Beach Petroleum Acquires Delhi Petroleum

Beach Petroleum has acquired the Delhi Petroleum Group of companies. The transaction will deliver Beach Petroleum an average 21 percent interest in excess of 200 oil and gas fields which are subject to numerous petroleum production licenses and major joint ventures encompassing large portions of the Cooper and Eromanga Basins of South Australia and Queensland.

The acquisition complements Beach Petroleum's existing Cooper Basin oil and gas reserves and provides significant opportunities and synergies to add value through exploration and production on a number of fronts.

The acquisition is expected to increase Beach Petroleum's oil and gas reserves from 36 mmboe to more than 95 mmboe (as at July 1, 2006).

The transaction was effected by Beach Petroleum's acquisition of the total issued capital of Australian Petroleum Investments Pty Ltd (API) for $44 million. API owns Delhi Petroleum Pty Ltd (Delhi), which is the owner of a 21% interest in the Cooper Basin Joint ventures.

In addition, Beach Petroleum has assumed Delhi's senior debt of approximately $230 million and will offer to redeem FIELDS notes for cash, with the ability of Australian and New Zealand FIELDS note holders to subscribe for shares in either Delhi Holdings Limited (Delhi Holdings) or Beach Petroleum. Delhi Holdings Limited is an unlisted public company which, as a result of the acquisition, will be owned by Beach Petroleum.

FIELDS note holders have the following alternatives:

• redeem some or all of their notes in full for $100 per note and any outstanding interest;
• redeem some or all of their notes in full and elect to have the right for $42 of the redemption monies to be applied to the subscription for shares in Beach Petroleum;
• redeem some or all of their notes in full and elect to have the right for $42 of the redemption monies to be applied to the subscription for shares in Delhi Holdings;
• retain some or all of their notes.

Beach Petroleum will offer to issue its shares to FIELDS note holders by a prospectus. The offer will be subject to Beach Petroleum's shareholders approving the issue at its annual general meeting to be held 23 November 2006.

A prospectus for the offer of Beach Petroleum shares to FIELDS note holders will be made available when the Beach Petroleum shares are offered and FIELDS note holders who wish to acquire the Beach Petroleum shares will need to complete the application form that will accompany the prospectus.

A prospectus for the offer of shares in Delhi Holdings will be made available to FIELDS note holders when the shares in Delhi Holdings are offered and FIELDS note holders who wish to acquire shares in Delhi Holdings will need to complete the application form that will accompany the prospectus.

The acquisition will be funded through a combination of an equity placement and renounceable rights issue and a debt facility.

Initial funding of the transaction will be via a bridging debt facility totaling $650 million to effect the immediate acquisition of the Delhi assets and fund the redemption of FIELDS notes.

The bridging debt facility is to be paid down from the proceeds of the equity raisings which are fully underwritten and will raise a total of approximately $360 million. The equity raising comprises a fully underwritten $113 million placement of approximately 81 million fully paid ordinary shares at $1.39 and a fully underwritten, two for seven renounceable rights issue at $1.39 a share to raise approximately $247 million. Euroz Securities Limited acted as equity placement agent and sole underwriter of the placement. Euroz Securities and Commonwealth Securities Limited acted as joint lead managers and underwriters to the rights issue.

A prospectus for the renounceable rights issue offer of Beach Petroleum shares will be made available when the shares are offered and a shareholder, or any person who has bought the rights, who wishes to acquire the shares will need to complete the application form that will accompany the prospectus.

Adelaide Equity Partners Ltd acted as corporate and financial adviser to Beach Petroleum, and Piper Alderman acted as legal advisers.

Bridging finance was provided by Commonwealth Bank of Australia.

Neither Beach Petroleum nor Delhi Holdings will make any offer of securities, and no securities will be allotted, to FIELDS note holders with a registered address outside of Australia and New Zealand. Beach Petroleum will not offer or issue securities under its rights issue to any person in a jurisdiction in which such offers or issues would be illegal or impractical.