Slide 1: Beach Energy FY18 full year results
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 release 20 August 2018 Ref: #040/18 Beach Energy FY18 full year results Beach has t
Slide 2: ASX release | Beach Energy FY18 full year results
ASX release | Beach Energy FY18 full year results Increased capital expenditure is reflective of the attractive organic growth opportunities of the enlarged asset portfolio. FY19 production volume expected to be in the range of 26.0 – 28.0 MMboe. Beach’s FY18 full year results have capped off a
Slide 3: FY18 Full Year Results
BEACH ENERGY LIMITED FY18 FULL YEAR RESULTS 20 August 2018
Slide 4: Compliance statements
Compliance statements Disclaimer Reserves disclosure This presentation contains forward looking statements that are subject to risk factors associated with Beach prepares its petroleum reserves and contingent resources estimates in accordance with the oil, gas and related businesses. It is believed
Slide 5: Overview
FY18 FULL YEAR RESULTS Overview Matt Kay, Chief Executive Officer 3
Slide 6: A transformational year
A transformational year Transformational Lattice acquisition Excellent FY18 operational performance Integration almost complete and done safely 96 wells drilled at a success rate of 82% Synergy and efficiency target increased to $60 million p.a Annual production of 19.0 MMboe, up 80% Mater
Slide 7: FY18: Delivering on our strategic objectives
FY18: Delivering on our strategic objectives To deliver sustainable growth in shareholder value Cooper Basin production increased to 12.3 MMboe Supply ~ 15% of east coast domestic gas demand OPTIMISE Cooper Basin 2P oil and gas reserves increased 71% GROW EAST Lattice acquisition adds expand
Slide 8: Health, Safety and the Environment
Health, Safety and the Environment Strong safety and environmental performance a key priority Safety Performance1 Environmental Performance1 LTIFR2 Crude Spill Volumes (kl) Total Spills 6 19% 51.9 99% 67% 5.4 Reduction in 37 LTIFR2 since FY13 9.6 25 23 25 1.6 1.8 0.2 0.1 0 FY15 FY16 FY17 FY18 FY13 F
Slide 9: Integration proceeding according to plan
Integration proceeding according to plan Synergy and operating efficiency target increased $ million Better than expected efficiency opportunities Phase 1 and phase 2 operating efficiencies Lower head count, reduce office costs, better integration benefits 10 ~60 Additional corporate Realised
Slide 10: Transformed Beach Energy portfolio
Transformed Beach Energy portfolio Expanded footprint with five production hubs and significant gas processing infrastructure FY18 Pro Forma Production1 Bass Basin Cooper Basin Taranaki Basin 26.8 MMboe Otway Basin Perth Basin • Beach operates ~70% of production FY18 2P Reserves2 Bass Basin Cooper T
Slide 11: Financial Update
FY18 FULL YEAR RESULTS Financial Update Morné Engelbrecht, Chief Financial Officer 9
Slide 12: FY18 financial results
FY18 financial results1 $ million FY17 FY18 Change Underlying NPAT recognises: Production (MMboe) 10.6 19.0 80% – 70% increase in sales volumes Sales volumes (MMboe) 11.8 20.1 70% – 36% increase in average realised oil price Average realised oil price ($/bbl) 68.8 93.4 36% – 92% increase in sales
Slide 13: Financial headlines
Financial headlines1 Strong operating performance drives FY18 Operating Cash Flow ($m) Operating cash flow Underlying NPAT2 Underlying NPAT ($m) +86% Step change from new +108% Cash taxes commenced in asset base FY18 Higher realised prices Expect 30% effective tax rate Maintaining cost dis
Slide 14: Underlying NPAT drivers
Underlying NPAT drivers1 $ million Movement in underlying NPAT1 Underlying NPAT up 86% to 800 $302 million 3 21 39 Other 20 – 70% increase in sales Gas and ethane Net financing price costs 115 volumes FX rates 600 207 $/GJ FY17 $6.07 A$/US$ FY17 $0.755 Tax – 36% increase in average FY18 $6.57 FY18
Slide 15: Net debt reduced to $639 million
Net debt reduced to $639 million On track to reach improved net gearing target of 20% by end of FY19 $ million Movement in net (cash) / net debt1 Net debt reduced from $860 million at the close of Lattice acquisition on 31 January 2018 to 42 22 $639 million at 30 June 2018 Liquidity $761 million
Slide 16: FY19 Capital Management Framework Focus
FY19 Capital Management Framework Focus Adhere to company’s capital management framework in FY19 Capital Disciplined Operational Reduction of debt Management re-investment efficiencies Flexible capital Optimising Target net gearing management Invest $460 – 540 operational and below 20% by end framew
