Beach Energy Limited · ASX:BPT
Beach Energy — FY2014 Earnings Presentation
60 slides from Beach Energy's earnings presentation, September 2014
Slide 1: FY14 Full Year Results Roadshow
FY14 Full Year Results Roadshow September 2014 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 variety
Slide 3: General overview
@\BEACH SIENERGY General overview
Slide 4: Cooper Basin acreage
Cooper Basin acreage Prolific gross acreage position of over 56,000 km2 generating 99% of production 4
Slide 5: Key facts about Beach
Key facts about Beach • ASX 100 company with a market capitalisation of ~A$2.2 billion1 • Largest Australian onshore oil producer • Strong balance sheet with cash of $411 million2 • Undrawn secured debt facility of $300 million • FY14 sales revenue of $1.05 billion • FY14 underlying NPAT of $259 mil
Slide 6: Beach share price performance
Beach share price performance Beach has strongly outperformed its peers in FY14 and the Energy and All Ordinaries indices consistently over the past four financial years FY14 share price performance FY10-FY14 share price performance 60% 2.00 +155% 50% (BPT) 50% Rebased to Beach’s share price (A$p.s.
Slide 7: General overview
General overview • Outstanding FY14 performance driven by the Beach operated oil business • Very strong balance sheet with the potential to fund capex until the end of FY16 • Oil linked gas contract with Origin to commence in FY15 • Nappamerri Trough Natural Gas (NTNG) exploration program on track f
Slide 8: Asset portfolio
Asset portfolio Deep portfolio of low risk production and exploration assets, with ‘game changing’ opportunities across diverse Australian basins 25 NTNG 20 SACB / SWQ JV - unconventional International 15 Bonaparte Risk Western Flank Otway Egypt wet gas unconventional onshore/ offshore Otway Western
Slide 9: Asset portfolio review
Asset portfolio review • Certain assets to be considered for divestment to ensure asset portfolio aligned with strategic outlook – International assets under review • Active history of non-core and value driven Various investment divestments: criteria to enhance overall portfolio returns with an – T
Slide 10: FY14 Financial overview
FY14 Financial overview Sales Revenue Underlying NPAT Operating Cash Flow • Record sales revenue of $1.05 billion • Cash balance of $411 million • Record underlying NPAT of $259 million • Full year dividend of 4.0 cps, up 78% • Record operating cash flow of $583 million • Undrawn $300 million secure
Slide 11: Actual and forecast production
Actual and forecast production FY14 9.4 MMboe • Production of 9.6 MMboe 9.6 MMboe to 8.6 MMboe • Production mix: 46% gas and gas liquids, 54% oil 8.0 MMboe • Cooper Basin oil production driven by: 7.5 MMboe Gas* Gas* 4.4-4.9 4.4 MMboe – Development of new and existing fields, 6.6 MMboe (25 PJe) MMbo
Slide 12: FY15 Capital expenditure guidance
FY15 Capital expenditure guidance Capex 3D Seismic Wells ($ million) (km2) DEVELOPMENT Cooper Basin – non-SACB/SWQ JVs 55 – 60 10 – 13 – Cooper Basin – SACB/SWQ JVs 270 – 300 70-80 – International 10 3 – Total Development 335 – 370 Up to 96 – EXPLORATION Cooper Basin – non-SACB/SWQ JVs 40 – 45 23-26
Slide 13: Reserves and contingent resources
Reserves and contingent resources 2P: 86 MMboe 2P and 2C: 552 MMboe Unconventional Gas and gas liquids Gas and gas liquids 67 MMboe 362 MMboe 2P reserves 86 MMboe Oil 19 MMbbl Conventional Gas and gas liquids 92 MMboe Oil 12 MMbbl Large reserves and resources base supporting future production growth
Slide 14: FY15 Key activities
FY15 Key activities Early success in FY15 program with the Balgowan-1 discovery 14
Slide 15: Eastern Australian gas market
Eastern Australian gas market 15
Slide 16: Eastern Australian gas markets
Eastern Australian gas markets • Strong predicted growth in Eastern Australian gas and Asian LNG demand • Gladstone based export LNG projects have transformed the east coast gas market • Projected gas supply is ‘tight’ and demand strong • The bulk of ‘non-LNG’ demand is yet to be contracted • Upward
