The acquisition of this interest will add a further 2.9 million barrels of 2P reserves to Beach Petroleum’s reserves base, based on operator’s assessments.
“This additional key interest not only further consolidates our position in the Gippsland Basin but also represents substantial progress in the strategy of establishing Beach as a long-term, mid-tier Australian oil and gas producer,” Beach Petroleum managing director Reg Nelson said.
“Prior to our initial entry into this project, Beach’s total oil reserves were around 5 million barrels,” he said.
“This latest transaction will see that total oil reserves figure rise to nearly 14 million barrels and boost Beach’s oil production potential to more than 3 million barrels per year in 2006-2007.
The company's production base, sales and revenue have been steadily rising over the past four years, and its quarterly report, released this morning.
Total oil and gas revenue jumped 59.2% to $62.8 million (before adjusting for a forward hedging) premium of $1.5 million for the year ended 30 June 2005 compared with $38.5 million in the previous year.
Four years ago Beach’s annual sales revenue was $9.2 million
Similarly, the Company’s annual oil and gas production – which was just 182,000 barrels of oil equivalent (boe) in the 2000-2001 financial year – jumped above the 1 million boe mark for the first time in 2004-2005, rising from 972,000 boe to 1,049,000 boe in the past 12 months.
Total oil and gas sales for the year were up from 889,000 boe to 1,005,000 boe.
The latest results included 301,000 boe produced in the June quarter – the highest quarterly output in the Company’s history and up 24% on the previous corresponding period.
Nicely cashed up, Beach Petroleum is now ready to invest in further growth.
It first acquired a 25% stake in the BMG development late last year. The project is currently being developed under a joint operating agreement (JOA) with Anzon.
The additional interest – taking Beach Petroleum’s holding to 37.5% – became available earlier this week when Anzon announced it had agreed to sell a 12.5% equity stake in the VIC RL 6, VIC RL 9 and VIC RL 10 Retention Leases to an unidentified third party, believed to be a major Japanese company.
This triggered the pre-emptive rights held by Beach Petroleum under the existing JOA with Anzon, giving Beach Petroleum until August 8 to exercise its right.
As well as the 37.5% interest in the project, Beach still has an option to acquire a further 12.5% farm-in interest. The company also owns a direct shareholding in Anzon of almost 10%.
Beach has agreed to acquire the additional 12.5% interest from Anzon on the terms as set out in Anzon Australia Limited’s announcement on Monday this week, being primarily $30 million in August 2005, and a further payment of $9 million in January 2006.
Anzon acquired 100% of the Basker, Manta and Gummy (BMG) petroleum assets from Woodside Petroleum last year.
The fields have Proven and Probable (2P) recoverable oil reserves of 23.3 million barrels. In addition, a contingent gas/condensate resource of 19.2 million barrels of oil equivalent has been identified.
Earlier this month, the project achieved its first significant step in the development approvals process when the Victorian Government granted approval for the drilling of the appraisal well Basker-2.
The semi-submersible drilling rig, the Ocean Patriot, is expected to arrive at the Basker Field early next month to start drilling Basker-2.
Once drilled, Basker-2 will be immediately completed and connected for extended production testing through the Crystal Ocean FPSO (floating production, storage and offtake vessel) with oil immediately transferred into the Basker Spirit tanker for storage and subsequent sale.
Production testing is expected to begin in October and continue for about six months. Drilling of three further development wells and one gas injection well is expected to start in December 2005, leading to full field production in July 2006.
The $76.8 million capital raising will not only fund the $39 million acquisition of the additional 12.5% interest, but will also strengthen Beach’s balance sheet to take advantage of future corporate expansion opportunities.
The funds have been raised through the placement of 120 million fully paid ordinary shares at $0.64 per share to institutional and sophisticated clients of Euroz Securities Limited.
The placement will be made in two tranches. The first tranche of 49.6 million shares expected to be completed on August 4 and the second tranche of 70.4 million shares will be completed subject to Beach shareholders approving the issue of those shares at a general meeting to be held in Sydney on September 1.
Beach issued bonus options to shareholders on March 31. These options, which expire on June 30, are exercisable at a price of 60 cents, which is at a discount to the placement price.
