Beach Energy Limited

Expanding the Cooper Basin Base Business

Macquarie Australia Conference

Sydney, 7 May 2010

1

Neil Gibbins

General Manager –

Exploration and Development

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 of variables and changes in underlying assumptions which could cause actual results or

trends to differ materially, including, but not limited to: price fluctuations, actual demand,

currency fluctuations, drilling and production results, reserve estimates, loss of market,

industry competition, environmental risks, physical risks, legislative, fiscal and regulatory

developments, economic and financial market conditions in various countries and regions,

political risks, project delays or advancements, approvals and cost estimates.

• All references to dollars, cents or $ in this presentation are to Australian currency, unless

otherwise stated. References to “Beach” may be references to Beach Energy Limited or its

applicable subsidiaries.

• Unless otherwise noted, all references to reserves and resources figures are as at 30 June

2009 and represent Beach’s share.

Competent Persons Statement

• This presentation contains information on Beach’s Reserves and Resources which have been

compiled by Mr Gordon Moseby, who is a full time employee of Beach, is qualified in

accordance with ASX listing rule 5.11 and has consented to the inclusion of this information in

the form and context in which it appears.

Compliance statements

2

Overview of Beach Energy Limited

Cooper Basin shale gas:

• Technical attributes

• Resource potential

• What’s happened in the US

• Why Beach is positioned for success

Other long term growth opportunities

3

Today’s presentation

• 2P reserves of 66 MMboe

• Sustainable long-term oil and gas production

• FY 2010 production guidance now 7.4 MMboe

• $140 million cash and zero debt*

4

Beach Energy Limited (ASX : BPT): A compelling value proposition

* as at 31 March 2010

• Huge Cooper Basin shale gas resource potential

• High potential East African rift oil exploration acreage

• LNG supply potential from existing portfolio

• Track record of value creation

• Highly competent team

• Quality joint venture and strategic relationships

Strong base

business

‘Game changing’

long-term growth

potential

The right

people and

relationships

Cooper / Eromanga Gippsland Egypt

Reserves & resources snapshot: 30 June 2009

5

A solid and enviable base from which to grow,plus a substantial portfolio of emerging opportunities

2P Reserves:

66 MMboe

2P Reserves & Contingent

Resources: 359 MMboe

Cooper / Eromanga 2P Gippsland Other

2P Reserves

are a fraction

of the total

resource base

Reserves and production

6

0

1

2

3

4

5

6

7

8

9

10

FY 2007 FY2008 FY 2009 FY 2010 est.

Gas & Gas Liquids Oil

0

20

40

60

80

100

120

140

160

FY 2006 FY2007 FY 2008 FY 2009

Gas & Gas Liquids Oil

2P ReservesProduction

• Consistent production performance:

– Cooper Basin flooding has resulted in

lower FY10 estimates

• Solid reserves growth in recent years:

– Offset by Tipton West gas divestment in

FY 2009

MM

bo

e

MM

bo

e

Corporate framework

7

• Consistent, targeted growth:

– Long-term cash flow, production and reserves

– Value driven investments

• Thinking ahead of the pack:

– Early entry, low risk, high return

– Participation in emerging technologies and opportunities

• Balanced portfolio:

– 60:30:10 risk profile

• Conservative and flexible balance sheet

• Invest in affordable low pollutant energy

• Cooper Basin is a key supplier

of onshore oil and gas to

eastern Australian markets:

– Diversified asset, product and

market mix

– Quality customers

• Beach participates in

approximately 300 exploration

and production licenses:

– Equity interests range from

approximately 17% to 100%

• Numerous exploration and

development opportunities

The ‘base business’: Cooper Basin production, development & exploration

8

Cooper Basin Oil

2P reserves 14.3 MMbbl

• Comprised of three key areas:

– Western flank (Beach operated)

– Central Cooper Basin (Santos

operated)

– Eastern flank (Beach operated)

• Successful development of the

Beach operated western flank:

