Beach Energy Limited · ASX:BPT
Beach Energy — Investor Day (September 2018)
103 slides from Beach Energy's investor day presentation, Sep 27, 2018
Slide 1: ASX release: Beach targets $2b free cash flow and 40 MMboe
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 27 September 2018 Ref: #045/18 Beach targets $2b free cash flow and 40 MMbo
Slide 2: ASX release contact details and highlights
ASX release | Beach Energy Investor Briefing A program of high return/low risk investment, with almost 90 per cent of capital being discretionary investment with two thirds targeting greater than 40% rate of return4 Close to zero net debt position by FY20, providing significant capital managemen
Slide 3: 2018 Investor Briefing
2018 INVESTOR BRIEFING Successful transition with strong growth platform Beach Energy Limited ABN20 007 617 969 September 2018 Investor Briefing 1
Slide 4: Compliance Statements
COMPLIANCE STATEMENTS Disclaimer Reserves disclosure This presentation contains forward looking statements that are subject to risk factors associated Beach prepares its petroleum reserves and contingent resources estimates in accordance with the with oil, gas and related businesses. It is believed
Slide 5: Contents
CONTENTS Introduction Matt Kay Chief Executive Officer Financial Strength & Discipline Morné Engelbrecht Chief Financial Officer Market Outlook Lee Marshall Group Executive - Corporate Strategy and Commercial Operational Excellence Dawn Summers Chief Operating Officer Morning Tea Break 10:20am – 10:
Slide 6: Introduction
INTRODUCTION Matt Kay, Chief Executive Officer Beach Energy Limited ABN 20 007 617 969 September 2018 Investor Briefing 4
Slide 7: Successful transition with strong growth platform
SUCCESSFUL TRANSITION WITH STRONG GROWTH PLATFORM • Low cost operator focussed on synergy and margin extraction • Clear strategy to increase shareholder value Financial Market • Five year targets: Strength and Access Discipline Production growing to 34 - 40 MMboe1 > 100% reserves replacement2 Op
Slide 8: Experienced executive team in place
EXPERIENCED EXECUTIVE TEAM IN PLACE Executive Role Name Commenced Experience Prior experience Chief Executive Officer Matt Kay May 2016 > 25 years Oil Search, Woodside, Santos Chief Financial Officer Morné Engelbrecht September 2016 > 18 years InterOil, Newcrest, PwC Chief Operating Officer Dawn Sum
Slide 9: Ready to unlock our reserves and cash flow potential
READY TO UNLOCK OUR RESERVES AND CASH FLOW POTENTIAL Disciplined discretionary …driving medium term …generating > $2.3 billion investment… production growth… of free cash flow over 5 yrs CAPITAL EXPENDITURE OUTLOOK1 PRODUCTION OUTLOOK1 FREE CASH FLOW OUTLOOK1 ($ MILLION) (MMBOE) ($ MILLION) Potentia
Slide 10: Beach Energy since 2016
BEACH ENERGY SINCE 2016 THE EMERGENCE OF A LEADING MID-CAP E&P COMPANY Drillsearch merger Cost and efficiency focus Lattice acquisition • 100% ownership in ex PEL 91 • Reduction in operating costs • Expansion to five production hubs and ex PEL 106 • Western Flank oil improvement • Offshore capabilit
Slide 11: Key takeaways from Investor Briefing
KEY TAKEAWAYS FROM INVESTOR BRIEFING A COMPELLING FIVE YEAR OUTLOOK Portfolio provides growth Production growing to 34 - 40 MMboe High return / low risk investment Over two thirds of discretionary investment > 40% IRR1 Profitability ROCE target 17 - 20% Free cash flow generation Target of >
Slide 12: Potential Victorian Otway farm down
POTENTIAL VICTORIAN OTWAY FARM DOWN PROCESS PROGRESSING Potential sale process underway to farm down a 30-40% interest in Victorian Otway Basin assets Assets in the sale process include an interest in all Otway assets and infrastructure: • Otway Gas Plant • Halladale / Speculant / Black Watch • Geog
Slide 13: FY19 guidance
FY19 GUIDANCE EBITDA GUIDANCE ADDED Only 7% of FY19 production is derived from FY19 Guidance capital expenditure. The majority of FY19 capex is driving medium term production growth FY19 production 26 – 28 MMboe • Net gearing expected to be < 20% by the FY19 capex $460 – 540 million end of CY18 (pri
