Beach Energy Limited · ASX:BPT
Beach Energy — Investor Day (November 2014)
83 slides from Beach Energy's investor day presentation, Nov 25, 2014
Slide 1: Investor Morning
For personal use only Investor Morning 25 November 2014 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 be
Slide 3: Welcome
Welcome For personal use only Time Topic Presenter 09:00 - 09:05 Welcome Derek Piper 09:05 - 09:10 Investor relations update Chris Jamieson 09:10 - 09:25 Strategy update Reg Nelson 09:25 - 09:40 Operational update Neil Gibbins 09:40 - 09:55 Otway Basin and Bonaparte Basin Neil Gibbins 09:55 - 10:05
Slide 4: Investor relations update
For personal use only Investor relations update Chris Jamieson – General Manager Investor Relations 4
Slide 5: Company overview
Company overview For personal use only • ASX 100 company with a market capitalisation of ~$1.4 billion1 • Largest Australian onshore oil producer • Strong balance sheet with cash of $343 million2 • Undrawn secured debt facility of A$300 million • Record FY14 production and sales revenue 1. As at 18
Slide 6: Launch of Beach Energy app
Launch of Beach Energy app For personal use only • First Investor Relations app offering from an Australian oil and gas company • Key features: – Push notifications for ASX releases – Market data and share price charting – Investor Relations support • Developed for all smart phones and tablets • Fre
Slide 7: Shareholder register perspectives
Shareholder register perspectives For personal use only Seasoned offshore energy investors increasing presence on Beach register • Significant increase in US institutional ownership over past 12 months • Deep understanding of unconventional plays from US shale experience • Attracted by early-stage n
Slide 8: Broker valuation perspectives
Broker valuation perspectives For personal use only Share price tracking oil; broker price targets suggest sell-off overdone $ 2.00 Beach Brent oil $1.80 $1.80 1.50 $1.24 +18% 18-Nov-14: $1.05 $1.05 1.00 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Broker Price Targets1 52-week high/low NB. Chart data to 18 N
Slide 9: Strategy update
For personal use only Strategy update Reg Nelson – Managing Director 9
Slide 10: Global demand dynamics
Global demand dynamics For personal use only A greater population lives inside this circle than outside it 10
Slide 11: Domestic supply response
Domestic supply response For personal use only 2,500 LNG GPG Residential & Commercial Industrial 2,000 1,500 1,000 500 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Source: Core Energy, 2014 Transformational change for the Australian
Slide 12: Strategically positioned gas acreage
Strategically positioned gas acreage For personal use only • Quality acreage footprints accessing multiple markets • Strategically targeting three key basins for deep and conventional gas • Cooper Basin deep gas activity: – Nappamerri Trough Natural Gas with Chevron and Icon – SACB JV REM and BCG pl
Slide 13: Demonstrated track record of growth
Demonstrated track record of growth For personal use only FY14 record results have raised the bar; growth trend continues 9.6 MMboe 9.4 MMboe to • Record FY14 production of 8.6 MMboe 9.6 MMboe 8.0 MMboe – Underpinned by outperforming 7.5 MMboe Gas* Bauer field Gas* 4.4-4.9 • FY15 production guidance
Slide 14: Operational update
For personal use only Operational update Neil Gibbins – Chief Operating Officer 14
Slide 15: Future direction
Future direction For personal use only 1. Western Flank oil and wet gas 2. Growing Cooper Basin acreage 3. NTNG moving toward Stage 2 4. SACB and SWQ JVs gas production ramp-up 5. Australian multi-basin focus 6. Whole of portfolio review 15
Slide 16: 1. Western Flank oil and wet gas
1. Western Flank oil and wet gas For personal use only Key facts • High net back; lowest cost operator in the Cooper Basin • Quick drill times and high flow rates • Excellent geological understanding • Established infrastructure • ~4,000 km2 of 3D seismic FY15 • 22 exploration and appraisal wells •
Slide 17: 2. Growing Cooper Basin acreage
2. Growing Cooper Basin acreage For personal use only Prolific and increasing gross acreage position of over 56,000 km2 17
Slide 18: 3. NTNG moving toward Stage 2
3. NTNG moving toward Stage 2 For personal use only PRLs 33 to 49 – potential payments ATP 855 – potential payments Stage 1 (initial 30%) Stage 1 (initial 18%) • US$36 million cash • US$59 million cash • US$95 million carry Stage 2 (additional 30%) (1) Stage 2 (additional 18%) (1) • US$41 million ca
Slide 19: 4. SACB and SWQ JVs ramp-up
