Beach Energy Limited · ASX:BPT
Beach Energy — H1 FY2019 Earnings Presentation
47 slides from Beach Energy's earnings presentation, Feb 13, 2019
Slide 1: Beach Energy transformation delivers enhanced profitability and growth
Beach Energy Limited ABN 20 007 617 969 25 Conyngham St, Glenside 5065, South Australia GPO Box 175, Adelaide 5001, South Australia T: +61 8 8338 2833 F: +61 8 8338 2336 beachenergy.com.au info@beachenergy.com.au ASX / Media release 13 February 2019 Ref: #006/19 Beach Energy transformation delivers
Slide 2: Underlying NPAT rises to $279m as Beach Energy increases EBITDA guidance
ASX release | Beach Energy FY19 half year results Underlying NPAT rises to $279m as Beach Energy increases EBITDA guidance A 147 per cent increase in sales revenue coupled with cost discipline has seen Beach Energy deliver a 199 per cent increase in its underlying Net Profit After Tax (NPAT) to $279
Slide 3: FY19 Half Year Results Presentation
FY19 HALF YEAR RESULTS PRESENTATION Kupe (New Zealand) offshore platform Beach Energy Limited ABN 20 007 617 969
Slide 4: Compliance Statements
COMPLIANCE STATEMENTS Disclaimer Five year targets This presentation contains forward looking statements that are subject to risk factors associated References to five year targets refers to those targets listed in the 2018 Asia Roadshow presentation with oil, gas and related businesses. It is belie
Slide 5: Introduction
INTRODUCTION Matt Kay, CEO Ensign 931 rig at HBWS site Beach Energy Limited ABN 20 007 617 969 3
Slide 6: Highlights
HIGHLIGHTS Strong operational start to FY19 Excellent half year result • H1 FY19 production of 15.2MMboe • Sales revenue of $955 million, up 147% • Facility reliability averaged above 97% • Underlying NPAT1 $279 million, up 199% • Strong customer gas demand and oil output • Interim dividend of 1.0 c
Slide 7: Our Top Priority
OUR TOP PRIORITY STRONG SAFETY AND ENVIRONMENTAL PERFORMANCE Safety performance1 Environmental performance1 TRIFR2 16 CRUDE SPILL VOLUMES (KL) 15.6 51.9 7.9 8 100% 3.8 9.6 3.5 2.8 0 0.2 0.1 0 FY15 FY16 FY17 FY18 H1 FY19 FY15 FY16 FY17 FY18 H1 FY19 Loss of containment Focus on HSE delivering best per
Slide 8: Delivering On Our Promises
DELIVERING ON OUR PROMISES Optimising our assets Developing our reserves Reserves replacement ✓ $56 million synergy run rate achieved by ✓ 68 Cooper Basin wells drilled in H1 FY19 ✓ Bauer appraisal finds eastern extension end H1 FY19 ✓ Additional rig secured to accelerate ✓ Moomba South drilling cam
Slide 9: Delivering As A Low Cost Operator
DELIVERING AS A LOW COST OPERATOR • Beach has extracted $56 million of synergies to date, Beach operating costs/boe1 primarily relating to exiting the TSA with Origin Energy, insurance savings and other integration benefits. $/boe 12 • Beach is targeting $30 million reduction in operating costs by t
Slide 10: FY19 Guidance Upgraded
FY19 GUIDANCE UPGRADED Capital expenditure FY19 Guidance Guidance narrowed on 31 January 2019 from $440-520 million to $450-500 million. Production 28 – 29 MMboe Higher expenditure is forecast in H2 FY19 due to increased planned drilling activity: Capital expenditure $450 – 500 million • Additional
Slide 11: Financial Results
FINANCIAL RESULTS Morné Engelbrecht, CFO Kupe (New Zealand) offshore platform Beach Energy Limited ABN 20 007 617 969 9
Slide 12: Financial Highlights
