beach energy limitedmacquarie 12th annual australia conference, sydney – 5 may 2011 slide 7 large...

Macquarie 12th Annual Australia Conference, Sydney – 5 May 2011

Beach Energy Limited Macquarie

‘12th Annual Australia Conference’ Sydney - 5 May 2011

Mr. Steve Masters

Chief Commercial Officer


General overview


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 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 2010 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.


Beach Energy Limited - A unique value proposition


Key catalysts for 2011

Multiple near-term catalysts with material re-rating potential


• FY11 guidance downgraded to 6.5 MMboe, as a result of recent:

– Wet weather and flood events

– Tantanna pipeline interruption

• Short-term opportunities for production growth given:

– Better land access for activities following Cooper Basin floods

– Aggressive exploration and development drilling for 2011

– Impress Energy acquisition

Solid production platform

0

2

4

6

8

10

12

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

Beach Operated Western Flank Oil

Gross Expected Ultimate Recovery (MMbbl)

Near-term production uplift potential


Large Resource base to build Reserves

2P Reserves

66 MMboe*

2P Reserves & Contingent Resources

363 MMboe*

* Volumes quoted are as at 30 June 2010 and do not incorporate 12 MMboe (Beach share) of additional Cooper Basin 2P reserves announced by Santos Ltd in Feb 2011, nor the impact of the Impress Energy acquisition

Material resource additions likely for Cooper Basin gas activity

Cooper / Eromanga Other Cooper / Eromanga 2P Other

2P Reserves are a fraction

of the total resource base


Positioned for growth in Eastern Australian gas markets


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

• Gladstone based LNG projects adds a new dimension to gas market dynamics

* Core Energy Group 2010

Beach is well placed strategically and

geographically to supply the market


Excellent prospects to increase Cooper Basin supply

• Strong predicted growth in Eastern Australian gas demand

• Strong predicted growth in Asian LNG demand

• Excellent channels to markets

• 2015+ opens up various domestic and export linked opportunities

• Cooper Basin gas does not have the potential challenges that may impact long-term coal seam gas development in Queensland and New South Wales

Increasing number of domestic and

export customers looking to buy gas

0

20

40

60

80

100

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

mtp

a

Uncontracted Demand by Country - Based on Likely Supply

China India Japan South Korea Taiwan Other Asia

Source: Core Energy Group 2010

0

200

400

600

800

1,000

1,200

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Ga

s (P

J)

Domestic Market: Gas Contracts versus Reference Demand

Total Reference Demand TOP


The impact of eastern Australian LNG projects

• Two projects have achieved FID committing > 16 mtpa capacity

• BG Group has recently announced it is marketing for QCLNG Train 3

• APLNG recently announced a 4.3 mtpa contract with Sinopec

• More projects / contracts to come in due course

~ 80% of East Coast 2P reserves are owned by parties developing LNG projects or with LNG aspirations

* Adapted from Energy Quest, February 2011

LNG markets provide access to oil-linked gas pricing – a paradigm shift

from traditional domestic pricing

18.7%

17.5%

14.9% 13.2%

6.2%

6.2%

9.7%

4.2%

2.3% 7.0%

Australian East Coast 2P Reserves*

BG Group

Santos / PETRONAS/ TOTAL / KogasOrigin Energy

Conoco Phillips

Shell

PetroChina

BHP Billiton /ExxonMobilAGL

Eastern Star Gas

Others


SACB JV - GLNG Project supply opportunity

• Discussions ongoing between SACB JV and Santos for the supply of 750 PJ to Santos’ GLNG Project*:

– Beach’s share of supply would be ~ 152 PJ

– 15 year contract - proposed to commence in 2014

– Oil-linked gas pricing

• Highlights strategic importance of Cooper Basin asset base

• Potentially creates new export supply opportunities

• Enhances various opportunities in the Cooper Basin

* Discussions between the South Australian Cooper Basin Joint Venture

(SACB JV) and Santos are incomplete, and the terms of any potential

agreement remain subject to ongoing dialogue between all relevant parties


Beach is an attractive supply option for gas customers

• Growing Cooper Basin reserves and contingent resources base

• Opportunities to add to reserves and resources in other basins close to markets

• Potential to develop scalable gas developments to suit various customer requirements

• Proximity to existing infrastructure that feeds various markets

• We want to sell gas


Cooper Basin shale gas potential


• PEL-218 (Permian JV) potential shale gas in place 40-80 Tcf

• Similar properties to successful US shale plays

• Encounter-1 and Holdfast-1 both successful due to:

– Target zones either in line or thicker than anticipated

– Gas saturated with no water through the target zone

• Results will assist in the design of future activities:

– Fracture stimulation (Q2 2011)

– Pilot well program (Q3-Q4 2011)