Slide 17: FY19 capital expenditure guidance
FY19 capital expenditure guidance FY19 capital expenditure split FY19 capital expenditure guidance: $460 - 540 million ~80% of expenditure is discretionary 19% 28% FY19 capital expenditure by asset group ~35% of discretionary expenditure to be spent on exploration/appraisal activities 3% Mor
Slide 18: FY19 production guidance
FY19 production guidance Production (MMboe) FY19 production guidance: 26.0 – 28.0 MMboe 26.0 - 28.0 – Mid-point is 42% higher than FY18 reported production 26.8 – Offsetting decline against FY17 production 19.0 FY19 product split (gas/gas liquids/oil) is expected to be broadly 17.1 16.6 – 17.6 u
Slide 19: FY19 Overview
FY18 FULL YEAR RESULTS FY19 Overview Matt Kay, Chief Executive Officer 17
Slide 20: Time is right to accelerate organic growth
Time is right to accelerate organic growth Beach to increase expenditure on highly value accretive growth portfolio Beach has a high quality portfolio of investment opportunities Over two thirds of all discretionary investment to generate IRR > 40%1 Over two thirds of oil discretionary investm
Slide 21: FY19: Delivering on our strategic objectives
FY19: Delivering on our strategic objectives To deliver sustainable growth in shareholder value Achieve best in class HSE performance Commence drilling Black Watch development well OPTIMISE Participate in up to 87 wells in Cooper Basin JV GROW EAST Prepare for Enterprise and Artisan explorat
Slide 22: Cooper Basin JV
Cooper Basin JV Increased drilling activity to target reserves, production growth FY19 Objectives Gas production – target increased production rates Oil production – increase oil production via development drilling and evaluate new horizontal drilling opportunities FY19 Activities Participatio
Slide 23: Western Flank Oil and Gas
Western Flank Oil and Gas Core asset with significant contribution to revenue FY19 Objectives Continuous focus on drilling efficiency Test lateral extent of Bauer field Expand use of horizontal drilling FY19 Activities Participation in up to 43 wells (8 gas, 35 oil), a 65% increase on FY18
Slide 24: Victorian Assets
Victorian Assets Key assets supplying Australian east coast domestic market FY19 Objectives Maximise production at BassGas and Otway Gas Project Re-initiating development and exploration activity in the Otway Basin Potential sale of ~30% interest in Otway permits FY19 Activities Drill Black
Slide 25: Perth Basin
Perth Basin Building foundations for a material west coast gas business FY19 objectives and activities Waitsia is a high quality, low cost gas resource, and is economic at current market prices Multiple commercialisation options being evaluated with operator Mitsui, making good progress Focus
Slide 26: New Zealand
New Zealand High performing asset with additional development opportunity FY19 objectives Maximise production, specifically liquids Reduce direct operating costs Optimise free cash flow FY19 Key activities FEED entry on Kupe Compression Project Evaluate further infill drilling / appraisal
Slide 27: Ready to accelerate organic growth
Ready to accelerate organic growth Financial position Net debt well ahead of initial target Opportunity Set Portfolio of highly accretive organic growth opportunities Investment growth Disciplined acceleration in discretionary growth ($460 – 540 million) Production growth Investment to drive medium
Slide 28: Q&A
FY18 FULL YEAR RESULTS Q&A 26
Slide 29: Appendices
FY18 FULL YEAR RESULTS Appendices 27
Slide 30: Strong drilling success achieved in FY18
Strong drilling success achieved in FY18 Increasing focus on horizontal wells Strong drilling performance in FY18 with 96 wells drilled Drilling Results at an 82% success rate1 Success Basin Category Wells Successes Drilling successes included: Rate Oil – Exploration 6 3 50% – Bauer-26 (ex PEL 9
Slide 31: FY19 drilling program
FY19 drilling program Increasing focus on horizontal wells Drilling program expanded across the portfolio with more rigs and more wells FY19 expected participation(number of wells) Beach to participate in up to 133 wells Gas Oil Total – Up to 69 development wells and up to 64 exploration / appra
Slide 32: Cooper Basin JV
Cooper Basin JV Continues to deliver Cooper Basin JV FY171 FY181 Production 4.4 MMboe 5.9 MMboe Sales revenue2 $350 million $557 million Operating costs3 $103 million $128 million Free cash flow4 $107 million $126 million Capital expenditure $54 million $110 million FY18 Activity Increased ownersh