FINANCIAL HIGHLIGHTS Sales volumes +181% over H1 FY18 due to: SALES VOLUME UNDERLYING EBITDA1 • Lattice acquisition 16.0 $724 • Strong customer demand MMBOE MILLION • Improved facility reliability Improvement in Underlying EBITDA, Underlying NPAT and UNDERLYING NPAT1 OPERATING CASH FLOW Operating Ca
Slide 13: H1 FY19 Financial Results
H1 FY19 FINANCIAL RESULTS $ million H1 FY18 H1 FY19 Change Underlying NPAT recognises: • 181% increase in sales volumes Production (MMboe) 5.2 15.2 193% • 15% increase in average realised oil price Sales volumes (MMboe) 5.7 16.0 181% • 147% increase in sales revenue Average realised oil price ($/bbl
Slide 14: Underlying NPAT Drivers
UNDERLYING NPAT1 DRIVERS Movement in underlying NPAT1 Movement in Underlying NPAT1 ($ millions) Underlying NPAT1 up 199% to $279 million 41 • 181% increase in sales 90 72 volumes Net financing 25 10 35 costs Other2 Gas and ethane Tax • 3% increase in average USD 127 Oil and liquids price FX rates oi
Slide 15: Financial Strength
FINANCIAL STRENGTH Movement in Net Debt ($ millions) • Net debt reduced by $308 million to $311 million at end of H1 FY19, net gearing 13.5% • Reduction driven by strong operating cash flows, offset by capital expenditure of $186 million and 479 dividend payments of $23 million. 639 6 Dividends/othe
Slide 16: Disciplined Balance Sheet Management
DISCIPLINED BALANCE SHEET MANAGEMENT • Targeting to be debt-free on completion of the proposed Net gearing since Lattice acquisition 40% Otway Sale, expected by the end of Q3 FY19, more completion (end January 2018) than 2 years ahead of original debt-free target date • Beach’s long term target net
Slide 17: Robust And Stable Revenue Base
ROBUST AND STABLE REVENUE BASE FIXED PRICE CONTRACTS PROVIDE REVENUE CERTAINTY FY19 estimated sales revenue and expenditure 2,500 • Beach expects to generate revenue of more than $700 million in FY19 from its stable gas business @ US$80/bbl oil 2,000 • Revenues from liquids sales provides upside @ U
Slide 18: Summary
SUMMARY ✓ Beach continues to de-gear rapidly, providing significant Balance sheet flexibility balance sheet flexibility ✓ Gas portfolio provides revenue certainty with market price High revenue certainty resets commencing at the end of FY20 Low cost operator ✓ Excellent progress on further efficienc
Slide 19: Asset Updates
ASSET UPDATES Matt Kay, CEO Artificial lift in the Cooper Basin Beach Energy Limited ABN 20 007 617 969 17
Slide 20: Asset Updates - SAWA
ASSET UPDATES - SAWA ✓ H1 FY19 production 2.4 MMboe, +4% on H1 FY18 Western Flank Oil Production largely a result of the successful Bauer Field appraisal and development program (MMboe) 2.4 2.4 2.3 ✓ Bauer four-well appraisal program has extended Operational 2.2 Western field limit towards the east
Slide 21: Bauer Field Development
BAUER FIELD DEVELOPMENT Horizontal vs vertical wells Improvement in drilling/connection times • Beach has increased the application of horizontal well • In FY18 Beach’s first ever operated horizontal well, technology, targeting the lower permeability McKinlay Bauer-26, achieved 12.7 days from spud-t
Slide 22: Western Flank Oil
WESTERN FLANK OIL ROLLOUT THE “BAUER STRATEGY” ACROSS THE WESTERN FLANK • Following success of Bauer appraisal program, the technical workflow to be applied across the Western Flank Kangaroo App planning underway • Hanson appraisal has commenced Kalladeina/ Congony • Second oil rig will allow for fi
