Beach Energy Limited · ASX:BPT
Beach Energy — Beach Petroleum — Shareholder Meeting (November 2006)
51 slides from Beach Energy's shareholder meeting presentation, Nov 23, 2006
Slide 1: Beach Petroleum Limited Annual General Meeting
Beach Petroleum Limited Annual General Meeting 23 November 2006 @1
Slide 2: Chairman's Address
Chairman's Address Mr Bob Kennedy - Chairman # Status of the Company « Asuccessful and diversified growth strategy « Growth since 2000 « Delhi acquisition — a landmark transaction Ladies and Gentlemen, Although the main purpose of my report today is to review the Company’s activities throughout the
Slide 3: Status of the Company
Beach Petroleum Limited PETROLEUM oy & Status of the Company The Company’s present status can be measured in many ways: «In terms of market capitalisation; «Through recognition and awards; «Through integrity in corporate governance; In terms of petroleum production and reserves; «In terms of explora
Slide 4: Corporate Structure
Corporate Structure Market Capitalisation (post rights issue) Date Issued Share e ued Shares (@ $1.45/share) 9 October 663 million $930 million 15 November 843 million $1.22 bition Admitted to ASX 200 in September 2006 In an objective sense, the facts are there. Beach is now capitalised at over one
Slide 5: Market and Industry Acknowledgment
Market and Industry Acknowledgment # Admitted to ASX 200 in September 2006 m= Forbes Asia “Best Under a Billion” award in 2006 (second year running) w “The Good Oil Conference” September 2006 2 Best Diversified Corporate Growth Strategy award « Best Producer award (BMG Project, jointly with Anzon Au
Slide 6: A Highly Effective Board
A Highly Effective Board # Board Effectiveness Diagnostic Review a Beach Board in top quartile a Board structure and role clarity (92%) a Board process index (90%) 2 Board composition index (96%) « Board tasks index (93%) Beach has a great management team, but this is balanced and supported very sol
Slide 7: Revenue and Earnings Growth
Revenue and Earnings Growth HET 186 3 riff “ $ million 49 milfion 126: 196- “ 86: 30. Earnings Before “ Bi Gross Revenue] Interest & Tax 26 40: 26. 10 Fyo2 FY03 FOS FYOS FY66 4 $ million cps Ea Het Profit After] 80 [Share Price Tax Year End (cps) o a 57 i Fya2 FvO2 FYO4 FYOS FYOG Fya2 Fvo2 Fyos FYOS
Slide 8: Total Shareholder Return
Total Shareholder Return Total Shareholder Return (TSR) mA measure of valve @ Three Year TSR (2003-06) of 425% added to shareholders through share price increase, bonus options issued and dividends paid Takes into account new shares issued through 7 fa) capital ised or option «= ONE Year TSR (2005-0
Slide 9: Reserves (2P) at end FY06
Reserves (2P) at end FY06 140, mmboe 120; 100, By any measure, the growth over the last six years in your Company’s reserves base has been outstanding. Proved and probable -- or 2P - reserves stood at | million barrels in 2001. At 30 June 2006, 2P reserves had built to 36 million barrels of oi! equi
Slide 10: Reserves (2P) at start FY07
Reserves (2P) at start FY07 140, mmboe 120; 100, 01 02 03 04 OF 6 07 40 The Delhi acquisition was effective from | July 2006. So from one day to another ~ from 30 June to 1 July ~ 2P reserves shot up from 36 million barrels of oi] equivalent to 101 million barrels of oil equivalent ~ or an increase
Slide 11: Reserves (2P) with BMG
Reserves (2P) with BMG Gas/Liquids Resource 140, mmbce 120; 100) 01 02 03 04 O85 O06 07 it However, the numbers are set to grow even further. We anticipate that the gas/liquids phase of development in the BMG Project in Bass Strait will soon receive project sanction, in which case a volume of gas an
Slide 12: Exploration Success
Exploration Success & Cumulative # 70 Exploration & Appraisal wells drilled in six years from ‘O01 to ‘06 @ Cumulative Commercial] 8 50% commercial success rate Si Note: In FYO7 we expect to participate in drilling: @ 100 conventional od and gas wells and © Complete initial development of approximat
Slide 13: Support for Local Communities
Support for Local Communities Beach is a strong supporter of activities in the local communities where we work. We do this because we should -- not to gain publicity. That is why you may not read about these activities in the papers. But shareholders should know that we give this support to many com
Slide 14: A Great Team
A Great Team Beach has a great team of people. Let me give you the quotes I promised from the Boston Consulting report on the ingredients they believe have made companies successful. “Budgeting and numbers can help you to understand where you are going. But only a vision makes vou go.” “The existenc
Slide 15: What a difference a day makes!
