"The gains in daily oil volumes will come from Beach's first full year ownership of the Bodalla oilfields in Queensland, and the commercialisation of its recent oil discoveries in South Australia's Cooper Basin," Beach's Chairman, Mr Robert Kennedy said.
Addressing shareholders at the company's annual general meeting in Adelaide, Mr Kennedy signalled Beach's intention to be an ongoing dividend payer, with shareholders shortly to receive their first dividend cheques since the 1980s.
"It is our intention to maintain a shareholder focus in running the business, and to continue to be a dividend payer," Mr Kennedy said.
"While the market is yet to fully rate the value of Beach Petroleum, nonetheless the share consolidation earlier this year has generally seen the consolidated shares trading at 7% above their pre-consolidation value."
First Sellicks' production imminent
The first offtakes from Beach's most significant discovery this year in the Cooper Basin of South Australia, the Sellicks-1 oil well on the western flanks of the Basin - will commence within days.
"The initial flow rate from Sellicks-1 will be about 500 barrels of oil per day (bopd), building to 1,000 bopd by January," Beach's Managing Director, Mr Reg Nelson said.
"The Sellicks structure is estimated to contain up to 1.5 million barrels of recoverable oil from an estimated 3.6 million barrels of oil in place - a field of the same order as the new Acrasia field to the northeast, in which Beach also participated."
High NPV per barrel
Mr Nelson said Beach's drilling efforts in the Cooper/Eromanga this year had been highly successful.
"The program has confirmed the Company's long-held view of the prospectivity of the regions west and south of the Moomba processing plant," Mr Nelson said.
"Significantly, the exploration schedule has potentially added up to 1-2 million barrels to Beach's reserve base but at a finding cost of only A$2.00 a barrel," Mr Nelson said.
"On current oil prices, this would deliver a net present value of A$15-20 per barrel to Beach on new discoveries in this region - the focus of our planned wildcat drilling in 2003."
"As Sellicks has shown, as Beach is able to move to full production quickly and cost effectively in our Cooper licence areas, the Net Present Value per barrel from future discoveries by us in this province is likely to remain high if present oil prices persist."
Enhanced prospectivity
Mr Nelson said the 2003 exploration program in the Cooper would target new oil fairways the Company believed lay along the western and southern basin flanks.
"Of the 12 wells in which Beach participated in, in onshore Australia since June 2001, 11 showed oil or gas indications and were completed as producers," he said.
"Five of these wells - all in the Cooper/Eromanga Basin - will be in production by December 2002.
"We don't believe any of these new discoveries are one-offs.
"Each new exploration well has opened up new territories spread through a wide geographic area with numerous targets to pursue.
"Beach will renew this chase in January 2003 with a base program of six new oil wildcats in the South Australian section of the Cooper Basin."
Bodalla "huge step forward"
Shareholders were also told that the move to 100% ownership of the Bodalla oil block in southwest Queensland, fully effective from 1 July this year, was a "huge step forward" for Beach.
"The Company acquired 2.8 million barrels of oil and four petajoules of gas/ condensate at Bodalla for $16.5 million," Mr Nelson said.
"This equates to an acquisition cost of A$4.70 boe (US$2.60 boe) - about a tenth of what we can sell it for at present," he said.
"This acquisition provides, however, more than cheap oil. It has added immeasurably to Beach's expertise and operational capacity."
Production funding new exploration
Mr Nelson said Beach had witnessed a fourfold increase in the opening quarter of this year in both production and revenue, compared with the previous corresponding period.
"We expect that this strong growth, enhanced by new discoveries, will continue throughout the rest of the 2002/2003 financial year," he said.
"The solid revenue from our production of oil and gas is now at a level it is self-funding our aggressive exploration drive over our licence areas - all of which are in premium but under-explored petroleum provinces."
Production from the Sellicks-1 discovery is expected to add "very substantially" to Beach's revenues from January 2003.
"Beach's success in the past year means we have secured a singular position as a new breed Australian petroleum exploration and production company," Mr Nelson said.
"Given the Company's current stage of growth and the quality of our onshore tenements, Beach will now focus in the medium-term exclusively on our onshore Australian prospects to build shareholder value and expand reserves.
"This is not to say we wouldn't examine offshore opportunities.
"However, offshore wells are typically more expensive, incur large capital costs before they yield revenues, and cannot be brought into production as quickly as onshore discoveries."