Slide 23: Asset Updates - SAWA
ASSET UPDATES - SAWA ✓ H1 FY19 production 1.0 MMboe, +55% on H1 FY18 largely a result of the commissioning of the latest Middleton facility capacity expansion Western Flank Gas ex PEL 106 and ex PEL 91, Beach 100% and ✓ Seven-well gas appraisal campaign in the core gas production area Operational to
Slide 24: Cooper Basin JV
COOPER BASIN JV MOOMBA SOUTH APPRAISAL • Phase one of Moomba South Appraisal saw seven successful wells from the eight well program • The eight wells constitute the first phase of a program designed to test up to 120 Bcf gas potential (Beach share) • Four of the seven successful wells online and pro
Slide 25: Asset Updates - SAWA
ASSET UPDATES - SAWA ✓ H1 FY19 production 0.4 MMboe1 Perth Basin Waitsia (Beach 50%), Beharra Springs ✓ Progress made towards decision regarding development of Waitsia reserves (Beach 67% and operator) Operational Market ✓ Excellence Progressing plans for Beharra Springs Deep Access and approvals fo
Slide 26: Asset Updates - Victoria
ASSET UPDATES - VICTORIA Bass Basin ✓ H1 FY19 production 0.9 MMboe1 Beach 53.75% producing assets, 50.25% non-producing, Beach operated ✓ Progressed the evaluation of a potentialOperational Market tieback of the Trefoil Field Excellence Access ✓ H1 FY19 production 4.8 MMboe1 ✓ Financial Ocean Onyx s
Slide 27: Asset Updates - La Bella
ASSET UPDATES – LA BELLA • Beach has been successful in its bid for the V18-3 block and has until 21st February 2019 to accept • V18-3 contains the undeveloped La Bella gas discovery Operational Market • Field is in tie-back distance to existing infrastructure Excellence Access • La Bella gas would
Slide 28: Asset Updates - New Zealand
ASSET UPDATES – NEW ZEALAND ✓ H1 FY19 production 1.5 MMboe1 New Zealand – Kupe Gas Project ✓ Front End Engineering and Design (FEED) commenced on the Kupe compression Beach 50% and operator project, FID targeted for H1 FY20 Operational Market Excellence Access Financial Value-accretive Strength and
Slide 29: Carnarvon Basin
CARNARVON BASIN IRONBARK PROSPECT Ironbark Prospect1 (WA-359-P Beach 21%, subject to farm-in; WA-409-P Beach 7.5% subject to farm-in) Ironbark • BP has secured the Ocean Apex rig to drill the Ironbark prospect • Drilling is expected to commence in late calendar 2020 • Ironbark is a potential high-im
Slide 30: Bonaparte Basin
BONAPARTE BASIN EXPLORATION BLOCK ALIGNMENT AGREED WITH SANTOS • Santos and Beach have reached agreement on alignment in the Bonaparte Basin and will be executing supporting documents in the coming days • Agreement spans four exploration blocks in the offshore Bonaparte Basin • Ownership will become
Slide 31: Beach Rig Schedule
BEACH RIG SCHEDULE H1 FY19 H2 FY19 H1 FY20 Non-operated rig Cooper Non-operated rig Basin JV Non-operated rig Non-operated rig Western Operated rig (oil) Non-operated rig (oil) Operated rig (gas) Flank Operated rig (oil) Otway Operated onshore rig (SA & Vic – gas) Basin Ocean Onyx (Offshore Vic) Tod
Slide 32: Key Takeaways
KEY TAKEAWAYS Otway Gas Plant Beach Energy Limited ABN 20 007 617 969 30
Slide 33: Ahead Of Target Against 5 Year Plan
AHEAD OF TARGET AGAINST 5 YEAR PLAN Production ✓ Beach output has exceeded expectations ✓ FY19 EBITDA guidance raised Guidance update ✓ FY19 production guidance increased, capex guidance narrowed on 31 January ✓ Net gearing 13.5% at 31 December 2018 ✓ Beach to be in a net cash position at completion