What a difference a day makes! At 30 June 2006 At 1 July 2006 Reserves 36 mmboe 101 mmboe Production 1.4 mmboe (target fo vee 97) Revenue $158 million viaraet for FY 07) Even though production, revenues and profits have increased for the sixth year in succession, the acquisition of Delhi Petroleum h
Slide 16: A Concept of Size
A Concept of Size The areal extent of some key Beach oilfields in relation to the City of Adelaide 46 Ladies and Gentlemen, thank you for your attention. Before I hand over to Mr Nelson, let me leave you ~ as an Adelaide audience - with a map that may give you some understanding of the oilfields tha
Slide 17: Annual General Meeting 23 November 2006
Beach Petroleum Limited PETROLEUM ee) Annual General Meeting 23 November 2006 My thanks as usual go to the now numerous Beach employees, the many consultants, suppliers and contractors who have given us such great back up, my fellow directors and, in particular, | would like to record the contributi
Slide 18: Managing Director's Address
Managing Director's Address Mr Reg Nelson — Managing Director a Financial Year 2605-06 and First Quarter 2606-07 a Key projects = BMG oil and gas~-liquids projects =» Cooper/Eromanga projects, now including Delhi Petroleum assets « Tipton West coal seam gas = Exploration with potentially high impact
Slide 19: Financial Year
Beach Petroleum Limited = Financial Year 06 So, firstly, Financial Year 06 ~ a year of great activity, strong revenue growth and profitability. @19
Slide 20: Beach at end of FY06
Beach at end of FY06 # Production « 1.4 mmb oil in FY 06 (up 33%) @ Revenue eee « $158 million in FY 06 (up 148%) : @ Profit « $44 million in FY 06 (up 162%) @ Market Cap « $900 million at 30 June ‘06 # Total Shareholder Return of 148% @ Reserves = 36 mmboe* (up 235%) * Reserves comprise 24 mmb oil
Slide 21: Reserves & Production Growth
Reserves & Production Growth Gippsland 100: TAPIS A$/bbI 1 of 02 03 04 88 06 2i These charts speak for themselves in showing how Beach’s reserves and production have grown since 2001 to the end of FY06, but bear in mind that these are expected to be dwarfed as we move into production from the BMG pr
Slide 22: Revenue Growth
Revenue Growth 1807" 160 440 120 Gross Revenue 100 $ miffion 20 ot 02 03 04 05 06 Financial Year Other 1 Gippsiand mOtway SA mou 22 Beach’s revenue has continued to grow consistently since 2006, but please also note the extent to which it has diversified. @22
Slide 23: Financial Year Q1
Beach Petroleum Limited PETROLEUM ee) Financial Year 07 Q1 With the record results from FY06 in mind, it’s timely to see how Beach has performed in the first quarter of FY07 ~- that is, up to the end of September 2006. ©23
Slide 24: A New Dimension
A New Dimension At 30 June 2006 At 1 July 2006 Reserves 36 mmboe 101 mmboe : ii mmboe Production 1.4 mmboe (target for FY 07) Revenue $158 million > $500 million (target for FY 07) Firstly, note how the Delhi acquisition has changed the reserves base - from 36 mmboe to 101 mmboe. Secondly, note the
Slide 25: FYQ7: Significant Q1 Production
FYQ7: Significant Q1 Production 37 2.57 Cooper (Dethi) B8MG 24 G Cooper (non-Dethi) million barreis 15 44 0.5) 04 05 06 FY07 Qi only 25 Here is a snapshot of oi! production. Let me emphasise that in this comparison the first 3 columns are for complete financial years (that is, for FY04 to FY06), whi
Slide 26: Revenue Growth
Revenue Growth 180” 160 140 120 Gross Revenue 100 @ Other a BMG © Otway m Cooper-gas m Cooper-Oil $ million 80 Os 06 Financial Year 26 Here is a similar comparison for revenue. Again, note that this compares full financial years from FY04 to FY06 with only the first quarter of FY07. ©26
Slide 27: A Successful & Diversified Growth Strategy
Beach Petroleum Limited PETROLEUM oy & A Successful & Diversified Growth Strategy I noted the diversification in Beach’s activities. This has been an important factor in our growth strategy, but it also helps to mitigate some of the risks from an investment point of view. @27
