Kay said the Cooper Basin oiler delivered a "fairly predictable" March quarterly report last week, and while there were good reasons to deliver predictability that was no way to grow a company.

 

He said Beach was always looking for ways to make the most of its assets, which was why it was planning to bring directional development drilling to the basin in order to trial methods of increasing output.

 

"What we are looking at, particularly across the Birkhead and McKinlay reservoirs, is taking techniques that have existed across other basins in the world for well over a decade, and trialling them here," he told Energy News.

 

He said the idea had really come from Beach's new head of exploration and development, Jeff Schrull, who was Cue Energy Resources' exploration manager until late last year, has also worked with Rialto Energy, Addax Petroleum and Chevron Corporation. 

 

"Jeff has certainly utilised some of these techniques elsewhere in the world, and what we are really seeing from some of the reservoirs here is the potential for higher flow rates if we can find the right technique," he said. 

 

"When we say horizontal drilling, what we really mean is [directional] drilling, so we can target the reservoir in real time.

 

"It isn't something that has been utilised to any great extent in the Cooper Basin."

 

The intelligent drilling will be monitored in real time, and can be directed to drill within target reservoirs to increase exposure to the wellbore.

 

Beach is hoping to see flow rates rise from around 150-250bopd from conventional vertical Birkhead wells to between 450-1000bopd from horizontal wells.

 

"If we run a four-well program we'd be hoping we could get up to 1800-4000bopd, so it is material," Kay said.

 

It will come at a cost. 

 

While a typical vertical well will cost $2-3 million, out in the Cooper Basin a horizontal well may bump that price tag up to $5-7 million.

 

Initially the horizontal drilling will be tested on known Birkhead Formation fields, potentially Kangaroo-1 or Bauer field, although final nominations have not been made.

 

Eventually, the technology is likely to be deployed on the McKinlay Formation if the early results are encouraging.

 

One of the other emerging themes for Beach is also a step-up in gas production, largely off the back of three successful recent wet gas discoveries in the ex-PEL 106 area - Canunda-3, Crockery-1 and Dandy-1 - from four wells.

 

"We have seen high liquids yields as well, and with a 75% strike rate we are far more confident than we were beforehand, and that really means in the current environment I think we'd be looking for approvals to drill 8-10 of those wells next year," Kay said.

 

"We'll be getting more aggressive on the gas front."

 

The company says there is enough gas discovered and developed now to run the expanded 25MMcfpd Middleton Gas Plant at full bore until 2018-19 and it won't take much to give Kay confidence to recommend an expansion to 40-50MMcfpd. 

 

"That's already on the drawing board, and it would probably only take another 1-2 successes around Middleton before we move forward on that," he said.

 

Beach is also seeing some legacy gas sales contracts expire, such as those with AGL Energy, and it is looking to add more third party gas contracts similar to the Adelaide Brighton deal to build its emerging gas business. 

 

In terms of drilling, the company is set to finish seven wells before the end of the fiscal year.

 

A two-well program in PEL 630 with Bridgeport Energy is trying to test the Namur Sandstone play in a largely untested part of the basin, on trend with some more recent Namur successes. 

 

Unfortunately, Beach revealed that the first well, Butterfish-1, was water-wet and shows in the Birkhead Formation were only traces of oil.

 

The second well, Harvey's Return-1, is now drilling ahead. 

 

While the next year's plans are developing, Kay said they would likely involve a similar number of wells as this year. 

 

"We are drilling and completing wells for $2-3 million each, and they can be tied back in a matter of months, so it is definitely something we are keen to pursue," Kay said.

 

Beach is targeting full replacement of produced reserves from existing operated acreage over next three years.

 

The company has established a $US20/bbl price for cash generation, across its core Cooper Basin area, and pushing further into the east coast gas market, while Kay is also keeping an eye out for high impact inorganic growth, although he will still not say where.

 

Kay is also hopeful of a success in the Otway Basin with the conventional Haselgrove-3 well, Beach's first Otway Basin well in a few years.

 

"It's an area we have been involved with for over 50 years, and we know it well," he said.

 

"We're intending to work closely with the community in Penola and the wider areas, to make sure everyone knowns what we are doing and why.

 

"We are looking forward to it and it is a good target. We give it a more than 30% chance of success, and if we are successful we have 6-7 potential follow-ups."