Slide 14: Reserves exposed to high margin markets
RESERVES EXPOSED TO HIGH MARGIN MARKETS Beach 2P reserves Gas 2P reserves East Coast gas 2P reserves by location by sales agreement 19 128 15% 17 42 11% 313 419 1,374 PJ 827 PJ MMboe (236 MMboe) (142 MMboe) 5% 827 69% 236 Oil-linked GSA Origin GSA Oil Condensate LPG Gas East Coast West Coast New Zea
Slide 15: Beach to unlock reserves potential over next 5 years
BEACH TO UNLOCK RESERVES POTENTIAL OVER NEXT 5 YEARS Beach 2P reserves Undeveloped 2P reserves Production outlook (MMboe)1 45 Developed 16 16 40 Outlook 52% 12 35 Range 150 30 Undeveloped 2P reserves 313 + 2C contingent resources + MMboe 25 MMboe 57 risked exploration success 20 49 15 Undeveloped 10
Slide 16: Multiple avenues to replace or grow 2P reserves
MULTIPLE AVENUES TO REPLACE OR GROW 2P RESERVES • Western Flank Oil 3P 2P 2C 2P • Cooper Basin JV • Western Flank Gas Reserve Reserve Conversion Conversion > 100% reserve replacement target1 • Cooper Basin • Otway Basin Exploration Inorganic • Perth Basin Portfolio Growth • Continuous evaluation
Slide 17: Our vision, purpose and values
OUR VISION, PURPOSE AND VALUES Our vision We aim to be Australia’s premier multi-basin upstream oil and gas company Our purpose To deliver sustainable growth in shareholder value Our values Our values define us, guide our actions, our decisions and our words Safety Safety takes precedence in everyth
Slide 18: Key takeaways from Investor Briefing
KEY TAKEAWAYS FROM INVESTOR BRIEFING A COMPELLING FIVE YEAR OUTLOOK Portfolio provides growth Production growing to 34 - 40 MMboe High return / low risk investment Over two thirds of discretionary investment > 40% IRR Profitability ROCE target 17 - 20% Free cash flow generation Target of > $
Slide 19: Financial strength and discipline
FINANCIAL STRENGTH AND DISCIPLINE Morné Engelbrecht, Chief Financial Officer Beach Energy Limited A.B.N. 20 007 617 969 September 2018 Investor Briefing 17
Slide 20: Successful transition with strong growth platform
SUCCESSFUL TRANSITION WITH STRONG GROWTH PLATFORM • Low cost operator focussed on synergy and margin extraction • Clear strategy to increase shareholder value Financial Market • Five year targets: Strength and Access Discipline Production growing to 34 - 40 MMboe > 100% reserves replacement Oper
Slide 21: Financial strength and discipline: track record of delivery
FINANCIAL STRENGTH AND DISCIPLINE TRACK RECORD OF DELIVERY • Strong underlying EBITDA margin growth • Continuing growth in return on capital employed • Free cash flow growth and double digit free cash • 141% CAGR in underlying EPS from FY16 to flow yield FY18 • Prudent balance sheet management targe
Slide 22: Synergy and cost efficiency targets
SYNERGY AND COST EFFICIENCY TARGETS FOCUS TURNS TO DIRECT CONTROLLABLE OPERATING COSTS • Better than expected synergy and efficiency $ million Reduction in direct controllable opportunities have emerged post acquisition operating costs FY19-20 • Lower head count, reduce office costs, better integrat
Slide 23: Oil and gas project returns
FINANCIAL STRENGTH AND DISCIPLINE OIL AND GAS PROJECT RETURNS • > 67% all discretionary capex to Gas projects Oil projects generate IRR > 40%1 with remainder 15 15 > WACC Count of projects Count of projects 10 10 5 5 • > 67% of oil discretionary investment 0 0 to generate IRR > 100%1 Range of IRR ou
Slide 24: Ready to unlock our reserves and cash flow potential
READY TO UNLOCK OUR RESERVES AND CASH FLOW POTENTIAL Disciplined discretionary • Investment to unlock undeveloped …generating > $2.3 billion investment… 2P reserves of free cash flow over 5 yrs CAPITAL EXPENDITURE OUTLOOK1 FREE CASH FLOW OUTLOOK1 ($ MILLION) • Investment range drivers: Impact of ($
Slide 25: ROCE and net gearing outlook