Slide 28: Growth through Exploration
Growth through Exploration Appraisal @ Exploration G1 #02 O38 04 O05 O06 + 48 Exploration Wells ~ 29% Success Rate * 22 Appraisal Wells ~ 86% Success Rate » Added 5 mmb @ ~$10/bb! 28 As Mr Kennedy has noted, a major contributor to that growth has been through our successful exploration efforts aver
Slide 29: Growth through Acquisition
Growth through Acquisition $mitlion 1000 $00 800 706 600 500 406 3060 200 100 Market Cap* © Capital Raised * at 9 October 2006 23 Other growth has been through some technically driven, astute investment in projects where real value has been unlocked. With shareholder support, you can see from this c
Slide 30: Key Projects
Key Projects 30 Beach now has a substantial position in three major projects: «Cooper/Eromanga gas, ethane, LPG (and associated liquids) and crude oil; *The Basker-Manta-Gummy project; and «The Tipton West coal seam gas project. So, let us examine some of these key projects. This diagram shows conce
Slide 31: Basker-Manta-Gummy
Basker-Manta-Gummy Beach 50% # Basker-Manta-Gummy Fields « 50% interest « 39,2 mmb 2P gross oil reserve (up by 168% from 23.3 romb at project sanction} « Contingent resource of 379 P] gas & 19 mmb condensate (72 mmboe) eee eee 34 The BMG project has received numerous accolades and it has certainly b
Slide 32: Basker-Manta-Gummy
Basker-Manta-Gummy Beach 50% 2 Work to date « Basker-2 drilled July 2005 « Extended test of Basker-2 produced 0.8 mmb Nov 05 ~ May 06 « 4 further development wells drilled in 2006. « Oil Reserves increased by 32% « Oi & Gas Resource increased by 240% BOBS aa ge Basker South et “\oBasker Filet « Inst
Slide 33: Basker-Manta-Gummy
Basker-Manta-Gummy Beach 50% # Current Status « Subsea connections Completed « Crystal Ocean has returned to site « Production to commence in Dec from 4 wells (gross up te ~25,000 bapd) « Net Beach Production for FY 07 up to ~2.5 mmb « Gas Project approval expected by Dec 2006. 33 This is the curren
Slide 34: Cooper-Eromanga Basin
Cooper-Eromanga Basin = Cooper/Eromanga Basin (ex-Delhi) « 16 wells in FY 06 5 discoveries (3 oil / 2 gas) “ « > 40 wells planned in FY 07 “ Oil Discovery at Callawonga-! in July 06 (net ~ 1.1 mmb) FY Production | Reserves {mmboe) (mmboe) 04 0.9 44 05 1.0 5A 06 6.9 49 07-forecast 0.9 >5.0 Beach’s oi
Slide 35: Tipton West Coal Seam Gas
Tipton West Coal Seam Gas Beach 40% w Proved & Probable (2P) reserves: 174 PJ w Proved, Probable & Possible (3P) Reserves: 2,300 PJ ‘inset w Close to markets & pipelines # Acquisition cost $0.50/GJ (2P Developed Reserves) The Tipton West coal seam gas project has been progressively developed during
Slide 36: Tipton West Coal Seam Gas
Tipton West Coal Seam Gas Beach 40% Phase 1 Development — 75 wells 50 weils drilled to date 25 connected and dewatering Small gas flows commenced On track for first gas sales early 2007 w Initial gas sales agreement with Braernar Power Station Project for up to 10 PJ/year Good potential to expand pr
Slide 37: High Reward Exploration
High Reward Exploration = New Zealand (BPT 20%) Cutter-1, drilled October/November = Cararvan (BPT 10%) Hurricane-2, Q2 ‘07 Target 40-50 mmbtt ofl potential 3D Seismic Q2 ‘07 Target >1 TCF gas potential Drill FY 08 Beach has also expanded its exploration efforts to gain a greater exposure to potenti
Slide 38: Delhi Petroleum Acquisition
Beach Petroleum Limited PETROLEUM oy & Delhi Petroleum Acquisition Delhi Petroleum is now well on the way to being integrated into Beach’s overall activities, but I°ll treat it separately here to give some sense of its import. ©38
Slide 39: Delhi Acquisition
Delhi Acquisition @ Beach has purchased the Delhi group of companies (Delhi) # Beach now owns approximately an average 21% of the Santos operated Cooper Basin Joint Ventures (CBIV’} 2 CBIV assets include = «300 mmboe reserves (net «65 mmboe to Delhi) = Significant and strategic infrastructure assets
