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Matador Resources CompanyAnnual Report 2022
Delivering
energy security
Beach Energy Limited
ABN 20 007 617 969
Delivering
energy security
Our Vision
We aim to be
Australia’s premier
multi-basin upstream
oil and gas company.
Our Purpose
Sustainably
deliver energy for
communities.
Our Values
Safety
Safety takes
precedence in
everything we do
Creativity
We continuously
explore innovative
ways to create value
Respect
Integrity
We respect each other,
our communities and
the environment
We are honest with
ourselves and others
Performance
Teamwork
We strive for
excellence and deliver
on our promises
We help and
challenge each other
to achieve our goals
Delivering critical
growth projects
More gas delivered to
the East Coast market
Offshore Otway Basin
The offshore Otway Basin project is a critical investment in
new gas supply to support the East Coast market. Drilling
commenced in February 2021 and concluded with the final
well of the campaign completed in July 2022. The seven-well
campaign was the largest in the basin’s history and delivered
one new gas discovery at the Artisan field and six development
wells in the Geographe and Thylacine fields. Over 820,000
operational hours were required for the drilling campaign,
which was delivered safely and received the 2021 IADC Safety
Award recognising outstanding safety performance. The two
Geographe wells have been connected to the Otway Gas Plant
and enabled higher production rates in the final quarter of FY22.
Activities for connection of the remaining four Thylacine wells
are underway.
Beach Energy Limited
ABN 20 007 617 969
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118
In this report
About Beach Energy
FY22 Highlights
Diverse Assets and Operations
Community Investments
Emissions Reduction
From our Leadership
Our FY22 Strategic Pillars
Our Markets
Operating Review
Reserves Statement
Sustainability
Board of Directors
Full Financial Report
Additional Information
Waitsia Gas Plant concept design
About this Report
This 2022 Annual Report is a summary of Beach Energy’s
operations, activities and financial position for the 12 month
period ended 30 June 2022. In this report, unless otherwise
stated, references to ‘Beach’ and the ‘Group’, the ‘company’, ‘we’,
‘us’ and ‘our’ refer to Beach Energy Limited and its subsidiaries.
See Glossary for further defined terms used in this report.
This report contains forward-looking statements. Please refer to
page 47, which contains a notice in respect of these statements.
All references to dollars, cents or $ in this document are to
Australian currency, unless otherwise stated. Due to rounding,
figures and ratios in tables and charts throughout this report
may not reconcile to totals. An electronic version of this report
is available on Beach’s website, www.beachenergy.com.au
The 2022 Corporate Governance Statement can be viewed
on our website on the Corporate Governance page.
Annual General Meeting
Venue: Crowne Plaza Hotel
(subject to prevailing health directives at the time)
Address: 27 Frome Street, Adelaide SA 5000
Date: Wednesday, 16 November 2022
For more information, visit:
www.beachenergy.com.au/agm
Annual Report 2022
Delivering
energy security
Beach Energy Limited
ABN 20 007 617 969
Beach a new entrant in
the global LNG market
Waitsia Stage 2, Perth Basin
Waitsia Stage 2 is a transformational growth project
which will see Beach become a new supplier in the global
LNG market. The project includes construction of a
250 TJ/day gas plant and development drilling in the
Waitsia field. Half of Beach’s existing Waitsia reserves
will be sold to bp via the North West Shelf facilities in
Karratha, with the remaining reserves earmarked for the
domestic market. Significant progress was made in FY22,
including commencing construction of the gas plant,
drilling three of six development wells and signing the LNG
Heads of Agreement with bp. Waitsia Stage 2 is targeting
first LNG sales in the second half of 2023.
Beach Energy LimitedAnnual Report 2022 02
About Beach
Energy
Beach Energy is an ASX-listed
oil and gas exploration
and production company
headquartered in Adelaide,
South Australia.
Beach’s purpose to
‘sustainably deliver
energy for communities’
means it operates
while maintaining the
highest health, safety
and environmental
standards.
Founded in 1961, Beach today
produces oil and gas from five basins
across Australia and New Zealand
and is a key supplier of gas to the
Australian East Coast gas market.
In addition to participating in
Australian and New Zealand domestic
gas markets, Beach will enter the
global LNG market in FY24 when it
exports its share of gas volumes from
the Waitsia Stage 2 project.
Beach also has a suite of exploration
permits across the onshore Cooper
and Perth basins, onshore and
offshore Otway Basin and offshore
acreage in the Bonaparte (Australia)
and Taranaki (New Zealand) basins.
Beach continues to pursue growth
opportunities within Australia and
nearby which align with its strategy,
satisfy strict capital allocation criteria
and demonstrate clear line of sight for
sustainable shareholder value creation.
Beach has a target of reducing
emissions intensity from its portfolio
by 35 per cent by 2030 and has an
aspiration to reach net zero Scope 1
and 2 emissions by 2050. Beach is
a 33% stakeholder in the Moomba
Carbon Capture and Storage project
in the Cooper Basin, one of Australia’s
largest emissions reduction projects.
Beach is committed to engaging
positively with the local communities
in which it operates and providing
local employment, supply chain
opportunities and partnerships with
a range of clubs and organisations.