Slide 34: Q&A
Q&A Outlook from Yolla platform, Bass Basin Beach Energy Limited ABN 20 007 617 969 32
Slide 35: Appendices
APPENDICES Lang Lang gas facility, Bass Basin Beach Energy Limited ABN 20 007 617 969 33
Slide 36: FY19 Drilling Program
FY19 DRILLING PROGRAM INCREASING FOCUS ON HORIZONTAL WELLS FY19 well participation increases to 160 wells (from 133 prior) FY19 expected participation Cooper Basin JV (number of wells) • Expect to participate in 98 wells (up from 87) after 4th rig added in August 2018 Gas Oil Total • Biggest increas
Slide 37: Oil Hedging Position
OIL HEDGING POSITION OIL HEDGES AS AT 31 DECEMBER 2018 3-way Collar 3-way Collar 3-way Collar Total Hedged $40 – 90 – 100 $40 – 103 – 113 $55 – 100 – 110 Volumes (bbl) per bbl per bbl per bbl FY19 97,500 270,000 825,000 1,192,500 Total 97,500 270,000 825,000 1,192,500 • Realised hedging losses total
Slide 38: Reconciliation Of NPAT To Underlying NPAT
RECONCILIATION OF NPAT TO UNDERLYING NPAT1 Comparison of Underlying Profit ($ million) H1 FY18 H1 FY19 Change Net profit / (loss) after tax 96 283 187 196% Acquisition costs and writeoff of debt establishment fees 10 8 (2) Gain on asset sales (5) - 5 Unrealised hedging movements 3 (14) (17) Gain on
Slide 39: Underlying EBITDAX, EBITDA, EBIT, NPBT And NPAT
UNDERLYING EBITDAX, EBITDA, EBIT, NPBT AND NPAT1 Comparison of Underlying EBITDAX, EBITDA, EBIT, NPBT ($ million) H1 FY18 H1 FY19 Change Underlying EBITDAX 228 724 496 218% Exploration expense 0 0 Underlying EBITDA 228 724 496 218% Depreciation and amortisation 88 284 Underlying EBIT 140 440 300 214
Slide 40: Strong Cash And Liquidity Position
STRONG CASH AND LIQUIDITY POSITION Movement in Cash Balance Movement($ millions) in HY cash balance • $204 million cash, and $594 million available liquidity at 31 December 21 2018 Proceeds from asset sales 186 6 • $479 million operating cash flow Capital expenditure helped fund: 479 Dividends/other
Slide 41: Asset Maps
ASSET MAPS Bauer-32 drill site, Cooper Basin Beach Energy Limited A.B.N. 20 007 617 969 39
Slide 42: Beach Energy Portfolio
BEACH ENERGY PORTFOLIO FY18 Pro forma production1 Bass Basin Cooper Taranaki Basin Basin 26.8 MMboe Otway Basin Perth Basin FY18 2P reserves2 Perth Basin Cooper Basin 313 MMboe Otway Basin Beach prepares its petroleum reserves and contingent resources estimates in accordance with the Petroleum Resou
Slide 43: Maps - SAWA
MAPS - SAWA Western Flank Oil Western Flank Gas Beach Energy Limited ABN 20 007 617 969 41
Slide 44: Maps - SAWA
MAPS - SAWA Cooper Basin JV Perth Basin Beach Energy Limited ABN 20 007 617 969 42
Slide 45: Maps - SAWA And New Zealand
MAPS – SAWA AND NEW ZEALAND South Australian Otway Basin New Zealand – Kupe Gas Project Beach Energy Limited ABN 20 007 617 969 43
Slide 46: Maps - Victoria
MAPS - VICTORIA Victorian Otway Basin Bass Basin * Subject to completion of the proposed sale of 40% of Victorian Otway interests to O.G. Energy Beach Energy Limited ABN 20 007 617 969 44
Slide 47: FY19 Half Year Results Presentation
FY19 HALF YEAR RESULTS PRESENTATION Beach Energy Limited Investor Relations 25 Conyngham Street Nik Burns, Investor Relations Manager Glenside SA 5065 Australia Mark Hollis, Investor Relations Advisor T: +61 8 8338 2833 T: +61 8 8338 2833 F: +61 8 8338 2336 beachenergy.com.au Kupe (New Zealand) offs