2 4 / 2 5 S E P T E M B E R 2 0 1 9
VICTORIAN OTWAY BASIN SITE VISIT
Compliance statements
Disclaimer
This presentation contains forward looking statements that are subject to risk factors associated with oil, gas 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.
Underlying EBITDAX (earnings before interest, tax, depreciation, amortisation, evaluation, exploration expenses and impairment adjustments), underlying EBITDA (earnings before interest, tax, depreciation, amortisation, evaluation and impairment adjustments), underlying EBIT (earnings before interest, tax, and impairment adjustments) and underlying profit are non-IFRS financial information provided to assist readers to better understand the financial performance of
the underlying operating business. They have not been subject to audit or review by Beach's external auditors. The
information has been extracted from the audited financial statements.
Free cash flow in this presentation is defined as cash flows from operating activities plus cash flows from investing activities less cash flows from acquisitions and divestments.
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 2019 and represent Beach's share.
References to planned activities in FY20 and beyond FY20 may be subject to finalisation of work programs, government approvals, joint venture approvals and board approvals.
Due to rounding, figures and ratios may not reconcile to totals throughout the presentation.
2
Assumptions
The five year outlook set out in this presentation is not guidance. The outlook is uncertain and subject to change. The outlook has been estimated on the basis of the following assumptions: 1. a US$62.50/bbl Brent oil price in FY20 and a US$70/bbl Brent oil price from FY21; 2. 0.70 AUD/USD exchange rate in FY20 and 0.75 AUD/USD exchange rate from FY21;
3. various other economic and corporate assumptions; 4. assumptions regarding drilling results; and 5. expected future development, appraisal and exploration projects being delivered in accordance with their current expected project schedules.
FY20 guidance is uncertain and subject to change. FY20 guidance has been estimated on the basis of the following assumptions: 1. a US$62.50/bbl Brent oil price; 2. 0.70 AUD/USD exchange rate; 3. various other economic and corporate assumptions; 4. assumptions regarding drilling results; and 5. expected future development, appraisal and exploration projects being delivered in accordance with their current expected project schedules.
These future development, appraisal and exploration projects are subject to approvals such as government approvals, joint venture approvals and board approvals. Beach expresses no view as to whether all required approvals will be obtained in accordance with current project schedules.
Reserves disclosure
Beach prepares its petroleum reserves and contingent resources estimates in accordance with the Petroleum Resources Management System (PRMS) published by the Society of Petroleum Engineers. The reserves and contingent resources presented in this report were originally disclosed to the market in the FY19 annual report released 19 August 2019. Beach confirms that it is not aware of any new information or data that materially affects the information included in the aforesaid market announcement and that all the material assumptions and technical parameters underpinning the estimates in the aforesaid market announcement continue to apply and have not materially changed.
The reserves and resources information in this report is based on, and fairly represents, information and supporting documentation prepared by, or under the supervision of, Mr David Capon (Manager Development Offshore Victoria, New Zealand and NT). Mr Capon is a full time employee of Beach Energy Limited and has a BSc (Hons) degree from the University of Adelaide and is a member of the Society of Petroleum Engineers. He has in excess of 25 years of relevant experience. The reserves and resources information in this presentation has been issued with the prior written consent of Mr Capon as to the form and context in which it appears.
Conversion factors used to evaluate oil equivalent quantities are sales gas and ethane: 5.816 TJ per kboe, LPG: 1.398 bbl
per boe, condensate: 1.069 bbl per boe and oil: 1 bbl per boe. The reference point for reserves determination is the custody transfer point for the products. Reserves are stated net of fuel, flare & vent and third party royalties.
