Beach Sets Annual Production Target at 3 Million Barrels

Beach Petroleum has set as a target annual production of three million barrels of oil within 18 months as the oil and gas producer and explorer ramps up its exploration and production operations across Australia.

Addressing shareholders at its 2005 annual general meeting in Adelaide, Beach Petroleum Chairman, Mr. Robert Kennedy, said the three million barrel target is a realistic objective for the 2006-2007 financial year.

It would be fuelled by the Company's expanding entitlements from the new producing offshore Gippsland oil field interest, and its current core exploration and production interests in the Cooper Eromanga Basin.

Mr Kennedy said the target did not include gas production from Beach Petroleum's anticipated $35 million acquisition of a 40% interest in Brisbane-based Arrow Energy NL's Stage 1 development of the Tipton West coal seam gas (CSG) project in Queensland's Surat Basin.

Nor did it include any upside from new discoveries from the Company's aggressive onshore and offshore exploration and development activities in the Cooper, Otway, Browse, Gippsland and Carnarvon Basins.

In what he described as a highly upbeat outlook for Beach Petroleum, Mr. Kennedy also announced:

  • The opening quarter for the 2005-2006 financial year had generated sales revenues of $29.4 million – nearly three times that of the previous corresponding quarter and nearly equal to the first half year revenue for 2004- 2005 of $30.4 million
  • The Company found more oil during the year than it produced – driven by new exploration discoveries (51 wells have been drilled by Beach in the past five years with a 43% commercial success rate)
  • With the acquisition of the offshore Gippsland fields, current net oil reserves stood at 13.5 million barrels at the end of the September 2005 quarter, compared to under one million barrels four years ago
  • This figure would increase significantly if, subject to current due diligence outcomes, Beach Petroleum proceeded with its Tipton West coal seam gas acquisition – with a financial commitment to the project expected next month
  • This commitment would involve funding the drilling of between 80-90 coal seam gas wells over the next 12 months
  • The gas condensate resource in the Basker Manta Gammy field, southeast of Victoria's Lakes Entrance and which this week produced the first offshore oil outputs in the Company's 45 year history – could be developed as early as 2008
  • The recent move into New Zealand's offshore Canterbury Basin offered a strong new exploration project in waters east of the country's South Island
  • The new Cooper Basin oil discovery, Kiana-1, just west of Moomba, should be in full production next month.

Beach Petroleum's Managing Director, Mr. Reg Nelson, told shareholders the Company faced a year of unprecedented exploration and production activity "across a very diverse portfolio in Australia of onshore and offshore projects".

"In so doing, while we have increased in size and scope substantially, we have reached this point of growth well balanced and well diversified for the future," Mr. Nelson said.

Of the imminent Tipton West acquisition, Mr. Nelson said its ability to realize early gas sales, its closeness to pipeline infrastructure and markets and the opportunity for further exploration and development, gave it the potential to be one of Australia's largest onshore gas resources of up to two trillion cubic feet.