Slide 17: Prolific gas acreage strategically located
Prolific gas acreage strategically located • Quality acreage footprints accessing multiple markets • Prime unconventional gas acreage with transformational potential • Gas liquids potential in most basins Multi-basin portfolio to feed eastern and northern Australian markets 17
Slide 18: Upstream and downstream dynamics
Upstream and downstream dynamics • ‘Equity’ molecules to ‘equity’ projects • Suppliers creating new markets via downstream investments • Vertical integration driven by both domestic and export opportunities • Depending on volume and deliverability, supply likely to under- write ‘equity’ projects as
Slide 19: Western Flank
Western Flank Cooper Basin 19
Slide 20: Western Flank
Western Flank • High net back for oil and wet gas • Quick drilling rate • High flow rate wells • Excellent geological understanding • Established infrastructure – 250 kilometres of flowlines – 10 facilities and five trucking points – 40 oil wells on production • 4,000 km2 of 3D seismic • New fields
Slide 21: Western Flank oil migration path
Western Flank oil migration path 21
Slide 22: PEL 91
PEL 91 • Beach 40% and operator, Drillsearch 60% • Current gross production ~10,500 bopd FY15 expectations • Bauer facility expansion from 50,000 bpd of fluid to 75,000 bpd in second half • CKS fields on-line in first half and Stunsail/Balgowan fields in second half, with Pennington to follow • Eigh
Slide 23: PRLs 85 to 104
PRLs 85 to 104 • Beach 75% and operator, Cooper Energy 25% • Current gross production ~4,500 bopd FY15 expectations • Reprocessing of existing 3D seismic around the Callawonga and Butlers/Parsons trends • Three development wells, one appraisal well and four exploration wells • Facility upgrades at C
Slide 24: PEL 104 and PEL 111
PEL 104 and PEL 111 • Beach 40%, Senex 60% and operator • Focus on the Birkhead Formation • Current gross production of ~4,500 bopd from Growler/Spitfire and Snatcher fields • Spitfire field producing strongly with further upside potential FY 15 expectations • Initial program of five wells • A numbe
Slide 25: PEL 106
PEL 106 • Beach 50% and operator, Drillsearch 50% • Liquids rich operated production • Gas sales agreement with SACB JV to March 2016 • Gross flow rate of ~12 MMscfd and ~1,000 bbl per day LPG and condensate FY 15 expectations • Three exploration wells and one appraisal well • Compression at Middlet
Slide 26: Other Cooper Basin
Other Cooper Basin 26
Slide 27: ATP 924
ATP 924 • Beach farming-in to 45% with Drillsearch • Permit area ~2,300 km2 and located between the Inland and Cook oil fields • Two stage farm-in process • Beach to fund ~150 km2 of current 3D seismic and drill initial exploration well • Upon election to continue, Beach to drill a further explorati
Slide 28: ATP 732
ATP 732 • Beach earning 50%, Bengal Energy 50% • Large underexplored permit • Located between the Jackson (~50 MMbbl of oil produced) and the Kenmore/Bodalla (~20 MMbbl of oil produced) oil fields • Targeting conventional oil reservoirs • Next well to be based on interpretation of ~300 km2 Nassarius
Slide 29: PEL 94 and PEL 95
PEL 94 and PEL 95 • PEL 94 – Beach 50% and operator, Strike Energy 35%, Senex 15% • PEL 95 – Beach 50% and operator, Strike Energy 50% • Targeting deep coals at 1,500 – 2,000 metres depth in PEL 94 • Well costs ~$3 million • Davenport-1 exploration gas well: – Fracture stimulated over a lower zone i
Slide 30: SACB JV and SWQ JVs conventional gas
SACB JV and SWQ JVs conventional gas 30
Slide 31: SACB JV and SWQ JVs
SACB JV and SWQ JVs • Significant acreage with substantial reserves base • 20.21% in the South Australian Cooper Basin Joint Venture (SACB JV) and 20-40% in the South West Queensland JVs (SWQ JVs) • Gross area covered by various joint ventures ~26,800 km2 (~6.6 million acres) • Joint ventures includ
Slide 32: Moomba processing facility
Moomba processing facility • Strategically located expandable facility • Current daily capacity approximately: – 300 TJ gas – 35 kbbl oil/condensate – 600 tonnes LPG • Opportunities to process more third party gas being actively pursued • Substantial gas storage system with capacity ~70 PJ • Gas sup
