Beach Energy Limited

I would now like to hand the conference over to Mr. Brett Woods, Managing Director and Chief Executive Officer. Please go ahead.

Good morning, everyone, and welcome to Beach Energy's FY25 half-year results presentation. Joining me today is Anne-Marie Barbaro, our Chief Financial Officer. Together, we will take you through our half-year results and provide an update on the outlook for the remainder of FY25 before we open up the Q&A. Before I begin, I'd like to acknowledge the hard work and dedication of the entire BEACH team. You'll recall that we announced our strategic review towards the end of last financial year, and since then we've been extremely busy with the organisational reset and implementing a range of strategic initiatives while keeping focused on safe delivery of operations and major projects. Today is pleasing to announce a set of results which reflects initial outcomes from that strategic review. I believe the results demonstrate good, solid progress and early signs of what is ahead for beach. Production growth, cost reductions and increases in earnings, cash flow and dividends are key themes for today. Importantly, we have achieved these results with outstanding safety and environmental performance. Slide two sets out our compliance statements, which I'll leave for you to read at your leisure. Slide three lists the key milestones for the first half. The organisational elements of the strategic review have been completed. The business has been restructured and we achieved our target 30% headcount reduction. In fact, we've exceeded that target and currently have 32% less headcount than at our peak last year. The appointment of my executive leadership team is also complete and I'm glad that many of you got to meet them during the Wayseer site visit in December. It is great to see the vigour in which the ExCo are chasing down opportunities in implementing our strategic initiatives. In the field, this half saw completion of two major projects and progress on waste here. Successful connection to the thylacine west wells and completed the offshore hot wave program and commissioning and ramp up of Moomba CCS completed the slammer commission's reduction project. I'll talk to our major projects in more detail shortly. Another great outcome was success we had in the Bass Basin with our wellboard descaling initiatives. We first trialled this at YOLA 6, which greatly improved gas flow, and subsequently followed it up with two other producing YOLA wells. This is a low-cost initiative at roughly $60,000 per well, which has delivered a material uplift in production. This past week, we've averaged over 25 terajoules a day of sales gas production, which compares to around 9 terajoules a day last financial year. This additional gas is going into the spot market to help ease current East Coast supply constraints. This is a great example of our operating philosophy for non-core assets. Our selective capital investment in this instance has delivered material value uplift. Turning to slide four and our headline financial results. This half we recorded an uplift across all key metrics, which, as I mentioned, is a solid outcome following on from our strategic review. Production was up 15% from the prior corresponding period. In the Otway Basin, we saw more than doubling of production from higher take-or-pay arrangements and increased well-deliverability following connection of Enterprise and Thylacine West. The Bass Basin also provided a meaningful contribution to growth thanks to the descaling initiatives. On the earning front, in addition to stronger production, the great work done by our commercial team and the Waitsea Joint Venture partner Mitsui in securing gas swaps for early energy cargos contributed to revenue growth. Two beach LNG cargoes were listed in the first half and delivered $139 million of revenue and supported 5% increase in total sales revenue to approximately $1 billion. Reductions in costs, including a 20% reduction in unit field operating costs, also underpinned our results. These factors combined to drive a 20% increase in the underlying EBITDA to $587 million and a 37% increase in underlying impact to $237 million. With high production, revenue and earnings, our cash flow and liquidity position strengthened. Liquidity increased to $631 million, net gearing reduced to 10%, and pre-growth free cash flow increased tenfold to $431 million. In recognition of first half performance, the Board has declared a $0.03 per share fully franked interim dividend. Whilst our free cash flow for the first half of FY25 has been strong, We've taken a balanced approach on the interim dividend to recognise the seasonality of gas demand on the East Coast, as well as the upcoming offshore abandonment activities that will be kicking off in the second half of FY25 as part of the Equinox campaign. Turning to slide five, which shows our continued solid outcomes across safety and environmental performance. We again recorded no tier one or tier two process safety events and no environmental spills of more than one barrel. Unfortunately, over Christmas, We had one recordable injury, which ended our record 12-month run of being recordable injury-free. An employee's hand was pinched in a pulley during maintenance activity. He has fully recovered and is as