4. SACB and SWQ JVs ramp-up For personal use only • Multi-well pad infill drilling, with four rigs currently operating • Ramp-up profile to be provided by the operator prior to end of calendar year 2014 • Operator targeting 30% production capacity increase from 2012 trough to meet new contracts • Ma
Slide 20: 5. Australian multi-basin focus
5. Australian multi-basin focus For personal use only • Cooper and Eromanga Basins the engine room for Beach – Generating all Australian production – Conventional oil, gas and deep gas activity • Otway Basin – Offshore 3D seismic underway – Onshore conventional wells to be drilled – Proximal to infr
Slide 21: 6. Whole of portfolio review
6. Whole of portfolio review For personal use only All assets under review; activity underway in a considered and confidential manner 21
Slide 22: Otway Basin and Bonaparte Basin
For personal use only Otway Basin and Bonaparte Basin Neil Gibbins – Chief Operating Officer 22
Slide 23: Otway Basin
Otway Basin For personal use only A rich history of producing fields proximal to existing infrastructure 23
Slide 24: Otway Basin onshore
Otway Basin onshore – PELs 494 and 495 For personal use only • Beach 70% and operator, Cooper Energy 30% • Bungaloo-1 (PEL 494) and Jolly-1 (PEL 495) targeted deep tight sandstones and shales • Elevated gas readings from Lower Sawpit Shale to the Casterton Formation – 181 metres of core recovered; g
Slide 25: Otway Basin offshore – T/49P
Otway Basin offshore – T/49 P For personal use only • Beach 20%, 3D Oil 80% and operator • Lightly explored permit adjacent to Geographe and Thylacine gas fields • Polarcus Asima vessel undertaking 3D seismic survey • 974 km2 Flanagan 3D seismic survey targeting prospects and leads in north of block
Slide 26: Bonaparte Basin
Bonaparte Basin – EP 126 For personal use only • Beach 55% and operator, Territory Oil & Gas 45% • Cullen-1 results currently being assessed • 1,600 metres of over-pressured marine shale with variable carbonate content – Encouraging gas and oil shows in tight sands – 54 metres of core recovered • 1,
Slide 27: International
For personal use only International David Spence – Senior Geologist International 27
Slide 28: Egypt – Abu Sennan Concession
Egypt – Abu Sennan Concession For personal use only • Beach 22%, Kuwait Energy Egypt 50% and operator, Dover Investments 28% • 16 wells drilled since initial farm-in in 2010 with 75% success rate • Currently producing ~3,000 bopd (gross) • El Salmiya-6 intersected an 82 metre oil column, 53 metres o
Slide 29: El Salmiya-6 – Kharita Formation
El Salmiya-6 – Kharita Formation For personal use only • Intersection of an 82 metre vertical column with 53 metres of net pay • Tested at 2,750 bopd with 9.7 MMscfd • Production from Kharita Formation in excess of 210 kbbls since 2013 • Reserve booking of 13.4 MMbbl (gross) at 30 June 2014 • Flarin
Slide 30: Abu Roash discoveries
Abu Roash discoveries For personal use only Smaller stacked oil columns delivering strong flow rates • Al Jahraa-2 intersected 11 • ASA-1 ST3 intersected 7.5 metres of net pay in the metres of net pay in the Abu Abu Roash “C”; flow tested at 2,164 bopd Roash “C”; flow tested at • Intersected 6.5 met
Slide 31: Tanzania – Lake Tanganyika South Block
Tanzania – Lake Tanganyika South Block For personal use only • Farm-out to Woodside announced in July 2014, in line with portfolio review – New equity interests (subject to Government approvals): Beach 30% and operator, Woodside 70% • 2,080 kilometre 2D seismic survey completed in August 2012 (red l
Slide 32: Tanzania – Multiple play types identified
Tanzania – Multiple play types identified For personal use only • Exploration program has identified multiple play types across the permit • 18 prospects and leads generated from original high quality 2D seismic • Follow up marine and transition 2D seismic being acquired 32
Slide 33: Eastern Australia gas market
For personal use only Eastern Australia gas market Rod Rayner – Group Executive Commercial 33
Slide 34: Prolific gas acreage strategically located
Prolific gas acreage strategically located For personal use only • Quality acreage footprints accessing multiple markets • Prime unconventional gas acreage with transformational potential • Gas liquids potential in most basins Multi-basin portfolio to feed eastern and northern Australian markets 34
Slide 35: Key Beach gas transactions
Key Beach gas transactions For personal use only • Origin gas sales agreement High value - Signed April 2013 opportunities - 139 PJ over eight years; potential to extend to 173 PJ over ten years - Supply to start by 1 July 2015 Exposure to oil linked gas prices • PEL 106B – SACB JV raw gas sales agr