Slide 33: Western Flank Oil and Gas
Western Flank Oil and Gas Core asset with significant contribution to revenue Western Flank Oil and Gas FY171 FY181 Production Oil 4.8 MMboe 4.7 MMboe Gas and gas liquids 1.0 MMboe 1.4 MMboe Total 5.8 MMboe 6.1 MMboe Sales revenue2 $363 million $535 million Operating costs3 $135 million $178 million
Slide 34: Victorian Assets
Victorian Assets Key assets supplying Australian east coast domestic market Victorian Assets FY181 Production 4.8 MMboe Sales revenue2 $208 million Operating costs3 $66 million Free cash flow4 $153 million Capital expenditure $4 million FY18 Activity Beach acquired 100% of Halladale, Black Watch,
Slide 35: South Australian Otway Basin
South Australian Otway Basin Haselgrove appraisal and Dombey-1 exploration drilling in FY19 FY19 Activities Drill Haselgrove-4 to appraise the Haselgrove Field Drill exploration well Dombey-1 (Beach 70% and operator) Sanction Haselgrove development project in FY19 with first gas targeted for F
Slide 36: Frontier Exploration
Frontier Exploration High impact exploration targets in portfolio Bonaparte Basin Acreage position in two distinct play fairways Key Prospects: WA-454-P / Breakwater and Regatta North NT/P84 / Gulpener and Corona NT/P85 / Ines Continue evaluation in FY19 Canterbury Basin Key Prospects: PEP 5
Slide 37: Eastern Australia
Eastern Australia GSAs provide ongoing exposure to an attractive long-term pricing outlook Current east Re-contracted / re-priced volumes Majority of existing East Coast volumes coast volumes re-priced or re-contracted by end 2021 Annual step-ups and CPI adjustments of Lattice contracts continue
Slide 38: East Coast gas market dynamics supports increased investment
East Coast gas market dynamics supports increased investment Southern gas market requires diverted LNG or LNG imports to meet demand Status of Reserves and Resources to meet domestic demand 2019-2038 East Coast gas market now servicing both domestic and LNG demand requirements AEMO forecast of a
Slide 39: Production by segment
Production by segment Production by asset group and segment (MMboe) FY17 FY18 H1 FY18 FY18 Year-on-year change Reported Beach Reported Beach Reported Lattice1 Pro Forma (%) Western Flank Oil 4.8 4.7 - 4.7 (1%) Western Flank Gas 1.0 1.4 - 1.4 46% Cooper Basin JV 4.4 5.9 1.4 7.3 64% Other Cooper Basin
Slide 40: Production by product
Production by product Production by Product (MMboe) FY17 FY18 H1 FY18 FY18 Year-on-year Reported Beach Reported Beach Reported Lattice1 Pro Forma change (%) Oil 5.7 5.7 0.1 5.8 2% Sales gas and ethane 4.0 10.7 6.4 17.1 332% LPG 0.4 1.3 0.6 1.9 330% Condensate 0.4 1.2 0.7 1.9 362% Total gas and gas l
Slide 41: Sales volumes and unit pricing
Sales volumes and unit pricing Reported sales volumes H1 FY18 H2 FY18 FY18 Oil (MMbbl) 2.9 3.5 6.4 Sales gas and ethane (PJ) 12.3 51.1 63.4 LPG (kt) 39 111 150 Condensate (MMbbl) 0.4 1.3 1.7 Total sales volumes (MMboe) 5.7 14.4 20.1 Average realised unit prices1 H1 FY18 H2 FY18 FY18 Oil ($/bbl) 87.5
Slide 42: Current oil hedging position
Current oil hedging position 3-way Collar 3-way Collar 3-way Collar 3-way Collar Total Hedged $40 – 90 –105 $40 – 90 – 100 $40 – 103 – 113 $55 – 100 – 110 Volumes (bbl) per bbl per bbl per bbl per bbl FY19 285,000 577,500 630,000 3,435,000 4,927,500 Total 285,000 577,500 630,000 3,435,000 4,927,500
Slide 43: FY18 reserves and resources summary
FY18 reserves and resources summary Reserves and contingent resources (net) 1P 2P 3P 2C Oil (MMbbl) 25 42 73 31 Gas and gas liquids (MMboe) 165 272 418 176 Total as at 30 June 2018 (MMboe) 190 313 491 207 Total as at 30 June 2017 38 75 138 153 Increase / (decrease) 405% 320% 255% 35% Developed and u
Slide 44: Reconciliation of NPAT to Underlying NPAT
Reconciliation of NPAT to Underlying NPAT1 Comparison of Underlying Profit ($ million) FY17 FY18 Change Net profit / (loss) after tax 388 199 (189) (49%) Acquisition, integration and debt cancellation costs - 51 51 Gain on asset sales (52) (5) 47 Unrealised hedging movements 4 13 10 Gain on settleme
Slide 45: Underlying EBITDAX, EBITDA, EBIT, NPBT and NPAT
Underlying EBITDAX, EBITDA, EBIT, NPBT and NPAT1 Comparison of Underlying EBITDAX, EBITDA, EBIT, NPBT ($ million) FY17 FY18 Change Underlying EBITDAX 347 766 419 121% Exploration expense - - Underlying EBITDA 347 766 419 121% Depreciation and amortisation2 (172) (315) Underlying EBIT 175 451 276 158
Slide 46: Beach Energy Limited Investor Relations
FY18 FULL YEAR RESULTS 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