Beach Energy Limited · ASX:BPT
Beach Energy — Investor Day (November 2015)
82 slides from Beach Energy's investor day presentation, Nov 5, 2015
Slide 1: Beach Energy Investor Morning
Beach Energy Investor Morning Demonstrating resilience in a challenging market 5 November 2015
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: Welcome
Welcome Time Topic Presenter 9.00 – 9.05 Welcome Derek Piper 9.05 – 9.15 Investor Relations Update Chris Jamieson 9.15 – 9.25 Overview Neil Gibbins 9.25 – 9.40 Proposed Drillsearch Merger Neil Gibbins 9.40 – 10.10 Operational Outlook Mike Dodd 10.10 – 10.20 Q&A 10.20 – 10.45 Morning Tea 10.45 – 11.0
Slide 4: Investor Relations Update
Investor Relations Update Chris Jamieson – Group Executive External Affairs
Slide 5: Our refreshed vision, purpose and values
Our refreshed vision, purpose and values Vision • To be Australia’s premier multi-basin upstream oil and gas company Purpose • To deliver sustainable growth in shareholder value Values • Safety: Takes precedence in everything we do • Creativity: Continuously explore innovative ways to create value •
Slide 6: Share price performance
Share price performance A challenging year across the sector $ 1.20 1.00 (28%) 0.80 (42%) (45%) 0.60 (50%) 1 Beach Peers Brent oil (US$) Brent oil (A$) 0.40 Oct-14NovNov-14DecDec-14Jan Jan-15FebFeb-15MarMar-15AprApr-15May May-15JunJun-15 Jul Jul-15 AugAug-15SepSep-15OctOct-15 2014 2015 NB. Chart dat
Slide 7: Shareholder register perspectives
Shareholder register perspectives October 2014 October 2015 Business model leveraged to oil recovery Investor Type 30% 32% Institutional 48% Low cost / high margin Corporate Retail operated oil 1% 69% 20% Increasing exposure to oil- linked gas pricing October 2014 October 2015 Balanced FY16 dr
Slide 8: Liquidity trends
Liquidity trends Chi-X platform accounting for a material portion of total trading volumes Share of Trading Volumes 100% 17.5%: Average Chi-X share of trading over past two years 80% Average Daily % of 60% Trading Volumes ASX Chi-X Total Issued (million) Capital1 Last 3 months 9.2 2.0 11.2 0.9% 40%
Slide 9: Overview
Overview Neil Gibbins – Acting Chief Executive Officer
Slide 10: Four-pillar strategy
Four-pillar strategy Optimise our core Build a Pursue other Maintain in the Cooper complementary compatible growth financial strength Basin gas business in opportunities in east coast basins Australia and nearby Growth in core Establish gas business Disciplined approach Supporting exploration, busin
Slide 11: Cooper Basin acreage
Cooper Basin acreage A prolific onshore hydrocarbon basin, with Beach gross acreage of c.50,000 km2 11
Slide 12: Broad opportunity set in Cooper Basin
Broad opportunity set in Cooper Basin • Maximise returns from existing assets – Safety improvements – Operating efficiencies – Facility upgrades and optimisation • Re-invigorate exploration – Comprehensive basin analysis – Unlock new play types – Technological advancements • Basin adjacencies – Cons
Slide 13: Reserves and contingent resources
Reserves and contingent resources1 2P: 74 MMboe 2P and 2C: 751 MMboe Gas and gas liquids 55 MMboe Unconventional 2P reserves 74 MMboe gas and gas liquids 589 MMboe Oil 19 MMbbl Conventional gas/gas liquids 75 MMboe Oil 13 MMbbl 1. As per announcement to the Australian Securities Exchange on 24 Augus
Slide 14: FY16 capital expenditure guidance
FY16 capital expenditure guidance Capital Expected Expenditure Other Major Activities Wells ($ million) DEVELOPMENT Cooper Basin 45 – 50 7–8 Bauer facility upgrade; Middleton gas compression Cooper Basin (SACB and SWQ JVs) 145 – 160 28 – 30 Connection of Windorah-Marama area development Total Develo
Slide 15: Financial strength underpins operations