O T W AY B A S I N S I T E V I S I T - 2 4 S E P T E M B E R
Session 1: Introduction
Our vision, purpose and values
Our vision
We aim to be
Australia's premier
multi-basin upstream oil and gas company
Our purpose
To deliver sustainable growth in shareholder value
4
Beach's portfolio
FY19 production
Taranaki
Basin
Bass
Basin
29.4
MMboe
Otway
Basin
Perth
Basin
FY19 2P reserves
Taranaki
Western
Flank
Cooper
Basin
Bass
Basin
Western
Flank
Basin
Otway | 326 |
MMboe | |
Basin | |
Perth | |
Basin |
Cooper
Basin
5
Beach's corporate strategy
Optimise | Strengthen | Pursue | Maintain | Our People |
our operated and non- | our complementary gas | other compatible growth | financial strength | and culture |
operated producing assets | businesses | opportunities |
FY20 Focus
- Focus on operating costs - $30 million reduction1in direct controllable operating costs by the end of FY20
- Execute Cooper Basin FY20 drilling program
- Progress Kupe compression project
• | Continue executing Victorian | •Continue progressing and | •Disciplined capital | •Continued focus on |
Otway development | replenishing frontier | management | enabling and engaging | |
program to keep the Otway | exploration portfolio | our employees and | ||
Gas Plant as full as possible | contractors | |||
• | Drill exploration wells | |||
Enterprise, Artisan and | ||||
Beharra Springs Deep |
•Waitsia Stage 2 FID
Safety Creativity Respect Integrity Performance Teamwork
6
1. Relative to FY18 baseline direct controllable operating costs of $160 million
Five year outlook updated at FY19 results
Accelerated production growth via highly value-accretive investment
Beach is targeting 34-40MMboe annual production in the
medium term…
Production outlook1
(MMboe)
40
35
30
25
20
FY19A FY20E FY21E FY22E FY23E FY24E
Outlook presented October 2018 | Updated 5 year outlook | |
…and cumulative free cash flow2of more than $2.7 billion over the next 5 years…
Free cash flow outlook1 | |
1,200 | ($ million) |
1,000 | |
800 | |
600 | |
400 | |
200 | |
0 | |
FY20E FY21E FY22E FY23E FY24E | |
…by accelerating investment in our expanded growth portfolio
Capital expenditure outlook1
($ million) | ||
1,000 | ||
750 - 850 | 650 - 800 | |
800 | ||
600 | ||
400 | ||
200 | ||
0 | FY21 - 24 | |
FY20 guidance | ||
range | Range | Outlook |
71. Outlook is determined using the assumptions set out on the "Compliance Statements" slide.
2. Free cash flow is defined in disclosures on slide 2 of this presentation. For five year outlook purposes cash flows associated with operating leases are not adjusted for potential changes from AASB 16.
Victorian Otway Basin
Overview
Victorian Otway Gas Assets comprise:
•Otway Gas Plant, ~10 km from Pt. Campbell
•Producing gas fields: oThylacine
oGeographe
oHalladale
oSpeculant
•Undeveloped gas fields: oBlack Watch
oLa Bella
•Thylacine offshore platform (unmanned)
•Gathering system from wells to gas plant
•Various exploration, production and pipeline permits and licences
8
FY19 production
Vic Otway
Basin
8.4 MMboe
29.4
MMboe
Rest of
Beach
FY19 2P reserves
Vic Otway
Basin
62 MMboe
326
MMboe
Rest of
Beach
Victorian Otway is pivotal to Beach's strategy
Beach plans to develop its undeveloped 2P reserves over the next 5 years
Beach 2P reserves1
(MMboe)
48% | 326 | 52% |
MMboe | ||
Developed | Undeveloped |
91. Outlook is determined using the assumptions set out on the "Compliance Statements" slide.
Otway Basin represents 19% of Beach 2P reserves and 27% of Beach undeveloped 2P reserves
Beach undeveloped 2P reserves1
(MMboe)
Other | Vic |
Otway |
169 | |
MMboe | |
Perth | Western |
Basin | Flank |
CBJV |
Refilling the hopper through value-accretive exploration
Exploration in the Vic Otway:
- Enterprise-1
- Artisan-1
- Other prospects and leads (Hercules and T/30P prospects)
- Contributing towards company target of > 100% average 2P reserves replacement over the next 5 years
The role of the Victorian Otway assets in Beach's strategy
Victorian Otway assets are expected to contribute approximately 17% of group production from FY20 - 24
5 year group production outlook1
Beach plans to invest ~$600 million in the Vic Otway Basin, 87% of investment is development and 13% exploration
5 year capital expenditure outlook
At capacity, the Otway Gas Plant can meet ~15% of Victorian peak winter demand and ~25% of Victorian annual gas demand
Victorian peak gas demand2
40
(MMboe)
by asset group 1
(TJ/d)
30 |
20 |
1,400
1,200
1,000
10 | ||||||||||||||||
0 | ||||||||||||||||
FY20E | FY21E | FY22E | FY23E | FY24E | ||||||||||||
Vic Otway | Other assets | Range | ||||||||||||||
~$4 billion
Otway growth | Other investment |
800
600
400
200
0
Otway Gas Plant supply at capacity
Underinvestment over the past 3-4 years combined with operatorship, key infrastructure and market
access were the key attractions of Lattice portfolio
10
- Outlook is determined using the assumptions set out on the "Compliance Statements" slide.