ROCE AND NET GEARING OUTLOOK 5 year ROCE outlook (%)1 • ROCE improvement driven by highly 5 year net gearing accretive growth investment, oil outlook (%)1 25% prices and higher gas prices 35% Outlook excludes impact from any potential • Maintaining high ROCE requires 30% Otway farm down 20% active b
Slide 26: Commodity price exposure
FINANCIAL STRENGTH AND DISCIPLINE COMMODITY PRICE EXPOSURE • Low commodity price risk exposure with upside • Cashflow underpinned by strong long term gas contracts and repricing 18% 51% • > 60% of cashflow in FY19 from liquids exposure • Additional cashflow from potential Otway sell-down to further
Slide 27: Market fundamentals
MARKET FUNDAMENTALS Lee Marshall, Group Executive Strategy and Commercial Beach Energy Limited A.B.N. 20 007 617 969 September 2018 Investor Briefing 25
Slide 28: Successful transition with strong growth platform
SUCCESSFUL TRANSITION WITH STRONG GROWTH PLATFORM • Low cost operator focussed on synergy and margin extraction • Clear strategy to increase shareholder value Financial Market • Five year targets: Strength and Access Discipline Production growing to 34 - 40 MMboe > 100% reserves replacement Oper
Slide 29: Key commodity market exposure
KEY COMMODITY MARKET EXPOSURE BEACH EXPOSED TO FOUR KEY COMMODITY MARKETS Strong commodity market fundamentals, providing revenue portfolio diversity East Coast gas West Coast gas Global liquids New Zealand gas • 15% market • Stable, large • 67% of FY18 • Kupe supplies supply1 market revenue 14% of
Slide 30: East coast gas market
EAST COAST GAS MARKET SOUTHERN MARKETS INCREASINGLY RELIANT ON LNG SUPPLIES AEMO forecasts flat southern gas supply1 Daily South West Queensland pipeline flow2 300 Gas flow from Southern 200 states into Queensland Gas flow (TJ/d) 100 0 (100) (200) Gas flow from Queensland (300) into Southern states
Slide 31: East coast gas market: potential cost of imported LNG
EAST COAST GAS MARKET POTENTIAL COST OF IMPORTED LNG $11.50- Approximate cost (A$/GJ) of LNG into South Eastern Australia 15.75 from Asia based on range of recent spot prices GJ Henry Hub New Notional US$3.00/MMBtu Liquefaction $12.50 Approximate cost (A$/GJ) of LNG from Asia assuming long term US$2
Slide 32: East coast gas market: supplying the market is a strategic imperative
EAST COAST GAS MARKET SUPPLYING THE MARKET IS A STRATEGIC IMPERATIVE • Beach is a material owner of critical gas infrastructure • Three basins and infrastructure hubs supplying East Moomba Coast gas Gas Hub 33.4% • Estimated 15% domestic market share • Strong demand for Beach’s uncontracted sales ga
Slide 33: Exposure to east coast gas prices
EXPOSURE TO EAST COAST GAS PRICES AN ATTRACTIVE LONG-TERM PRICING OUTLOOK • Annual step-ups and CPI Current east Re-contracted / re-priced volumes adjustments of Lattice contracts coast volumes 100% • Majority of existing East Coast Beach volumes re-priced or average 80% > 80% of current re-contract
Slide 34: West coast gas market
WEST COAST GAS MARKET WAITSIA OPTIMALLY POSITIONED Short term: Waitsia ideally positioned to capture market: • WA domestic gas market expected to remain Low unit cost gas balanced Low complexity development Medium term: Fast project execution • Declining production and reduced North West Shelf
Slide 35: Global liquids market
GLOBAL LIQUIDS MARKET PREMIUM PRODUCTS A KEY REVENUE CONTRIBUTOR FY18 revenue by product • Second largest producer of • LPG produced from Cooper, Australian oil with 14.6% of Otway, Kupe and Bass production1 • Realised average price in line • 48% of FY18 revenue from with Saudi benchmark crude oil 6
Slide 36: Operational excellence
OPERATIONAL EXCELLENCE Dawn Summers, Chief Operating Officer Beach Energy Limited ABN 20 007 617 969 September 2018 Investor Briefing 34
Slide 37: Successful transition with strong growth platform
SUCCESSFUL TRANSITION WITH STRONG GROWTH PLATFORM • Low cost operator focussed on synergy and margin extraction • Clear strategy to increase shareholder value Financial Market • Five year targets: Strength and Access Discipline Production growing to 34 - 40 MMboe > 100% reserves replacement Oper