Slide 36: East coast gas market dynamics
East coast gas market dynamics For personal use only • Falling quantity of contracted gas in key East coast domestic gas contracts, by basin, 2012 to 2031 Eastern Australia market – Contractual arrangements covering around 260 PJ of gas due to expire in next four to five years • Large domestic gas u
Slide 37: Critical gas price drivers
Critical gas price drivers For personal use only • Impending LNG project commissioning Eastern Australia total gas demand scenarios (PJ) • Delay in delivery of CSG to meet export 2500 requirements LNG GPG Residential & Commercial Industrial • Increasing costs to develop CSG adding to 2000 demand for
Slide 38: Gas pricing and supply
Gas pricing and supply For personal use only Gas consumption by market and sector, 2003-04 to 2011-12 Australian gas consumption, by sector, 2011-12 Source: BREEE, 2013a Source: BREEE, 2013a Note: Mining gas use includes use by LNG plants in the liquefaction process • Gas is a vital and efficient so
Slide 39: Cooper Basin – Delhi (SACB and SWQ JVs)
For personal use only Cooper Basin – Delhi (SACB and SWQ JVs) Mike Dodd – General Manager Exploration and Development 39
Slide 40: SACB and SWQ JVs
SACB and SWQ JVs For personal use only • Significant acreage with strategic infrastructure • Gross joint venture area of ~26,800 km2 (~6.6 million acres) • ~6,000 kilometres of flowlines • Primary processing and transportation facilities • Upside from shale, coal and basin centred gas plays • Beach
Slide 41: Moomba processing facility
Moomba processing facility For personal use only • Strategically located, expandable facility • Daily capacity of approximately: – 420 TJ gas (post de-bottlenecking); – 35 kbbl oil/condensate; and – 600 tonnes LPG • Substantial gas storage system with capacity of ~70 PJ • Gas supplied directly into
Slide 42: SACB JV gas – 2013/14
SACB JV gas – 2013/14 • Development in 2013 and 2014 primarily focused on close spaced infill drilling at For personal use only Cowralli, Moomba North and Big Lake; program results mixed • Expansion of CO2 handling capacity at Moomba tracked to plan and budget 42
Slide 43: SACB JV gas – 2015
SACB JV gas – 2015 • Following a period of concentrated infill drilling, 2015 program will be more For personal use only geographically widespread • Mudera and Marabooka to focus on shallower Coorikiana sands, with lower drilling costs 43
Slide 44: SWQ JVs – 2015
SWQ JVs – 2015 • 2015 program to focus on northern fields, with appraisal and exploration drilling For personal use only • Significant development and appraisal/exploration at Whanto • Additional pipeline investment under consideration to deliver gas to market 44
Slide 45: Recent SACB JV unconventional results
Recent SACB JV unconventional results For personal use only Testing the western margins of the Nappamerri Trough Well Name Stabilised Status Flow Rate Gaschnitz-1 ST1 ~0.6 MMscfd Shut-in Drilled, awaiting Gaschnitz-4 N/A fracture stimulation Gooranie-6 0.8 Online Langmuir-1 1.0 Shut-in Moomba-193H 1
Slide 46: SACB JV unconventional – 2015
SACB JV unconventional – 2015 For personal use only The program is likely to include: • Deep coal fracture stimulation stages in conventional gas development wells wherever deemed commercial; • Drilling a follow up well in the vicinity of Moomba-194 to address multiple stacked unconventional targets
Slide 47: Cooper Basin – Oil and wet gas
For personal use only Cooper Basin – Oil and wet gas Mike Dodd – General Manager Exploration and Development 47
Slide 48: Multi-play Cooper Basin acreage
Multi-play Cooper Basin acreage For personal use only Australia’s most prolific onshore hydrocarbon basin 48
Slide 49: New oil fields coming on-line
New oil fields coming on-line For personal use only PEL 91 • New pipelines from CKS, Stunsail and Pennington facilities feeding in to new hub • Hub to be gateway for transportation of oil through single pipeline to Bauer • CKS on-line in October 2014 • Balgowan field to tie-in to Stunsail facility –
Slide 50: Bauer well pad development
PEL 91 - Bauer well pad development For personal use only • Bauer-16 to -19 development well pad drilling underway • Initial 12¼” surface hole drilled for each, after which each drilled to total depth • Directional drilling from ~1,200 metres depth • Time and cost savings already achieved – Sideways
Slide 51: Exploration success continues
