Beach Energy Limited · ASX:BPT
Beach Energy — H1 2011 Earnings Presentation
37 slides from Beach Energy's earnings presentation, Mar 3, 2011
Slide 1: Beach Energy Limited FY11 Half Year Results
Beach Energy Limited FY11 Half Year Results 2 & 3 March 2011 Reg Nelson Managing Director Neil Gibbins Chief Operating Officer Graham Smith GeneralFY11 Manager Finance Half Year Results Slide 1
Slide 2: Compliance statements
Compliance statements 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 affected by a varie
Slide 3: Financial overview
Financial overview Graham Smith, General Manager Finance FY11 Half Year Results Slide 3
Slide 4: A solid result in challenging times
Financial overview A solid result in challenging times HY11 Change Sales volume 4.9 MMboe (2%) Sales revenue $265.2 million 2% Cash flow from operations $85.2 million 294% Net (loss)/profit after tax ($87.6) million (358%) Underlying net profit after tax $18.6 million (27%) Interim dividend declared
Slide 5: Financial overview
Financial overview • $179 million cash on hand at 31 December 2010 • Positive operating cash flow of $85m • Nil debt • $35 million in undrawn financing facilities • Declared 0.75 cents per share fully franked interim dividend • Substantial franking credits available for future dividends FY11 Half Ye
Slide 6: Continuing strong cash position
Cash movement Continuing strong cash position HY11 HY10 $million $million Opening cash balance 169.9 136.2 Cash from operations 85.2 21.6 Exploration and development (73.7) (96.2) Impress acquisition (38.1) - Proceeds from asset sales 44.2 68.7 Net dividends paid (7.0) (7.3) Net other (1.9) (5.2) Ca
Slide 7: Sales revenue
Sales revenue Oil Price • Sales revenue of $265 million increased by 2% mainly due to: 120 – Higher oil, gas and ethane 100 prices – Unfavourable foreign exchange 80 movements (stronger AUD) • HY11 average gas/ethane price 60 A$/bbl $5.23/GJ – up 8% on HY10 40 • HY11 average oil price US$81/bbl 20 –
Slide 8: Sales revenue
Sales revenue Sales Revenue Comparison 300 $3.5 $17.5 $4.5 $6.3 $13.3 $265.2 $259.3 Gas/ethane Volume / Mix Third Party 250 Liquids Prices Prices Purchases FX Rates A$/GJ AUD/USD US$/boe 2009 $4.85 2009 $0.87 2009 $75 2010 $5.23 2010 $0.95 200 2010 $83 $m 150 100 $5.9 million total increase 50 0 Dec
Slide 9: Gross profit
Gross profit Gross profit comparison 70 $2.3 $4.6 $5.9 $23.6 60 $12.1 3rd party purchases Cash Sales production 50 revenue costs $44.9 Depreciation 40 $37.0 $m Inventory 30 20 $7.9 million total decrease 10 0 Dec 09 Dec 10 FY11 Half Year Results Slide 9
Slide 10: Underlying net profit after tax
Underlying net profit after tax HY11 HY10 $million $million Net profit after tax (87.6) 33.9 Remove unrealised commodity hedge loss / (gain) (4.6) 0.7 Remove revaluation of assets (13.6) (1.1) Remove asset sales - (11.6) Remove impairment of assets 118.5 - Remove legal settlement 12.8 - Remove gain
Slide 11: Underlying net profit after tax
Underlying net profit after tax Underlying net profit after tax comparison 35 $1.8 $3.3 30 $2.5 $7.9 $25.5 Tax 25 Other expenses Net financing and revenue costs 20 $18.6 $m Gross profit 15 10 $6.9 million 5 total decrease 0 Dec 09 Dec 10 FY11 Half Year Results Slide 11
Slide 12: Operational overview
Operational overview Neil Gibbins, Chief Operating Officer FY11 Half Year Results Slide 12
Slide 13: HY11 production
HY11 production Area HY11 HY10 Oil (MMbbl) Cooper and Eromanga Basins 1.1 1.3 Gippsland Basin 0.1 0.1 Williston Basin 0.0 - Total Oil 1.2 1.4 Sales Gas & Ethane (PJ) Cooper Basin 11.6 12.8 LPG (kt) Cooper Basin 22.0 23.2 Condensate (MMbbl) Cooper Basin 0.2 0.2 Total oil and gas (MMboe) 3.5 4.0 FY11
Slide 14: Large Resource base to build Reserves
Large Resource base to build Reserves 2P Reserves 2P Reserves & Contingent Resources 66 MMboe* 363 MMboe* 2P Reserves are a fraction of the total resource base Cooper / Eromanga Other Cooper / Eromanga 2P Other Excellent prospects for reserves growth via resource conversion and exploration * Volumes
Slide 15: Solid production platform - with near-term uplift potential
Solid production platform - with near-term uplift potential Beach Operated Western Flank Oil • FY11 guidance of ~ 7.0 MMboe* Expected Ultimate Recovery (MMbbl) 12 • Consistent Cooper Basin production performance 10 • One in a forty year flood event has 8 impacted production 6 • Good short-term oppor
Slide 16: A one in forty year flood event
A one in forty year flood event 2010 flood event Typical conditions Anticipating better conditions for the Cooper Basin in 2011 FY11 Half Year Results Slide 16
Slide 17: Western Flank oil growth opportunities
Western Flank oil growth opportunities • Beach operated • Impress Energy acquisition FY11 Half Year Results Slide 17
Slide 18: Cooper Basin oil - Near-term growth opportunities