Slide 38: Operational excellence
OPERATIONAL EXCELLENCE DELIVERY OF VALUE THROUGH SAFE, RELIABLE AND EFFICIENT OPERATIONS HSE and Process and Performance People risk technology Beach Energy Limited ABN 20 007 617 969 September 2018 Investor Briefing 36
Slide 39: The Beach approach: low cost Cooper Basin operations
THE BEACH APPROACH TRACK RECORD OF LOW COST COOPER BASIN OPERATIONS Decades of Cooper Basin experience Cooper Basin operated performance Safe operation of over 130 oil and OIL FIELD OPERATING COSTS1 GAS FIELD OPERATING COSTS1 gas wells and multiple facilities 10 10 25 10 Operating cost ($ millio
Slide 40: Our top priority: safety and environmental performance
OUR TOP PRIORITY STRONG SAFETY AND ENVIRONMENTAL PERFORMANCE A KEY PRIORITY Safety performance1 Environmental performance1 LTIFR2 6 CRUDE SPILL VOLUMES (KL) TOTAL SPILLS 51.9 99% 32% 5.4 67% Reduction in LTIFR2 since FY13 9.6 37 25 23 25 1.6 1.8 0 0.2 0.1 FY13 FY14 FY15 FY16 FY17 FY18 FY15 FY16 FY17
Slide 41: Improving base production using best practice and technology
OPERATIONAL EXCELLENCE IMPROVING BASE PRODUCTION USING INDUSTRY BEST PRACTICE &TECHNOLOGY Productivity • Automation of steady state operations, efficient start-up and reduced downtime Advanced Process Control Secondary recovery • Advanced well completions and artificial lift in the Cooper Basin
Slide 42: Driving a sustainable reduction in direct operating costs
OPERATIONAL EXCELLENCE DRIVING A SUSTAINABLE REDUCTION IN DIRECT OPERATING COSTS Operating Cost • Drone technology - Offshore Platform Inspections Advanced • Advanced Digital Radiographic techniques - CUI inspections Inspection techniques • Optimising maintenance activity, frequencies, planning, t
Slide 43: Five year outlook: facility reliability
FIVE YEAR OUTLOOK – FACILITY RELIABILITY BUILDING A FOUNDATION FOR THE FUTURE Higher operated facility …will help Beach achieve …and generate higher reliability… our production targets… revenue and production FACILITY RELIABILITY1,2 PRODUCTION OUTLOOK1 • Beach is targeting 98% facility (MMBOE) 100%
Slide 44: Five year outlook: direct operating costs
FIVE YEAR OUTLOOK – DIRECT OPERATING COSTS BUILDING A FOUNDATION FOR THE FUTURE Beach is targeting > 20% reduction in …translating to > $30 million/annum saving direct controllable operating costs1… versus FY18 pro forma levels DIRECT CONTROLLABLE OPERATING COST 175 • Beach is targeting a > 20% redu
Slide 45: Operational excellence: key goals and targets
OPERATIONAL EXCELLENCE DELIVERY OF VALUE THROUGH SAFE, RELIABLE AND EFFICIENT OPERATIONS Our top priority is safety Continue to embed the Cooper Basin low cost operating model Deliver operational excellence Reliability Operating costs 98% reliability across all operating assets Sustainable red
Slide 46: Asset reviews
ASSET REVIEWS Beach Energy Limited ABN 20 007 617 969 September 2018 Investor Briefing 44
Slide 47: Successful transition with strong growth platform
SUCCESSFUL TRANSITION WITH STRONG GROWTH PLATFORM • Low cost operator focussed on synergy and margin extraction • Clear strategy to increase shareholder value Financial Market • Five year targets: Strength and Access Discipline Production growing to 34 - 40 MMboe > 100% reserves replacement Oper
Slide 48: Beach Energy portfolio
BEACH ENERGY PORTFOLIO EXPANDED FOOTPRINT WITH FIVE PRODUCTION HUBS AND SIGNIFICANT GAS PROCESSING INFRASTRUCTURE FY18 Pro forma production1 Bass Basin Cooper Taranaki Basin Basin 26.8 MMboe Otway Basin Perth Basin FY18 2P reserves Perth Basin Cooper Basin 313 MMboe Otway Basin Bass Taranaki 1. Pro
Slide 49: Cooper Basin JV
COOPER BASIN JV Geoff Barker, Group Executive Development Beach Energy Limited A.B.N. 20 007 617 969 September 2018 Investor Briefing 47
Slide 50: Cooper Basin JV
COOPER BASIN JV BEACH VARIOUS INTERESTS (MOST IN 30-40% RANGE), SANTOS OPERATOR • Cost reductions enable renewed focus on growth • Targeting steady to increasing production over the medium-long term (87 wells in FY19, up 36%) • Simplification of the JV from three to two partners • Review of existing
