Highlights

• Beach to acquire Senex Energy’s Cooper Basin portfolio of assets
• Following completion, Beach to be sole operator in the Western Flank and associated infrastructure
• Consideration is $87.5 million cash with an effective date of 1 July 2020
• Acquisition includes 6.8 MMboe of 2P reserves and forecast FY21 production of ~0.6 MMboe
• Extensive exploration portfolio includes more than 10 drill-ready prospects
• Acquisition is immediately earnings accretive, with $5 million per annum of synergies identified

Beach Energy has executed an Asset Sales Agreement (“ASA”) with Senex Energy to acquire Senex’s Cooper Basin assets for a cash consideration of $87.5 million.

The acquisition sees Beach expand on its comprehensive South Australian Cooper Basin portfolio after picking up a material acreage position from Senex (10,876 km² gross). As an existing equity holder in many of the key permits, Beach already has in depth knowledge of the key assets and plays.

Beach Managing Director Matt Kay said he was pleased to make the acquisition as it would enable the company to apply its exploration, appraisal and development expertise across a broader footprint.

“From a Beach perspective this was a logical acquisition given our proven track record of extracting value from permits we operate, combined with the fact we are building on our extensive position in the Western Flank across the South Australian Cooper Basin,” Mr Kay said.

“The transaction is immediately earnings accretive for shareholders, with initial estimates pointing to approximately $5 million in annual operating cost savings, expected to be realised in the first year post acquisition.”

“Pleasingly, the new acreage contains more than 10 drill-ready oil and gas prospects, providing additional upside potential. These prospects will be integrated into our growth portfolio as drilling candidates from FY22.” The transaction sees Beach become the sole Western Flank operator, delivering material synergies through the simplification of Western Flank field operations and enabling Beach to apply its proven technical capabilities to explore, appraise, develop and produce the reserves and resources.

In addition, the Transaction will see Beach take 100% ownership of Western Flank infrastructure, including the Growler to Lycium Flowline System (“GLFS”) and the Lycium to Moomba Flowline System (“LMFS”).

Beach believes the acquisition will also unlock significant value creation opportunities. These include:

1. Consolidation of field operations and reduction in corporate overheads. As a proven lowcost operator, Beach will look to consolidate and simplify field operations across all operated assets within the Cooper Basin. Initial estimates point to approximately $5 million in annual operating cost savings, expected to be realised in the first year post acquisition.
2. Application of Beach’s proven approach to appraisal and development. Beach has applied new thinking to its Western Flank operations, resulting in a doubling of 2P Estimated Ultimate Recovery over the past 4 years and the doubling of operated oil production over the past 2 years. Beach will apply this approach to Senex’s Assets following completion of the Transaction.
3. Exploration upside. The extensive exploration portfolio provides opportunities for Beach to apply its technical expertise, which has been developed and successfully applied in its existing operated acreage. Focus areas will include the prospective Birkhead oil play, the southern portion of the Western Flank (covered by the recently acquired Westeros 3D seismic) and multiple Patchawarra gas prospects adjacent to the Gemba gas discovery. More than 10 drill ready prospects have already been identified within the newly acquired acreage.

The Transaction remains subject to a number of conditions precedent, including relevant regulatory approvals. Settlement is expected to occur in the March 2021 quarter (or earlier), with an adjustment made to the acquisition price based on cash flows from 1 July 2020 to the settlement date. The acquisition will be funded from existing cash and debt facilities.

Overview of assets acquired

• All of Senex’s Cooper Basin assets, covering 10,876 km² gross, including:
• A 60% operated interest in ex PEL 104 and ex PEL 111, including the Growler, Snatcher and Spitfire oil fields and associated infrastructure. Beach’s interest in these permits will be 100% following completion.
• A 60% operated interest in the GLFS and a 40% interest in the LMFS. Beach’s interest in these assets will be 100% following completion.
• A 100% operated interest in PPL 270, containing the producing Gemba gas field.
• A 70% operated interest in PPL 207, containing the producing Worrior oil field.

KeyFacts Energy: Beach Energy Australia country profile