A positive start to FY20 with Western Flank oil production up 9%

• Western Flank quarterly oil production increased by 9% to 1.6 MMbbl.
• Q1 FY20 production of 6.55 MMboe is 6% below the prior quarter after completion of the Otway Sale on 31 May 2019. On a pro forma basis quarterly production is 1% higher than prior quarter.
• Operated facility reliability averaged above 99% in Q1 FY20, a new record for Beach. Focus is now on maintaining reliability above 98%.

Drilling success rate remains high, positive drilling results at Bauer NW and Dombey

• A total of 59 wells were spudded, including eight operated horizontal oil wells.
• Overall drilling success rate was 83%, including a 73% success rate on 26 appraisal wells.
• Subsequent to quarter end, a new gas discovery was made at Dombey-1 (Beach 70% and operator) in the South Australian Otway Basin.
• Subsequent to quarter end, Bauer Northwest-2 and Bauer North-2 appraisal wells intersected the McKinlay reservoir six metres and eight metres high to prognosis respectively. The successful appraisal results in an increased oil in-place volume in the western and northeastern portions of the Bauer field.

Beach Energy has released its FY20 First Quarter Activities Report, which was highlighted by record drilling activity for Beach in the Cooper Basin and a strong overall production result of 6.55 MMboe.

Managing Director Matt Kay said that Beach has continued the momentum of FY19, a year in which the company set new records for production and revenue.

“Our FY20 first quarter results are further evidence of Beach’s commitment to delivery and I am very proud of the efforts of our team in safely executing our strategy,” Mr Kay said.

“Our production result of 6.5 MMboe was down just 6% on the previous quarter despite selling a 40% interest in the Victorian Otway assets. Strong production results across our other assets – namely a 9% increase in Western Flank oil output – were highlights for the quarter. After adjusting for the Otway sale (a pro forma basis) our quarterly production was 1% higher than the prior quarter.

“Facility reliability is a key component in achieving our production targets. We set ourselves the ambitious goal of reaching an average facility reliability across our six operated production assets of above 98% by the end of FY20. I am pleased to announce that facility reliability averaged above 99% in this quarter, an excellent result that is testament to the good work being achieved by our operations teams. Our task now is to maintain our high reliability rates above 98% going forward.

“As we outlined at our full year results, a key task for Beach in FY20 was to undertake a further round of appraisal drilling at the Bauer field, to establish the field limit and finalise our full field development program. In the past few days we have had very positive results at Bauer Northwest-2 and Bauer North-2 appraisal wells, which intersected the McKinlay formation six metres and eight metres high to prognosis respectively. These exciting results were well above our pre-drill expectations. Re-mapping of the field will be completed at the end of the appraisal program and reserves will be updated at the end of FY20.”

Meanwhile the Victorian Otway drilling campaign is expected to commence in Q2, following the completion of drilling activities at the Dombey-1 gas discovery in the SA Otway Basin.

“The initial results from Dombey-1 are encouraging, with the well having intersected 25 metres of net gas pay in the Pretty Hill Formation at quarter end. Testing will be conducted to determine commerciality,” Mr Kay said.

“Our focus now turns to the Victorian side of the border, with drilling of our Black Watch and Enterprise onshore-to-offshore wells due to commence in Q2, ahead of a significant offshore drilling campaign.”

In New Zealand, the Kupe asset started the quarter with consecutive months of 100% reliability, meeting high customer nominations and seeing production remain broadly steady on the quarter. The quarter also saw the Kupe compression project reach FID and initial tie-in works will take advantage of the statutory inspection and maintenance shutdown that will take place in November.

Lower customer nominations from BassGas led to production being 13 per cent down for the quarter. The T/RL2 Joint Venture has continued to progress concept select phase for the proposed Trefoil development.

In the Perth Basin, the Beharra Springs Deep-1 gas exploration well spudded subsequent to quarter end.

Capital expenditure

First quarter capital expenditure was $214 million, a 33% increase over the prior quarter as Beach continues to execute on its multi-year investment program. A 45% increase in Cooper Basin wells spudded during the quarter, a full quarter drilling in the SA Otway Basin, progress on the inlet compression project in New Zealand, commencement of the Waitsia stage 1 expansion project and ramping up of activity in the Victorian Otway Basin were factors driving the increase.

Group production

Q1 FY20 production of 6.5 MMboe was down 6% on the prior quarter due to the completion of the Otway Sale and low customer nominations at BassGas, partly offset by increased Cooper Basin production, with Western Flank recording a 7% production increase and Santos-operated Cooper Basin JV production, flat.

Drilling highlights

Beach participated in 59 wells that spudded in the quarter – 58 in the Cooper Basin and one in the SA Otway Basin. Drilling operations were completed at 52 wells at a success rate of 83% (success defined as wells that are cased and suspended as future producers or injectors) while nine wells were drilling ahead at quarter-end.

Perth Basin activity update

As previously reported, in July 2019 Beach executed agreements with AWE (Beharra Springs) Pty Ltd, a related body corporate of MEPAU, to move to 50:50 ownership of production licences L11 and L22 (Beharra Springs), exploration permit EP 320 and pipeline licence PL 18 in the Perth Basin. Satisfaction of customary completion conditions is continuing with completion to follow.

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