Beach Energy Limited · ASX:BPT
Beach Energy — H1 FY20 Earnings Presentation
39 slides from Beach Energy's earnings presentation, Feb 11, 2020
Slide 1: FY20 Half Year Results Presentation
11 FEBRUARY 2020 FY20 HALF YEAR RESULTS PRESENTATION
Slide 2: Compliance statements
Compliance statements Disclaimer Assumptions This presentation contains forward looking statements that are subject to risk factors associated with oil, gas and FY20 guidance is uncertain and subject to change. FY20 guidance has been estimated on the basis of actual results related businesses. It is
Slide 3: Growth program is on track in FY20
Growth program is on track in FY20 ✓ Growth program execution progressing well ✓ 105 wells drilled in H1 FY20 at 83% success rate Growth execution on track ✓ Western Flank operated oil production above 22,000 bopd ✓ Victorian Otway drilling program underway with Black Watch-1 ✓ Ocean Onyx rig expect
Slide 4: Health, Safety and Environmental Performance
Health, Safety and Environmental Performance Safety Performance Environmental Performance TRIFR 16 Crude Spill Volumes (kl) 15.6 12 51.9 7.9 99.9% 8 9.6 3.5 5.1 4 3.4 3.8 0.2 0.1 0.07 0.04 0 FY15 FY16 FY17 FY18 FY19 H1FY20 FY15 FY16 FY17 FY18 FY19 H1FY20 Focussed on HSE performance Process Safety -
Slide 5: Continued success in reducing operating costs
Continued success in reducing operating costs Field operating costs/boe1 Operational Excellence $/boe • Generating value through safe, reliable and efficient operations. 10 9.9 9.4 o Kupe full plant statutory shutdown completed on time and on 9.2 9.1 3 9 budget In November 2019. Over 80,000 hours of
Slide 6: Beach portfolio not exposed to spot gas prices
Beach portfolio not exposed to spot gas prices Historic and forecast east coast gas sales Recent gas market dynamics (% of volume) • Low LNG spot prices impacting East Coast Gas Market spot prices 100% • Beach has minimal spot gas price exposure: More than 99% of East Coast gas sales in H1 FY20 sold
Slide 7: Financial Results
F Y 2 0 H A L F Y E A R R E S U LT S P R E S E N TAT I O N Financial Results
Slide 8: Financial highlights
Financial highlights Strong financial performance maintained after partial sale of Victorian Otway interests in prior period • First full half since completion of sale of 40% of Victorian Otway Basin interests in Sales revenue UNDERLYING EBITDA1 H2 FY19 $900 MILLION $622 MILLION • H1 FY20 Sales Reve
Slide 9: Financial highlights
Financial highlights $ million (unless otherwise indicated) H1 FY19 H1 FY20 Change Underlying NPAT recognises Production (MMboe) 15.2 13.0 15% • 4% increase in realised oil price, 6% increase in Pro Forma Production (MMboe) 13.2 13.0 2% realised gas and ethane price Sales volumes (MMboe) 16.0 13.4 1
Slide 10: Underlying NPAT
Underlying NPAT Underlying Net Profit After Tax Comparison $274 million Underlying NPAT is 2% lower than H1 FY19 driven by factors including: $ millions • Partial sale of Victorian Otway Basin interests in FY19 7 16 • Lower gross profit2 Gross 15 279 29 30 Other profit expenses Tax 274 • Higher tax
Slide 11: Financial strength maintained
Financial strength maintained Strong operating cash flow supports investment program Movement in cash $ millions • First half operating cash flow, excluding tax paid, of $589 million 35 26 o H1 FY20 cash tax of $238 million relates to 589 finalisation of FY19 period and provisional cash tax payment
Slide 12: Summary
Summary Strong financial performance maintained ✓ Strong balance sheet position provides flexibility to continue growth investment Balance sheet flexibility ✓ On track to end year in net cash position while also increasing FY20 investment ✓ $510 million available liquidity at 31 December 2019 ✓ Gas
Slide 13: FY20 guidance and asset update
F Y 2 0 H A L F Y E A R R E S U LT S P R E S E N TAT I O N FY20 guidance and asset update
Slide 14: Updated FY20 guidance