– Beach discovered approximately

10 MMbbl over the past 8 years

• Beach operated six well drilling

campaign planned for 2010

The ‘base business’: Conventional Cooper Basin oil & gas

9

Cooper Basin Gas

2P reserves 228 PJ & 7.4 MMboe

• Gas & ethane contracts with major

retailers and end consumers

• Domestic and export LPG contracts

• Export naptha contracts

• Quality joint venture partners in

Santos and Origin Energy

• Drilling program planned to convert

500 PJ (gross) of conventional gas

resources into 2P reserves

• Beach is seeking to grow its

base gas business in eastern

Australian markets from the

Cooper Basin

• Good long-term growth

opportunities for eastern

Australian gas resources:

– Strong projected domestic and

export demand

– Carbon policies

• Cooper Basin shale gas is a

‘sleeper’ in the options for long-

term domestic and export gas

supply

Expanding the Cooper Basin ‘base business’:Positioning for long-term Australian gas supply

10

Schematic geology of natural gas resources

11 Source: Energy Information Administration (EIA), US Department of Energy

Hydraulic fracturing

12 Source: Modified from Chesapeake Energy

SHALE FRACTURES

STEEL CASING

• Early identification of Cooper

Basin shale gas potential

• Captured prospective acreage

with high equity participation

• Huge resource potential:

– Comparable to combined NSW

and Queensland coal seam gas

volume

• Access to multiple market

opportunities via existing

and future infrastructure

• Developing key relationships

to deliver technologies and

new markets

Cooper Basin:Significant shale gas potential

13

Nappamerri Trough: Potential gas in place greater than 200 Tcf

• Extensive and thick shale

packages

• Similar properties to the best

US shale plays

• Nappamerri Trough total area

~ 10,000 km2

• Potential gas in place 20 – 100

Bcf/km2

• Beach has high equity

participation in key permits:– PEL 218 (1,600 km2: 90%)

– ATP 855P (1,680 km2: 25 - 40%)

14

Geological properties

Thick shale sequence 150m thick over 10,000 km2

Organically rich 5% Total Organic Carbon (TOC)

Gas prone Proven

Thermally mature Proven

Overpressure Proven

Tight gas sands Potential upside

Mechanical properties

Suitability for fracturing Probable

Containment of fracture Low risk

Commercial aspects

Infrastructure Significant infrastructure already exists

Cost structure To be determined

Market Multiple options; dependent on cost structure

Why the Nappamerri Trough?

15

• First well (Holdfast-1) spud planned for July

2010

• Vertical exploration wells

• Gas in place (GIP) measurement a key

objective:

– Extensive coring

– Evaluate gas content of shale

– Determine porosity and free gas

• Results will assist in the design of future

pilot well program:

– Evaluate mechanical properties from core

– Determine in-situ stress (mini-frac in Holdfast-1)

– Well design (vertical / horizontal / multi-lateral)

– Completion design (liner / cement / stimulation)

16

The initial tests: Holdfast-1 & Encounter-1 exploration wells

Nappamerri Trough: Geographical context vs US basins

17

Cooper Basin

Nappamerri

Trough

Cooper Basin shale gas:Similar to best US plays

18

Parameter Cooper Basin

Nappamerri

Trough

Barnett

(Texas)

Haynesville

(Louisiana)

Depth (ft) 9500 - 11500’ 5400 - 9600’ 10000 -13000’

Thickness (ft) 400 - 500’ 250 - 500’ 200 – 300’

Petrology Siliceous

Mudstone

Siliceous

Mudstone

Argillaceous

/ Calcareous

Mudstone

Age Permian Lower

Carboniferous

(Mississippian)

Jurassic

Porosity % To be measured 7 10

TOC Av% 5 5 4

Ro% 1.6 - 3.1 (type II) 1 - 1.3 (type II) 2.2 - 3 (type III)

Temp degF 300 - 390 200 240 - 322

Gas in place

(Av) Bcf/sq.mile

Prelim. 50 - 250

To be measured

100 200

0

5

10

15

20

25

30

35

40

2006 2007 2008 2009

No. of frac stages/well

F&D cost (US$/bbl)

