Beach Energy : H1 FY19 results and presentation

Beach Energy Limited

ABN 20 007 617 969

25 Conyngham St, Glenside 5065, South Australia

GPO Box 175, Adelaide 5001, South Australia

T: [phone]

F: [phone]

ASX / Media release

13 February 2019

Ref: #006/19

Beach Energy transformation delivers enhanced profitability and growth

Beach Energy has today released its Half Year Report for the 2019 financial year

Strong half year result

• •Sales revenue up 147% to $955 million

• •199% increase in underlying NPAT1to $279 million, supported by cost discipline

• •Interim dividend of 1.0 cent per share, fully franked

Strong operational start to FY19

• •Facility reliability averaged above 97%

• •H1 FY19 production of 15.2MMboe

Net cash position expected by end Q3 FY19

• •Operating cash flow $479 million; free cash flow2$293 million

• •Net gearing of 13.5% at 31 December 2018

Drilling success

• •68 wells drilled in H1 FY19 at a 79% success rate

• •Bauer appraisal campaign successful; identifies new well locations

• •Bauer horizontal development well average spud-to-online time improved by 24% to 23.5 days

FY19 guidance improved

• •FY19 production guidance from 25-27 MMboe to 28 - 29 MMboe3

• •FY19 capex guidance narrowed to $450 - 500 million3

• •FY19 EBITDA guidance increased by $200 million to $1.25 - 1.35 billion

• •FY19 DD&A guidance increased to $450 - 500 million

Investing to deliver future growth

• •Rigs secured for SA and Vic Otway drilling programs

• •Additional rigs secured in Cooper Basin to accelerate drilling

• •La Bella gas field secured via gazettal

1Underlying results are categorised as non-IFRS financial information provided to assist readers to better understand the financial performance of the underlying operating business. They have not been subject to audit or review by Beach's external auditors, howeverhave been extracted from the reviewed financial statements. Please refer to the appendices of the attached FY19 Half Year Results Presentation for reconciliation of underlying results.

• 2Free cash flow defined as operating cash flow less capital expenditure (excluding acquisitions and divestments).

• 3Refer to ASX release #002/19 dated 31 January 2019.

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ASX release | Beach Energy FY19 half year results

Underlying NPAT rises to $279m as Beach Energy increases EBITDA guidance

A 147 per cent increase in sales revenue coupled with cost discipline has seen Beach Energy deliver a 199 per cent increase in its underlying Net Profit After Tax (NPAT) to $279 million.

Beach CEO Matt Kay said the release of the First-Half results, in which Beach increased its FY19 EBITDA guidance to $1.25 -$1.35 billion, highlighted the strength of the company's portfolio of assets. "These results highlight what Beach is capable ofdelivering. I am extremely proud of what we haveachieved in the first half of this year," Mr Kay said.

"All our key financial metrics have improved, our net gearing was 13.5 per cent as at 31 December, 2018 and we are on track to be net cash by the end of Q3 FY19.

"Our strong balance sheet position is in many ways thanks to the cash generation strength of thebusiness. Our operating cash flow was up 175 per cent on the corresponding half to $479 million and we delivered $293million of free cash flow."

Beach announced a fully-franked interim dividend of 1 cent per share.

Mr Kay said he was particularly pleased that the First-Half results provided clear evidence that Beach is well placed to deliver on its five-year plan.

"On the production front, our output of 15.2MMboe has exceeded expectations, driven by acombination of strong customer demand, improved facility reliability and positive field performance,"

Mr Kay said.

"We also continued our excellent track record on the drilling front, with 68 wells drilled in H1 FY19 at a success rate of 79per cent."

"In particular, our Bauer appraisal campaign has been extremely successful and has enabled us toidentify new well locations. While this campaign also saw us improve our horizontal drilling efficiencies, with spud-to-online times reduced to 23.5 days-a 24 per cent improvement."

Mr Kay said the business would continue the momentum into the second half of the year.

"These first six months have established excellent momentum for the year and we will look tobuild on that, most visibly with up to 92 wells expected to be drilled in the second half" Mr Kay said.

"We have secured rigs to execute our South Australian and Victorian Otway drilling programs andadditional rigs will also accelerate drilling in the Cooper Basin."