- Source: AEMO, Victorian Gas Planning Report
Why are we investing in the Victorian Otway?
Four years since last well drilled and three years since last well connected
Otway Gas Plant output1
(TJ/day)
250
Halladale and Speculant brought | |
Facility Capacity = 205 TJ/d | online in August 2016 |
200
150
100
JV plans to increase gas supply to the OGP via the drilling of:
- 8 development wells
- 3 exploration wells
50 | Speculant-1 was last | |||||||||||||||||||||||||
well drilled in 2015 | ||||||||||||||||||||||||||
0 | ||||||||||||||||||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
Otway JV (Beach and O.G. Energy) preparing to embark on a low risk program to refill the Otway
Gas Plant. Gas market dynamics are supportive of new investment
111. Source: AEMO, Gas Bulletin Board
Positive exploration track record
100% success to date in Beach-operated acreage with seismic amplitude support
Well Name | Year | Amplitude support? | Success? |
La Bella-1 | 1993 | Yes | Yes |
Geographe-1 | 2001 | Yes | Yes |
Thylacine-1 | 2001 | Yes | Yes |
Thylacine-2 | 2001 | Yes | Yes |
Halladale-1-DW1 (Black Watch) | 2005 | Yes | Yes |
Halladale-1-DW2 | 2005 | Yes | Yes |
Halladale-1-DW3 | 2005 | Yes | Yes |
Thylacine South-1 | 2006 | Yes | Yes |
Geographe-2PST1 | 2012 | Yes | Yes |
Geographe-2L1 | 2012 | Yes | Yes |
Geographe-2L2 | 2012 | Yes | Yes |
Halladale-2 | 2014 | Yes | Yes |
Both Enterprise and Artisan prospects in our drilling program have seismic amplitude support
12Table shows all wells drilled on Beach licence and permit areas in the nearshore and offshore Victorian Otway Basin since 1993 on known, validated amplitude anomalies
Increasing exposure to market pricing
Legacy contract pricing to end in FY21/22, exploration and La Bella adds flexibility
- Increased Otway Gas Plant output to coincide withre-pricing of Lattice GSA and end of AGL GSA
- Thereafter, all gas from Geographe, Thylacine, Halladale, Speculant and Black Watch to be supplied to Origin under Lattice GSA
- Gas from any new discoveries and La Bella to be supplied into new gas contracts
Otway Gas Plant gas production outlook (100% interest)1
70 | ||||||
60 | ||||||
50 | ||||||
40 | ||||||
30 | ||||||
20 | ||||||
10 | ||||||
0 | ||||||
FY20E | FY21E | FY22E | FY23E | FY24E | FY25E | FY26E |
Market prices (La Bella and one exploration success) | Re-priced contracts | Current contract prices |
131. Production outlook is determined using the assumptions set out on the "Compliance Statements" slide and assumes one exploration success and La Bella development. Any changes to the underlying assumptions could cause actual reported results to differ materially to the outlook presented. Outlook is presented on 100% basis.
Beach East Coast gas portfolio
Otway gas an important component in Beach's portfolio
Beach
average realised gas price:
FY19
$6.81/GJ
Re-contracted /re-priced volumes
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
FY20 | FY21 | FY22 | FY23 | FY24 | ||
Legacy Pricing | New Market Pricing | |||||
Almost 80% of Beach's estimated east coast gas sales in FY24 is sold at prevailing market prices
-
Beach's East Coast gas portfolio comprises gas from:
oOtway Basin assets oBass Basin assets oCooper Basin assets - Lattice gas contracts have annualstep-ups and CPI adjustments ahead of repricing events
- By FY22 more than 70% of Beach's east coast gas sales is expected to bere-priced or re- contracted
- Beach capital investment supported by market dynamics
ACCC report that Victorian and South Australian producers have agreed prices ranging from
$8.87 - 10.83/GJ for gas supply in 2020 (average price: $9.72/GJ)1
14
1. Source: ACCC Gas Inquiry Report 2017 - 2020 Interim Report July 2019, page 60. Expected 2020 wholesale producer gas commodity prices in the East Coast Gas Market, from Victoria and South Australian producers, for supply in 2020, agreed under GSAs executed between 1 January 2018 and 24 April 2019.