FY22
Highlights
Liquidity
$765m
$165m net cash at year-end
Otway Gas Plant
Geographe 4 and
5 connected
Moomba CCS
Final Investment
Decision taken
Otway Basin
Offshore drilling
campaign complete
Enterprise
Final Investment
Decision taken
Cooper Basin
Oil exploration
campaign delivered
Waitsia Stage 2
Gas plant
construction and
drilling commenced
Award
APPEA
Project Environment
Excellence Award
Award
2021 IADC
Safety Award
Safety
>7 years of no
recordable injuries at
the Otway Gas Plant
>4 years of no
recordable injuries at
the Beharra Springs
Gas Plant
03
Gas plant reliability
>99% gas plant
reliability at
Otway and Kupe
>99%
Sales Revenue
Operating Cash Flow
2022
2021
Underlying EBITDA
2022
2021
Underlying NPAT
2022
2021
$1,749m
$1,519m
$1,111m
$953m
$504m
$363m
21.8 MMboe
15%
$1,223m
Production
21.8 MMboe
32% Cooper Basin JV
24% Western Flank Oil and Gas
19% Otway Basin (VIC)
13% Taranaki Basin
6% Perth Basin
5% Bass Basin
1% Otway Basin (SA)
Annual Report 2022Beach Energy Limited 04
Diverse Assets
and Operations
Beach Energy has
a diverse portfolio
of assets, spanning
onshore and offshore
operations across five
hydrocarbon basins.
Production, exploration, appraisal
and development activities are
undertaken in the Cooper Basin
(South Australia and Queensland),
Bass Basin (Victoria), Otway Basin
(Victoria and South Australia),
Perth Basin (Western Australia) and
the Taranaki Basin (New Zealand).
FY22
Production
7.1 MMboe
Cooper Basin JV
5.2 MMboe Western Flank
4.1 MMboe
Oil and Gas
Otway Basin (VIC)
2.8 MMboe
Taranaki Basin
1.3 MMboe
Perth Basin
1.1 MMboe
Bass Basin
0.1 MMboe
Otway Basin (SA)
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Gas production
Oil production
Exploration/appraisal
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Beach office
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Western Flank
Oil and Gas
Otway Basin
(VIC)
Taranaki Basin
Key Assets
– Moomba Gas Plant
– ~220 producing oil
and gas fields
– Middleton Gas Plant
– Oil infrastructure
– ~30 producing oil and
– Depleted reservoirs
gas fields
for CCS
– Kupe Gas Plant
– Kupe gas field
– Otway Gas Plant
– Thylacine, Geographe,
Speculant, Halladale and
Black Watch gas fields
– Enterprise, Artisan and
La Bella discoveries
FY22 Highlights
– 64 wells drilled at a
94% success rate
– FID for Moomba CCS
– Additional rig to accelerate
gas development
– 26 wells drilled at a 54%
success rate
– Two oil discoveries and
two gas discoveries
– Mitigation strategies for
oil production decline
– Completion of seven-well
offshore drilling campaign
– Connection of Geographe
– Kupe inlet compression
project commissioned
– Kupe Gas Plant uptime
4 and 5 wells
>99%
– FID for connection of the
Enterprise discovery
– No recordable safety
incidents
05
Community
Investments
Beach is committed to being
an active member in the
communities we are part of,
and collectively contributing
to a more sustainable future.
Our community investment program funds
community-led initiatives that build resilience,
empowerment and positive change. In FY22,
Beach contributed $4.1 million to a range of
community organisations.
Focused on education, the environment, and
health, safety and well being, in FY22 Beach
supported 65 organisations, benefiting more
than 29,000 people.
$4.1m
Total contributions
65
Organisations
~29,000
People benefited
n
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B
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s
a
B
V
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Melbourne
New Plymouth
Perth Basin
Bass Basin
– Beharra Springs and
Xyris gas plants
– Waitsia Stage 2 Gas Plant
(under construction)
– Beharra Springs and
Waitsia gas fields
– Lang Lang Gas Plant
– Yolla gas field
– Trefoil, White Ibis and
Bass discoveries
Otway Basin
(SA)
– Katnook Gas Plant
– Haselgrove gas field
– Waitsia Stage 2 works
– Yolla wireline
commenced
– LNG HoA signed with bp
– Three Waitsia development
wells drilled
intervention project
– Acquisition of the Prion
3D seismic survey
– Identification of the
Yolla West infield
drilling opportunity
– Dombey 3D seismic
survey acquired
– Extended production
from Katnook Gas Plant
Beach Energy LimitedAnnual Report 2022
Demonstrating our
commitment, Beach
announced a new emissions
intensity reduction target
which aims to deliver a
35% reduction in emissions
intensity by 2030.
06
Emissions
Reduction
Our emissions reduction journey
Beach Energy understands the role that oil and gas
must play in decarbonising the global economy. We are
committed to reducing emissions from our operations
and have previously announced an aspiration to reach
net zero Scope 1 and 2 emissions by 2050.
Demonstrating our commitment, Beach has confirmed
a new emissions intensity reduction target which aims
to deliver a 35% reduction in emissions intensity by
2030 against 2018 levels.