Financial strength underpins operations • Operating cash flows of $303 million Pre-tax Operating Cash Flows $ million in FY15 (pre-tax) 640 Net operating cash flows 606 – Underpinned by high margin Tax payments Western Flank oil operations 480 • FY15 cash flows framed FY16 capital expenditure progra
Slide 16: Proposed Drillsearch Merger
Proposed Drillsearch Merger Neil Gibbins – Acting Chief Executive Officer
Slide 17: Merger benefits
Merger benefits Primed to pursue growth opportunities • Creating a business based on expertise and a track record of growth • Balance Sheet strength allowing new opportunities to be pursued • A clear strategy and the ability to execute Significant benefits for both sets of shareholders • • Both
Slide 18: Combined Cooper Basin acreage
Combined Cooper Basin acreage Proposed merger with Drillsearch would increase gross acreage to c.69,000 km2 18
Slide 19: Leading ASX mid-cap oil and gas company
Leading ASX mid-cap oil and gas company Enhanced scale with capacity to pursue organic and inorganic growth options • Potential for improved liquidity, possible market re-rating and dividend potential – good for shareholders • $313m in FY15 pro-forma operating cash flow, strong balance sheet – good
Slide 20: Targeting synergies and operating efficiencies
Targeting synergies and operating efficiencies Pre-tax synergies of ~$20 million per annum within two years1 • Blending the best talent from both companies 1 Operational • Optimisation of technical and field activities • Opportunities to high-grade the exploration portfolio • Elimination of duplicat
Slide 21: Indicative timetable
Indicative timetable Event Date ASX announcement of scheme 23 October 2015 First Court Date Early December 2015 Despatch Beach Notice of Meeting to Beach shareholders Early December 2015 (if required) Despatch Explanatory Booklet to Drillsearch shareholders and Mid December 2015 lodge with ASX Beach
Slide 22: Operational Outlook
Operational Outlook Mike Dodd – Acting Chief Operating Officer
Slide 23: Existing footprint across multiple basins
Existing footprint across multiple basins A re-aligned focus closer to home Cooper and Eromanga Basins Oil Gas Gas Liquids Tight Gas • Diversified hydrocarbon explorer Operated and producer Non-operated • Core expertise in the Cooper and Eromanga basins • Existing presence across oth
Slide 24: Safety takes precedence
Safety takes precedence Hours Worked and Lost Time Injuries Continual focus on safety, with over Hours 12 months of LTI-free operations (million) LTIs 1.5 8 • Ongoing safety communications with Beach employees and contractors • Review and refinement of HSE strategy 6 1.0 – Emergency response trainin
Slide 25: Operations overview – Q1 FY16
Operations overview – Q1 FY16 First quarter ended 30 September 2015 Actual and Forecast Production MMboe • Production of 2.3 MMbbl 10.0 9.6 – 50% oil; 50% gas and gas liquids 9.1 7.8 – 8.6 • Stunsail and Pennington facilities 8.0 commissioned 8.0 7.5 Gas* 4.4 Gas* – 20,000 bfpd each (25 PJe) 4.5 Gas
Slide 26: Western Flank Ex PEL 91
Western Flank Ex PEL 91 • FY15 gross production of 4.1 MMbbl Retention licences 151 to 172 granted (11,263 bopd) • Up to seven exploration, appraisal and development wells in FY16 – Bauer appraisal wells in Q2 FY16 to test northern and southern extensions • Bauer facility increase to 133,000 bfpd (+
Slide 27: Western Flank Continuing evolution of the Bauer Field
Western Flank Continuing evolution of the Bauer Field Pre-drill – July 2011 June 2015 Pre-drill June 2015 July 2011 • Gross oil • Target six metre column of column height 17 metres 25 • Good quality • Permeability fluvial sandstone up to reservoir 13.6 Darcy identified • Estimated • Recovery recover
Slide 28: Western Flank Ex PEL 92
Western Flank Ex PEL 92 • FY15 gross production of 1.5 MMbbl Retention licences 85 to 104 granted (4,110 bopd) • FY15 successes include: – Two-well appraisal / development campaign in Callawonga Field; – Additional flowlines and separator cleaning campaign; and – Inversion of existing 3D seismic • F