Cooper Basin oil - Near-term growth opportunities • Western Flank oil has been a core contributor to Beach • Flooding has prevented access to this area in 2010 • Beach operated 16 well program commenced in February 2011: – Four development wells to accelerate production – 12 exploration/appraisal we
Slide 19: Impress Energy acquisition
Impress Energy acquisition • Beach is in the process of moving to compulsory acquisition of Impress • Impress holds a 40% interest in highly prospective Western Flank oil acreage • On 21 February, Senex Energy (Operator) announced that it upgraded 2P reserves in the Growler and Snatcher oil fields b
Slide 20: New Ventures - 'Big Oil' Potential
New Ventures – ‘Big Oil’ Potential: • Tanzania • Egypt FY11 Half Year Results Slide 20
Slide 21: Tanzania - East African Rift
Tanzania - East African Rift • Beach 100% • Under - explored, high potential region • Significant success in nearby analogous areas (ie: Tullow Oil in Uganda) • Potential for large (> 200+ MMbbl) discoveries: – Natural oil seeps on Lake Tanganyika indicates a working petroleum system • Offshore Tanz
Slide 22: Tanzania: Lake Tanganyika natural oil seeps
Tanzania: Lake Tanganyika natural oil seeps FY11 Half Year Results Slide 22
Slide 23: Egypt
Egypt • Beach interests range 15 – 22% • Exposure to prolific and emerging hydrocarbon basins: – Portfolio of near-term development & exploration opportunities • North Shadwan expected to produce first oil in 2011 • Abu Sennan four-well appraisal / exploration program commenced in December 2010: – P
Slide 24: FY11 capital requirements
FY11 capital requirements HY11 FY11 Forecast $million $million Development capital Cooper Basin 32.1 90.2 BMG 0.8 0.8 Egypt 0.8 5.7 Total development capital 33.7 96.7 Exploration capital Australasia 8.7 52.0 Unconventional 16.8 44.1 International and new ventures 6.8 19.1 Total exploration capital
Slide 25: Strategic overview
Strategic overview Reg Nelson, Managing Director FY11 Half Year Results Slide 25
Slide 26: Beach Energy Limited - A unique value proposition
Beach Energy Limited - A unique value proposition FY11 Half Year Results Slide 26
Slide 27: Positioned for growth in Eastern Australian gas markets
Positioned for growth in Eastern Australian gas markets FY11 Half Year Results Slide 27
Slide 28: Prolific Cooper Basin acreage position
Prolific Cooper Basin acreage position Beach owns a strategic suite of assets and infrastructure, positioning it to supply Cooper Basin gas for generations to come FY11 Half Year Results Slide 28
Slide 29: Eastern Australian gas markets are growing
Eastern Australian gas markets are growing • Current domestic gas demand ~ 700 PJ per annum: – ~ 100 PJ from Cooper Basin • Domestic gas demand expected to grow to ~ 1100 PJ by 2025*: – Driven by power generation – Higher demand scenarios possible Domestic Market: Gas Contracts versus Reference Dema
Slide 30: Excellent prospects to increase Cooper Basin supply
Excellent prospects to increase Cooper Basin supply • Strong predicted growth in Eastern Unfulfilled Demand: Australian gas demand will drive new Uncontracted Demand by Country - Based on Likely Supply opportunities 100 • Beach is currently in discussions to supply 80 Santos’ GLNG Project 60 mtpa 40
Slide 31: The potential of Cooper Basin shale gas
The potential of Cooper Basin shale gas FY11 Half Year Results Slide 31
Slide 32: A dominant shale gas acreage in the Cooper Basin
A dominant shale gas acreage in the Cooper Basin • Nappamerri Trough holds potential gas in place > than 200 Tcf • Similar properties to the best US shale plays • Encounter-1 has now been drilled: – Shale and sandstone target area 30% thicker than anticipated at 393 metres • Holdfast-1 spudded in Ja
Slide 33: Beach is undervalued
Beach is undervalued “We have changed our recommendation from Hold to Buy and revised our price target to A$1.15 (prev A$0.91/sh) following reassessment of BPT’s shale gas potential...” – Wilson HTM, 1 March 2011 “…..it *Beach+ has a superior asset mix, consisting primarily of low risk/return conven
Slide 34: Beach vs ASX 200 and ASX 200 Energy Indexes (XEJ)
Beach vs ASX 200 and ASX 200 Energy Indexes (XEJ) Period of very restricted land access due to Cooper Basin flood event FY11 Half Year Results Slide 34
Slide 35: Strong and diverse growth potential
Strong and diverse growth potential Current share price does not reflect Beach’s growth portfolio “Substantial upside does exist to our valuation (multiples of our valuation) if BPT commercialises its shale gas acreage…” – Euroz, 23 November 2010 FY11 Half Year Results Slide 35
Slide 36: 2011 Catalysts
2011 Catalysts FY11 Half Year Results Slide 36
Slide 37: Key catalysts for 2011
Key catalysts for 2011 Multiple near-term catalysts with material re-rating potential FY11 Half Year Results Slide 37