19

US technology improvements drive down costs: e.g. - Bakken Shale

• Technology advancements in

multi – stage frac completions

is driving efficiencies in US oil

& gas developments

• Key advancements are

particularly associated with

long lateral drilling + multi-

stage fracs

• Advances in technology is

delivering:– Increased reserves & production

– Lower finding & development

costs

• Australian shale projects can

benefit from the US experience

& learning gained by others

Bakken Shale (oil), North Dakota

Source: Sundance Energy

• Australian unconventional gas M&A activity has been mainly associated

with Queensland coal seam methane (CSM):

– More than $20 billion worth of recent CSM deals

– Purchasers include BG Group, ConocoPhillips, Shell and PETRONAS

• Australian unconventional gas M&A activity has lagged overseas ‘action’

whilst the industry was developing technology, resources and markets

Australian industry dynamics lag the US on a number of fronts

20

Deal Location Date Acres Value

Mitsui - Anadarko Marcellus Feb 10 100,000 US$1.4b

Total - Chesapeake Barnett Jan 10 270,000 US$2.25b

ExxonMobil – XTO

Energy

Various basins Dec 09 Included 1 million

acres of various

shale gas acreage

US$41b

BG Group – EXCO

Resources

Haynesville Aug 09 120,000 US$1.1b

Some recent US shale gas transactions

US shale gas production forecasts highlight its importance and global industry relevance

21

“…production from gas shale plays in 2030 is 50 percent higher in the AEO2010 reference case,

than in the updated AEO2009 reference case.” - EIA 2010 Annual Energy Early Outlook, Dec 2009

Source: Energy Information Administration (EIA), US Department of Energy

Multiple long-term shale gas market options

Market opportunities

Existing customers –

extension contracts

Existing customers –incremental

contracts

New domestic

customers

Gas Swaps

Mature existing MOUs

Export LNG

• Good prospects to increase

Cooper Basin supply over time

• New domestic gas supply

opportunities include:

– Power generation

– Feedstock

– Liquid fuels

• LNG supply a long-term

objective

• Beach will continue to seek

opportunities with others that

can facilitate gas market

development

22

Cooper Basin shale gas:Indicative shale gas development timeline

23

Holdfast-1 &

Encounter-1 vertical

exploration wells

Q3 2010

Design pilot production

well Q2

Q4 2010/

Q1 2011

BOOK GAS RESOURCE

Q2 2011

Pilot production

well

Drill Q2 2011

Frac Q4 2011

Test Q1 2012

Pilot development

Commence FY13

BOOK GAS

RESERVE

Target FY13/14

FIRST GAS SALES

Target FY15

Beach will be investigating options to potentially

accelerate the above timeline

24

Some other long-term growth opportunities: ‘Big oil’ and ‘big gas’

Tanzania

Papua New Guinea

Australia

New Zealand

25

Tanzania - East African Rift:An emerging ‘big oil’ province

• Beach 100%

• Under - explored, high potential

region

• Significant success in nearby

analogous areas (Uganda)

• Recent M&A activity in Uganda

highlights regional potential

• Potential for large (> 200+ MMbbl)

discoveries

• Petroleum Sharing Agreement

signing expected within months

• Exploration activity to commence

in 2010

Offshore ‘big gas’ opportunities

• LNG supply potential from existing portfolio:

– Burnside (multi-Tcf discovery made in 2009, Beach 7.34%)

– Pandora (mean gas resource approx. 0.8 Tcf, Beach 6.36%)

– Barque gas prospect (multi-Tcf potential, Beach 20%)

Browse Basin Gulf of Papua Canterbury Basin

26

• Sustainable underlying base business:

– Long-life reserves

– Long-term production and cash-flow

– Asset, product and market diversity

• At the forefront of developing an

Australian shale gas industry

• Tangible growth potential targeting

regionally specific opportunities:

– Cooper Basin shale gas

– Game-changing exploration and

development potential

• Robust balance sheet

• The right people and strong strategic

relationships to deliver long-term growth

Beach Energy

27

Beach Energy Limited

Expanding the Cooper Basin Base Business

Macquarie Australia Conference

Sydney, 7 May 2010

28

Neil Gibbins

General Manager –

Exploration and Development