Slide 33: SACB JV conventional gas
SACB JV conventional gas • Six rigs operating • Focus on cost savings through multi-well pad drilling • SIMOPS approach to fracture stimulation • Targeted 30% capacity growth by 2015, leading to a step-change in cost reductions • Maintenance strategies successfully delivering record low downtime lev
Slide 34: Unconventional gas
Unconventional gas Cooper Basin 34
Slide 35: Unconventional transaction activity
Unconventional transaction activity McArthur Basin 2011 2012 2013 2014 Beetaloo Basin 600 Canning Basin Almost $2 billion 500 Southern committed to Gross consideration (A$ million) Georgina Basin 400 new Australian Cooper- unconventional joint Eromanga Basin 300 ventures since 2011 Amadeus & Pedirka
Slide 36: Unconventional positioning
Unconventional positioning • Strategically targeted three key basins for unconventional acreage • Cooper Basin activity: – Nappamerri Trough Natural Gas with Chevron and Icon – SACB JV unconventional REM and BCG plays • Otway and Bonaparte Basins targeting gas and gas liquids • All basins proximal t
Slide 37: The keys to unconventional success
The keys to unconventional success • Well profiles the key focus on all projects • Uncovering ‘sweet spots’ with focused activity around them • Process improvements and technology to drive efficiencies • Costs to be driven down by efficiencies and scale • Gas pricing trending upward • The right part
Slide 38: SACB JV unconventional gas
SACB JV unconventional gas 38
Slide 39: SACB JV unconventional program
SACB JV unconventional program 39
Slide 40: REM play
REM play • Targeting the Roseneath Shale, Epsilon Formation, Murteree Shale and Patchawarra Formation • Moomba-191 and -194 tied-in • Roswell-1 and Moomba-192 vertical wells fracture stimulated and flow tested • Moomba-193H: – 1,000 metre lateral targeting the Murteree – Fracture stimulated over ten
Slide 41: BCG play
BCG play • Gaschnitz-1 ST1 vertical well: – Seven zone stimulation over entire Permian section – Produced at ~1 MMscfd – Completed and shut-in • Remaining Gashnitz vertical wells for 2014: – Two deep, targeting full Permian section – One shallow, targeting Toolachee (coring point)/Daralingie • Langm
Slide 42: Nappamerri Trough Natural Gas
Nappamerri Trough Natural Gas 42
Slide 43: Nappamerri Trough Natural Gas
Nappamerri Trough Natural Gas • A staged and methodical exploration and appraisal program • Delineation of a significant untapped resource • Multiple formations present • Aerially extensive with permits covering more than 800,000 acres • In excess of 1,000 metres of gas saturated section • Fracture
Slide 44: NTNG wells
4|\BEACH SalENERGY 1 g Sut Queensland [Redland-1 cope Holdfast-2 sa — Basin TE Geoffrey-1|-—_ | Holdfast-1 Ikeppel-1 QLD DR 0 A9 Marble-1 = Nepean-1 Halifax-1 Dashwood-1 Li ir-1 angmuir- - seal Hervey-1 Gaschnitz-3@ Etty-1 Gaschnitz-1 @ Encounter-1 | and-4™ @ Gaschnitz-2 0 10 20 km Rapid-1 Boston-3
Slide 45: ATP 855 stimulation program
ATP 855 stimulation program • Up to four wells to be fracture stimulated • Expected to commence early September • New stimulation spread from the USA • Order of wells to be fracture stimulated: – Hervey-1 – Five stages targeting the upper Patchawarra Formation – Geoffrey-1 – One stage targeting the
Slide 46: Timing of Stage 1 completion
Timing of Stage 1 completion Terms of the farm-in agreement signed in February 2013 as follows: South Australia – PRLs 33-49 • Beach to notify Chevron following completion of Stage 1 work program • Once notified, Chevron has 60 days to decide on moving to Stage 2 Queensland – ATP 855 • Chevron to de
Slide 47: Exploration and appraisal cross section
Exploration and appraisal cross section Note: Well locations are approximate only and may have been shifted to show their correct structural position on the cross section 47
Slide 48: Other Australia
4|\BEACH SaIENERGY Other Australia PSST . . eNO ge!