Slide 40: Delhi Acquisition
Delhi Acquisition # Total Acquisition Cost $590 million + Assets $530 million + Group Structure (inc cash of approx. $45 million, inventory & tax losses) $60 milfion @ 65 mrmboe of Proved & Probable Reserves acquired for A$8.15/boe » Gas &Gas Liquids ~ A$1.60/G) - Off ~ A$10.00/bb1 Beach considers t
Slide 41: Cooper Basin — Beach Assets
Cooper Basin — Beach Assets (post Delhi acquisition) Bodalla Beach Christ t Beach 18% as bse Block A00%: 4L This map shows how the Delhi acquisition fits with Beach’s other Cooper/Eromanga exploration and production assets. You can now see that Beach has built a significant position in a very large
Slide 42: Cooper Oil Program
Cooper Oil Program a Development & Appraisal Program in existing oil fields a Beach Equity ~25% (but 38.5% of Naccowlah Block} # ~700 mmb OOIP in Cooper Basin # Recovery from existing wells ~200 mmb (28%) Increase recovery factor by 5-10% >> additional 35-70 mmb Low risk/high success rate... but lot
Slide 43: Cooper Oil Program Analogy — Kenmore Field
Cooper Oil Program 2 Analogy — Kenmore Field (Beach 100%) « OOIP 35 mmb « Drilled 9 wells 2003-05, 7 successes « Increased recovery factor from 35% to 41% ~~ net 2.2 mmb # Example of COP - Naccowlah Biock (Beach 38.5%) « OOFP ~220 mmb « 5-10% increase in recovery will yield 11-22 mmb » 22 wells plan
Slide 44: Delhi Acquisition - Summary
Delhi Acquisition - Summary 2 Assets complementary and well known to Beach # 181% increase in 2P reserves at fair value # Transaction structure precluded counter bids from competing parties. @ High potential upside in Cooper Oil Program -- 130 wells in calendar year 2007 a Gas swapping opportunities
Slide 45: Beach Post-Acquisition
Beach Post-Acquisition Reserves = Cooper/Eromanga 70 mmboe « Gippsland 20 mmboe = Surat 12 mmboe # Production = Above 10 mmboe in FYO7 = 30% oil / 70% Gas & Gas Liquids ® As at Judy 1, 2006 GLADTO 45 Following the Delhi acquisition, Beach’s reserves have increased substantially ~ to 101 mmboe, as su
Slide 46: Peer Comparison: Reserves
Peer Comparison: Reserves 128, 106, 80 mimboe 60 40, * Pre-contingent BMG gas conversion Beach Petroleum 2P Reserves OSH @ BPT @ AWE ROC HAZA # HDR @ AED BIPM m TAP 0 AMU ARQ 46 A comparison with its industry peers shows that Beach sits close to Oil Search Limited in terms of 2P reserves - and ahead
Slide 47: Outlook
Beach Petroleum Limited PETROLEUM € he & Let me conclude by giving a summary of the outlook for your Company over the next year or so. @©47
Slide 48: Outlook: Production Growth
Outlook: Production Growth im SMG Gas 410 i Tipton, @ Cooper (Delhi) 75 BMG yamboe @ Cooper (non-Deihi) Financial Year 48 With BMG coming on stream in December 2006, the additional production from Delhi, Cooper/Eromanga oil and Tipton West gas, we expect that target production of between 10 and 12 m
Slide 49: Outlook: Revenue Growth
Outlook: Revenue Growth 600, * Assuming oil price 500 of A$80/bbi 88 400) ‘ E @ Surat 8 * 300; @ Cooper (Delhi) & BMG 200; @ Cooper (non-Delhi) 1004 Ls . *)Gippstand productios: from December 28 4 ss UlWUe We — only six months’ production for FYO? FYOL1 FYO2 FYO3 FYO4 FYO5 FYO6 Target FYO7 4g We sho
Slide 50: Outlook: Extensive Drilling
Outlook: Extensive Drilling Number of Wells & Unsuccessful ll Success-Gas @ Success-Oil HB New wells | 30 Strong earnings will allow Beach to participate in an unprecedented level of drilling activity during FY07. I noted earlier that we have drilled 70 wells in the six years from 2001 to 2005. We e
Slide 51: Beech) Sotroleuy hes prey Dale ‘this: presentarion based on andarimanen available ti
Beech) Sotroleuy hes prey Dale ‘this: presentarion based on andarimanen available ti Faunese, accuracy, Compistenses: of corertasss:-of the information, Opinions etd sor ie resian eee Sears ae ee i hse oy rack ees, agents os user Ce or) aera an vo ee ee wees on iaiiagh aris bee his. Mie of a On: ie
Beach Petroleum — Shareholder Meeting (November 2006) on 6ix