O T W AY B A S I N S I T E V I S I T - 2 4 S E P T E M B E R
Session 2: Progress since Otway acquisition
Priorities and outcomes since Beach acquisition
Priorities | Outcomes | ||
People | • | Functional operating model to promote technical excellence | ✓Functional operating model now in place |
•Build out offshore capabilities to support offshore programs | ✓190 staff increased to 550, plus contractor support | ||
HSER | • | Ensure safe operations during transition to Beach ownership | ✓Our safest year on record in FY19 |
•Integrate HSER systems with Beach systems | ✓Our best process safety year on record in FY19 | ||
Operations | • | Focus on reliable operations | ✓OGP Facility reliability 97.6% in FY19 |
• | Initiate operational excellence program | ✓FY20 YTD OGP facility reliability > 99% | |
Data review | • | Review all production data and simulation models | ✓Better understanding of existing gas fields |
•Integrate 3D seismic surveys into a single 'Super Cube' | ✓Optimised location of development wells | ||
Commercial | • | Move to 100% interest in Otway | ✓Toyota Tsusho stake acquired, JOA re-written |
•Sell down Otway stake to aligned, well funded partner | ✓Sale of 40% interest to O.G. Energy for $344m | ||
•Complete GSA repricing with Toyota Tsusho volumes | ✓Completed price review with Origin Energy | ||
•Evaluate low cost bolt-on acquisition opportunities | ✓Acquired undeveloped La Bella gas field for $4m | ||
Development | • | Re-evaluate previous operator development plans | ✓Optimised 8 well development program announced |
•Secure rigs for drilling campaign | ✓Contracted Ensign 931 and Ocean Onyx rigs | ||
Exploration | • | Confirm Enterprise and Artisan as viable exploration targets | ✓Enterprise and Artisan prospectivity confirmed |
•Use reprocessed seismic to identify new prospects and leads | ✓Prospects and leads being high-graded |
✓T/30P exploration well in drilling schedule
16
Progress under Beach ownership
January 2018: | November 2018: | February 2019: | June 2019: | |||
Awarded VIC/P73 | Commence | |||||
Lattice | Contracted Ocean | |||||
containing | SA Otway | |||||
acquisition | Onyx semi- | |||||
La Bella gas field | drilling | |||||
completed | submersible rig | |||||
for $4 million | campaign | |||||
2018 | 2019 |
October 2018: | December | May 2019: | August 2019: | |||
Announced | 2018: | Sell down of | Announced 183% | |||
O.G. Energy to | Contracted | 40% interest | organic 2P reserves | |||
acquire 40% | Ensign 931 | to O.G. Energy | replacement ratio | |||
interest | onshore rig | complete | in Victorian Otway | |||
17
Beach's functional operating model
Development and Exploration & Appraisal teams for Otway development program
Geoff Barker
Group Executive -
Development
30+ years' experience Woodside, Shell, RISC
GM Well Engineering & | GM Well Engineering & | GM Development | GM Development |
Construction (Onshore) | Construction (Offshore) | Projects | |
(Subsurface) | |||
30+ years' experience | 35+ years' experience | 30+ years' experience | |
25+ years' experience | |||
Shell, Tullow, SASOL, | Shell, Santos, Apache, | Santos, Quadrant, | |
Santos, Oil Search, RISC | |||
Petro SA | Vermillion | Origin, Apache | |
Well engineering and | |||||||||
Well engineering and | Projects team | Subsurface team | |||||||
construction team | construction team | ||||||||
20 people | 7 people | ||||||||
14 people | 28 people | ||||||||
Jeffrey Schrull
Group Executive -
Exploration & Appraisal
30+ years' experience
Chevron, Addax
GM E&A (Victoria)
20+ years' experience
Hess, InterOil
Exploration & appraisal team
13 people
18
Otway Basin seismic reprocessing and remapping
Otway Basin data review since acquisition
Integrated workflows targeting exploration and development opportunities
Seismic - Lower subsurface risk
-
Legacy 3D seismic surveys in the offshore basin reprocessed into a Super Cube - over
9,000 km2of data - State-of-the-artseismic reprocessing and rigorous mapping has led to reserves upgrades in producing fields and identification of new prospects
- Super Cube allows the calibration of new prospects and leads to existing fields, reducing risk