Slide 51: Cooper Basin JV: improving production costs and cycle times
COOPER BASIN JV IMPROVING PRODUCTION COSTS AND CYCLE TIMES • A 50% reduction in gas well drilling costs and 34% • A 40% reduction in drill cycle times since 2014 has improvement in unit production cost has led to a led to increased number of wells drilled per annum more efficient Cooper Basin JV and
Slide 52: Cooper Basin JV: Moomba South appraisal
COOPER BASIN JV MOOMBA SOUTH APPRAISAL • 2C 2P reserve conversion potential App F • Beach supporting Santos in appraising Patchawarra in Moomba South App I App B • Key uncertainties are reservoir App D thickness and deliverability 2 • Further calibration of geologic model 212 which predicts increa
Slide 53: Watkins/Watson North: new opportunities in an old field
COOPER BASIN JV WATKINS/WATSON NORTH – NEW OPPORTUNITIES IN AN OLD FIELD • Example of oil potential in CBJV and collaboration between JV partners • Field reviews in late 2017 identified immediate drilling opportunities in Watkins/Watson North • Net pay was 100% more than pre-drill expectations and a
Slide 54: Cooper Basin JV: efficiency has created a growth story
COOPER BASIN JV EFFICIENCY HAS CREATED A GROWTH STORY • Operator targeting steady to increasing Activities to enhance value 5 year contribution to Beach1 production levels for next decade • Increased drilling activity to 25-30% facilitate renewed focus on • Strong focus on controlling costs appraisa
Slide 55: Victorian Otway Basin
VICTORIAN OTWAY BASIN Geoff Barker, Group Executive Development Beach Energy Limited ABN 20 007 617 969 September 2018 Investor Briefing 53
Slide 56: Victorian Otway Basin: Beach 100% and operator
VICTORIAN OTWAY BASIN BEACH 100% AND OPERATOR • Liquids-rich, long-life asset with low risk 2P reserves by product exploration and development opportunities (MMboe) 5 6 • Multi-year, nine-well programme commencing in H2 FY19 with undeveloped reserves and exploration prospects 75 MMboe • 205 TJ/d Otw
Slide 57: Victorian Otway Basin: production
VICTORIAN OTWAY BASIN PRODUCTION • Nine drilling opportunities planned in the next four Otway Gas Plant production outlook1 years to keep the Otway Gas Plant as full as possible until FY26. Project life > 15 years • Start with lowest cost onshore-to-offshore, 60 Extended Reach Directional (ERD) well
Slide 58: Two extended reach directional wells to be drilled
VICTORIAN OTWAY BASIN TWO EXTENDED REACH DIRECTIONAL WELLS TO BE DRILLED FY19 TO FY20 • Two ERD wells drilled from onshore to offshore • Program starts with Blackwatch-1 development well in late FY19, followed by Enterprise-1 exploration well • ERD wells allow accelerated hook-up and early productio
Slide 59: Victorian Otway Basin: indicative timeline
VICTORIAN OTWAY 1 BASIN INDICATIVE TIMELINE • Phased development with high impact, FY19 FY20 FY21 FY22 low unit technical cost exploration/development up front Black Watch (development) • Early exposure to uncontracted gas with Enterprise low risk exploration success (exploration) • ERD wells, lower
Slide 60: Victorian Otway Basin: key asset with large contribution
VICTORIAN OTWAY BASIN KEY ASSET WITH LARGE CONTRIBUTION TO BEACH • Long-life asset Activities to enhance value 5 year contribution to Beach1 25-30% • Optimise rig contracting strategy • Investing capital in undeveloped to mitigate risk of future day rate reserves and low risk exploration inflation P
Slide 61: South Australian Otway Basin
SOUTH AUSTRALIAN OTWAY BASIN Geoff Barker, Group Executive Development Beach Energy Limited ABN 20 007 617 969 September 2018 Investor Briefing 59
Slide 62: South Australian Otway Basin: Beach interests
SOUTH AUSTRALIAN OTWAY BASIN BEACH INTERESTS 70 – 100% AND OPERATOR • Reinvigorated area of business with FY18 Haselgrove discovery (15 MMboe 2C contingent resource) • Attractive local gas market gas demand • Supported in part by state and federal grants • Key objective is conversion of the continge
