Derek Piper - IR Matthew Kay - Chief Executive Officer Mike Dodd - Chief Operating Officer Jeff Schrull - Group Executive, Exploration and Development

James Byrne - Citi James Nevin - RBC Capital Markets

Ladies and gentlemen, thank you for standing by, and welcome to quarterly report for the period ended 31st of March 2017. At this time, all participants are in a listen-only mode. There will be a presentation, followed by a question-and-answer session. [Operator Instructions] Please be advised that this conference is being recorded today, Thursday, 27th of April 2017. I'd like to hand the conference over to your speaker today, Mr. Derek Piper. Thank you. Please go ahead.

Thank you, Karen, and good morning all. Thanks for joining our results call on what’s I know, that are going to be a busy day for us in the industry. With me here is Matt Kay, our Chief Executive Officer; Mike Dodd, Chief Operating Officer; and Jeff Schrull, Group Executive, Exploration and Development; and other members of our executive management team. Matt and Mike and Jeff are going to talk to our results for the last quarter and then we'll open the lines for Q&A. Matt, I'll hand over to you to run an overview of the results.

Thanks, Derek, and welcome everyone to the call. We once again had a solid quarterly to present to you today. With pleasing results across all of our the operations. Strong production, gas discoveries, new completion of our facility expansions and strengthen liquidity are some of the highlights. Pleasingly, these results and our year-to-date performance allow us to confidently talk to increased exploration and development activity for FY18. Starting with production, our results held up strongly, thanks to good performance from recent wells brought online and field development activity. Decline of only 5% to 2.5 million barrels of oil equivalent reinforced our full-year guidance, which we have maintained at 10.3 million to 10.7 million barrels of oil equivalent. We are on track and we continue to perform well in the field. Also on guidance, we reduced full-year capital expenditure guidance to $160 million to $170 million, down from $170 million to $185 million. Around half of this reduction was due to further efficiencies in the field, in both operated and non-operated assets. The other half was updated from timing revisions as we look forward to the next few months of field planning. That means, in short, that approximately $7 million is spent from this year will spill into next year. Exploration success was again a clear highlight for the quarter. Particularly the completion of our operated gas exploration program, which delivered three discoveries from 4 wells. These discoveries led new 2P reserves support Middleton production at maximum capacity beyond FY18, and importantly have strengthened our intent to increase capital allocation from an expanded FY18 exploration program. Given the success we’ve had and planned increase in activity, we’re already assessing the expansion -- a further expansion of our Middleton facilities from 25 million scf a day of raw gas to between 40 million and 50 million scf a day. As we think about a more aggressive campaign in FY18, it's also important to highlight that a year-to-date drilling success rate through exploration of priced land development is currently sitting at 85% year-to-date. That’s from the 40 wells that we’ve drilled this year. Jeff will provide some more detail on our plans in a moment. Still on exploration, it was pleasing to be awarded $6 million of grant from the South Australian government to help fund the conventional gas exploration Well in the Otway basin. This marks a return to the Company to exploration in the Otway and is an exciting opportunity. We’ve already identified a 34 Bcf prospect and we have multiple follow-up opportunities that provide potential to meaningful new volumes to supply to the market. It's also worth noting that Beach will participate in a further $16 million of government grants via our non-operated joint ventures. In short, the total net benefit to Beach is just over $10 million of grants. Turning briefly to our financial results. Despite a 6% reduction in oil price, we again strengthened our liquidity by generating net operating cash flow with $75 million for the quarter. And we increased our cash reserves by $27 million. That was after dividend payments of $13 million. Our available liquidity is now in excess of $675 million. Contributing to these results was the recently negotiated gas contract with Adelaide Brighton, which commenced on 1 January. This new contract and the expiry of legacy Cooper Basin joint venture contracts increased our average realized sales gas and ethane price by 6% to $6.28 per gigajoule. The commercial arrangements of our operated and non-operated gas ventures are now well-established. They provide an attractive mix of tenors and pricing structures, an ability to contract surplus volumes to new customers or selling to the spot market. So that’s just a quick snapshot of the quarter highlights. And I will hand over to Mike to discuss the operations in more detail.