- Development well planning onbest-in-class depth migration data reducing execution risk
Courtesy of
20 | Seismic x-section on next page | ||
Otway Basin data review since acquisition
ANew data - fundamentals in place | A' | ||||
Enterprise- | Minerva-1 | Artisan-proposed | Thistle-1 | GeographeGeographe-1 | Thylacine-1Thylacine-2 |
proposed | North-1 | ||||
In-house and external reprocessing of existing seismic surveys has led to a better understanding of | Courtesy of |
21existing fields, increased confidence in existing prospects and the identification of new opportunities
Otway Basin data review since acquisition
Thylacine remapped - leading to optimised well locations
•Thylacine gas field currently producing from four wells
•Current deliverability ~50 TJ/day
•Four new development wells planned as part of upcoming drilling campaign
•State-of-the-art reprocessing of Super Cube and rigorous mapping led to increase in reserves and optimisation of new development well locations
•Targeting an increase in Thylacine deliverability to 150 TJ/day once all new development wells are brought online
22 | Courtesy of |
Otway Basin data review since acquisition
Artisan and Hercules
Artisan-1
SSE | NNW |
-
500m
- Artisan, a low risk exploration prospect, will be the first well drilled in the offshore campaign
- Super Cube seismic data allows otherde-risking indicators to be observed and calibrated
High
Hercules |
Lead |
Low
- Work on Artisan and surrounding seismic data has identified another lead to the south - named Hercules
- Hercules under consideration for drilling as part of current drilling program, depends on Artisan success
23Courtesy of
Otway Basin data review since acquisition
La Bella - discovered gas field provides optionality
- Permit VIC/P73 containing the La Bella gas field was acquired as part of government gazettal round in February 2019 for $4 million
- Gross 2P gas reserves ~40 PJ
- Victorian Otway 2P reserves life of 12 years means we have flexibility around development timing
- New data allows rapid understanding and calibration of the field and planning is now underway for development
- Well timing and pipeline connection dependent on other drilling results
Courtesy of
24
Otway Basin data review since acquisition
Further exploration potential - T/30P and beyond
- T/30P prospect and lead portfolio being refreshed utilising Super Cube data
- Portfolio currently being matured for drilling
- The T/30P commitment well is on the rig schedule for execution in FY21
- Further exploration potential identified in the outboard area
- Beach team will mature prospects and leads for consideration as future drilling candidates
25
Courtesy of
Deep Shallow
O T W AY B A S I N S I T E V I S I T - 2 5 S E P T E M B E R
Session 3: Otway Gas Plant
Beach's functional operating model
HSER team
Brett Doherty
Group Executive - HSER
30+ years' experience
Rasgas, Inpex
Head of Head of | Head of Corporate Risk | ||||||||||||||
Head of Health & Safety | Head of Operations | Head of Environment | |||||||||||||
Assurance | Technical Assurance | 20+ years' experience | |||||||||||||
13+ years' experience | 20+ years' experience | ||||||||||||||
15+ years' experience | 30+ years' experience | Santos Ltd, Corrs | |||||||||||||
Inpex, BHP | Beach, SA Government | ||||||||||||||
Origin Energy, Rio Tinto | ExxonMobil, Origin | Chambers | |||||||||||||
27
Health, safety, environment and risk
Safety performance | Environmental performance2 |
TRIFR116 | Crude Spill Volumes (kl) |
15.6 | ||||||||||
12 | 51.9 | |||||||||
8 | 7.9 | 99.9% | ||||||||
9.6 | ||||||||||
4 | 3.5 | 3.4 | ||||||||
3.8 | ||||||||||
0.2 | ||||||||||
0 | 0.1 | 0.07 | ||||||||
FY15 | FY16 | FY17 | FY18 | FY19 | ||||||
FY15 | FY16 | FY17 | FY18 | FY19 | ||||||
Focus on HSE delivering best performance to date
- Safety: Our safest year on record
- Environment: Our best environmental performance on record
- Process Safety: Our best process safety performance on record
281. TRIFR: Total Recordable Injury Frequency Rate, calculated as number of recordable injuries per million hours worked (Beach employees and contractors).