Slide 29: Western Flank Ex PEL 104 / 111
Western Flank Ex PEL 104 / 111 • FY15 gross production of 1.6 MMbbl Retention licences 136 to 150 granted (4,502 bopd) • FY15 successes include: – Martlet-1 and Martlet North-1 Namur Sandstone oil discoveries; and – Production growth, with strong performance from Spitfire Field • Historical focus on
Slide 30: Western Flank Ex PEL 106
Western Flank Ex PEL 106 • FY15 gross production of 0.7 MMboe Retention licences 129 and 130 granted (1,794 boepd) • Two exploration wells in FY16, testing stacked stratigraphic traps in liquids-rich play – Drilling planned for Q3 FY16 • Ralgnal-1 extended production test underway, with encouraging
Slide 31: Western Flank Technologies assisting new play types
Western Flank Technologies assisting new play types • Conventional seismic Conventional seismic Reflection amplitudes associated with formation boundaries – Enables structural interpretation • Inverted seismic Inverted seismic Transforms reflection data into quantitative rock properties – Inverted d
Slide 32: Western Flank Ex PEL 106 3D seismic interpretation
Western Flank Ex PEL 106 3D seismic interpretation Middleton Admella Potential mounded sequence within the SSW NNE Brownlow Package Nappamerri Toolachee Epsilon Murteree Vs18 Vs30 Canunda Package Vs45 Brownlow Package Vs50 Vs80A 32
Slide 33: Western Flank Resultant exploration targets identified
Western Flank Resultant exploration targets identified Middleton Illustrative target packages Admella metres tvdss Murteree -2,500 Vs18 Canunda Package Vs30 Brownlow Package -2,600 Vs45 Middleton Package Vs50A -2,700 Vs50 Vs80A -2,800 33
Slide 34: Eastern Flank PL 184: Thylungra-2
Eastern Flank PL 184: Thylungra-2 • Thylungra-1 drilled in 1995 Targeting Hutton Sandstone oil – Encountered oil shows in the Hutton Sandstone and Basal Jurassic Formation (BJF) • Thylungra-2 to be drilled 15 metres up-dip of Thylungra-1 – Targeting Hutton Sandstone, with BJF a secondary target – Al
Slide 35: Cooper Basin Gas SACB and SWQ JVs drilling program
Cooper Basin Gas SACB and SWQ JVs drilling program South Australia • Reduced drilling activities in FY16, with up to 40 wells planned – Three rigs currently drilling • More appraisal / near-field exploration activities relative to past infill drilling – SACB JVs: Focus on liquids-rich fields; deep c
Slide 36: Cooper Basin Gas Deep Coals
Cooper Basin Gas Deep Coals Southern Deep Coals • Targeting coals at 1,500 – 2,000 metres depth • Well costs of ~$3 million • Davenport-1 exploration well indicated good permeability and gas content in core • Extended production test expected late FY16 Patchawarra Trough Deep Coals • Thick coals pre
Slide 37: Cooper Basin Gas Nappamerri Trough Natural Gas
Cooper Basin Gas Nappamerri Trough Natural Gas Ex PEL 218 (PRLs 33 to 49) – Beach 100% • 18 wells drilled across permits; 16 fracture stimulated ATP 855 – Beach 64.9% and operator, Icon Energy 35.1% • 495 MMboe contingent resources1 1. As announced to the Australian Securities Exchange on 21 August
Slide 38: Offshore Otway Basin 3D seismic survey
Offshore Otway Basin 3D seismic survey • Permit adjacent to producing Thylacine and Offshore Otway – T/49P Geographe gas fields • Proximal to existing infrastructure • Two larges structures confirmed in north of Geographe Field permit area (Flanagan and Whalebone) • Detailed mapping underway; next s
Slide 39: International New Zealand
International New Zealand Canterbury Basin (PEP 52717) Prospective exploration acreage • Farm-down process underway • Seeking extension to April 2016 well commitment • Further studies underway to determine optimum well location Taranaki Basin (PEP 52181) • No current activities • Seeking extension t
