1. Beach Energy Limited
Resource and Energy Symposium Reg Nelson – Managing Director
Broken Hill Resource and Energy Symposium – 22 May 2012 22 May 2012
Slide 1

2. 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 2011
and represent Beach’s share.
Competent Persons Statement
• This presentation contains information on Beach’s Reserves and Resources which have been
compiled by Mr Neil Gibbins, 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.
Resource and Energy Symposium – 22 May 2012 Slide 2

3. Introduction
Resource and Energy Symposium – 22 May 2012 Slide 3

4. South Australia & Broken Hill – A strong resources link
• Broken Hill was an early and
important part of South Australia’s
resources and energy sector
• South Australia is in the midst of a
resurgence in exploration activity,
driven by:
– The Lead-Zinc initiatives of the
late 1980’s
– The ‘Business Plan’/ aeromag
flown over SA and financed by the
state government
– And further initiatives since,
resulting in…..
• Major capital investment
programs, such as: Photo courtesy of DMITRE
– Olympic Dam
– Prominent Hill The unsung heroes of the resources and
– Cooper Basin conventional and energy industries are the trailblazing
unconventional drilling programs pioneers
Resource and Energy Symposium – 22 May 2012 Slide 4

5. A new mining boom with critical energy needs
• SA now at a critical energy point:
– Alinta to shut down Playford brown
coal power station
– The distortionary effects of too much
wind power
What are the alternatives?
• ‘Greener’ fuels such as wind, solar and
geothermal are expensive and not as
‘green’ as many think
• There is an increasing reliance on
imports for diesel and jet fuel
……and growing demand for explosives
and fertilisers
~ 40% increase to 2025
Dwindling coal supply and demand
with ‘greener’ fuel challenges make
GAS the future energy source
Source: Core Energy Group 2011
Resource and Energy Symposium – 22 May 2012 Slide 5

6. The benefits of natural gas
• High hydrogen, hence cleaner burning
than coal
• Reduced water demand
• Able to provide flexibility to cover base
and peak loads
• Potential to underpin the development
of a new and scalable petrochemical
industry (explosives, fertilisers etc)
• Possibility of building a new era for high
purity diesel and jet fuel via gas to
liquids
• ….but, Eastern Australia is short gas Uncontracted demand
Significant increase in demand for
gas expected from 2015 due to
LNG export and east coast demand
Source: Core Energy Group 2011
Resource and Energy Symposium – 22 May 2012 Slide 6

7. Can Australia replicate the
North American shale boom?
Resource and Energy Symposium – 22 May 2012 Slide 7

8. EIA – United States Gas Production Projection
2000 2012
US Natural Gas Production 1990-2020 US Natural Gas Production 1990-2035
Sources: History: Advanced Resources International, Inc. (ARI). Projections: Source: US Energy Information Administration, AEO2012
Energy Information Administration, AEO2000, DOE/EIA-0383 (2000) Early Release Overview, 23 January 2012
(Washington, DC, December 1999), reference case
In 2000, EIA projected EIA is now projecting shale
conventional gas production would and tight gas will represent 70%
dominate future supply of US supply by 2035
Resource and Energy Symposium – 22 May 2012 Slide 8

9. Gas options for Eastern Australia – a critical time
Australian East Coast 2P
Reserves*
Non-LNG
~ 9k PJ
East Coast 2P Reserves
held by LNG proponents
~ 40k PJ
* Adapted from Energy Quest, February 2012
~ 80% of East Coast 2P reserves are owned by parties developing LNG
projects or with LNG aspirations
Resource and Energy Symposium – 22 May 2012 Slide 9

10. The Shale Gas Option – but what to look for?
• In 2007 Beach, understanding the success of US shale gas
developments, reviewed Australian basins for opportunities
• Beach identified technical key contributors to success
– Shale thickness
– Organic content
– Mineralogy
– Maturity
– Over-pressure
– Ability to take high equity position
– Proximity to
infrastructure/market access
Resource and Energy Symposium – 22 May 2012 Slide 10

11. The Shale Gas Option – key technical attributes
Parameters for gas in place Parameters for deliverability
• Shale thickness • Overpressure (drive)
• Lateral continuity • Mineralogy (brittleness)
• Organic content • Maturity (hydrocarbons)
• Maturity
Cross-
Drainage Bulk Permeability sectional area
Gas in place area density
GIP = A * h * ρ * GCt Q = k * A * ΔP Pressure
Gradient
μ
Volumetric
Reservoir Total gas flow rate
thickness content Viscosity of
flowing fluid
Resource and Energy Symposium – 22 May 2012 Slide 11

12. Primary focus: Cooper Basin - Nappamerri Trough
• Primary focus was to find
the best shale acreage in
Australia
• All regions in Australia
were considered
• Key factors considered in
identifying the primary
target:
– Rock quality, i.e. organic
content, brittleness
– The right environment,
i.e. thick, overpressured,
thermally mature
– Ability to take high
equity position
– Proximity to
infrastructure/market The Nappamerri Trough Permian section
access under-explored off-structure
Resource and Energy Symposium – 22 May 2012 Slide 12

13. Nappamerri Trough- geological setting
• The deepest and largest of the northeast-southwest trending
troughs in the Cooper Basin
• Thick Permian section of coals, siltstones, sandstones and shales
• Roseneath Shale, Epsilon Formation and Murteree Shale (REM)
were the initial focus for shale gas
Shale gas target
Basin
centred
gas
target
Resource and Energy Symposium – 22 May 2012 Slide 13