The emissions intensity reduction target will measure
equity emissions intensity reduction across all
operated and non-operated activities, including
the nation-leading Moomba CCS Project, operated
by Santos.
Our emissions reduction journey has already begun,
as we decarbonise through initiatives such as reducing
flaring at our sites and partnering our operations with
renewable energy.
The emissions intensity reduction target will be
measured against a 2018 baseline, when Beach
expanded its portfolio through the acquisition of
Lattice Energy.
For further details about the emissions intensity
reduction target and how Beach intends to achieve it,
please see the 2022 Sustainability Report.
Emissions Reduction Framework
Dedicated sustainability team
Annual review cycle for scope 1 and 2 emissions
reduction targets
Regular reporting against emission
reduction targets
Commitment to aspirational targets aligned
with Paris <2°C warming limits or better
Delivering Fuel, Flare and Vent (FFV) projects
to reduce emissions
Annual scope 1 & 2 emissions pathway targets
set for to guide progress
Moomba CCS
07
Beach has a 33% ownership interest in the Moomba
CCS Project, operated by our joint venture partner Santos.
Constructed adjacent to the Moomba Gas Plant in the
Cooper Basin, the project is one of the world’s largest
CCS projects and will deliver a material greenhouse gas
reduction for Beach’s portfolio.
Upon its completion, Moomba CCS will safely store up to
1.7 million tonnes per annum of carbon emissions in the
depleted reservoirs near the Moomba Gas Plant.
The project has been registered with the Clean Energy
Regulator, providing a crediting period of 25 years, over
which period the project will qualify for Australian Carbon
Credit Units.
Beach reached a Final Investment Decision for the
Moomba CCS Project in November 2021. Project
construction is underway with first injection of CO2
targeted for 2024.
Moomba Gas Plant, Cooper Basin
CO2 per annum safely
stored upon completion
Up to
1.7 Mtpa
Capture
C02
C02
transmission
pipeline
MOOMBA GAS PLANT
Dehydrate
Compress
Injection wells
Inject
“Our numbers show that
reaching net zero goals
without CCS will be
almost impossible.”
—
International Energy Agency
Executive Director Fatih Birol
The Cooper and Eromanga basins in South
Australia and Queensland have the potential for
injection of over 20 million tonnes of CO2 per
year for more than 50 years. This capacity is
equivalent to taking half of Australia’s passenger
vehicles off the road.
Annual Report 2022Beach Energy Limited 08
Letter From
the Chairman
Demonstrated progress
towards becoming
Australia’s premier
multi-basin upstream
oil and gas company.
Dear Shareholder,
On behalf of the Beach Energy Board of Directors, I am
pleased to deliver the Annual Report for 2022, which
outlines a year of project milestones and improved
financial performance.
Beach’s underlying net profit after tax of $504 million is
the company’s best result since the start of the COVID-19
pandemic and our operating cash flow of $1.2 billion is a
company record. Year-end liquidity of $765 million and a net
cash position of $165 million will enable Beach to complete
its major growth projects and deliver more gas to market
at a time when it is needed most.
The role that your company has played in supporting local
energy security during a time of global uncertainty should
not be understated. It is something we should all be proud
of and is the theme of this year’s Annual Report.
You will remember that on completing the Lattice
acquisition in 2018, Beach turned its focus towards growing
domestic gas supply. Our plan has been to develop the
assets within our portfolio, keep our plants processing
at higher rates for longer, and in doing so achieve
sustainable growth.
This last year saw much progress made on Beach’s two
largest projects, which underpin our production targets
for FY24 and beyond.
The drilling campaign in the offshore Otway Basin,
the largest in your company’s 60-year history, was a
tremendous success. The campaign delivered one new gas
discovery and six development wells. Two development
wells were connected to the Otway Gas Plant in financial
year 2022 and we are targeting connection of the remaining
four wells in mid-2023. Our progress demonstrates Beach’s
ability to deliver large and complex projects, which not even
a global pandemic could stop.
Waitsia Stage 2 in Western Australia is a transformational
project which will see Beach become a supplier of LNG
to the global market. We signed a Sale and Purchase
Agreement with bp, a top tier counterparty, for all Waitsia
Stage 2 LNG volumes. We are targeting first LNG volumes
to leave the North West Shelf in the second half of 2023.
As important as it is to deliver more energy to communities,
we must also do this in a way that is sustainable and limits
our Scope 1 and 2 emissions.
Beach has announced a new target to reduce emissions
intensity by 35% by 2030 against 2018 levels. This target
takes into account both our operated and non-operated
assets, including our investment in one of Australia’s largest
carbon emission reductions projects, Moomba Carbon
Capture and Storage (CCS).
CCS will play a significant role in global efforts to
decarbonise, including Beach’s own aspiration to reach
net zero Scope 1 and 2 emissions by 2050.
09
“ The role that your company has played
in supporting local energy security
during a time of global uncertainty
should not be understated.”
This year, your company welcomed a new CEO, with
Morné Engelbrecht being appointed following an extensive
international search. Having spent more than six years with
Beach as CFO, your Board of Directors has tremendous
confidence in Morné and his team to deliver on the next
phase of Beach’s growth.