Slide 63: South Australian Otway Basin: indicative timeline
SOUTH AUSTRALIAN 1 OTWAY BASIN INDICATIVE TIMELINE • Beach planning first gas to FY19 FY20 FY21 FY22 FY23 market by end of 2019 (H1 Katnook facility FY20) (design and build) • Katnook processing facility Dombey-1 concept select studies are (exploration) underway Haselgrove-4 (appraisal) • Haselgrove
Slide 64: Perth Basin
PERTH BASIN Geoff Barker, Group Executive Development Beach Energy Limited ABN 20 007 617 969 September 2018 Investor Briefing 62
Slide 65: Perth Basin: Waitsia and Beharra Springs
PERTH BASIN WAITSIA (BEACH 50%), BEHARRA SPRINGS (BEACH 67% AND OPERATOR) 2P reserves by product • Waitsia is a high quality, low cost (MMboe) gas resource 0 • Multiple commercialisation options 72 MMboe being evaluated with operator Mitsui 72 Gas Condensate • Working with Mitsui to deliver 2P devel
Slide 66: Waitsia gas commercialisation
PERTH BASIN WAITSIA GAS COMMERCIALISATION • Joint Venture is evaluating a number of commercialisation options, including: - existing gas customers - potential new domestic gas customers (including mining and petrochemical companies) - potential export opportunities • Targeting a development decision
Slide 67: Perth Basin: Kingia play opening
PERTH BASIN KINGIA PLAY OPENING Perth Basin gas discoveries over time1 • Waitsia appraisal result is a game changer for the Perth Basin 180 320 • Opened up the Kingia / High Cliff play, a Cumulative EUR (MMboe) new, deeper play with significant upside 120 potential EUR (MMboe) 160 • Multiple prospec
Slide 68: Beharra Springs Deep prospect
PERTH BASIN BEHARRA SPRINGS DEEP PROSPECT (BEACH 67% INTEREST) Multiple material deep pool tests and potential for stacked gas pools as seen at Waitsia Beach Energy Limited ABN 20 007 617 969 September 2018 Investor Briefing 66
Slide 69: Western Flank
WESTERN FLANK Jeffrey Schrull, Group Executive Exploration and Appraisal Beach Energy Limited ABN 20 007 617 969 September 2018 Investor Briefing 67
Slide 70: Western Flank Oil
WESTERN FLANK OIL BEACH OPERATED INTERESTS 75 - 100%, NON-OPERATED 40%, SENEX OPERATOR 2P reserves by product • Material part of Beach’s portfolio (MMboe) • Provides significant oil price exposure 34 MMboe • Value accretive near term development opportunities Oil - Material appraisal and development
Slide 71: Western Flank Oil: Bauer appraisal program
WESTERN FLANK OIL BAUER APPRAISAL PROGRAM • Bauer field limit appraisal and development in FY19 • Two vertical development wells to obtain critical data for modelling and four McKinlay horizontal wells for production • Four appraisal wells to test field limits • Follow up horizontal drilling to be p
Slide 72: Rollout the Bauer strategy across the Western Flank
WESTERN FLANK OIL ROLLOUT THE “BAUER STRATEGY” ACROSS THE WESTERN FLANK • Appraisal and development planning underway for multiple fields Kangaroo App planning underway • Significant upside in McKinlay, Namur and Birkhead Kalladeina/Congony reservoirs from this approach App/Dev planning underway Pen
Slide 73: Western Flank Oil: reserves growth has exceeded expectations
WESTERN FLANK OIL RESERVES GROWTH HAS EXCEEDED EXPECTATIONS • Western Flank 2P oil reserves: Beach Western Flank Oil 2P reserve life1 - More than doubled over the past 3 years 8 6 7.2 - Reserves life now > 7 years 5 Annual production (MMbbl) 2P oil reserves life (years) • 2P reserves increase underp
Slide 74: Application of horizontal well technology
WESTERN FLANK OIL APPLICATION OF HORIZONTAL WELL TECHNOLOGY • Strong economic metrics have always been a Comparison of vertical and horizontal wells1 competitive advantage for the Western Flank Oil assets 2,500 Actual Birkhead horizontal typewell Actual McKinlay horizontal typewell McKinlay horizont
Slide 75: Western Flank Oil: high margin asset with more to give