- Includes Lattice assets from 1 January 2018.
- Based on API 754 Tier 1, 2, 3. Loss of Primary Containment process safety events.
Process Safety - Loss of containment3
10
8
6
4
2
0
Dec Feb Apr | Jun Aug Oct Dec Feb Apr | Jun Aug Oct Dec Feb Apr June |
2017 | 2018 | 2019 |
Pacesetting HSER performance achieved through …
Organisation
- Modelled on established industry practice, yielding HSE independence and significant discipline experience.
- Entire Division recruited to provide HSE expertise across all Oil & Gas Drilling, Construction and Operations activities
- Delivered this support efficiently through a Functional Model.
Systems
- Deliberate decision to continue operating under the Lattice Energy HSEMS providing stability and clarity on risk controls during the transition.
- Completed integration of important HSE IT systems, including the Incident and Action Management Tools.
- Implemented a Emergency and Incident Management Framework, Response Teams and System.
Strategy
- Heightened focus on process safety leadership - assurance executed by all levels of the business.
- Integrated and improved Technical Authority and Process Safety Frameworks.
- Implemented3-Tier Assurance Framework.
- Addressing community expectations through focus on sustainable development - emissions benchmarking across all assets with the aim of
setting future reduction targets.
29
HSE&R - 5 Year Vision and Strategy
# incidents
Safety
Process Safety
Environment
Health
Security
- 5 Year Vision: Zero incidents achieved and maintained
- Strategy of continuous improvement year on year
15% | Reduction strategy leverages: | |
• | Annual KPIs and Targets | |
• | Internal Inputs | |
oIncident investigation learnings | ||
oAudit and assurance findings | ||
• | External Inputs | |
oIndustry group participation | ||
oRegulations and standards | ||
oIndustry best practice |
2019 | 2020 | 2021 | 2022 | 2023 |
30
Operational excellence
Delivery of value through safe, reliable and efficient operations
People | Performance |
HSE | Process & |
and risk | technology |
31
Beach's functional operating model
Production Division : Victoria - Otway
Dawn Summers
Chief Operating Officer
25+ years' experience
BP, Genel Energy, Origin
GM Technical Services | GM Production, Planning | |||||||||||
GMs of SA, WA and | GM Victorian | |||||||||||
Operations | 20+ yrs experience | & Performance | ||||||||||
NZ | ||||||||||||
30+ yrs experience | BHP, Origin, BP, | 20+ yrs experience | ||||||||||
Woodside, Mobil, AMEC | Union Texas | BHP, Santos, AWE, Mitsui | ||||||||||
32
Operational excellence
Delivery of value through safe, reliable and efficient operations
Key goals
Key targets
Otway FY19
actuals
Reliability | Operating costs | |||
98% reliability across all operating assets | Sustainable reduction in direct operating costs of | |||
by end FY20 | greater than 20% by end FY20 | |||
>$20 millionper annum incremental revenue | >$30 millionper annum reduction in direct | |||
targeted by the end of FY20 vs FY18 | controllable operating costs by FY20 vs FY18 | |||
2.6% Improvement=$8.2m incremental revenue | 12% Op Cost Reduction = $7.7m | |||
Reliability : FY18 = 95% to FY19 = 97.6% | $/boe : FY18 = 8.9 to FY19 = 7.3 | |||
33
Operational excellence
Improving base productionusing industry best practice & technology
Productivity
- Advanced Process Control
- Secondary recovery
- Technical Limit and debottlenecking techniques
Application at Victorian Otway
•Best practice start-up times and reduced downtime
- Process efficiency including inlet compressor control and LPG yield optimisation
- Debottlenecking of liquids handling during pig runs•Optimising production and exports
- Optimising fuel gas and reducing emissions
Victorian Otway facility reliability increased from 95% in FY18 to 97.6% in FY19
34
Operational excellence
Driving a sustainable reduction in direct operating costs
Operating Cost | Application at Victorian Otway | |
- Drone technology - Offshore Platform Inspections
✓Advanced Inspection | • | Advanced Digital Radiographic techniques - CUI inspections |
techniques | ||
- Reducing confined space entry through digital technology
✓Smart, risk-based | •Optimising high frequency maintenance activity, planning, tool time |
•System integration and functional alignment | |