Slide 40: International Africa
International Africa Tanzania – Farm-down underway Egypt – Sale process underway 40
Slide 41: Q&A
Q&A
Slide 42: Gas Market Update
Gas Market Update Rod Rayner – Group Executive Commercial
Slide 43: Eastern Australia gas market
Eastern Australia gas market Demand to triple in five years Eastern Australia Gas Market Composition – 2014 • 2013 consumption: ~700 PJ • 2018 consumption (forecast) ~2,100 PJ – 70% attributable to LNG Expanded transport infrastructure connectivity • Allowing supply to access Queensland LNG Source:
Slide 44: Eastern Australia gas market
Eastern Australia gas market Domestic gas now exposed to global LNG Forecast Eastern Australia Gas Demand market dynamics • Domestic gas consumers competing with export markets • LNG demand ramp up coinciding with expiry of legacy Cooper and Gippsland basin contracts • Increased base price and oil-l
Slide 45: Eastern Australia gas supply
Eastern Australia gas supply Conventional gas Eastern Australia 2P Gas Reserves (PJ) • Regional market dynamics prevailed • Historically able to meet seasonality in demand • Recent decline hindered gas demand growth CSG • Major increases in 2P reserves, mainly Queensland becoming dominant source of
Slide 46: Opportunities for Cooper Basin gas
Opportunities for Cooper Basin gas • Cooper Basin ideally situated adjacent to transport infrastructure to eastern and southern markets – Able to supply domestic and LNG export markets • Existing Beach gas sale contracts provide exposure to domestic and LNG export markets, without associated midstre
Slide 47: Otway and Gippsland basins
Otway and Gippsland basins • Existing exploration acreage proximal to regional transportation and processing infrastructure, supplying eastern Australia markets • Gas production able to be supplied to southern and LNG markets via SEAgas and EGP pipelines • Premium gas pricing for seasonal flexibilit
Slide 48: Infrastructure Projects
Infrastructure Projects Mike Bangerter – Team Leader, Facilities Engineering
Slide 49: Facilities Engineering
Facilities Engineering Key functions Key activities • Design, procure, construct and • Facilities engineering commission surface plant and equipment for processing, custody metering, storage • Asset integrity and reliability and transportation of oil and gas fluids • Production measurement from well
Slide 50: Operated Cooper Basin infrastructure
Operated Cooper Basin infrastructure Cooper Basin Fields Producing Wells Facilities South Australia – Oil 24 78 15 South Australia – Gas 6 3 1 Queensland – Oil 6 42 7 Total 36 123 23 23 facilities servicing 123 wells across 36 fields 50
Slide 51: Oil processing facilities – General approach
Oil processing facilities – General approach Modular design approach Pennington facility under construction • Modular approach of pre-fabricated equipment and assemblies reduces on- site construction time and costs • Template design concept developed to reduce design time and maintain consistency to
Slide 52: Oil processing facilities – 3D modelling
Oil processing facilities – 3D modelling • 3D CAD design introduced late 2014 to improve design and construction implementation • Allows better visualisation of how the facility will look and operate • Assists HAZOP, risk assessments and HSE compliance • Significant benefits in accuracy have led to
Slide 53: Project execution – Process overview
Project execution – Process overview Projects divided into phases with approval gates • Phases 1, 2, 3 and 5 performed by Beach • Phases 4 and 6 outsourced if required 53
Slide 54: Project execution – Oil processing facilities