WESTERN FLANK OIL HIGH MARGIN ASSET WITH MORE TO GIVE • Significant contributor of free cash Activities to enhance value 5 year contribution to Beach1 flow due to high margin production 15-20% • Appraisal of lateral extent of Bauer and similar oil fields • Capital program is designed to fully PRODUC
Slide 76: Western Flank Gas
WESTERN FLANK GAS PRODUCING ASSETS EX PEL 106 AND EX PEL 91, BEACH 100% AND OPERATOR 2P reserves by product • A recent growth story (MMboe) 2 • Liquids rich gas play with access to East Coast gas market through 2 9 MMboe Moomba gas plant 6 • Asset spans development, Gas Condensate LPG appraisal and
Slide 77: Western Flank Gas: Middleton gas facility
WESTERN FLANK GAS MIDDLETON GAS FACILITY • Continued drilling success has allowed expansion from 25 to 40 MMscfd production capacity Middleton area raw gas rate1 50 'Loop' line installed Middleton compressors Installation of the ‘loop’ line from Middleton to Moonanga Middleton ~40mmscfd compression
Slide 78: Western Flank Gas: exploration and development
WESTERN FLANK GAS EXPLORATION AND DEVELOPMENT • Drilling program to support objective of long term stable production out of Middleton • Eight gas wells planned for FY19 (appraisal and exploration) - Appraisal to convert 3P reserves to 2P reserves • Future development drilling in the core Middleton,
Slide 79: Western Flank Gas: growth story
WESTERN FLANK GAS GROWTH STORY • Capital program designed to maintain Activities to enhance value 5 year contribution to Beach1 Middleton raw gas at 40MMscfd • Appraisal of existing gas 4-8% discoveries for 2P reserves upside • Key variables to outlook include: PRODUCTION • Prospects arising from th
Slide 80: Bass Basin
BASS BASIN Jeffrey Schrull, Group Executive Exploration and Appraisal Beach Energy Limited ABN 20 007 617 969 September 2018 Investor Briefing 78
Slide 81: Bass Basin
BASS BASIN BEACH 53.75% PRODUCING ASSETS, 50.25% NON-PRODUCING, BEACH OPERATED 2P reserves by product • BassGas is a mature asset (MMboe) servicing the east coast gas 1 market 1 9 MMboe • Beach objectives are to minimise operating costs, maximise 7 productivity and extend field life Gas Condensate L
Slide 82: New Zealand
NEW ZEALAND Jeffrey Schrull, Group Executive Exploration and Appraisal Beach Energy Limited ABN 20 007 617 969 September 2018 Investor Briefing 80
Slide 83: New Zealand: Kupe gas project
NEW ZEALAND – KUPE GAS PROJECT BEACH 50% AND OPERATOR 2P reserves by product • Stable, solid free cash flow (MMboe) generating asset 5 3 • Important to New Zealand gas and 30 MMboe LPG supply 22 • Low risk compression Gas Condensate LPG development project to maintain 2P developed / undeveloped medi
Slide 84: Kupe gas plant
NEW ZEALAND – KUPE GAS PROJECT KUPE GAS PLANT • Nameplate capacity of the plant is 77 TJ/day with Kupe sales gas production outlook1 (gross) excellent reliability (> 99%)2 25 • Gas exported via pipeline to North Island distribution network 20 15 • Condensate transported via road and shipped PJ inter
Slide 85: Kupe gas project: description of field
NEW ZEALAND – KUPE GAS PROJECT DESCRIPTION OF FIELD • Kupe developed by three wells • Valuable liquids-rich gas produced • Compression project working towards FID in early FY20 - Low risk, high value to extend production plateau and field life • Possible that no further wells required to drain the f
Slide 86: Kupe gas project: key group cash flow contributor
NEW ZEALAND – KUPE GAS PROJECT KEY GROUP CASH FLOW CONTRIBUTOR Activities to enhance value 5 year contribution to Beach1 • Expected to generate ~10% of Beach’s free cash flow over the next 5 years • Successful FEED and subsequent 5-10% execution of Kupe compression • Key variables to outlook include
Slide 87: Frontier exploration
FRONTIER EXPLORATION Jeffrey Schrull, Group Executive Exploration and Appraisal Beach Energy Limited ABN 20 007 617 969 September 2018 Investor Briefing 85
Slide 88: High impact exploration targets in portfolio
FRONTIER EXPLORATION HIGH IMPACT EXPLORATION TARGETS IN PORTFOLIO Carnarvon Basin • Key Prospect: WA-359-P / Ironbark Bonaparte Basin • Three exploration permits, two with Santos as JV partner • Gas-condensate-oil, multiple plays • Key Prospects: Breakwater, Marina Deep, Corona Canterbury Basin • Tw