maintenance 'scrub' |
- Utilising smart technology to increase reliability
✓JV Partner and Basin | • | Warehousing, spares and contractor synergies |
supply chain & logistics | • | Helicopter, vessel & vehicle optimisation in Victoria |
synergies | ||
Victorian Otway operating cost reduced from $8.9/boe in FY18 to $7.3/boe in Y19
35
The Otway Gas Plant
•The Otway Gas Plant is located onshore near Port Campbell, Victoria
•It processes commingled raw gas from the Thylacine, Geographe, Halladale and Speculant gas fields, into sales gas, LPG (propane and autogas) and condensate products
•The maximum operating capacity of the onshore plant is approximately 205 terajoules per day (equivalent to 75 PJ/a)
•The plant is designed for annual average production of:
o60 petajoules of natural gas (PJ/a)
o~100,000 tonnes of LPG
o~800,000 barrels of condensate
36
Facilities overview
OGP connection to the gas grid
•The Otway Gas Plant is strategically located close to key infrastructure:
oIona gas storage facility
oSEA Gas pipeline (to Adelaide)
oSouth-west pipeline (to Melbourne)
37
Otway Gas Plant process flow diagram
38
O T W AY B A S I N S I T E V I S I T - 2 5 S E P T E M B E R
Session 4: Development plans
Our forward development program
Indicative drilling timeline
ERD program | Rig: Ensign 931 |
FY20 | FY21 | FY22 |
Black Watch-1Enterprise-1
Offshore program | Rig: Ocean Onyx |
Development drilling | Development drilling | ||||
Development program: 4 x Thylacine, 2 x Geographe wells and La Bella | |||||
Artisan-1 | T/30P well | ||||
- Eleven drilling opportunities in current program: 8 development wells and 3 exploration wells
- Rig schedule to remain flexible depending on drilling results. E.g. La Bella timing may be pushed back in the schedule depending on exploration results at Enterprise and Artisan.
40
Nearshore - starting close to home
Lowest development costs
Ensign 931 rig secured for ERD drilling program
- Same rig was used to drill Halladale and Speculant development wells
- Rig is currently drillingDombey-1 in SA Otway Basin
- Following the completion ofDombey-1 drilling, rig will mobilise to Victoria to drill Black Watch-1 development well and Enterprise-1 exploration well
- The onshore rig will drill highly deviated wells to reach offshore reservoirs
- Key benefit is the onshore wellhead location, providing lower cost completion and processing options as well as fasterhook-up to the Otway Gas Plant
41
BlackWatch-1 to be drilled from Halladale well pad
Halladale as a template - Black Watch as follow up
Halladale delivered:
- Halladale/Speculant online rate 80 MMscf/d
- High production rates maintained by pressure support/recharge
- 2P reserves increased by 3.6 Bcf (net) FY19 due to lower production declines supported by new mappings
Black Watch development anticipated to do the same:
- Approximately 70% of the BlackWatch-1 well path twins the producing Halladale-2 well
- Well designed for 60 MMscf/d
43
Enterprise exploration well
Low risk, high value exploration target in a proven play
Enterprise-1
Enterprise-1
Enterprise-1
Proposed
High
Low | Enterprise |
East Lead |
- Enterprise 7 km from Minerva in proven Waarre play
- New Super Cube tied to proprietary transition zone data allows calibration to known fields reducing subsurface risk
-
In a success case:
oEnterprise-1 to be cased and suspended as a future producer
oProceed with regulatory approvals and construction of new pipeline to Otway Gas Plant
Ocean Onyx semi-submersible rig
- Ocean Onyxsemi-submersible rig contracted in December 2018 for the offshore Otway Basin drilling program
- Ocean Onyx is currently undergoing upgrades in Singapore
- Upgrades are required to handle the expected operating conditions in the Otway Basin
- Rig delivery currently expected in Q3 FY20
Key remaining milestones ahead of offshore drilling:
- Completion of upgrade installation and operational readiness checks
- Regulatory approvals (e.g. NOPSEMA approval of safety case)
- Delivery of long lead items
45
Otway offshore scope
Diagrammatic only - not to scale | Subsea Structure | Future Subsea Developments | ||
Subsea Tree | ||||
Rigid Tie-In Spool | Flexible Flowline | Existing Infrastructure | ||
46 | Umbilical |
-