Before I conclude, I want to thank all the hard-working
people who have contributed towards delivering on Beach’s
strategy this last year. We are very lucky to have some of
the industry’s most talented and committed individuals
working with Beach.
Lastly, I thank you, our shareholders for your continued
support of our company. On behalf of the Board, we
look forward to continuing our strong momentum this
coming year.
Glenn Davis | Chairman
15 August 2022
Beach Energy LimitedAnnual Report 2022 10
Letter From
the CEO
Dear Shareholder,
The 2022 financial year brought into sharp focus the
important role natural gas will play in providing energy
security for decades to come.
With global instability causing pressure on oil and gas
prices and Australia experiencing the realities of an
energy network not yet ready for the transition away from
traditional baseload power, the provision of locally sourced
gas has never been more important.
Beach has been advocating the importance of finding more
gas for the increasing demand on Australia’s East Coast for
several years. We have been investing heavily in developing
new gas resources and were one of few companies actively
drilling and developing gas throughout the COVID-19
pandemic. As we navigate the current energy crisis, I am
proud to say that all of our East Coast gas production is sold
to domestic retailers and that we are targeting growing our
East Coast gas market share by more than 30%(1) by FY24.
FY22 financial review
Over recent years, Beach has taken decisive steps to diversify
its production base, gain exposure to multiple commodity
markets and invest for growth. The benefits of this strategy
were clearly evident in our financial results this year.
While production was down 15% to 21.8 MMboe due to
natural field decline as we deliver our major growth projects,
we benefited from increasing demand and pricing for our
oil and gas. Total revenue increased 13% to $1.8 billion and
underlying earnings before interest, tax, depreciation and
amortisation (EBITDA) increased 17% to $1.1 billion.
These results contributed to a strengthening of our financial
position. We ended the year in a net cash position with
total available liquidity of $765 million, including a 100%
increase in cash reserves to $255 million. This leaves us
in great shape to deliver our major development projects
and balance our longer-term growth aspirations with future
capital management initiatives.
FY22 operating review
The 2022 financial year was one of many operational
milestones and achievements, including completion
of the offshore Otway Basin drilling campaign and
commencement of the Waitsia Stage 2 project.
In the offshore Otway Basin, drilling commenced in
February 2021 and concluded in July 2022. The seven-
well campaign was the largest in the basin’s history and
delivered one new gas discovery at the Artisan field and six
development wells in the Geographe and Thylacine fields.
The first two wells of the campaign, Geographe 4 and 5, were
connected to the Otway Gas Plant and contributed to an 82%
increase in gas production in the final quarter of the year.
Connection of the final four wells in mid-2023 is targeted.
Most importantly, the offshore Otway Basin drilling
campaign was delivered safely and won the 2021 IADC
Safety Award recognising outstanding safety performance.
A great achievement we are all very proud of.
In the Perth Basin, the Waitsia Stage 2 project commenced
with progress made on plant construction and development
well drilling. First LNG sales in the second half of 2023 is
targeted, which will herald Beach as a new supplier in the
global LNG market.
In New Zealand, the Kupe compression project was
successfully commissioned and we now plan for future infill
drilling opportunities to bring the plant back to capacity
production rates.
In the Bass Basin, a major plant maintenance shut down
was safely carried out. We are now focused on planning for
drilling the Yolla West infield opportunity.
In the Cooper Basin, our Western Flank oil exploration
campaign delivered two commercial discoveries and
one technical success. We also employed new reservoir
management strategies to help mitigate natural oil decline,
with the decline in daily production rates out-performing
our beginning-of-year guidance.
Climate action
Gas has a critical role to play in supporting the global
energy transition but we must continue to do everything
practicable to continue the reduction of our emissions.
That is why I am pleased to announce Beach’s new
emissions intensity reduction target of 35% by 2030.
This target is benchmarked against 2018 levels and takes
into account both operated and non-operated assets.
(1)
Increasing East Coast gas market share from 12% to 16%
Beach is investing heavily
in new gas supply for local
markets at a time when
it is desperately needed.
11
FY23 outlook
As Beach enters the new financial year, we have a busy schedule
ahead of us as we build towards our target of 28 MMboe of
production in FY24. Activities this year will include:
– Connecting the four Thylacine offshore wells and the
Enterprise discovery to the Otway Gas Plant;
– Planning for our next nearshore and offshore Otway Basin
exploration programs;
– Progressing Waitsia Stage 2 gas plant construction and
development well drilling;
– Perth Basin gas exploration drilling in both operated and
non-operated acreage;
– Planning for drilling the Kupe development well in the
Taranaki Basin;
– Planning for drilling the Yolla West infield well in the Bass Basin;
– Ongoing oil and gas exploration, appraisal and development
drilling in the Cooper Basin; and
– Working with our joint venture partner to progress
the Moomba CCS project.
Conclusion
It is an honour to have been appointed Chief Executive Officer
of Beach. We have a proud history of more than 60 years and I
look forward to building on our significant legacy.
As we sign off on a year of significant milestones and
achievements, I take this opportunity to thank our staff
and contractors across Australia and New Zealand. Your
commitment is greatly appreciated. I am also grateful for the
support and guidance of our Board and executive team.