Project execution – Oil processing facilities Each development is different and requires careful evaluation • During the Appraise and Select phases, facility processing requirements and engineering solutions are developed • Considerations for the development of each processing facility include: Rese
Slide 55: Project execution – Timeline
Project execution – Timeline Timelines vary depending on complexity, capacity and content of project Stunsail facility • 20,000 bfpd processing capacity • 2,500 bopd storage • 19 kilometre export pipeline and end of line facilities • Multiple well flowline connections Indicative lead times Appraise,
Slide 56: Western Flank pipelines
Western Flank pipelines • Pipeline network installed between 2008 and 2015 – 280 kilometres of oil pipelines – 72 kilometres of gas pipelines • Delivers improved efficiency and reduced costs – Uninterrupted production during times of flooding – Less reliance on trucking • Composite material now used
Slide 57: Western Flank pipelines
Western Flank pipelines Spoolable composite pipe • High pressure capability • Immune to corrosion, with few joints • Rapid installation, resulting in lower costs • Minimal environmental impact Installation of Stunsail to Bauer oil pipeline with direct plough technique 57
Slide 58: Western Flank pipelines
Western Flank pipelines Stick glass reinforced epoxy (GRE) pipe material • Manufactured with glass fibre filament windings in an epoxy resin • High strength and corrosion resistant, with low installation costs • Improved flow capacity and long service life Pipe assembly of 200 nominal bore Lycium to
Slide 59: Best practice asset management
Best practice asset management • Value engineering analysis and life of asset considerations factored into each development • Skid mounted equipment reduces on-site installation and enables re-use at other locations • Equipment selected to have commonality across all assets – Provides familiarity fo
Slide 60: Approach to Basin Reviews
Approach to Basin Reviews Andrew Krassay – Senior Geologist, New Ventures
Slide 61: Australian basins – Regional geology
Australian basins – Regional geology Australian basins by Age Cenozoic Mesozoic- Cenozoic Mesozoic Paleozoic- Cenozoic Paleozoic- Mesozoic Paleozoic Neoproterozoic -Paleozoic Archean- Proterozoic BPT permits Australian basins – diverse, old, stacked and complex 61
Slide 62: Australian basins – Overview
Australian basins – Overview Frontier Mature Proven 62
Slide 63: Case 1: Mature – Cooper / Eromanga basins
Case 1: Mature – Cooper / Eromanga basins Mature area • ~4,000 wells • Good regional 2D seismic coverage • Significant 3D seismic • ~500 oil and gas fields • Pipelines • Facilities • Excellent access to markets • Clear understanding of cost structures and commercial hurdles 1:3 million scale 63
Slide 64: Case 1: Mature – Cooper / Eromanga basins
Case 1: Mature – Cooper / Eromanga basins Mature area NGMA merged basement- top Permian depth map • Extensive mapping and databases available • Good understanding of regional geology • Known structure and stratigraphy Basin review focus • Review of key datasets • Defining play fairways and extension
Slide 65: Case 1: Mature – Cooper / Eromanga basins
Case 1: Mature – Cooper / Eromanga basins Wells • 3,760 wells within 50 kilometres of Permian edge Oilfields (n=206) • 74% within the Permian Basin • Only seven oilfields (3%) >25 km Gasfields (n = 269) • 99.6% within Permian Basin 1:3 million scale 65
Slide 66: Case 1: Mature – Cooper / Eromanga basins
Case 1: Mature – Cooper / Eromanga basins Lead Lead Lead Basin review • Refining source, charge, migration models • Well failure analysis • Play fairway mapping • Seismic mapping in time and depth • Developing P&L inventory • Risking and volumetric modelling 66
Slide 67: Case 2: Proven – Otway Basin
Case 2: Proven – Otway Basin Proven basin with frontier areas • ~250 wildcat wells • Good regional 2D seismic coverage • Extensive 3D seismic over main producing areas • ~50 gas fields • Pipelines and facilities localised to hubs • Excellent access to markets 67
