Slide 1: FY16 Preliminary Full Year Results, FY17 Outlook
FY16 Preliminary Full Year Results FY17 Outlook 29 August 2016
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: FY16 Overview
FY16 Overview Matt Kay – Chief Executive Officer
Slide 4: A compelling value proposition
A compelling value proposition Profitable and net debt free: Cash flow breakeven of US$26/bbl; dividend payable Leveraged to oil price recovery: +US$10/bbl = +$50m NPAT and +A$65m cash flow Cost savings progressing: Material savings delivered at Beach and SACB joint venture Active E&D progra
Slide 5: Strong progress across all strategic pillars
Strong progress across all strategic pillars Optimise our core in the Cooper Basin Maintain financial strength Drillsearch merger and integration Net debt free 26% operated field cost reduction 40% corporate cost savings 90% drilling success rate $28 million net cash generated Continue
Slide 6: Record production and reduced costs
Record production and reduced costs • Continued safety standard improvements Record Production Western Flank Opex +6% • Record production of 9.7 MMboe, up 6% -26% • 90% drilling success rate from 51 wells 9.1 9.7 $4.90 • Field operating cost reductions MMboe MMboe /boe $3.60 /boe – Operated Western
Slide 7: Merger synergies of $40 million p.a.
Merger synergies of $40 million p.a. • Drillsearch merger complete Enlarged gas and gas liquids footprint • 100% ownership of core Western Flank assets (ex PEL 91 and 106) • Elimination of duplicated costs • $40 million of pre-tax annual cost savings • Strengthened free cash generation • Seamless in
Slide 8: Strong financial performance
Strong financial performance Sales Revenue Underlying NPAT Operating Cash Flow 1,200 140 270 140 600 140 800 180 400 70 70 70 400 90 200 558 233 36 0 0 0 0 0 0 FY122012 2011 FY132013 FY142014 FY152015 FY16 FY122012 2011 FY132013 FY142014 FY152015 FY16 FY122012 2011 FY132013 FY142014 FY152015 FY16 LH
Slide 9: Financial
Financial Peter Sandery – Acting Chief Financial Officer
Slide 10: Robust financial results year-on-year
Robust financial results year-on-year $ million FY15 FY16 Change Sales volumes (MMboe) 10.5 10.8 3% Sales revenue 727.7 558.0 (23%) Operating cash flow 228.5 233.4 2% Net profit / (loss) after tax (514.1) (588.8) (15%) Underlying NPAT1 90.7 35.7 (61%) Cash balance 170.2 199.1 17% Net debt / (cash) t
Slide 11: Sales revenue movement
Sales revenue movement $ million 1,000 45.7 10.8 64.2 800 50.3 212.3 727.7 Gas / ethane FX rates prices Third party Volume / sales 600 mix A$/US$ $/GJ 558.0 FY15 0.837 FY15 $5.68 FY16 0.728 FY16 $6.01 Oil and 400 liquids prices 23% US$/boe FY15 US$74 FY16 US$44 200 $169.7 million total decrease 0 FY
Slide 12: Comparison of NPAT with underlying NPAT
Comparison of NPAT with underlying NPAT FY15 FY16 $ million $ million NPAT (514.1) (588.8) Adjusted for: Mark-to-market of convertible notes derivative (13.3) – Merger costs – 7.7 Unrealised hedging losses – 15.4 Provision for non recovery of international taxes – 7.5 Impairment of assets 789.11 634
Slide 13: Underlying NPAT despite oil price
Underlying NPAT despite oil price • Underlying NPAT down 61% to $36 million Underlying NPAT A$/bbl $ million Brent oil • Decline mainly due to impact on revenue 270 140 from lower realised oil prices – 33% reduction in average realised oil price 180 • Underlying NPAT supported by: 70 – Record produc
Slide 14: Robust financial position
Robust financial position • Further strengthening of financial position Operating Cash Flows A$/bbl $ million Brent oil due to: 600 140 – Capital expenditure reduction to $184 million (FY15: $416 million) – Cost savings achieved across the business 400 – Cash flow breakeven down 60% to A$35/bbl (US$
Slide 15: Operational
Operational Mike Dodd – Group Executive Exploration and Development
Slide 16: Record production delivered