expected, and we're implementing measures to prevent such incidents in the future. We are fully committed to a safety and well-being culture, pursuing continual improvement in Beach's business. On slide six, We show the key highlights from our offshore Otway Basin development program and movement CCS project, both of which were completed during the half. In the Otway Basin, the six-well development program concluded with the connection of Thylacine West 1 and 2. The Thylacine West wells have performed in line with expectations since coming online. BEACH has invested in the Otway Basin to restore well deliverability for the Otway gas plant and bring much-needed new gas to the East Coast market. It is great to see the plant operating at high rates and knowing that we have additional gas available for the market when our customer needs it. On the emissions front, I was in the Cooper Basin last week with our joint venture partner, Santos, along with the Premier of South Australia, Peter Malinowskis, and the Minister for Energy and Mining, Tom Kitsantonis, to tour our member CCS facility. The committing process and ramp-up of CO2 injection well exceeded our expectations, which is an absolute credit to the project teams. At capacity injection rates, the emissions reduction delivered by Murmur CCS is equivalent to taking roughly 700,000 petrol cars off the roads each year. So we're making a real contribution to Australia's emissions reduction journey. The success of Murmur CCS strikes a telling blow to the Naysayers who are choosing anti-gas ideology over science. Turning now to Waits here on slide seven. The key milestones of mechanical completion being construction of the plant, was achieved during the first half, and the completion of the phase two development drilling scope is now done. We are now in full final commissioning phase and continue to target first sales gas from the plant in the first quarter FY25. In December, we announced some quality issues at the valve station for the Zyrus to wait to see a flow line. Most of the valve rectification works have now been completed. However, there are still some components which we're expecting delivery this month. mid this month. While this delayed the introduction of Xyros fuel gas into the plant to support commissioning activities, we've maintained our first sales gas target. In conjunction with the operator Mitsui, we have established plans to introduce temporary power and hot water supply to progress critical commissioning such as the Amin Tower. This would previously only been undertaken once Xyros fuel gas was introduced to the plant, de-risking the schedule. Beach now has in excess of 20 senior professionals seconded into the commissioning team to support Mitsui. Mitsui is operators controlling the commissioning schedule and activities, with club personnel taking direction from Mitsui now. We acknowledge the frustration and length of the delivery time for this project. Beach is now operating and doing what it can to support this process. Despite the challenges, a real positive has been our ability to do a gas fire time swaps to fill early LNG cargoes. In addition to the two cargos in FY24, Beech lifted another two cargos this half and has delivered $293 million in revenue at a healthy average price of over $18 Aussie per MMBTU. These gas swaps have been a great initiative with key advantages being bringing forward revenue and cash flow, which would otherwise have been dependent on Waitsia plant startup, benefiting from strong commodity pricing and the pricing inherent in Beech's LNG contracts, Utilisation of committed processing costs at the north-west shelf, which are repayable regardless whether volumes are supplied or not. And the strengthening of our financial position thanks to significant cash contribution from these cargoes. With four cargoes listed today and a fifth in January, the material contribution weight simplified once running at full rates is now evident. Holding all-outs constant and ignoring factors such as de-bottlenecking upside We would expect eight to 10 Beach LNG cargoes per year. Now turning to slide eight for a quick look at our second half focus. Commissioning the Waitsia gas plant is clearly a priority. And though we're not operating Waitsia Joint Venture, Beach will continue to deliver support to Mitsui in bringing the plant online. In the Perth Basin, we have also some exciting drilling coming up. The Ariana gas exploration hole will be drilled from the L1 permit meaning any discovered volumes could be directed to the Wadesea Export Licence. Bahara Springs Deep Free Development Well aims to convert undeveloped 2p reserves and will help inform future development plans for that field. Two other important work programs will commence this half. First, we've been planning the next phase of the offshore Victoria activity for some time and will soon commence that program. I will take you through that campaign in more detail shortly. But in the fourth quarter, we aim to plug and abandon two wells and drill one exploration well in the offshore railway. In the western flank, we have a 10-well oil development and appraisal campaign ready to go, with rig negotiations entering their final stages. I'll provide detail on both of these programs after we hear from Anne-Marie on our financial plans.