Schematic shows how the seven offshore development wells and Artisan exploration well (success case) would be connected to the existing offshore infrastructure
oGeographe wells are connected with short rigid connectors to existing tie-in points - Short lead times and low cost
- Thylacine wells tied back to platform using flexible flowlines
- Reviewing options to optimise subsea infrastructure
- La Bella tie in route depends on Artisan success, but usespre-existingtie-in points in either case
Our plan is to fill the Otway Gas Plant
…and keep it full with the lowest unit technical cost gas
- Output to progressively ramp up as wells connected and tied in, commencing with BlackWatch-1 in H2 FY20
Otway Gas Plant gas production outlook (100% interest)1
60
- Sufficient deliverability expected to be available to fill OGP capacity by FY23
50 | ||||||||||||||||||||
40 | ||||||||||||||||||||
PJ | 30 | |||||||||||||||||||
20 | ||||||||||||||||||||
10 | ||||||||||||||||||||
0 | ||||||||||||||||||||
FY20 | FY21 | FY22 | FY23 | FY24 | FY25 | FY26 | FY27 | FY28 | ||||||||||||
2 exploration successes + La Bella | 1 exploration success + La Bella | |||||||||||||||||||
471. Production outlook is determined using the assumptions set out on the "Compliance Statements" slide and assumes risked exploration success and La Bella development. Any changes to the underlying assumptions could cause actual reported results to differ materially to the outlook presented. Outlook is presented on 100% basis.
Growth potential (debottlenecking)
- Beach undertaking review of facility constraints
- Evaluating options for increasing throughput above current capacity limit of 205 TJ/day
- Range of low to higher cost and capacity addition options expected to be prepared
- Capacity expansion to be considered based on results of drilling campaign
48
Key takeaways
- Safety takes precedence in everything we do
- Vic Otway is a strategically important asset to Beach and East Coast gas market
- 15-20%of Beach 2P reserves, 5 year investment and production, Vic winter gas demand (at capacity)
3. We've made significant progress in Vic Otway since acquisition
- Beach team has the offshore experience and capabilities
- Onshore and offshore rigs contracted for drilling programs
- Rigorous rework of all data has optimised well locations, improved understanding of assets and yielded more prospects and leads
- Operational efficiency ~98% reliability in FY19, > 99% in FY20 YTD
- Beach is preparing to execute on its 3 year, $1 billion (gross) development program designed to refill the plant and extend the life throughvalue-accretive exploration, potentially requiring de-bottlenecking
- Otway Gas Plant to play a key role in meeting Victorian gas demand for years to come
49
O T W AY B A S I N S I T E V I S I T
Appendices
Otway Basin - History of asset and commercial activity
Year | Asset Activity | Year | Commercial Activity |
2001 Gas discovered at Thylacine and Geographe
2004 Otway Gas Project sanctioned
2004
2010
Initial joint venture for development of Thylacine and Geographe: Woodside Energy 51.55%, Origin Energy Resources 29.75%, Benaris International NV 12.70% and CalEnergy Gas (Australia) 6%
Origin Energy acquires Woodside interests and assumes operatorship
2005 Gas discovered at Halladale and Black Watch
2017
2008 Thylacine gas production commences
2017
2013 Geographe gas production commences
2017
2014 Gas discovered at Speculant
2018 (Jan)
2016 Gas production commences at Halladale and Speculant
2018 (Jun)
51 | 2018 (Oct) |
Origin announced proposal to acquire Benaris interests
Origin announces sale of Lattice Energy (including Otway assets) to Beach
Beach announces acquisition of Toyota Tsusho interests
Lattice acquisition completed
Beach completes acquisition of Toyota Tsusho interests, moves to 100% ownership
Beach announces sale of 40% interest in all offshore and nearshore Otway interests and OGP to OGOG Energy
Beach Energy Limited
Level 8, 80 Flinders Street
Adelaide SA 5000 Australia
- +61 8 8338 2833
- +61 8 8338 2336 beachenergy.com.au
Investor Relations
Nik Burns, Investor Relations Manager
Mark Hollis, Investor Relations Advisor
T: +61 8 8338 2833
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Beach Energy Limited published this content on 24 September 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 September 2019 08:26:04 UTC