation contains forward-looking statements, including statements of current intention, opinion and predictions regarding Guidance is uncertain and subject to change. Guidance has been estimated on the basis of the following assumptions: 1. vari
Slide 3: Beach Energy's reset
Beach Energy’s reset Earning the right to grow Addressing current challenges: ▪ Reserves revisions Refreshed 1 strategy and ▪ Driving organisation efficiencies operating model ▪ Structurally lowering operating and capital costs Portfolio realignment ▪ Addressing ‘treadmill’ capital expenditure 2 and
Slide 4: Key strategic review objectives
Beach Energy’s reset Key strategic review objectives Purpose Deliver leading shareholder returns through the sustainable supply of energy Refreshed 1 strategy and Vision Become Australia’s leading domestic energy company operating model Strategy Core hubs | High margins | Sustainable growth Portfoli
Slide 5: Key value drivers
Key value drivers Multiple catalysts over the medium-term ✓ Cost-out program targeting >$150 million in annual field operating cost and sustaining capital expenditure reductions ✓ Material new gas supply of up to ~150 TJ/day over the next 12-18 months from Enterprise, Thylacine West and Waitsia ✓ Hi
Slide 6: Refreshed strategy and operating model
Refreshed strategy and operating model Otway Gas Plant, Victoria
Slide 7: Purpose and Vision
Purpose and Vision Becoming Australia’s leading domestic energy company ▪ Australia: A proud Australian pioneer Deliver leading shareholder returns ▪ Domestic: East Coast and West Coast Australia focus Purpose through the sustainable supply of energy ▪ Energy: Upstream gas, oil and liquids with pote
Slide 8: Refreshed strategy
Refreshed strategy Three pillars to drive shareholder returns CORE HUBS HIGH MARGINS SUSTAINABLE GROWTH Eastern Australia and Owner’s mindset Pivot to long-life, resilient assets Western Australia Low-cost operations Climate Transition Action Plan Grow share of East and West Coast gas markets Struct
Slide 9: Beach's strategy horizons
Beach’s strategy horizons Base | Grow | Extend ▪ Strategic adjacencies ▪ Gas peaking power ▪ Refresh portfolio with pivot to ▪ Enhance margins longer-life assets ▪ Strategic acquisitions ▪ Low-cost, higher-margin ▪ Maintain diversification (domestic gas, liquids, LNG) EXTEND ▪ Strong Balance Sheet A
Slide 10: Operating principles and capital management framework
Operating principles and capital management framework Rebuilding trust | Disciplined growth | Returns to shareholders Strict Operating Principles Capital Management Framework Free cash flow breakeven oil price Strong Balance Sheet <US$30/bbl Targeting <15% gearing; up to 25% through Field operating
Slide 11: Onshore-offshore asset-based organisational structure
Onshore-offshore asset-based organisational structure Fit for purpose with strict accountability Managing Director & CEO Brett Woods EVP EVP Onshore EVP Offshore EVP ESG Chief Financial EVP Strategy EVP People Exploration EVP Technical Assets Assets & Legal Officer & Commercial & Culture & Subsurfac
Slide 12: Portfolio realignment and cash flow improvement
Portfolio realignment and cash flow improvement Enterprise wellsite construction, Victoria
Slide 13: Market dynamics
Market dynamics Long-term structural deficits highlight need for more supply East Coast gas supply and demand1 West Coast gas supply and demand2 Sustained, long-term structural deficits across key markets 500 PJ 600 PJ 400 500 ▪ East Coast gas supply decline of ~30% by 300 400 early 2030s 300 200 20
Slide 14: Core hubs
Core hubs Growing East and West Coast gas market shares through advantaged infrastructure and acreage Cooper Basin Cooper Basin JV Perth Basin Beach various interests (non-operated) 310 TJ/day Moomba Gas plant Waitsia 1.7 Mt CO2 injection capacity Beach 50% (non-operated) Western Flank 250 TJ/day Wa
Slide 15: Core hubs: East Coast growth opportunities
Core hubs East Coast growth opportunities Organic growth ▪ Enterprise online; Thylacine West connection in H1 FY25 ▪ ~150 TJ/day (gross) Otway Basin take-or-pay in H1 FY25 ▪ Otway gas exploration planning focused on material scale opportunities (>100 Bcf) Moomba CCS Western Flank Bauer well site o H
Slide 16: Core hubs: West Coast growth opportunities
Core hubs West Coast growth opportunities Organic growth ▪ Construction, commissioning and start-up of Waitsia Gas Plant o Targeting first gas in early CY2025; 3-4 month ramp-up o Increasing plant utilisation and debottlenecking across FY26 ▪ Waitsia Stage 2 gas development drilling (4-5 wells) ▪ Po
Slide 17: Non-core assets
Non-core assets Maximise value from harvesting, re-purposing or divestment Rationale Non-core asset operating philosophy • Not aligned with strategic review outcomes Safety takes precedence • Growth opportunities not consistent with Beach new operating principles • Value to be extracted through oper
Slide 18: Cost and capital expenditure reductions
Cost and capital expenditure reductions Significant operated cost and capital reductions delivered to date Delivered Target Operated / non-operated split FY24: ~$250 million (gross) Labour and ~$50 million1 >$65-75 million p.a.1 associated Operated: 100% ➢ 23% headcount reduction ➢ 30% headcount red
Slide 19: Field operating cost reduction
Field operating cost reduction Targeting a ~30% reduction in unit field operating costs to <$11/boe ~$17/boe ~30% ▪ Organisational structure efficiencies ▪ Labour and associated cost reductions ~$14/boe1 ▪ Service provider contracting efficiencies <$11/boe ▪ Joint venture partner and peer collaborat