Thanks, Brett. Good morning, all, and thank you again for joining us today. Our headline financial metrics are set out on slide 10. As Brett mentioned, our results for the first half of FY25 reflect good progress towards our strategic review initiatives. Production and sales volumes were up 15% and 12%, respectively, which underpin growth in earnings and cash flow. Underlying EBITDA was up 20% to $587 million, underlying NPAT up 37% to $237 million, and operating cash flow up 88% to $659 million. While we recorded two weightsier LNG swap cargos, our revenue mix rotated from liquids to gas thanks to a more than doubling of production from the Otway Basin and a 67% increase from the Bass Basin. For the half, liquids accounted for 55% of sales revenue and gas accounted for 45%. For reference, in the prior corresponding period, the split was 67% liquids and 33% gas. Also of note is the 18% increase in our average realised gas price to $10.50 per gigajoule. This partly reflects the tightening market, which we've long anticipated, as well as our strategy to expose more of our gas to spot and shorter-term pricing. Repricing of the Otway and Cooper Basin GSAs and the new Enterprise GSA also contributed to stronger realised prices. Slide 11 steps out our underlying NPAT, which, as mentioned, was 37% above the prior corresponding period. Strong revenues for the half were largely driven by an uplift in production in our Victorian offshore gas assets, which Brett outlined earlier, and LNG revenues. Lower cash costs contributed to earnings growth, with a reduction in field operating costs driven by cost-out initiatives, which are progressing well, and lower third-party LNG purchases recorded. partially offsetting these reductions with higher northwest shelf LNG tolling charges, as well as a result of additional LNG cargo this half. Slide 12 shows movement in cash during the financial year, which resulted in closing cash reserves of $251 million. Operating cash flow of $659 million was 88% above the prior corresponding period, thanks to higher production, weightier LNG swap cargos and cost-out initiatives. Lower income tax payment and lower financing costs as a result of lower dawn debt also contributed to higher operating cash flow. Cash capital expenditure of $413 million was materially below the $603 million recorded in the prior corresponding period. Cash outflows from growth activities reduced from $298 million to $191 million through completion of some of our major projects while cash outflows from sustaining expenditure reduced from $305 million to $222 million. Sustaining capital expenditure is on track to hit our FY25 target of less than $450 million. This will be achieved through a number of activities, including our cost out programs and work program optimizations. On slide 13, you'll see a much improved financial position. Higher free cash flow generation during the half saw us pay down $115 million of debt and end the period with net debt of $389 million, net gearing of 10% and available liquidity of $631 million. In recognition of the half-year results and strong cash flow generation, the Board declared a $0.03 per share fully franked interim dividend. This is a 50% increase from the prior dividend and marks the first step in Beecher's journey towards paying higher sustainable dividends. It should be noted that if you apply our capital management framework and dividend policy to the first half's pre-growth free cash flow of $431 million, you'll arrive at a dividend that is higher than $0.03 that we've declared. Our policy is applied over a full year free cash flow, and we're taking a prudent approach to the interim dividend, noting that in the second half of FY25, we'll be conducting abandonment in offshore Victoria and commencing our western flank development drilling. Our aim is to deliver sustainable long-term dividend growth. I'll close by reiterating that Beech is in a strong financial position as reflected through our strong results for the first half of FY25. This allows us to maintain flexibility as we balance investment in growth while sustainably increasing our dividends to shareholders. On that note, I'll hand back to Brett.