Exploration success continues For personal use only • Namur play fairway extended to the northeast with discoveries at Stunsail-1, Balgowan-1, Burners-1 and Martlet-1 • Planning underway to further appraise Bauer, Chiton, Stunsail, Pennington, Hanson, Spitfire and Martlet • New focus on untapped pot
Slide 52: Solidus 3D seismic survey
PEL 91 - Solidus 3D seismic survey For personal use only New 3D seismic survey expected to add up to 50 prospects and leads • 492 km2 acquisition area • Line preparation completed • Recording ~90% complete • Focusing on prospective acreage to the north of Bauer • Non-traditional PEL 91 formations to
Slide 53: Namur Sandstone oil play
Namur Sandstone oil play For personal use only • Numerous Namur oil prospects defined from 3D seismic data • Play extended to PEL 104/111 with success at Martlet-1 • Up to four PEL 91 exploration wells targeting Namur prospects in Q3 FY15 • Production facility at Stunsail designed to accommodate fur
Slide 54: Birkhead Formation oil play
Birkhead Formation oil play For personal use only • Birkhead fields in PEL 104 and PEL 111 include: – Growler and Spitfire (PEL 104); and – Snatcher and Mustang (PEL 111) • Birkhead oil discoveries in PEL 91 include: – Bauer-5, Stunsail-1 and Pennington North-1 • Inversion of 3D seismic data has pro
Slide 55: Operated gas and gas liquids
Operated gas and gas liquids For personal use only PEL 106 • Beach 50% and operator, Drillsearch 50% • Canunda-2 appraisal well cased and suspended • Gas sales agreement with SACB JV to March 2016 • Maupertuis-1 drilling ahead, two further exploration wells in FY15 • Potential compression at Middlet
Slide 56: Cooper Basin Eastern Flank
Cooper Basin Eastern Flank For personal use only 56
Slide 57: Eastern Flank – Drillsearch farm-in
Eastern Flank – ATP 924 For personal use only • Farming-in 45% with Drillsearch • Permit area ~2,300 km2 and located between the Inland and Cook oil fields • Agreement to drill up to two wells and acquire 150 km2 of 3D seismic • Targeting Jurassic oil and Permian gas reservoirs on large structural r
Slide 58: Eastern Flank – Bengal Energy farm-in
Eastern Flank – ATP 732 For personal use only • Farming-in 50% with Bengal Energy • 306 km2 Nassarius 3D acquired in 2014 in the north of the permit • Seismic processing ongoing – Excellent data quality • Targeting Birkhead/Hutton reservoirs beneath meteorite disturbance • One well planned in Q4 FY1
Slide 59: PEL 94 and PEL 95
PEL 94 and PEL 95 For personal use only • PEL 94 – Beach 50% and operator, Strike 35%, Senex 15% • PEL 95 – Beach 50% and operator, Strike 50% • Targeting deep coals at 1,500 metres – 2,000 metres depth in PEL 94 • Well costs of ~$3 million • Davenport-1 exploration gas well: – Fracture stimulated o
Slide 60: Cooper Basin – Nappamerri Trough Natural Gas
For personal use only Cooper Basin – Nappamerri Trough Natural Gas Carrie Trembath – Senior Geologist 60
Slide 61: Nappamerri Trough Natural Gas
Nappamerri Trough Natural Gas For personal use only • Permian section equity interests: – PRLs 33 to 49 (Beach 70% and operator, Chevron 30%) – ATP 855 (Beach 46.9% and operator, Chevron 18%, Icon Energy 35.1%) • Aerially extensive with permits covering more than 800,000 acres • In excess of 1,000 m
Slide 62: Stage exploration wells
Stage 1 exploration wells For personal use only Wells strategically located to delineate acreage for retention and exploration purposes 62
Slide 63: Learning curve
Learning curve For personal use only Knowledge from exploration phase has delivered an understanding of lithology across the Nappamerri Trough; able to fracture stimulate and flow gas from target zones 63
Slide 64: Stage exploration phase objectives
Stage 1 exploration phase objectives For personal use only 1. Geographically and vertically delineate target zones Identify and prioritise play types for future appraisal 2. activities Test various fracture stimulation techniques and 3. technologies for optimal design 4. Flow gas and test deli
Slide 65: 1. Geographical and vertical delineation
1. Geographical and vertical delineation For personal use only 65
Slide 66: 2. Identify and prioritise play types
2. Identify and prioritise play types For personal use only Basin Centred Gas Play Exploration phase has identified priority sub-plays in the Nappamerri Trough Unique Enhanced Natural Mixed Stratigraphy Porosity Fractures Lithology Identification of critical sub-plays has paved the way for future ap
Slide 67: 2. Identify and prioritise play types – Unique Stratigraphy