Thank you, Matt. As Matt communicated, the operational side of the business is healthy and continues to deliver the key aspects of Beach's operational business in the last quarter, although we’ve had a very strong quarter of production, the connection of successful wells and performance of artificial lift projects are paying dividends, we’ve made very good progress on our two major facilities projects. Project guidance, which was lifted at the midyear is maintained. Capital guidance has been lowered and the OpEx savings which we’ve talked about previously being sustained. So I'll briefly expand on some of the detail behind these achievements now. Firstly, on production, quarterly production of 2.5 million barrels was 5% down on the previous quarter, 4% up on the previous corresponding quarter. This healthy volume demonstrates the effectiveness of the projects that we’ve carried out over the year in largely offsetting natural field decline, especially in the gas and liquids business, but also in the oil business. Moving to some more detail on gas, firstly, our operated gas business centers on the ex PEL 106 area where success with the drillbit and facilities projects are combining to grow this business, which gives us the prospects of increasing amounts of currently uncontracted gas being available for new contracts or spot sales. Obviously, this is a very attractive position to be in and I’m sure Jeff will be happy to give you the details of the very successful drilling campaign in a moment. Firstly, I will talk about some of the significant development projects on a six area. The connection and initial production from the Middleton East-1 Well, one of the successful exploration Well from last year campaign has contributed to the daily average rate of just over 2,000 barrels of oil equivalent today for a total of 185,000 barrels of oil equivalent for the quarter. Production for the quarter was impacted throughout March with the member operator restricting volumes due to a cap member and shut-ins associated with the mechanical work associated with the production project. Installation of the two compressors at Middleton has been completed and the equipment has been commissioned. The restrictions previously mentioned have impacted on being able to handover to a full volume production mode to date is expected that this occur over the next week or so, and we expect to see daily volumes increase to approximately 25 million a day. With the recent exploration successes in the area, we expect to maintain those rates through FY18 and currently considering the case to increase the capacity at the Middleton facility to 40 million or more to accommodate exploration reserve additions. Although total operated gas production for the quarter was down on the previous quarter, it's worth remembering that production was deferred and not lost and is available to enhance production in Q. The Cooper Basin joint ventures gas production was a good new story for the quarter with a boost from the connection of exploration Well successes in Queensland, in particular, [indiscernible] 5 and 6 wells which added about 12 million a day of production. Moving quickly on to oil, and moving further West, the ex PEL 91 area continues to dominate oil production. Production in the area was bolstered by the connection of Kangaroo-1group and the performance of wells connected in the previous quarter contributing to a daily average production of 9,800 barrels of oil per day in the quarter. The Bauer facility expansion is almost complete, with oil expected into the facility this week. The increase in handling capacity from 75,000 to 120,000 barrels of fluid a day will allow Bauer-24 and 25 to be brought online and give headroom for new discoveries in the area. We should see a moderate uptick due to the new wells being brought online and debottlenecking of some of the existing flow lines. The first four quarter of production from Callawonga-12 and continued good performance at the Q2 artificial lift projects have hit daily average production flat in the ex PEL 92 area. Lastly a word on CapEx and OpEx. As Matt mentioned, capital guidance has been reduced to $160 million to $170 million. But in addition, I should point out that the OpEx savings described at the half year of the group is sustained. And as such, we’re looking at a full-year OpEx, some 15% down on what we contemplated at the start of the financial year. I will now handover to Jeff to talk through our exploration efforts and successes.