In closing, I thank you, our shareholders, for your continuing
loyal support. Beach is dedicated to delivering value for
you as we support Australia’s energy security and pursue
sustainable growth.
Morné Engelbrecht | Chief Executive Officer
15 August 2022
Otway Gas Plant
We have a plan to reach this target and we will report
regularly on progress. We also maintain our aspiration to
reach net zero Scope 1 and 2 emissions by 2050.
Carbon capture and storage (CCS) is emerging as a
frontrunning technology for reducing emissions economically
and in a timely manner. Net Zero will not be possible without
CCS and the Moomba CCS project will be a game-changer
for the local industry and one of the key contributors to Beach
reaching our emissions intensity reduction target.
Once the project is commissioned in 2024, we are targeting
injection and storage of up to 1.7 million tonnes of carbon
emissions annually into depleted Cooper Basin reservoirs.
This equates to roughly 0.5 million tonnes net to Beach, or
one third of our current equity emissions.
I am also very excited to announce our biggest ever
environmental partnership with Deakin University’s Blue
Carbon Lab, which seeks to use new technologies to
re-establish coastal wetlands, and creates meaningful
ecological and social impact, while also creating
opportunities for our staff to get involved in these important
environmental projects.
Committed to the emissions reduction journey
New
Moomba CCS first
Net Zero by
35%
emissions
intensity reduction target
CO2
injection
in 2024 targeted
2050
aspiration
Scope 1 and 2 emissions
Beach Energy LimitedAnnual Report 2022 12
Executive
Team
1.
Morné Engelbrecht
Chief Executive Officer
BCom (Hons), CA (ANZ), MAICD
3.
Ian Grant
Chief Operating Officer
MSc, CMgr FCMI, GAICD
Mr Grant has over 25 years’ experience in the
energy industry, having held senior leadership
and executive roles in operations, projects,
drilling and supply chain functions.
Born in Scotland, Mr Grant has extensive
North Sea experience and has worked in Europe
and Australia with companies such as Mobil,
ARCO/BP, Apache, Quadrant Energy and Santos.
Most recently Mr Grant was Chief Operating
Officer for Quadrant Energy and Vice President of
Production Operations for Santos based in Perth.
He is passionate about delivering safety,
operational and commercial performance in both
onshore and offshore environments.
4.
Sam Algar
Group Executive Exploration and Subsurface
BA (Hons), PhD
Dr Algar joined Beach in February 2021 and
brings over 25 years’ experience in the energy
industry, having held senior leadership and
executive roles in Australia and internationally,
including the UK, Indonesia, Malaysia, Canada
and the USA, looking after global exploration,
new venture and subsurface portfolios.
Most recently Dr Algar was Senior Vice
President, Subsurface and Exploration with
Oil Search Limited. Dr Algar holds a Bachelor
of Arts (Hons) Geology from Oxford University
and a PhD Geology from Dartmouth College
in the USA.
Previous employers include Ophir Energy,
Murphy Oil, ENI, LASMO and Enterprise Oil.
Mr Engelbrecht joined Beach in 2016 as
Chief Financial Officer and was responsible
for the finance, tax, treasury, IT, contracts &
procurement, insurance, internal audit and
investor relations functions. In November 2021,
he was appointed Acting Chief Executive Officer
of Beach and in May 2022 he was appointed
Chief Executive Officer.
He is a Chartered Accountant with more
than 20 years’ experience including in the oil
& gas and resource sectors across various
jurisdictions including Australia, South Africa,
the United Kingdom, Papua New Guinea and
China. Prior to this he held various financial,
commercial and advisory senior management
positions at InterOil, Lihir Gold (Merged
with Newcrest), Harmony Gold and PwC.
In November 2021, he was appointed to the
board of the Australian Petroleum Production
& Exploration Association (APPEA).
Mr Engelbrecht also has extensive experience
in strategy and planning, capital management,
debt and equity markets, Mergers & Acquisitions
and joint venture management and operations.
2.
Anne-Marie Barbaro
Chief Financial Officer
BCom, CA (ANZ)
Ms Barbaro joined Beach in 2018 in the role
of Group Manager Planning and Reporting and
was subsequently promoted to General Manager
Finance in 2019 and Acting Chief Financial
Officer in November 2021. Ms Barbaro was
appointed Chief Financial Officer in July 2022,
and is responsible for the finance, tax, treasury,
IT, investor relations, procurement, insurance
and internal audit functions.
Ms Barbaro is a Chartered Accountant with over
20 years’ experience in the accounting industry,
including 12 years in the oil and gas sector.
Prior to this, Ms Barbaro held roles at Santos
across Finance and Marketing and Trading,
as well as finance roles at Australian Naval
Infrastructure and PwC.
1
2
3
4
5
6
7
8
13
5.
7.
Brett Doherty
Group Executive Health, Safety, Environment
and Risk
BEng (Electrical), LLB (Hons)
Paul Hogarth
Acting Group Executive Corporate Strategy
and Commercial
B.Com
Mr Doherty joined Beach in February 2018 as
Group Executive Health, Safety, Environment
and Risk, bringing over 30 years of upstream oil
and gas experience to Beach. His career includes
extensive exposure to both offshore and onshore
development and operations.
