Beach Energy : 2018 Beach Energy Ltd Annual Report

Our vision, purpose and values are clear and concise statements that define Beach as an organisation. These statements have been developed to be enduring, and to navigate us through the longer term.

We are Australia's leading mid-cap oil and gas exploration and production company.

Our portfolio is diverse, with onshore and offshore operations in five basins across Australia and New Zealand.

We are helping to meet the growing demand for energy, supplying about 15 per cent of the east coast gas market.

We are truly a transformed company, proud of our history and focussed on the future."

Beach Energy Limited

|ABN 20 007 617 969

Callawonga facility,

Cooper Basin, South Australia

IN THIS REPORT

Overview 01

About Beach Energy 02

Our strategy 04

Financial performance 06

Chairman's letter 08

Chief Executive Officer's report 10

Review of operations 14

Sustainability 26

Board of Directors 30

Executive team 32

Full Year Report 34

Directors' report 35

Auditor's independence declaration 58

2018 Remuneration in brief (unaudited) 59

Remuneration report (audited) 60

Directors' declaration 75

Full year financial report 76

Notes to the financial statements 81

Independent auditor's report 117

Additional Information 125

Glossary of terms 125

Schedule of tenements 127

Shareholder information 131

Corporate information 132

Competent Persons Statement

The reserves and resources information in this Annual Report is based on, and fairly represents, information and supporting documentation prepared by, or under the supervision of,

Mr Tony Lake (Manager Development Western Flank Gas). Mr Lake is an employee of Beach Energy Ltd and has a BE (Mech) degree from the University of Adelaide and is a member of the Society of Petroleum Engineers. The reserves and resources information in this report has been issued with the prior written consent of Mr Lake in the form and context in which it appears.

Annual General Meeting Venue

Adelaide Convention Centre

Address

North Terrace, Adelaide SA 5000

Date

10.30am, Friday, 23 November 2018

OVERVIEW

FULLYEARREPORTADDITIONALINFORMATION

Annual Report 2018

01

ABOUT BEACH ENERGY

Australia's largest onshore oil producer, with a major gas business

Beach Energy is an ASX listed, oil and gas, exploration and production company headquartered in Adelaide, South Australia. Founded in 1961, it has operated and non-operated, onshore and offshore, oil and gas production from five producing basins across Australia and New Zealand and is a key supplier to the Australian east coast gas market. Beach's asset portfolio includes ownership interests in strategic oil and gas infrastructure, such as the Moomba processing facility and Otway Gas Plant, as well as a suite of high potential exploration prospects. Beach is focused on maintaining the highest health, safety and environmental standards.

Beach has established a world-class operated oil business on the Western Flank of the Cooper Basin, and has grown to become Australia's largest onshore oil producer. We have an active operated drilling program focused on key Western Flank play fairways, and we continue to develop our acreage across the Cooper Basin.

Beach also has a major gas business comprising operated and non-operated, onshore and offshore assets across five producing basins that supply gas to the Australian west coast and east coast markets and the New Zealand market. With its Cooper Basin, offshore Otway Basin and Bass Basin producing assets, Beach supplies approximately 15% of Australian east coast domestic gas demand.

In addition to its producing assets, Beach has permits in the onshore Otway, Bonaparte and Browse basins in Australia and the Canterbury Basin in New Zealand.

Beach continues to pursue growth opportunities within Australia and nearby which align with its strategy, satisfy strict capital allocation criteria, and demonstrate clear potential for shareholder value creation.

Beach is also committed to engaging positively with the local communities in which it operates, providing local employment, as well as partnerships with a range of clubs and organisations.

FY18: A transformational year

During the financial year, Beach acquired the Lattice Energy Group, Benaris' interest in the Otway Gas Project and

Toyota Tsusho Corporation's interest in the Otway Gas Project and the BassGas project. Beach acquired these interests for $1,532 million in consideration with an effective accounting acquisition date of 1 January 2018.

To fund the acquisitions, Beach raised approximately $301 million through a 3 for 14 pro-rata accelerated non-renounceable entitlement offer and entered into banking arrangements to access $1,475 million in credit facilities, including a $450 million revolving credit facility.

Today, Beach has an expanded footprint with five production hubs and significant gas processing infrastructure.

OUR VISION

We aim to be Australia's premier multi-basin upstream oil and gas company

OUR PURPOSE

To deliver sustainable growth in shareholder value

OUR VALUES

Our values define us, guide our actions, our decisions and our words

Safety

Creativity

Safety takes precedence in everything we do We continuously explore innovative ways to create value

Respect

We respect each other, our communities and the environment

Integrity

We are honest withourselves and others

Performance We strive for excellence and deliver on our promises

Teamwork

We help and challenge each other to achieve our goals

Our committed people and our values-based culture are our foundation for success

The transformational event in FY18 was the acquisition of Lattice. This was a unique opportunity for Beach, and provides us a large and diversified footprint across Australia and New Zealand, significantly increasing our scale while continuing to maintain financial strength."

MATT KAY

CHIEF EXECUTIVE OFFICER

02 Beach Energy Limited

|ABN 20 007 617 969

(Beach 53.75% operated)

Canterbury Basin

Please note map is not to scale

FY18 Pro Forma Production1 - by region 7%

78%

Cooper Basin

Perth Basin

Otway Basin

Taranaki Basin

- by oil vs gas and gas liquids

3%

BassBasin

1.

Pro forma FY18 defined as a Beach FY18 reported production of 19.0 MMboe plus H1 FY18 Lattice production of 7.9 MMboe. H1 FY18 Lattice production was not consolidated within the accounts of Beach. This information is provided for information purposes only and should not be relied upon.

Note: Due to rounding, figures and ratios in tables and charts throughout this annual report may not reconcile to totals.

0

500

Gas pipeline

Gas pipeline (proposed)

Major Basin

Beach permit interest

OVERVIEW

FULLYEARREPORT

GAS

Annual Report 2018

ADDITIONALINFORMATION

03