Record production delivered • Record production of 9.7 MMboe Production (MMboe) – 53% oil; 47% gas and gas liquids 9.6 9.7 9.1 • Record operated oil production of 3.6 MMbbl 8.0 7.5 Gas* Gas* 4.4 4.5 • Higher portion of operated production (26 PJe) Gas* 4.5 (26 PJe) (26 PJe) – 41% of total production
Slide 17: Increased operated oil exposure
Increased operated oil exposure Area FY15 FY16 Change Cooper / Eromanga basins 4,490 5,028 12% Oil (kbbl) Egypt 132 141 7% Total oil 4,622 5,169 12% Cooper Basin 22.1 21.8 (1%) Sales gas and ethane (PJ) Egypt 0.1 0.3 365% LPG (kt) Cooper Basin 44.3 43.9 (1%) Condensate (kbbl) Cooper Basin 361 353 (2
Slide 18: 90% drilling success rate
90% drilling success rate • 90% drilling success rate from 51 wells High drilling success rates in FY16 • Five new field discoveries in Windorah Wells Successful Wells Trough (SWQ JV) Area Category Drilled / Rate • Field extensions in Durham Downs and Oil exploration 3 1 33% Coolah complexes (SWQ JV
Slide 19: Reserves and contingent resources
Reserves and contingent resources1 2P: 70 MMboe 2P and 2C: 275 MMboe Unconventional Gas and gas liquids 2C gas and gas liquids 47 MMboe 92 MMboe Conventional 2C gas/gas liquids 2P reserves 89 MMboe Oil 70 MMboe 23 MMbbl 2C Oil 25 MMbbl • Reduced contingent resources of operated unconventional gas ac
Slide 20: FY17 Outlook
FY17 Outlook Matt Kay – Chief Executive Officer Mike Dodd – Group Executive Exploration and Development
Slide 21: Significant east coast gas opportunity
Significant east coast gas opportunity • Structural change underway in the east East coast gas supply and demand 2015 – 2025 (PJ/a)1 coast gas market Supply Demand 2,000 • Increasing signs of gas supply / demand imbalances 1,500 • New discoveries required 1,000 • Beach well positioned 500 – Existing
Slide 22: Greater influence over SACB JV outcomes
Greater influence over SACB JV outcomes Recent Joint Venture Changes Benefits to Beach Not tied to joint venture partner • Separate lifting and marketing of commitments Gas lifting / marketing own equity molecules Ability to seek best price / terms for future surplus volumes • Commencement of Be
Slide 23: Leveraged to oil price recovery
Leveraged to oil price recovery • A leading Australian oil producer, with a Australian Oil Production – Last 12 Months major gas business 5.2 MMbbl • Oil-linked gas sales with other beneficial pricing parameters • Active Western Flank oil and gas Peer 1 Peer 2 Beach Peer 3 Peer 4 Peer 5 exploration
Slide 24: Cash flow breakeven reduced 60%
Cash flow breakeven reduced 60% A$ / bbl US$ / bbl FY16 90 60% 65% Cash flow 89 • Reduced cash flow breakeven from lower costs and breakeven1 74 35 26 greater control over SACB JV capital expenditure 0 FY15 FY16 FY15 FY16 • Broad range of operating cost savings achieved A$ / boe Operated 26% – Reneg
Slide 25: $40 million p.a. Drillsearch merger synergies
$40 million p.a. Drillsearch merger synergies Combined Beach and Drillsearch $ million Corporate Overheads • 57% reduction in combined Beach / 60 Drillsearch corporate overheads 57% reduction since FY15 – Duplicated corporate overheads 40% removed 40 24 reduction – Combined headcount reduction 15 of
Slide 26: Record production again from FY17 outlook
Record production again from FY17 outlook Expecting increased production of 9.7 – 10.3 MMboe ─ Another record year targeted in FY17 Active Western Flank exploration program to drive organic growth ─ New focus on play types with significant follow-on prospects Greater influence over SACB and SW
Slide 27: Mitigation of natural field decline
Mitigation of natural field decline Peak oil field decline in FY17 to be offset by merger benefits • 100% ownership of core and field development activities producing permits (ex PEL 91 and 106) Field Natural Drillsearch Egypt and • Bauer facility expansion to development field merger1 activities de