Mr Hogarth has over 25 years of international
energy industry experience working in
senior commercial, marketing, business
development and strategy roles spanning the
energy value chain in Australia, Europe, Asia,
Africa and the USA.
Prior to Beach, Mr Doherty was General
Manager of Health, Safety and Environment
at INPEX Australia. He has held several senior
international positions during his career,
including ten years as the Chief HSEQ Officer at
RasGas Company Limited, in the State of Qatar.
6.
Susan Jones
General Counsel
LLB (Hons)
Ms Jones joined Beach in February 2021 and
was appointed General Counsel in August 2021.
She has over 25 years experience having worked
in Australia, USA, UK and northern Africa in legal
and non-legal roles. Her legal experience covers
all aspects of legal operations, M&A, project
finance, PSC negotiations, commodity sales and
compliance. She has also held senior commercial
and asset management roles.
Previous employers include Total, Woodside,
BHP and Ophir. In addition to her in-house
experience, she has worked at King Wood
Mallesons (Australia) and Sidleys (New York).
Ms Jones is originally from South Australia and
holds a first class honours LLB. In addition to
being admitted to practise law in Australia she
is admitted to practise in New York.
Mr Hogarth joined Beach in October 2019 as
General Manager Commercial and Marketing.
Prior to joining Beach, he worked for Shell,
BG Group and Woodside.
His deep experience in global energy markets
at various points of the energy value chain
(upstream, midstream and downstream)
developed his acute understanding of the key
value drivers to successfully lead acquisition and
divestment; market entry; and commercialisation
of energy products, including LNG, domestic/
pipeline gas, oil, condensate, LPG and electricity.
Mr Hogarth holds a Bachelor of Commerce from
Curtin University.
8.
Greg Murray
Group Executive Human Resources
B.Health Sc, M.Bus (HRM)
Mr Murray joined Beach in January 2022 as
Group Executive Human Resources and brings
20 years’ experience in energy and engineering
services industries, including executive
leadership of human resources, corporate affairs,
marketing, communications and corporate
social responsibility functions, combined with
over 16 years’ international experience gained
in the United Kingdom, Asia Pacific region and
China. Mr Murray has also had commercial and
major industrial projects leadership experience,
including Mergers and Acquisitions and major
transformation activities.
Prior to joining Beach, Mr Murray was Chief
Human Resources, Communications and CSR
Officer for ENGIE Asia Pacific and China region.
Mr Murray is responsible for Beach’s
human resources and organisational
development functions.
Beach Energy LimitedAnnual Report 2022 14
Our FY22
Strategic Pillars
Our strategy is to support
Australia’s energy security
and build the foundation
for sustainable growth.
Optimise core
producing assets
Maintain financial
strength
Pursue other
compatible growth
opportunities
Otway Gas Plant
99.9% reliability
– Western Flank reservoir
management strategies
– Kupe inlet compression project
– Yolla wireline intervention
program
$165m
net cash at
30 June 2022
– Refinanced and upsized
debt facility
– Disciplined capital management
– $765m liquidity at year-end
– Integration of Senex’s
Cooper Basin assets
– Moomba CCS project
– Ongoing assessment of
growth opportunities
– Geographe 4 and 5 connected
– FID for connection of the
Enterprise discovery
– Waitsia Stage 2 project
commenced
– LNG SPA signed with bp
– New emissions intensity
reduction target
– APPEA environmental
project award
– Emissions reductions projects
at Beach-operated sites
– Moomba CCS project
Strengthen our
complementary gas
business
Offshore Otway drilling
campaign completed
Sustainability
15
Our Markets
Exposure to five commodity markets
with strong fundamentals.