"Despite this active development program, cost discipline continues tobe a strong focus at Beach. Ourattention is now on reducing direct controllable operating costs."

"We have some good runs on the boardwith cost and efficiency improvements and will look to build on that for the remainder of the year."

"On the New Ventures front we have secured the La Bella gas field in the Otway Basin, alignedexploration interests with Santos in the Bonaparte Basin and BP has secured a rig for the Ironbark prospect in the Carnarvon Basin. Beach is preparing for furthergrowth".

For further information contact the following on [phone]:

Investor Relations Media

Nik Burns, Investor Relations Manager

Rob Malinauskas, Group Manager - Corporate Affairs

Compliance statements

Please refer to page 2 of the attached FY19 Half Year Results Presentation for compliance statements.

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COMPLIANCESTATEMENTS

Disclaimer

This presentation contains forward looking statements that are subject to risk factors associated with oil, gas 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 productionresults, reserve estimates, loss of market, industry competition, environmental risks, physicalrisks, 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.

Underlying EBITDAX (earnings before interest, tax, depreciation, amortisation, evaluation, exploration expenses and impairment adjustments), underlying EBITDA (earnings before interest, tax, depreciation, amortisation, evaluation and impairment adjustments), underlying EBIT (earnings before interest, tax, and impairment adjustments) and underlying profit are non-IFRSmeasures that are presented to provide an understanding of the performance of Beach's operations. They have not been subject to audit or review by Beach's external auditors but havebeen extracted from reviewed financial statements. Underlying profit excludes the impacts of asset disposals and impairments, as well as items that are subject to significant variability from one period to the next. The non-IFRS financial information is unaudited however the numbers have been extracted from the reviewed financial statements.

All references to dollars, cents or $ in this presentation are to Australian currency, unlessotherwise stated. References to "Beach" may be references to Beach Energy Limited or itsapplicable subsidiaries. Unless otherwise noted, all references to reserves and resources figuresare as at 30 June 2018 and represent Beach's share.

References to planned activities in FY19 and beyond FY19 may be subject to finalisation of work programs, government approvals, joint venture approvals and board approvals.

Due to rounding, figures and ratios may not reconcile to totals throughout the presentation.

Five year targets

References to five year targets refers to those targets listed in the 2018 Asia Roadshow presentation (refer ASX Release #049/18 dated 8 October 2018) and are presented on the basis the sale of a 40% interest in the Otway Basin is completed. Annual production target range of 30 to 36 MMboe in FY23. Reserves replacement ratio targeted to average 100% for the five year period FY19 to FY23, where reserve replacement ratio calculated as 2P reserves additions divided by production. Returnon capital employed (ROCE) is defined as underlying net profit after tax (underlying NPAT) dividedby the average of opening total equity and closing total equity. Targeted five year cumulative free cash flow defined as cash flow from operating activities less cash flow from investing activities (including proceeds from the sale of a 40% interest in Victorian Otway Basin assets) at a US$74.25/bbl Brent oil price in FY19 and a US$70/bbl Brent oil price from FY20 and 0.77 AUD/USD exchange rate in FY19 and 0.75 AUD/USD exchange rate from FY20.

Assumptions

FY19 guidance is uncertain and subject to change. FY19 guidance has been estimated on the basis of the following assumptions: 1. a US$61.00/bbl Brent oil price in H2 FY19; 2. 0.72 AUD/USD exchange rate in H2 FY19; 3. various other economic and corporate assumptions; 4. assumptions regarding drilling results; and 5. expected future development, appraisal and exploration projects being delivered in accordance with their current expected project schedules. These future development, appraisal and exploration projects are subject to approvals such as government approvals, joint venture approvals and board approvals. Beach expresses no view as to whether all required approvals will be obtained in accordance with current project schedules.

FY19 guidance set out in this presentation has been prepared on the basis that the proposed sale of a 40% interest in its Victorian Otway Basin assets to O.G. Energy (announced to the ASX on 5thOctober 2018) completes at the end of Q3 FY19. Completion remains subject to satisfaction of customary conditions, some of which are outside of the control of Beach and as a result the timing of settlement may differ from the assumption used in this release.

INTRODUCTION

Matt Kay, CEO

Ensign 931 rig at HBWS site