Updated FY20 guidance Prior FY20 Guidance Current FY20 Guidance Production 27 – 29 MMboe 27 – 28 MMboe Capital Expenditure1 $750 – 850 million $875 – 950 million Underlying EBITDA $1.25 – 1.4 billion $1.275 – 1.35 billion DD&A3 $17-18 / boe $17 – 17.5 / boe • FY20 Underlying EBITDA guidance includes
Slide 15: FY20 production guidance update
FY20 production guidance update Production momentum building into H2 FY20 FY20 production guidance narrowed to 27 – 28 MMboe Production growth drivers in H2 FY20 include: 27 – 28 • Oil production growth on track versus initial guidance • Western Flank operated oil production average above 22,000 bop
Slide 16: FY20 capital expenditure update
FY20 capital expenditure update Updated FY20 capital investment guidance $875 – 950 million 1. Western Flank infrastructure investment (~$30 million) By asset group …and by type • Follows successful drilling efforts in H1 FY20 7% 4% • Higher fluid handling capacity 6% 16% 25% • More artificial lift
Slide 17: Western Flank Oil
Western Flank Oil Beach operated interests 75 - 100%; non-operated 40%, Senex operator H1 FY20 areas of activity Successful drilling campaign leads to 44% increase in oil output • H1 FY20 production of 3.4 MMbbl, +44% vs H1 FY19 • 46 wells drilled at 72% success rate1 o 100% success rate in operated
Slide 18: Western Flank Oil
Western Flank Oil Bauer appraisal drilling identifies further field extension Bauer top McKinlay reservoir map showing Appraisal strategy proving effective movement in field limit • H1 FY20 Bauer appraisal drilling activity added new oil production wells and Top Reservoir Map - 2020 identified field
Slide 19: Western Flank Oil
Western Flank Oil High levels of activity to continue H2 FY20 planned areas of activity H2 FY20 focus areas 1. Continued use of dedicated exploration and appraisal rig to: • Further appraise Kalladeina / Congony fields • Appraise Balgowan and Rincon fields • Return to exploration drilling with Selli
Slide 20: Western Flank Gas
Western Flank Gas ex PEL 106, ex PEL 107 and ex PEL 91, Beach 100% and operator Western Flank Gas areas of activity H1 FY20 progress • H1 FY20 production of 1.1 MMboe, +8% vs H1 FY19 • Gas drilling campaign was completed in early FY20 with two successful wells • Inventory of wells sufficient to keep
Slide 21: Cooper Basin JV
Cooper Basin JV Beach various interests (20.76 - 52.2% range), Santos operator H1 FY20 Cooper Basin JV drilling activity H1 FY20 progress • H1 FY20 production of 4.2 MMboe, stable on prior year • Beach participated in 53 wells at 92% success rate • First half highlights included the 100% success rat
Slide 22: Perth Basin
Perth Basin Waitsia (50% interest, Mitsui operated) Waitsia Stage 1 expansion and Waitsia stage 2 locations Waitsia stage 1 expansion underway and progressing towards Stage 2 FID • Waitsia Stage 1 expansion FID reached in July 2019, construction underway o Waitsia production shut in from January 202
Slide 23: Perth Basin – substantial exploration and appraisal potential
Perth Basin – substantial exploration and appraisal potential Beharra Springs (Beach 50% operated) Recent results supporting ramp up in activity • Beach and MEPAU aligned interests 50:50 across Perth Basin • Beharra Springs Deep-1 Kingia success, flowed at up to 46 MMscfd on test1, similar reservoir
Slide 24: Victorian Otway Basin
Victorian Otway Basin Beach 60% and operator H1 FY20 progress • H1 FY20 production of 2.1 MMboe, -55% on prior year (impacted by sale of 40% interest, natural field decline, customer demand) • 100% facility reliability achieved in the December 2019 quarter H2 FY20 focus areas • Statutory shutdown in
Slide 25: South Australian Otway Basin
South Australian Otway Basin Beach interests 70 – 100% and operator H1 FY20 progress • Dombey-1 gas discovery: o Flow testing completed. Gas analysis: CO2 < 0.1%, CGR 5–8 bbl/MMscf o Geological model to be updated with data from ongoing pressure monitoring to assess connected volumes and potential f
Slide 26: Bass Basin