Global oil and liquids
– Geopolitical/energy security concerns highlight
importance of oil and liquids
– Increasing demand outlook to support energy transition
– Limited investment in new supply
accentuating imbalances
– Beach offers unhedged exposure to Brent and
liquids pricing
Global LNG
– Geopolitical/energy security concerns
highlight importance of LNG
– Limited investment in new supply
accentuating imbalances
– Beach a new entrant in the global LNG market
– SPA with bp for all of Beach’s share of Waitsia
Stage 2 LNG
East Coast gas
– Beach supplying ~12% of annual demand, targeting
~16% in FY24
– Significant investment in the Otway Basin to
support the East Coast market
– Reducing coal-fired power, intermittent renewable
supply and grid network instability support gas
demand outlook
– Anticipate gas supply will continue to tighten
– Stable policy framework required to stimulate
investment in new gas supply
Photo courtesy of bp
West Coast gas
– Beach supplying ~2% of annual demand
– Significant investment in development and exploration
to support the domestic market
– Existing gas supply expected to decline with tightness
in late 2020s anticipated
– New industries and demand opportunities emerging
New Zealand gas
– Beach supplying ~8% of annual gas demand and
~25% of annual LPG demand
– Gas accounts for >20% of energy mix and
expected to remain a critical source
– Supply constraints emerging with no new
gas developments
– Other major New Zealand gas fields in decline,
supporting further investment in Kupe
East Coast gas
Darwin
West Coast gas
New Zealand gas
Brisbane
Wellington
Perth Basin
Taranaki Basin
Otway Basin (SA)
Adelaide
Pipelines
Sydney
Canberra
Bass Basin
Melbourne
Otway Basin (VIC)
Hobart
Hobart
Hobart
Perth
Pipelines
Pipelines
GD22-0085
GD22-0085
GD22-0085
Beach Energy LimitedAnnual Report 2022 16
Operating
Review
Performance overview
Production
2P Reserves
2C Contingent Resources
Sales revenue
Statutory net profit after tax
Underlying net profit after tax
Statutory earnings per share
Underlying earnings per share
Cash flow from operating activities
Net assets
Net debt/(cash)
Net gearing ratio
Fully franked dividends declared per share
Shares on issue
Share price at year end
Market capitalisation at year end
Production
Perth Basin
Otway Basin (Victoria)
Otway Basin (South Australia)
Bass Basin
Western Flank Oil and Gas
Cooper Basin JV
Cooper Basin Other
Taranaki Basin
Total
MMboe
MMboe
MMboe
$ million
$ million
$ million
cps
cps
$ million
$ million
$ million
%
cents
million
$
$ million
FY18
19.0
313
207
1,251
199
302
9.2
13.9
663
1,838
639
25.9
2.0
2,277
1.755
3,995
FY19
29.4
326
185
1,925
577
560
25.4
24.6
1,038
2,374
(172)
n/a
2.0
2,278
1.985
4,522
FY20
26.7
352
180
1,650
499
459
21.9
20.2
874
FY21
25.6
339
191
1,519
317
363
13.9
15.9
760
2,818
3,088
(50)
n/a
2.0
2,281
1.520
3,467
48
1.5
2.0
2,281
1.240
2,829
FY22
21.8
283
221
1,749
501
504
22.0
22.1
1,223
3,540
(165)
n/a
2.0
2,281
1.725
3,935
FY21
Oil
equivalent
(MMboe)
Oil
(MMbbl)
0.8
2.8
0.3
1.9
8.9
8.1
0.1
2.7
25.6
–
–
–
–
3.4
1.0
0.0
–
4.4
FY22
LPG
(kt)
Condensate
(kbbl)
Oil
equivalent
(MMboe)
Year-on-year
change
–
35
–
13
36
67
2
51
–
287
1
166
287
524
19
323
1.3
4.1
0.1
1.1
5.2
7.1
0.1
2.8
59%
47%
(58%)
(42%)
(42%)
(13%)
104%
3%
204
1,607
21.8
(15%)
Sales
Gas
(PJ)
7.5
20.6
0.7
4.8
6.7
29.4
0.6
12.0
82.3
17
Beach has a demonstrated
track record of prudent
Balance Sheet management,
including deploying capital
for investment only when
there is a clear line of sight
to sustainable value creation.
Revenue
Underlying EBITDA
$1.8 billion $1.1 billion
13%
17%
Finance
A strengthened financial position to
support future growth and capital
management initiatives.
In FY22, Beach benefited from strengthening commodity
prices and ongoing success with its strategy to grow and
diversify its asset portfolio.
The year saw much uncertainty and volatility in global
markets. Against this backdrop, Beach stayed focused
on safely delivering its major growth projects while
maintaining strict focus on costs and capital expenditure
across the business.
This culminated in a pleasing set of financial results.
Despite a 15% decline in production to 21.8 MMboe,
mainly due to natural field decline, financial performance
showed a material improvement. Revenue was up 13%
to $1.8 billion, underlying earnings before interest, tax,
depreciation and amortisation (EBITDA) up 17% to
$1.1 billion, underlying net profit after tax up 39% to
$504 million and cash flows from operating activities
up 61% to $1.2 billion.
Higher realised sales prices supported these results.
The average realised oil price was up 79% to $140 per
barrel and the average realised gas/ethane price was up
10% to $8.1 per gigajoule. Beach’s unhedged oil exposure
and increased contributions from higher-priced gas
contracts contributed to these outcomes.
Beach ended the year with a strengthened financial
position despite heightened capital spend to deliver the
Otway and Perth basin growth projects. During the year,
Beach’s debt facility was refinanced and upsized to a
$600 million revolving limit. At year-end, $90 million
of debt was drawn and cash reserves were $255 million,
resulting in a net cash position of $165 million and
total liquidity of $765 million. This leaves the company
well positioned to deliver current projects while
balancing future growth aspirations with capital
management initiatives.
Beach has a demonstrated track record of prudent
Balance Sheet management, including deploying capital
for investment only when there is a clear line of sight to
sustainable value creation. This disciplined focus on capital
management will continue as the company embarks on an
active FY23 and strives to deliver its production target of
28 MMboe in FY24.
Beach Energy LimitedAnnual Report 2022 18
Operating
Review
Perth Basin
Contribution
6% FY22 Production
35% 2P Reserves
A new entrant in the
global LNG market.