Thanks, Mike. While our exploration development, CapEx, resources and human resources are continuing to be focused on our four key play fairways, two gas and two oil. I’d like to give a brief summary of what happened in Q1 over these -- for these -- excuse me, Q3, for these play fairways, what Q4 looks like and what we’re thinking about doing in FY18. I will start with the gas play fairways. The Southwest Patchawarra play fairways, one of our proven producing provinces. We've got Middleton gas compression that kicked in, et cetera, that’s what our gas hub is. The [indiscernible] is focusing on getting as much oil and gas as we can or condensate gas as we can out of those fields, maximizing EUR per well looking at bypass pay and maximizing the production. As Matt and Mike does mentioned, we just finished the 4-well. We have a 75% commercial success rate. We have the 4 wells worked, Canunda, Mokami and Crockery. We’ve added almost [indiscernible] million barrels of 2P reserves for Beach. So we are quite enthusiastic about this. And the good news is that my E&D team has handed three new producers over to the upstream to hook up and get producing. One of the wells tested 8.6 million a day and 800 barrels of condensate a day in the Mokami well and I will mention more about that in a minute. What that -- going into the program, our success rate was assumed to be about 25%. So the increase to 75% for commercial success rate has given us a lot of confidence that our exploration mapping techniques are lowering the risk of these prospects. And we now have 8 to 10 lead/very strong drillable prospects that we’re working on and building hopefully in the FY18 exploration budget. In addition to that, we’re -- just started seeding on our surveying lease the Spondylus 3D survey over PEL 107, which is the Southern end of the Southwest pass trend and that will lead to even more drilling in this critical play fairway in FY19. The Permian Edge play fairway is a more frontier play fairway for gas. The Mokami well is right on the edge of the two, but it's probably akin to the Permian Edge play fairway and it has derisked that play fairway significantly. It has a direct impact on one of the leads that Beach has had in its portfolio [indiscernible] Prospect and we look forward to drilling that in FY18. So stay tuned to hear more about the [indiscernible] Prospect. We’ve got 4 to 6 other drillable candidates that we’re working up in the Permian Edge play fairway, including 2 very strong leads in the PEL 630 block, 630 East block that we recently farmed into with Bridgeport. So lot of good news coming from our -- both of our gas play fairways. And then the Namur, moving on to oil. Beach's bread and butter, Namur-McKinlay play fairway. As part of our initiative to find more oil from our existing fields, we’ve identified several infill drilling programs and that had a slight impact on our Q4 drilling queue. So we’re currently drilling the 2 wells in PEL 630, the farm-in wells, [indiscernible] and Harvey's Return. After Harvey's Return, we’re going to the Callawonga field where we’ve identified a five well infill program along with our JV partners, Cooper and those wells are going to add between 750 to 1,000 barrels a day with a EUR combined close to 0.5 million barrels. It's really good to see the immediate returns and the increase in production as part of our technical efforts. Following that program, we’re moving to the Bauer field, and we’re going to drill our first -- Beach's first horizontal well. We are going to drill horizontal well in the McKinlay reservoir and we hope to add incremental production from that well to 2,000 to 3,000 barrels a day, an EUR of 750 -- 750,000 barrels. The good news is that if it works there is -- at least four or five follow-up locations in Bauer and the play extends to the north over our CKS natural fields in Pennington. So there is a lot of forward-looking production adds associated with that. Moving to exploration, we’ve a five well program in FY17 to test the northern end of the Namur play fairway. Three well in PEL 182, which are operated by Cenex and two were the farm-in wells in 630. Two of those wells have been drilled and unfortunately P&A, those are the spot [indiscernible] wells that they did find encouraging tests in the Birkhead. Now drilling the 2 wells in 630, as I said earlier, [indiscernible] and Harvey's Return. And the third well 182 will be drilled in May by Cenex, that’s the Immortals well. Following those 5 wells, we will have a better understanding of what the value of the Northern extend have the Namur play fairway is and we can factor that into our program. We are also embarking on a geologic -- a different approach to depth conversion, which is one of the technical things you have to solve in this play fairway by having geologically modeled [indiscernible] models over the area to help getter depth images. And we’re hoping to find some additional prospects and have a better understanding of our fields as a result of this work. The second oil play fair is the Birkhead play fairway. We had the proven field at Bauer's Spitfire etcetera that are operated by Cenex. We drilled the Kangaroo discovery well earlier this financial year and is on -- its being produced, as Mike mentioned, encouraging results so far. We look forward to incorporating the production from Kangaroo and the regional mapping into figuring out where to upgrade this very promising trend. The 2 wells that we’ve planned are [indiscernible] and Rocky and the plan with both of those wells is to drill straight holes with sidetrack locations that can hopefully serve as pilots for horizontal wells. We think one of the keys to unlocking this Birkhead play is the application of geosteering techniques in horizontal drilling so that we can increase the deliverability per well on a daily production level and also the EUR per well. So we’re hoping -- the pending FY18 budget approval, we’re going to plan on doing a couple of horizontal pilots for the Birkhead play sometime in FY18. Couple of highlights from our Delhi exploration acreage, the Ranger well, this is drilled by Santos. It was built and completed, cased and suspended. It will come online in FY18 and significantly the Snowmen [ph] 3D volume has ended. It's a big 1,200 primary survey. We’ve already got 12 very good leads and prospects that we’re working out, and we look forward to that deliveries impact exploration drilling through FY18 and '19.

Thanks, Jeff. With that, Karen I will ask you to open the lines for the Q&A please.

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of James Byrne. Please ask your question.

Good morning, guys. How are you going?

Good. Thanks, James.

Congratulations on some of the small gas discoveries. I just wanted to ask quickly about the proposed expansion at Middleton. What would you made to say that for that work program in FY18 to be able to justify during that work? I mean, do we need to see five more successes like the ones you’ve just seen. How should we, the market gauge success?

Well, I think, James one thing I would say that Jeff commented a little bit more about the drilling in a second, but we’re right on the cusp at the moment, keeping we can see with the existing discoveries that we're going to keep Middleton at its new capacity full for the next couple of years at least. And so it won't take much in terms of a couple of more discoveries, first think about triggering that next decision. So we’re right on the cusp already. Jeff, I don’t know if you want to add to that?

Yes, I guess, the -- one of the key success factors is how many commercially successful wells we drill. How many producers do we leave behind. We just drilled 4 wells, we’ve got three producers, we handed over to ops. And obviously if we drill 10 more and we keep that same kind of strike rate, we’d hand 6 or 7 more producers over the ops. We will see how the dice roll for us, but if we get that level of success, I would hope that we could expand it. But some of the wells in the Permian Edge play fairway would go through different set of infrastructure. So all the wells we’re drilling, they were considering drilling for FY18, not necessarily going to go to Middleton. The 630 East is up to the North and it would go after some of this Santos operated infrastructure.