Slide 68: Case 2: Proven – Otway Basin
Case 2: Proven – Otway Basin Basin Review • Well failure analysis • Play fairway mapping • New high quality seismic acquisition • Structural model Proven fairway • Detailed seismic mapping and AVO analysis Fairway extension • Use of analogues ? • Looking to extend known proven plays = Eumeralla - Wa
Slide 69: Case 2: Proven – Otway Basin Creaming Curve
Case 2: Proven – Otway Basin Creaming Curve Speculant 450 Martha - Henry Netherby 60,000 Cumulative Production (boe/d) ~2.3 Tcf 400 Onshore Offshore 350 Casino Cumulative Reserves (MMboe) 40,000 300 Thylacine 250 20,000 Minerva – La Bella Paaratte North – Wallaby Crk 200 Geographe 150 Ladbroke Grove
Slide 70: Case 2: Proven – Otway Basin
Case 2: Proven – Otway Basin SSW NNE 10 km ~2000mSS 3D Oil interpretation • Key to unlocking remaining potential in this basin is 3D seismic with inversion • Potential to extend the Shipwreck Trough play fairway is encouraging • Detailed mapping to understand structural style, seal units and fluids
Slide 71: Case 3: Frontier – Northern Territory
Case 3: Frontier – Northern Territory Frontier areas • Stacked, mostly old basins • Two currently in production – Amadeus and Bonaparte basins • Only 152 petroleum exploration wells • Sparse 2D seismic coverage • Few existing fields • Localised infrastructure • Market access limited to specific area
Slide 72: Case 3: Frontier – Northern Territory
Case 3: Frontier – Northern Territory Frontier areas • Nearly all of NT under application or covered by existing exploration permits • Regional geological assessment suggests vastly varying prospectivity and exploration risks • Basin review relies on fundamental datasets and ‘old school’ interpretat
Slide 73: Case 3: Frontier – Northern Territory
Case 3: Frontier – Northern Territory Bonaparte Basin • One of two producing basins in the NT • Basin review suggested proven offshore plays extended onshore in Petrel Sub- basin – Beach took a position in this acreage • Drilled Cullen-1 to test these plays • Interpretation of three valid plays: – S
Slide 74: Case 3: Frontier – Northern Territory
Case 3: Frontier – Northern Territory 74
Slide 75: Case 3: Frontier – Northern Territory
Case 3: Frontier – Northern Territory High resolution airborne gravity gradiometer and magnetics survey Updip carbonate or clastic trap potential NW SE Oil shows 75
Slide 76: Case 3: Frontier – Northern Territory
Case 3: Frontier – Northern Territory Petrel Sub-basin gravity + play map 76
Slide 77: Key technical questions for basin reviews
Key technical questions for basin reviews • Shape, depth and thickness of the basin • Nature of the basin-fill • Age and thermal history of the basin • Data coverage and confidence • Exploration maturity • Evidence for presence of active petroleum system(s) • Main source rocks and reservoir-seal pai
Slide 78: Close
Close Neil Gibbins – Acting Chief Executive Officer
Slide 79: Appendix
Appendix
Slide 80: Other Australian interests
Other Australian interests Otway Basin Gippsland Basin Various Beach interests, from 30% to 75% Beach 35%, Cooper Energy 65% and operator 80
Slide 81: Other Australian interests
Other Australian interests Bonaparte Basin Browse and Carnarvon Basins Browse Basin: Beach 7.34%, Santos 47.83% and operator, Chevron 24.83%, Inpex 20.0% Beach 100% Carnarvon Basin: Beach 10.0%, Santos 37.33% and operator, APACHE 34.03%, Eni 18.66% 81
Slide 82: Contact information
Contact information Beach Energy Limited 25 Conyngham Street Glenside SA 5065 Tel: +61 8 8338 2833 Fax: +61 8 8338 2336 Website: www.beachenergy.com.au Investor Relations Derek Piper Investor Relations Manager Email: derek.piper@beachenergy.com.au 82