• A review of 2P reserves across the Western Flank oil and gas fields, including the Bauer oil field, has been
undertaken following recent declines in oil production and recent drilling results
• 18.4 MMboe net downgrade to 2P reserves across Western Flank oil and gas assets (pre-production
o 17.6 MMbbl downgrade to Western Flank oil 2P reserves
o 7.2 MMboe downgrade to Western Flank gas and associated liquids 2P reserves
o Partially offset by acquisition of Senex Energy’s Cooper Basin oil and gas assets, with a 2P reserve
increase of 4.2 MMbbls and 2.2 MMboe, respectively
o Net Western Flank 2P oil and gas reserves downgrade represents ~5% of total Company 2P
reserves as at 30 June 2020
• Re-focusing Western Flank oil and gas effort towards exploration portfolio following several years of
successful development of existing fields, with recent exploration drilling success rate of ~33%
• FY21 pro forma production guidance downgraded to 25.2 – 25.7 MMboe (previously 26.5 – 27.5 MMboe)
• FY22 Western Flank oil production expected to be 4.0 – 5.0 MMbbls below previous estimates
• Five-year outlook is withdrawn and Beach will no longer provide a five-year outlook in its current form1
• Beach to hold an investor call at 9:00am AEST today, Friday 30 April 2021 (details on page 5)
Beach Energy Limited (ASX: BPT, Beach) today announced an update to the Company’s business activities,
including further details on the Cooper Basin Western Flank oil and gas operations. The update follows details
provided at the Company’s FY21 Half Year Results on 15 February 2021.
At the FY21 Half Year Results, Beach announced the Company had experienced higher than expected decline
rates within the Bauer field, the largest oil field on the Western Flank. The higher declines were a result of
interference between the horizontal wells within the McKinlay reservoir, drilled during the FY21 program, and
both the existing Namur vertical producers and other McKinlay horizontal development wells.
Since the FY21 Half Year Results, additional production data from Bauer field oil wells drilled throughout the
FY21 campaign confirmed the production decline. In addition, recent results from oil wells drilled outside of
1 Outlook impacted by variability to the business, which includes adjustments in work programs that were experienced during the COVID-19 pandemic,
reductions in the Western Flank oil and gas production profile and variations to project interests as a result of asset acquisitions.
Beach Energy Limited | Business Update
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the Bauer oil field, including the Balgowan, Chiton, Hanson and Kalladeina fields, have come in towards the
low end of expectation.
The geological model used to determine reserve volumetrics for the Bauer oil field has been used for nine
other oil fields across the Western Flank, in line with Beach’s Annual Reserve Audit. The model has also been
used to determine well locations for the recent drilling programs. While the results of FY19 and FY20 drilling
programs supported the use of the Bauer model on these fields, the FY21 drilling program highlighted the
difficulty in prognosing depth in low relief Western Flank oil structures due to natural variability.
Recent drilling results highlighted that some elements of the geological model taken from Bauer, particularly
regarding the volumetric estimates, are not entirely applicable to these oil fields, which have shown greater
Drilling of the FY21 wells was completed in March 2021 and they are being progressively connected and
completed on pump, with this activity continuing into FY22. Stabilised production trends typically require at
least three months and sometimes up to six months, before predictions of well and field performance can be
Beach typically commences the annual reserve audit process during March, with completion in August, however
given recent drilling results, the Company has undertaken an urgent review of Western Flank oil and gas
reserves for FY21. The Beach assessment has resulted in a 2P reserve downgrade of 17.6 MMbbls across
Western Flank oil fields.
Beach expects FY22 Western Flank oil production to be 4.0 – 5.0 MMbbls below previous estimates.
Separately, across the Western Flank gas assets, several wells have shown increased water production, which,
combined with recent pressure and production data, has led to a 7.2 MMboe downgrade in 2P gas and
associated liquids reserves.
No immediate impact on gas production is expected. Exploration and appraisal drilling is planned for FY22 to
extend plateau production through the Middleton gas plant.
Partially offsetting the reserve downgrade, Beach has completed the acquisition of Senex Energy’s Cooper
Basin Western Flank oil and gas assets, with a 2P reserves increase of 4.2 MMbbls and 2.2 MMboe, respectively.
Whilst we are undertaking our annual Cooper Basin Joint Venture (CBJV) 2P oil and gas reserves audit, there is
no correlation between the Western Flank oil and gas reserve downgrade and Beach’s CBJV reserves position.
Beach Energy Managing Director and Chief Executive Officer, Matt Kay said the unique nature of these fields
had presented some challenges.
“The past five years has seen the Western Flank outperform our expectations, but we are now witnessing
material decline from a number of fields,” Mr Kay said.
“This has had a negative impact on our recent production results, as well our FY21 production guidance and
Western Flank 2P oil and gas reserves.
“Previous reserves assessment across the complex Western Flank oil and gas fields have proven to be optimistic
following recent drilling results. The team has developed new reservoir models to optimise field development.
We also enlisted the support of three independent reserve consultants, including Beach’s external reserves
auditor RISC, to confirm our approach.”
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Beach has booked a 17.6 MMbbl downgrade to 2P oil reserves and 7.2 MMboe downgrade to 2P gas reserves
across Western Flank assets compared to FY20 reserve statement (pre-production impact). This equates to a
net downgrade of ~5% of the Company’s 2P oil and gas reserves as at 30 June 2020, before the impact of FY21
production and post-acquisition of Senex Energy’s Cooper Basin assets, effective 1 July 2020. A breakdown of
the 2P oil and gas reserves downgrade can be found in the table below.
Beach’s FY21 production guidance has been impacted by:
• Larger than expected decline across the Western Flank oil assets
• Lower nominations from the Otway Gas Project
Beach has withdrawn and will no longer provide a five-year outlook in its current form. The Company is
currently reviewing plans regarding its outlook, which will be completed in conjunction with the FY21 Full Year
This is due to an acknowledgement of continuing variability to the business, which includes adjustments in
work programs that were experienced during the COVID-19 pandemic, reductions in the Western Flank oil and
gas production profile and variations to project interests as a result of asset acquisitions.
Planned production growth from the Otway Basin and Perth Basin developments remain on track.
With Beach’s net gearing of ~1% (following the completion of the acquisition of Senex Energy’s Cooper Basin
assets) and liquidity of $430 million, Beach maintains its strong balance sheet to support the delivery of our
two key growth projects, the Waitsia Gas Project Stage 2 and the Victorian Otway development campaign, as
well as the potential development of Trefoil in the Bass Basin.
Our key gas growth projects remain on track to deliver material production growth, providing a stable, longlife earnings base and expected platform to deliver value to Beach shareholders.
Assessing carrying values
The downgrade to 2P reserves across Western Flank oil and gas assets could lead to carrying value adjustments.
Beach will assess the carrying values of all its assets as part of its FY21 Full Year Audited Results reporting
process, to be released on 16 August 2021.
Beach will hold a webcast at 9:00am AEST today, Friday 30 April 2021. Access to the webcast will be available
on our website www.beachenergy.com.au.
courtesy of Bell Direct
i hold BPT (' free-carried' ) ( my average SP is 52.5 cents )
down over 20% on the day currently
will be considering adding more sub 80 cents
maybe the 'channel trade' strategy i had hoped for this is still alive ( i thought it was a bust .. no top-up opportunity likely )
will be watching for 80c ( to consider at what price to buy more )