Slide 20: Sustaining capital expenditure reduction
Sustaining capital expenditure reduction Targeting a ~20% reduction in sustaining capital expenditure1 Toward top end of $900 – 1,000 million ▪ Risk-reward based approach to drilling and completions ▪ Fit-for-purpose asset maintenance programs Annual growth Growth capital $375-425 ▪ Organisational s
Slide 21: Free cash flow breakeven reduction
Free cash flow breakeven reduction Targeting a free cash flow breakeven oil price of <US$30/bbl ~US$54/bbl ▪ Targeted reductions in sustaining capital expenditure and field operating costs ▪ Increasing production from low-operating cost assets ~45% (Otway Basin, Waitsia) ▪ Free cash flow sensitivity
Slide 22: Contracting strategy to enhance margins
Contracting strategy to enhance margins Protecting free cash flow breakeven while increasing exposure to market pricing upside Contracting schematic Contracting strategy Resilience ▪ Fixed price contracts to protect cost base up to free cash flow breakeven ▪ Hedging to be utilised when deemed approp
Slide 23: Positioning for sustainable growth
Positioning for sustainable growth Cooper Basin, South Australia
Slide 24: Climate Transition Action Plan
Climate Transition Action Plan Robust CTAP implemented to meet Beach’s transition targets CTAP targets Moomba CCS ▪ First CO2 injection in H1 FY25 targeted Net zero scope 1 & 2 ▪ Targeting up to 1.7 Mtpa CO2 storage (>0.5 Mtpa net to Beach) emissions ambition by 2050 ▪ Operator targeting lower end o
Slide 25: Health, safety and environment
Health, safety and environment Ensuring a safe and sustainable future Personal safety performance FY24 performance 8 400 ▪ Stand Together For Safety campaign delivering improved Thousands 7 350 6 300 outcomes: 5 4.6 250 4 3.6 200 o >6 months with no recordable injuries 3 150 2 100 o Zero Tier 1 / 2
Slide 26: Growth outlook
Growth outlook Strategic acquisitions to complement organic growth Organic growth catalysts Strategic acquisition attributes East Coast: Otway Basin Timing ▪ Disciplined approach to acquisitions – Value over volume Enterprise connection Complete Thylacine West connection H1 FY25 ▪ Focused on Core Hu
Slide 27: Disciplined investment framework
Disciplined investment framework Strict investment criteria to drive value Targeted Characteristics Investment Hurdles ▪ Higher margins and free cash flow generation ▪ IRR1 >15% Oil ▪ Faster payback ▪ Align with CTAP objectives ▪ Potential for new hub opportunities ▪ Long-life, stable production ▪ I
Slide 28: Energy value chain adjacencies
Energy value chain adjacencies Potential for adjacency growth using existing infrastructure footprint Upstream Energy Value Chain Power Value Chain Natural Gas Gas Power Gen Storage (Peaking/Base) Oil Coal Power Gen Trading LNG Marketing & Pipeline & Solar Power Gen Distribution Trading Shipping Con
Slide 29: Strong financial position
Strong financial position Capacity and flexibility to pursue disciplined growth Liquidity and gearing Debt maturity profile ($ million) $421 million current liquidity 320 350 250 $230 million Undrawn debt facilities FY24 FY25 FY26 FY27 $191 million Cash reserves ▪ Broad syndicate of domestic and int
Slide 30: Outlook
Outlook Cooper Basin, South Australia
Slide 31: FY25 production and capital expenditure outlook
FY25 production and capital expenditure outlook Production growth dependent on timing and ramp-up of Waitsia Gas Plant Production: 17.5 – 21.5 MMboe Capital expenditure: $700 – 800 million Toward top end of FY24 ~18 MMboe $900 – 1,000 million Taranaki Kupe field capacity of 35- 45 TJ/day Basin (gros
Slide 32: Indicative impacts to 30 June 2024 reserves position
Indicative impacts to 30 June 2024 reserves position1 ▪ A subsurface assessment has been undertaken as part of the strategic review ▪ Drilling results and reservoir performance are expected to impact reserves ▪ 30 June 2024 Reserves and Resources Statement to be released with FY24 full year results
Slide 33: Strategic review progress
Strategic review progress What we have done Where we are going ✓ Refreshed strategy ➢ Further cost and capital reduction targets ✓ New asset-based organisational structure o Reach 30% headcount reduction target ✓ Core hubs and identification of non-core assets o Unit field operating costs <$11/boe ✓
Slide 34: Beach Energy value proposition
Beach Energy value proposition Becoming Australia’s leading ✓ domestic energy company ✓ Supplying key markets ✓ Strong financial position Increasing free cash flow for ✓ dividends and growth Multiple near and medium- ✓ term value catalysts CCS to support emissions ✓ reduction 34
Slide 35: Appendix
Appendix Kupe Gas Plant, New Zealand
Slide 36: Definitions
Definitions Spend on major infrastructure projects and development projects, offshore drilling and exploration drilling in the Perth Basin. Growth capital expenditure FY24 includes Waitsia Stage 2, Enterprise, Kupe South 9, Perth Basin exploration and Moomba CCS Spend to sustain production levels (m
Slide 37: Acreage maps
Acreage maps Perth Basin Otway Basin 37
Slide 38: Acreage maps
Acreage maps Western Flank Cooper Basin JV 38
Slide 39: Acreage maps
Acreage maps Bass Basin New Zealand 39
Slide 40: Beach Energy Limited
Beach Energy Limited Level 8, 80 Flinders Street Adelaide SA 5000 Australia T: +61 8 8338 2833 F: +61 8 8338 2336 beachenergy.com.au Investor Relations Derek Piper, General Manager Investor Relations & Treasury T: +61 8 8338 2833