2. Identify and prioritise play types For personal use only Unique Stratigraphy • Intersected stratigraphic sections in the Nappamerri Trough not seen elsewhere in the Cooper Basin • Thick sand packages in Daralingie to be further appraised • Daralingie sand packages productive when tested to date •
Slide 68: 2. Identify and prioritise play types – Enhanced Porosity
2. Identify and prioritise play types For personal use only Enhanced Porosity • Dissolved rock matrix in certain high maturity areas have caused large gas filled pores • Large pores, or secondary porosity, increase gas storage potential • Secondary porosity increases the sandstone permeability, resu
Slide 69: 2. Natural Fractures and Mixed Lithology
2. Identify and prioritise play types For personal use only Natural Fractures Mixed Lithology • Identified in the Nappamerri Trough • All lithology types within the using image logs Nappamerri Trough are gas saturated • Enhance permeability and increase • Multiple options for well design and induced
Slide 70: 3. Fracture stimulation optimisation
3. Fracture stimulation optimisation For personal use only • Learnings from previous fracture stimulations leveraged in the current ATP 855 campaign • Experimentation with: – Fluid types (X-linked vs Linear); – Fluid viscosity; – Proppant concentration; – Proppant hardness and size; and – Perforatio
Slide 71: 3. Fracture stimulation optimisation
3. Fracture stimulation optimisation For personal use only Microseismic testing has improved understanding for stimulation design • Technology successfully implemented to gain information about: – Fracture height; – Fracture half length; – Fracture complexity ; and – Reservoir response to different
Slide 72: 3. Fracture stimulation optimisation
3. Fracture stimulation optimisation For personal use only Record events Locate events using Process data to gain Map and plan view of the velocity model information about location, magnitude and fracture orientation focal mechanism of events Microseismic results are integrated with all other subsur
Slide 73: 4. Flow gas and test deliverability
4. Flow gas and test deliverability For personal use only Gas produced to surface from targeted well locations in the NTNG permits 73
Slide 74: 4. Flow gas and test deliverability
4. Flow gas and test deliverability For personal use only Areas of focus identified, with potential for discovery of additional play types 74
Slide 75: 5. Increase 2C contingent resources
5. Increase 2C contingent resources For personal use only 75
Slide 76: 5. Increase 2C contingent resources
5. Increase 2C contingent resources For personal use only 76
Slide 77: Operational update
Operational update For personal use only • Hervey-1 fracture stimulated in September 2014 over five stages – Patchawarra: one stage; Daralingie: one stage; Toolachee: three stages – Flowed gas at 0.4 MMscfd at 50 psi wellhead pressure and 40/64” choke – Surface microseismic acquired • Etty-1 fractur
Slide 78: Operational update
Operational update For personal use only • Redland-1 fracture stimulated in October- November 2014 over four stages – Daralingie: one stage attempted (high pressures and low injectivity); Toolachee: three stages – Surface microseismic acquired – Currently snubbing to complete well • Geoffrey-1 fract
Slide 79: Future direction
Future direction For personal use only Stage 1 Stage 2 Static Rock Dynamic Rock Optimisation Properties Behaviour Data collection from Technology underpins Solid foundation for multiple sources: rock behaviour next phase of appraisal - Drilling analysis: activities: - Coring - Fracture stimulation -
Slide 80: Appendices
For personal use only Appendices 80
Slide 81: Reserves and contingent resources
Reserves and contingent resources For personal use only 2P: 86 MMboe 2P and 2C: 552 MMboe Unconventional Gas and gas liquids Gas and gas liquids 67 MMboe 362 MMboe 2P reserves 86 MMboe Oil 19 MMbbl Conventional Gas and gas liquids 92 MMboe Oil 12 MMbbl Large reserves and resources base supporting fu
Slide 82: FY15 capital expenditure guidance
FY15 capital expenditure guidance For personal use only Capex 3D Seismic Wells ($ million) (km2) DEVELOPMENT Cooper Basin – non-SACB/SWQ JVs 55 – 60 10 – 13 – Cooper Basin – SACB/SWQ JVs 270 – 300 70-80 – International 10 3 – Total Development 335 – 370 Up to 96 – EXPLORATION Cooper Basin – non-SACB
Slide 83: Contact Information
Contact Information For personal use only Head office 25 Conyngham Street Glenside SA 5065 Tel: +61 8 8338 2833 Fax: +61 8 8338 2336 Website: www.beachenergy.com.au Chris Jamieson General Manager Investor Relations Email: chris.jamieson@beachenergy.com.au Derek Piper Investor Relations Manager Email