Slide 49: Otway Basin
Otway Basin • Building a portfolio of onshore and offshore gas assets • The largest growth profile of any Australian basin over the past year • Onshore processing capability of 500 MMscfd • Further conventional onshore drilling anticipated • Acquired a 20% interest in T/49P from 3D Oil for $3 millio
Slide 50: Bonaparte Basin
Bonaparte Basin • EP 126, 138 (Beach earning up to 85%) • ~6,500 km2 high resolution airborne gravity and magnetic survey acquired, processed and interpreted • Cullen-1 reached a total depth of 3,325 metres • 54 metres of core recovered • Evidence of natural fractures • Initial indications of gas an
Slide 51: International
International 51
Slide 52: Egypt
Egypt • Relinquishment of the Mesaha block • Targeting material oil prospects • Abu Sennan success within the El Salmiya field • Increase in net entitlement oil reserves at 30 June 2014 of 1.2 MMbbl • Currently drilling two wells in the Abu Sennan Concession, El Salmiya-6 and ASA-1X ST3 • Gas develo
Slide 53: Farm-out of Tanzanian acreage
Farm-out of Tanzanian acreage • Woodside farming-in to 70% of the Lake Tanganyika South Block • As part of the farm-in, Woodside will: – Reimburse its share of back costs – Fund a further round of seismic – Contribute to Beach’s share of costs for an initial exploration well to an agreed cap, should
Slide 54: Romania – Est Cobalcescu block
Romania – Est Cobalcescu block • Beach 30%, PetroCeltic 40% and operator, Petromar 30% • ~1,000 km2 with complete 3D seismic coverage • Water depth <100 metres • ExxonMobil deep water block Domino discovery to the south, with appraisal drilling underway • Further drilling expected in 2015 • First we
Slide 55: Appendices
4|\BEACH SalENERGY Appendices
Slide 56: Financial results overview
Financial results overview Outstanding financial results, with records achieved for sales volumes, revenue, operating cash flow and underlying NPAT FY14 FY13 Change Sales volume (MMboe) 10.8 9.0 20% Total sales revenue ($ million) 1,052.1 698.2 51% Operating cash flow ($ million) 582.6 261.3 123% NP
Slide 57: Growing Corporate Activity
Growing Corporate Activity 2014 YTD – Greatest activity in the listed oil and gas industry over the last four years 2011 2012 2013 YTD 2014 2,000 1,840 1,500 Equity Value A$m 1,000 924 535 474 500 178 212 107 104 100 48 na - Target Acquirer Shandong Landbridge Group Co Announcement Date Jul-11 Aug-1
Slide 58: Chevron transaction summary
Chevron transaction summary • Subject to joint venture approvals, the key work program elements envisaged across the two permits involve an initial exploration program to be followed by pilot production programs PRLs 33 to 49 – potential payments ATP 855 – potential payments Stage 1 (initial 30%) (1
Slide 59: SACB JV unconventional and infill wells
SACB JV unconventional and infill wells Moomba wells - nomenclature Current Well Name Previous Well Name Purpose Status Roswell 1 Roswell 1 Vc 50 coal, REM, Microseismic Flowing from Vc 50 post frac Roswell 2 Roswell 2 Horizontal Roseneath Shale 1000 -1500' Spud 12 Oct Moomba 192 Aurora 1 Vertical R
Slide 60: Contact Information
Contact Information Head office Chris Jamieson 25 Conyngham Street General Manager Investor Relations Glenside SA 5065 Tel: +61 8 8338 2833 Tel: +61 8 8338 2833 Mob: +61 8 (0)487 173 244 Website: www.beachenergy.com.au Email: chris.jamieson@beachenergy.com.au 60