Strong operating performance lifts production 10%, liquids generated over 60% of revenues

• Lattice assets operated safely and with high reliability in the quarter, underpinning a 10% increase in Beach production to 7.23 MMboe versus the March quarter.
• Production lift was primarily due to increased output from the Cooper Basin JV (+12%), Otway Basin (+21%) and Bass Basin (+64%), offset by lower Western Flank (-2%) and New Zealand (-16%) volumes.
• Sales volumes of 7.60 MMboe was 12% ahead of the March quarter, due to higher production volumes and increased Cooper Basin sales volumes from shipment timing.
• Average realised oil price of $103.2/bbl was 11% ahead of the March quarter, supporting a 20% increase in sales revenue to $471 million.
• Liquids (oil, condensate, LPG) accounted for over 60% of revenues in the June quarter.

Free cash flow generation further strengthens balance sheet, provides strong growth platform

• Net debt at 30 June 2018 was $639 million a $221 million reduction since the completion of the Lattice acquisition at 31 January 2018. Net gearing at 30 June was under 26%.
• Net debt reduction was underpinned by strong free cash flow generation of $149 million (excluding acquisitions), up from $133 million in the March quarter.
• Available liquidity at 30 June was $761 million.

Beach moves to 100% ownership of the Otway Basin assets

• Acquisition of additional interests in the Otway Gas Project and BassGas from Toyota Tsusho completed, with the acquired interests to be consolidated from 1 January 2018.

Beach announces material increase to reserves and contingent resources as at 30 June 2018

• Subsequent to the end of the quarter, Beach announced that 1P reserves had increased by 152 MMboe (+405%) to 190 MMboe and 2P reserves increased by 239 MMboe (+320%) to 313 MMboe.
• Approximately one third of the increase in 2P reserves was due to the underlying performance of the assets and exploration/appraisal success.
• 2P reserves life increased from 7 years at the end of FY17 to 11 years at the end of FY18.

FY18 production at high end of guidance range, capex below bottom end

• Excluding 0.2 MMboe of additional contribution from the Toyota Tsusho acquisition, FY18 production was 18.8 MMboe, at the high end of guidance of 18.1 – 19.1 MMboe.
• FY18 consolidated capital expenditure was $288 million, below prior guidance range of $294 – 324 million. Capital expenditure in the Western Flank and Cooper Basin JV continues to show reductions from cost-out initiatives.
• FY19 production and capital expenditure guidance will be provided with the FY18 financial results on 20 August 2018. Medium term production and capital expenditure information will be provided at the investor day, to take place on 27 September 2018.

Comments from Chief Executive Officer, Matt Kay
“The June quarter was one of heightened activity and success across the board, and rounded out what has been a transformational year for Beach.”

“We were able to deliver a 10 per cent increase in production to 7.23 MMboe. In addition, we enjoyed a seven per cent lift in overall realised product prices leading to our quarterly sales revenue reaching $471 million, up 20 per cent from the prior quarter.”

“What is especially pleasing is that we continue to make good progress on optimising our future development program. During this quarter, we completed the review of our expanded portfolio and continued the successful integration of the Lattice assets into our company. Despite this period of transition, safety has remained the paramount focus.”

“The strong performance of the integrated business is highlighted by improvements in free cash flow generation to $149 million this quarter. This has been driven by lower capital expenditure and higher revenues.”

“This free cash flow generation has seen our net debt reduce to $639 million at the end of FY18, underscoring the speed at which we are de-gearing – well ahead of initial projections.

“Net gearing was under 26 per cent at 30 June, down from approximately 33 per cent at the financial close of the Lattice acquisition at 31 January. Liquidity at the end of FY18 was $761 million, providing Beach with plenty of headroom to fund our growth ambitions.”

“In the Cooper Basin, we are looking to apply the learnings from our first three horizontal oil wells drilled in ex PEL 91 to an expanded FY19 drilling program, which we will release details about soon.

“On the project delivery front, phase one of the Middleton gas expansion was completed on 30 June and is already producing at rates of up to 40 MMscfd of raw gas. The phase two expansion to optimise liquids handling is expected to occur in the first half of FY19. We continue to work closely with the Cooper Basin JV operator, Santos, on optimising future drilling to increase liquids output and maintain or lift gas production volumes.”

“Our Victorian assets showed improved performance during the quarter, underpinned by a combination of higher customer nominations, improved facility reliability resulting in less unplanned downtime, efficient liquids inventory management to maximise sales and successful Yolla wireline operations.”

“Otway Basin gross average daily production rate was up 12% on the prior quarter, with BassGas 7% higher than the prior quarter.”

“Beach also moved to 100% ownership of the Otway Basin assets following the financial completion of the acquisition of additional interests from Toyota Tsusho. The sale process associated with the proposed sell down of an interest in our Otway permits is ongoing.”

“Our FY18 reserves report showed a 320% increase in 2P reserves, from 75 MMboe to 313 MMboe.

“The recently acquired Lattice assets were responsible for approximately two thirds of the increase in 2P reserves, with around one third due to positive reserve revisions across many of our assets.”

“Pleasingly, our Western Flank 2P oil reserves increased by 14 MMbbl, net of production, as our oil fields continue to produce at higher than forecast rates and we look to apply horizontal drilling techniques to extract additional oil volumes. Our 2P reserves life has increased from 7 years at the end of FY17 to 11 years at the end of FY18.”

“We are progressing well in discussions with Waitsia operator Mitsui regarding the optimal development pathway for the gas field. We continue to engage with gas customers as we seek to maximise the value of this high quality resource.”