14. Over-pressure
• Over-pressure created by hydrocarbon generation
• The pressure gradient in the Nappamerri Trough is ~0.72 psi/ft
• Over-pressure necessary for gas drive
• Preservation of pore throats during compaction enhancing
permeability
Pressure (psi)
0 2000 4000 6000 8000 10000
0
1000
Depth (m)
2000
Top Overpressure
3000 REM
Depths
ΔP ~3,000psi
4000
Resource and Energy Symposium – 22 May 2012 Slide 14

15. Maturity for deliverability
• With increasing maturity
expect enhanced dewatering
and dehydration of clays
• Loss of capillary water
enhancing permeability
• Fluid viscosity is a function of
maturity
• Methane is less viscous than
wet gas and all things being
equal, methane will flow
better
• High level of maturity enables
abundant gas generation
creating over-pressure Source: Tucker.M, Sedimentary Petrology, 1998
Resource and Energy Symposium – 22 May 2012 Slide 15

16. Fluid viscosity is important for higher flow rates
• Dry gas will flow better than
gas with high liquids content in
thick homogeneous shales
• If liquids are present,
interbedded (mixed)
lithologies (e.g., sandstones)
are better
• Beach’s focus for liquids-rich
plays are in basins with these
potential attributes (e.g.,
Bakken – North Dakota, Otway
Basin (SA and Victoria) and
Bonaparte (NT))
Resource and Energy Symposium – 22 May 2012 Slide 16

17. Cooper Basin versus successful US plays
Cooper Basin
PEL 218 Permian REM Haynesville
Parameter (Beach 100%) Barnett (Texas) (Louisiana)
TVD (ft) 9,500 - 11,500 5,400 - 9,500 10,500 - 14,000
Thickness (ft) 550 - 800 100 - 500 60-350
BHT (degF) 390 - 410 150 280-380
TOC (%) 2-4 4-8 2-5
Pressure Gradient (psi/ft) 0.72 0.52 0.85-0.93
Maturity (Ro %) 2-4 0.6-1.6 1-1.2
Quartz, % (brittle) 30-40 40-60 25-52
Calcite % (brittle) 0 5-30 13-44
Siderite % (brittle) 5-10 0 0
Swelling clays (%) - 1-5 -
Source: McKeon. M, Halliburton Presentation, Horizontal Fracturing in Shale Plays
Similar properties to successful major US shale plays
Resource and Energy Symposium – 22 May 2012 Slide 17

18. A summary of Beach’s commanding Cooper position
PEL 218 ~1,600 km2
• Beach 100%* (Permian)
• 2 Tcf of contingent resource booked in
the Permian
ATP 855P ~1,670 km2
• Beach 60% (operator), Icon Energy 40%
• First dedicated shale well in 2012
SACB JV ~7,100 km2 (Moomba, etc)
• Beach 20.21%, Santos 66.6% (operator),
Origin Energy 13.19%
• 0.7 Tcf (net) of unconventional
contingent resource booked to date
• Shale well recently fracture stimulated
• 3 Nappamerri Trough unconventional
wells proposed
Multiple targets to be addressed
by operated and non-operated
drilling programs * Beach currently holds 99.99%, in the process of acquiring 100%
Resource and Energy Symposium – 22 May 2012 Slide 18

19. Shale and beyond - program highlights to date
• Results from Encounter-1 and Holdfast-1
exceeded expectations due to:
– Gas saturated target zone potentially over
one kilometre
– ~2 MMscfd initial flow rate from
Holdfast-1
– Booking 2 Tcf contingent resource
– 480 metres of core recovered assisting
technical analysis
– Gas flows up to 750,000 scfd from one frac
stage in the Patchawarra from Encounter-1
• Moonta-1 vertical well completed with mud
logs indicating gas saturation throughout
Permian section
• Streaky-1 vertical exploration well has
spudded
300+ Tcf of gas in place estimated for
PEL 218
Resource and Energy Symposium – 22 May 2012 Slide 19

20. What is shale and basin centred gas?
Source: Amended from Schenk and Pollastro, 2002
Thick and consistent gas saturation across a basin
Resource and Energy Symposium – 22 May 2012 Slide 20

21. Advantages of Beach’s Cooper Basin acreage
• Good working relationship
with pastoral owners and
other stakeholders
• Co-operative not competitive
land use
• Semi-desert country
• Relatively flat topography
• Well established oil and gas
infrastructure
• Raw and sales gas pipelines
cross PEL 218 and ATP 855P
• Multiple commercialisation
options
Good relationships and well established infrastructure
Resource and Energy Symposium – 22 May 2012 Slide 21

22. 2012 proposed Cooper unconventional drilling program
Resource and Energy Symposium – 22 May 2012 Slide 22

23. Summary
• Decisive and aggressive exploration
• Confirmed shale gas and basin centred gas objectives
• Unique shales
• Substantial multi-level resource play
• Fast paced and comprehensive forward exploration program
Resource and Energy Symposium – 22 May 2012 Slide 23

24. An opportunity for Australia
Resource and Energy Symposium – 22 May 2012 Slide 24

25. Sovereign risk now a real issue for Australia
• Need to remove uncertainties and
disincentives, i.e. the carbon tax and
PRRT
• First five years are critical for a
nascent industry
• Technical advances through Beach’s
unconventional program will aid
‘Greener’ power, such as geothermal
• Unconventional gas and oil has the
ability to power mining production,
supply the domestic power market
and LNG export market
• Enhanced gas production is critical for
explosives manufacture and fertiliser
production
Downstream producers should be pushing government for removal of
upstream tax impediments to free up gas production
Resource and Energy Symposium – 22 May 2012 Slide 25

26. Contact information
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: chris.jamieson@beachenergy.com.au
Resource and Energy Symposium – 22 May 2012 Slide 26