Bass Basin Beach 53.75% producing assets, 50.25% non-producing, Beach operated H1 FY20 progress • H1 FY20 production of 0.6 MMboe, -36% on prior year due to lower customer demand and natural field decline • Wireline work on Yolla wells successfully increased production by 19 MMscfd (gross) • Trefoil
Slide 27: New Zealand – Kupe Gas Project
New Zealand – Kupe Gas Project Beach 50% and operator H1 FY20 progress • H1 FY20 production of 1.3 MMboe, -16% on prior year • Kupe compression FID reached in July 2019 (~$70 million gross budget); first gas on track for late FY21 • November statutory shutdown successfully completed in 29 days as bu
Slide 28: Frontier Exploration – New Zealand
Frontier Exploration – New Zealand Three high impact exploration targets; drilling underway at first Tawhaki – Great South Basin (Beach 30% interest) • Acquired a 30% interest in exploration permit PEP50119, offshore NZ • OMV is operator • Contains the undrilled Tawhaki exploration prospect, which h
Slide 29: Frontier Exploration – Australia
Frontier Exploration – Australia Ironbark prospect to be drilled in mid FY21 Ironbark – Carnarvon Basin (Beach 21% interest) • Preparations for drilling continuing with operator, BP Ironbark • Ocean Apex rig contracted and long lead items ordered • Drilling scheduled to commence in December 2020 qua
Slide 30: Near term work program
Near term work program1 Calendar 2020 Calendar 2021 Jan Apr Jul Oct Jan Apr Cooper Basin ~4 rigs operating Joint Venture ~2 rigs operating Western Flank Haselgrove appraisal SA and Vic Onshore Otway Basin Black Watch-1 (development) and Enterprise-1 (exploration) Victorian Offshore Artisan-1 explora
Slide 31: Indicative FY20 drilling program
Indicative FY20 drilling program Record drilling activity in the Western Flank, offshore Otway drilling to commence FY20 expected number of wells Highlights • Record drilling activity in FY20 - up to 191 wells (FY19: 134) Gas Oil Total • Target 83 wells in Western Flank (FY19: 42) Western Flank 3 80
Slide 32: Key takeaways
Key takeaways Beach is executing well and delivering on its promises Operations ✓ 98% facility reliability ✓ Kupe shutdown completed on time/budget and safely A successful H1 FY20 Development ✓ 105 wells drilled, including 14 horizontal wells, at 83% success rate Growth execution on track Exploratio
Slide 33: Q&A
F Y 2 0 H A L F Y E A R R E S U LT S P R E S E N TAT I O N Q&A
Slide 34: Appendices
F Y 2 0 H A L F Y E A R R E S U LT S P R E S E N TAT I O N Appendices
Slide 35: Reconciliation of NPAT to Underlying NPAT
Reconciliation of NPAT to Underlying NPAT1 $ millions H1 FY19 H1 FY20 Change Net profit after tax 283 279 (4) (2%) Acquisition costs and writeoff of debt establishment fees 8 - (8) Gain on asset sales - (9) (9) Unrealised hedging movements (14) - 14 Impairment of exploration asset - 1 1 Tax impact o
Slide 36: Underlying EBITDAX, EBITDA, EBIT, NPBT and NPAT
Underlying EBITDAX, EBITDA, EBIT, NPBT and NPAT1 $ millions H1 FY19 H1 FY20 Change Underlying EBITDAX 724 622 (102) Exploration expense - - - Underlying EBITDA 724 622 (102) Depreciation and amortisation 284 224 60 Underlying EBIT 440 398 (42) Finance expenses 48 8 40 Interest income (2) (2) - Under
Slide 37: AASB 16 Lease Impacts
AASB 16 Lease Impacts Adopted 1 July 2019 Dec-19 Financial Statement Disclosures Net Impact of AASB 16 • Accounting change only • Lease Assets $100m • No net cash impact Balance Sheet • Lease Liabilities $101m • NPAT impact of $1m decrease • Immaterial net Asset impact • Depreciation of Lease Assets
Slide 38: Beach Energy portfolio
Beach Energy portfolio FY19 production Taranaki Basin Western Bass Flank Basin 29.4 MMboe Otway Cooper Basin Basin Perth Basin FY19 2P reserves Taranaki Basin Western Bass Flank Basin Otway 326 Basin MMboe Cooper Basin Perth Basin 38
Slide 39: Beach Energy Limited Investor Relations
Beach Energy Limited Level 8, 80 Flinders Street Adelaide SA 5000 Australia T: +61 8 8338 2833 F: +61 8 8338 2336 beachenergy.com.au Investor Relations Nik Burns, Investor Relations Manager Mark Hollis, Investor Relations Advisor T: +61 8 8338 2833