A commanding Cooper Basin shale gas acreage position

Encouraging results to date – material resource booking anticipated in 2011


The importance of REM section for shale & tight gas

• Thick target section

• Gas charged

• Over-pressured

• Favourable mineralogy

Key attributes confirmed to date provide significant

encouragement


Comparison to US plays

Parameter PEL 218 Permian REM Barnett (Texas) Haynesville (Louisiana)

Depth (metres) 2,900 – 3,500 1,650 – 3,000 3,050 – 3,950

Shale thickness (metres)

120 – 260 75 – 150 60 – 90

Total Organic Carbon Av%

3 – 5 5 4

Pressure Gradient (psi/ft)

0.72 0.55 0.85

Gas in place (Av) Bcf/sq.km

40 - 80 40 80

Similar properties to successful US shale plays


Shale gas exploration – Stage 1 indicative timeline

Proof of concept: 2010 – 2011

Drill and core Holdfast-1 & Encounter-1

vertical exploration

wells

Q4 2010/ Q1 2011

Fracture stimulate wells

~ 8 zones/well

Q2 2011

Flow test

Q2 2011

BOOK GAS RESOURCE

Q2/Q3 2011

Pilot Production

Wells

Q3/Q4 2011


Next steps

With successful proof of concept:

• Design pilot horizontal wells targeting highest yield zones in REM

• Drill further vertical delineation wells across acreage

• Expand production pilot to multiple wells

• Seek to monetise early production via existing facilities

• Determine market potential and processing requirements

Encounter-1 well site


Dominant Western Flank oil acreage position


Cooper Basin – Western Flank Oil

Western Flank oil is a core contributor to Beach due to:

• High net back per barrel

• Beach holding strong equity positions

• Quick drill and tie-in periods

• Established infrastructure and surety of delivery

• High flow rates from wells

• Good understanding of the geology resulting in high success rates

• Multiple play types

A high profit area with significant remaining exploration potential


Potential risked reserves addition of six million barrels of oil

Western Flank Drilling Program

Beach operated

• Five exploration wells in PEL 91 (Beach 40%)

• Eleven wells in PEL 92 (Beach 75%)

• Targeting exploration prospects of 0.5-5.5 million barrels of oil (gross)

• Success at first four PEL 92 development / appraisal wells

Senex operated

• Proposed ten well program including four development wells on the Growler field


‘Big oil’ potential, Tanzania


Rift systems - Gulf of Suez vs Lake Tanganyika

Gulf of Suez:

• Rift valley system

• Area approximately 9,000km2

• 800+ exploration wells drilled

• 9.5 billion barrels of oil discovered

Lake Tanganyika

• Rift valley system

• Area approximately 32,900km2

• Two exploration wells drilled

• No discoveries to date

Gulf of Suez Lake Tanganyika

Lake Tanganyika is more than three times the size of the Gulf of Suez


• Beach 100%

• Underexplored area with high potential

• Lake Tanganyika South acreage is approximately 7,000 km2

• Potential for large (> 200 MMbbl) discoveries:

– Natural oil seeps on Lake Tanganyika indicate a working petroleum system

• Airborne gradiometric gravity and hi-resolution aeromagnetic data acquired in 2010

• 2D seismic survey planned for Q3/Q4 2011

Rift systems - Lake Tanganyika, Tanzania

Initial prospect and leads generation in 2011


Lake Tanganyika South Seismic Line – 2D

Lake Tanganyika South vs Lake Albert - Analogy

1.5 sec -

2.0 sec -

2.5 sec -

Lake Albert Seismic Line – 3D

Deeper water in Lake Tanganyika

Source: Tullow Oil plc – EAPCE, 2011 Source: Beach Energy Ltd – Project Probe data


• Typical rift graben/half graben geometries

• Seismic indicates large structures with bounding faults

• Play types are:

– Stratigraphic traps

– Fault traps

– Three way structured traps against basement

– Anticlinal traps

• These are similar to successful play types in Uganda, Lake Albert

Lake Tanganyika South – play types

Large stacked structures under Lake Albert appear similar to those within the Lake Tanganyika South concession


Egypt – Established and growing portfolio


Egypt overview

• Beach interests range 15 – 22%

• An established and growing portfolio

• 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

• Mesaha* has the potential to contain 100 MMbbl+ targets

* Subject to Ministerial approval


Closing remarks


Strong and diverse growth potential

Current share price does not reflect Beach’s growth portfolio


Beach Energy Limited – Head office 25 Conyngham Street Glenside SA 5065 Tel: +61 8 8338 2833 Fax: +61 8 8338 2336 Website: www.beachenergy.com.au

Chris Jamieson Investor Relations Manager Tel: +61 8 8338 2833 Mob: +61 8 (0)487 173 244 Email: [email protected]

Contact information

beach energy limitedmacquarie 12th annual australia conference, sydney – 5 may 2011 slide 7 large...

Documents