Okay. I understand. Look, obviously a lot going on the gas market environment. How do you guys see yourself position in being able to be part of that solution? I mean, obviously you’ve got some good news at Middleton and you talked about the grasp that you’ve exploration in your way. What else -- like what else you have in the portfolio that you think can be of benefit in this tight gas market to you?

James, this is obviously a schematic that we’ve believed in for a number of years and obviously having visited Canberra a few times in the last couple of months, we’re well across the positioning that’s happening. And I think what you’re saying is the opportunity in terms of providing gas to the market for us is clearly focused on the states that we believe we have a good opportunity to invest in, which right now is South Australia and Queensland. However, we think it's important to see further reform both federally and from the states to open-up opportunities for us to invest in opportunities in other states in the -- on the East Coast. So, clearly we along with others in industry are lobbying for that, because we have a strong balance sheet, we would love to be reinvesting further. But at the moment, our core focus is on states which I'm sure, I would say are open for business which at the moment is Queensland and SA.

Sure. Look, obviously your JV partner in the Cooper Basin had just released to the market that they will be producing as much some gasses as they export through LNG. You think that had direct impact on that joint venture in the Cooper Basin? Could you see another rig going in there? Would you be supportive of that, because I noticed that you’re not participating in all the wells drilled in that JV at the moment with the current amount of rigs?

Yes, look I think just a couple of things to highlight there, James. Just, firstly for clarity, because sometimes there is confusion in the market around this is clearly we are not a party to the LNG projects nor do we supply any gas directly to the LNG projects or to the Horizon contract. There is some confusion occasionally in the market on that, but I’d just made that point clear. Look, we've got very good alignment with Santos and the leadership at Santos we deal with them very regularly at multiple levels. And at the moment, other than a couple of wells which we've elected to opt out on the basis of commerciality of those individual wells, we’ve got very good alignment on the program going forward. So, it's certainly not seeing any fracturing in terms of the strategic outlook for the Cooper Basin. And in terms of another rig, that’s a case-by-case situation. It depends on what the venture would want to drill and if there are commercial prospects, then of course we would be supportive of that. And one thing I would highlight is the Cooper Basin as of today is looking very different from what it look like a year-ago and its certainly looking very different from what it look like three years ago. Once you've got 30% odd write-down on drilling of wells and 30% add increase in efficiency of drilling the wells and you’re reducing your operating costs, then that Basin looks very different than probably what it did three to five years ago.

Yes, one of the things -- this is Jeff. One of the things that we’re focusing on is the exploration prospectivity in the JV that were in the Santos. I mentioned this [indiscernible] survey earlier that’s a big survey in Southwest Queensland and its actually mostly gas prospectivity. So it will be encouraging Santos to get the best prospect to moved to the front of the queue.

Yes, sure. Okay. Yes, and I guess, in some regards it could be taken as a little bit of a negative, for instance gas market. You also had the Nappamerri Trough. I mean, yes, its long-dated and you need to see line of sight shareholder value. But one of the risks we see [indiscernible] is that corporate side is spending capital on nonconventional resources in the near-term to supply [indiscernible]. And, I mean, do you see better unconventional resources and in your portfolio outside of the Nappamerri Trough and hence we’re happy to walk away.

Now look, what I think it's purely around unconventional as I think that what we’ve said is we’ve done a full assessment of unconventional in the Cooper. There has been a lot of money spent not only by us historically, but by industry to try and prove that concept up and we haven't really moved it substantially forward nor the industry. So what we’ve said is we don’t want to be reinvesting in science experiments. We want to see line of sight to commercialization. Now that doesn't rule us out from other Australian unconventional opportunities or other Australian CSG opportunities. It's all about shareholder value, if we see line of sight to commercialization and we will have a very good look at that. We’ve got the balance sheet to do that.

Sure. Okay. Thanks very much, guys.

Your next question comes from the line of James Nevin. Please ask your question.

Hi, guys. Just one quick question. I was hoping, are you able to give an update on gas inventory levels? In the Cooper, I think in prior quarters sales gas was only a bit higher than production. If you could just provide an update on that, please?

Yes. So at the moment its around 45 PJs in storage at Moomba. If that was the question, James.

Yes, and then as far as just -- is that planned to be sold then as well or what are the plans for in for those?

Look, it obviously it's a -- that’s a venture decision around use of that storage, but there is no specific plans to highlight to the market today. It's obviously, the key for us is usually continuing to drill out the Cooper and get more gas into the market, rather than any specific kind of approach [ph].

Thank you.

[Operator Instructions] A - Matthew Kay: Karen, I think we might end the call there. So once again thanks to everyone for joining the call. And as always, please give us a call if you have any follow-up questions. Thanks everyone and have a good day.

Thanks, everyone.

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.