Slide 28: Developments will optimise production
Developments will optimise production Bauer Oil Facility Expansion Bauer facility expansion to 120,000 barrels of fluid Daily capacity per day (+60%) (kbfpd) 120 ─ Completion expected in Q3 FY17 120 60% increase in oil production Expansion to provide headroom for: 75 capacity post ─ Increasing w
Slide 29: Capital directed for greatest returns
Capital directed for greatest returns Rigorous capital allocation framework underpins all discretionary expenditure decisions $180 – 200 million $184 million Discretionary Expenditure: High-graded projects; NPV positive; near-term line of sight to financial return; capital allocation requirements me
Slide 30: Diverse play types will drive organic growth
Diverse play types will drive organic growth • High graded prospects to expand existing footprints • Up to 13 operated wells planned – Low risk development wells – Near-field exploration / extensions – New focus on Birkhead / Patchawarra play types • Material upside to size of prospects in event of
Slide 31: Growth via drilling of operated wells
Growth via drilling of 13 operated wells Permit Well Timing Target Rationale Hanson-4 Q1 Namur • Development well to support facility expansion Stunsail-3 Q1 Namur • Development well; part of low cost, full field development plan Osmanli-1 Q1 Namur • Near-field exploration on proven play trend Ex PE
Slide 32: Redefining Western Flank prospectivity
Redefining Western Flank prospectivity • Kangaroo-1 (Beach 100%) targeting stratigraphically trapped Birkhead oil – Drilling in Q1 FY17 • Analogous to nearby Birkhead discoveries at Spitfire and Growler fields • Birkhead oil successfully tested at Stanleys-1 and Stunsail-1 – Flow rates of up to 270
Slide 33: Non-core asset divestments to continue
Non-core asset divestments to continue Cooper Basin activity • Sale agreement for Kenmore-Bodalla operated oil interests – Mature fields and remote operations; operating costs were double those of Western Flank – Mitigated end of life liabilities • Withdrawal from ATP 732 farm-in agreement Other act
Slide 34: Disciplined approach to inorganic growth
Disciplined approach to inorganic growth • Clearly defined growth strategy underpinned by robust core base business Strategy • Demonstrated progress in FY16 via Drillsearch merger • Focussed on opportunities with similar risk profile to base business • Strict, revised capital allocation framework fo
Slide 35: A compelling value proposition
A compelling value proposition Profitable and net debt free: Cash flow breakeven of US$26/bbl; dividend payable Leveraged to oil price recovery: +US$10/bbl = +$50m NPAT and +A$65m cash flow Cost savings progressing: Material savings delivered at Beach and SACB joint venture Active E&D progra
Slide 36: Appendix
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Slide 37: FY17 capital expenditure program
FY17 capital expenditure program Capital Expenditure $ million Wells Key Projects Exp. App/Dev Western Flank Operated Oil • Solidus 3D inversion Ex PEL 91 25 – 30 5 2 • Bauer and Hanson facility expansions • Callawonga facility expansion Ex PEL 92 Up to 10 2 1 • Artificial lift Fixed Expenditure 10
Slide 38: Cooper Basin acreage
Cooper Basin acreage Western Flank Gas and Gas Liquids Ex PEL 106 (100%*) - Middleton facility Ex PEL 513 (40%) Ex PEL 101 (80%*) Greater Kenmore- Bodalla area oil assets2 Western Flank Oil Unconventional acreage1 Ex PEL 91 (100%*) Delhi – SACB and SWQ JVs - Bauer Field Oil and gas exploration and E
Slide 39: Contact information
Contact information Beach Energy Beach Energy Limited Limited 25 Conyngham 25 Conyngham Street Street Glenside SA Glenside SA 5065 5065 Tel: +61 Tel: +61 8 8 8338 8338 2833 2833 Fax: +61 Fax: +61 8 8 8338 8338 2336 2336 Website: www.beachenergy.com.au Website: www.beachenergy.com.au Investor Relatio