Slide 89: Bonaparte Basin: Northern Area, Malita Graben
BONAPARTE BASIN NORTHERN AREA – MALITA GRABEN • Beach holds five permits in the Bonaparte Basin covering two main exploration play trends: - Northern Area - Malita Graben; and - Southern Area - Petrel Sub-Basin Northern Area – Malita Graben (Beach 50%, Santos 50% op) • Exploration permit close to ex
Slide 90: Bonaparte Basin: Southern Area, Petrel Sub-Basin
BONAPARTE BASIN SOUTHERN AREA – PETREL SUB-BASIN Southern Area – Petrel Sub-basin • Two large Beach-operated exploration permits; WA-454-P (100% Beach) and NT/P84 (Beach 50%, Santos 50%) • Features multiple prospects and leads • Gas, gas-liquids and oil potential close to existing infrastructure • F
Slide 91: Carnarvon Basin: Ironbark prospect
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) • Potential high-impact gas resource within tie-back distance to the NWS project. Targeting the deeper Mungaroo reservoirs, which are the primary reservoirs at Gorgon
Slide 92: Canterbury Basin: large prospective resource potential
CANTERBURY BASIN LARGE PROSPECTIVE RESOURCE POTENTIAL Canterbury Basin (Barque, Beach 50%; Wherry and Gondola, Beach 65%) Wherry prospect • Three multi-Tcf plus liquids prospects1 • Proven hydrocarbon system with high liquids content • Wherry is the likely first-drill prospect • Sits within Beach-op
Slide 93: Summary
SUMMARY Matt Kay, Chief Executive Officer Beach Energy Limited ABN 20 007 617 969 September 2018 Investor Briefing 91
Slide 94: Ready to unlock our reserves and cash flow potential
READY TO UNLOCK OUR RESERVES AND CASH FLOW POTENTIAL Disciplined discretionary Development priorities: Development capex investment… Cooper Basin and Victoria targeting east coast gas CAPITAL INVESTMENT SPLIT DEVELOPMENT CAPEX SPLIT BY DISCRETIONARY CAPEX SPLIT BY 5 YEAR OUTLOOK LOCATION – 5 YEAR OU
Slide 95: Investment and free cash flow outlook
INVESTMENT AND FREE CASH FLOW OUTLOOK Disciplined discretionary • Investment to unlock undeveloped …generating > $2.3 billion investment… 2P reserves of free cash flow over 5 yrs CAPITAL EXPENDITURE OUTLOOK1 FREE CASH FLOW OUTLOOK1 ($ MILLION) Potential Vic • Investment range drivers: Impact of ($ M
Slide 96: Investment to grow production
INVESTMENT TO GROW PRODUCTION Over two thirds of discretionary investment to 5 year production outlook (MMboe)1 generate IRR > 40% 45 Over two thirds of discretionary oil investment to generate IRR > 100% 40 Outlook 35 Range Key variables in 5 year production outlook: 30 Undeveloped 2P reserve
Slide 97: ROCE and net gearing outlook
ROCE AND NET GEARING OUTLOOK 5 year ROCE outlook (%)1 • ROCE improvement driven by highly 5 year net gearing accretive growth investment, oil outlook (%)1 25% prices and higher gas prices 35% • Maintaining high ROCE requires 30% 20% active balance sheet management 25% 15% Target net gearing • Positi
Slide 98: Key takeaways from Investor Briefing
KEY TAKEAWAYS FROM INVESTOR BRIEFING A COMPELLING FIVE YEAR OUTLOOK Portfolio provides growth Production growing to 34 - 40 MMboe High return / low risk investment Over two thirds of discretionary investment > 40% IRR Profitability ROCE target 17- 20% Free cash flow generation Target of >$2.
Slide 99: Q&A
Q&A Beach Energy Limited ABN 20 007 617 969 September 2018 Investor Briefing 97
Slide 100: Appendices
APPENDICES Beach Energy Limited A.B.N. 20 007 617 969 September 2018 Investor Briefing 98
Slide 101: 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 • Up to 69 development wells and up to 64 exploration / appraisal wells Gas Oi
Slide 102: FY19 oil hedging position
FY19 OIL HEDGING POSITION OIL HEDGES AS AT 1 JULY 2018 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 63
Slide 103: 2018 Investor Briefing contact details
2018 INVESTOR BRIEFING 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 Beach Energy Limited ABN 20 007 617