FY22 Highlights
FY23 Focus
Over four years of Beharra
Springs Gas Plant operations
with no Lost Time Injury
Signing of LNG HoA with bp
Commencement of
construction of the 250 TJ/day
Waitsia Gas Plant
Commencement of the
Waitsia Stage 2 development
drilling campaign
Complete construction of the
Waitsia Gas Plant
Complete the six-well
Waitsia Stage 2 development
drilling campaign
Commence the Perth Basin gas
exploration drilling campaign
Progress marketing strategy
for any new gas volumes from
exploration success
19
Development
The Waitsia Stage 2 project is a key driver of Beach’s growth
strategy and aims to develop existing gas reserves for both
the global LNG market and the domestic Western Australia
market. The work program commenced during the year,
with construction of the 250 TJ/day capacity Waitsia
Gas Plant progressed and three of six development wells
drilled and completed.
Waitsia Stage 2 is targeting first LNG sales in the second
half of 2023.
Exploration and appraisal
Well planning and regulatory processes progressed for
a three to six-well gas exploration campaign in the joint
venture’s extensive Perth Basin gas play. The expected first
Beach operated well of the campaign, Trigg 1, is on-trend
and up-dip from the West Erregulla gas field and the South
Erregulla discovery and presents as a robust analogue to
the Lockyer Deep gas discovery.
Commercial
Beach signed a HoA with bp for all of Beach’s 3.75 million
tonne share of LNG from Waitsia Stage 2. Subsequent
to year-end, Beach finalised an LNG Sale and Purchase
Agreement to formalise the arrangements. Terms
include a hybrid pricing structure linked to both Brent
and Japan Korea Marker (JKM) indices. Pricing parameters
preserve Beach’s exposure to current commodity prices
and provide for full upside price participation. The SPA
also includes a downside price protection mechanism.
LNG will be delivered to bp on a free on board basis from
the North West Shelf facilities in Karratha, Western
Australia, leveraging bp’s leading LNG trading and shipping
capabilities and existing ownership interest in the North
West Shelf Joint Venture.
Acreage description
Perth Basin producing licence areas include Waitsia (Beach
50%, MEPAU 50% and operator) in licences L1 and L2 and
Beharra Springs (Beach 50% and operator, MEPAU 50%)
in licences L11 and L22. The exploration permit is EP 320
(Beach 50% and operator, MEPAU 50%).
The Waitsia Stage 2 project is
a key driver of Beach’s growth
strategy and aims to develop
existing gas reserves for
both the global LNG market
and the domestic Western
Australia market.
1.3 MMboe
FY22 production
2021 | 0.8 MMboe
99 MMboe
2P Reserves
2021 | 100 MMboe
Production
Total production of 1.3 MMboe was
59% higher than the prior year (FY21:
0.8 MMboe) and comprised 7.5 PJ of
sales gas (+59%). Higher production
was underpinned by a full year of
contribution from the Waitsia Stage 1
expansion (completed August 2020)
and the Beharra Springs Deep discovery
(connected April 2021).
Beach Energy LimitedAnnual Report 2022 20
Operating
Review
Otway Basin
(Victoria)
Contribution
19% FY22 Production
24% 2P Reserves
Developing new gas
supply to support the
East Coast market.
FY22 Highlights
FY23 Focus
Over seven years of Otway
Gas Plant operations with no
Lost Time Injury
Completion of the seven-well
offshore drilling campaign
Connection of Geographe 4
and 5 to the Otway Gas Plant
Average daily Otway Gas Plant
production up 46% to
94 TJ/day gross
(FY21: 64 TJ/day)
Final Investment Decision taken
for connection of Enterprise to
the Otway Gas Plant
Connection of the four
Thylacine wells and the
Enterprise discovery to the
Otway Gas Plant
Marketing of new Enterprise
gas volumes
Maturing offshore exploration
drilling prospects for
FY24/25 drilling
Planning for nearshore and
onshore 3D seismic acquisition
21
Development
Otway Basin program
Beach completed the seven-well offshore drilling campaign.
Drilling commenced in February 2021 and concluded with
release of the Ocean Onyx rig in July 2022. The campaign
was the largest in the basin’s history and delivered one new
gas discovery at the Artisan field and six development wells
in the Geographe and Thylacine fields.
Completion of Beach’s first offshore development drilling
campaign is a significant achievement which has de-risked
the Otway Basin program and proven Beach’s offshore
operating capabilities. Key highlights from the campaign
include:
– Beach’s first extended offshore drilling campaign,
delivered safely, on schedule and on budget;
– Beach was the only Australian offshore operator to
drill continuously through the COVID-19 pandemic;
– Over 820,000 operational hours to deliver the
campaign, with the rig operator, Diamond Offshore
Drilling, receiving the 2021 IADC Safety Award
recognising outstanding safety performance;
– Longest horizontal well drilled in the Otway Basin
(Thylacine North 2 lateral section of 3.5 km);
– Longest horizontal campaign in the Otway Basin
(three wells with a total lateral section of 8.1 km); and
– First gas from the two Geographe development wells
delivered in less than nine months from spud.
Completion of the drilling campaign is a key milestone
in delivering Beach’s production target of 28 MMboe in
FY24. Connection of the four Thylacine development
wells in mid-2023 is targeted and expected to enable the
Otway Gas Plant to produce at full nameplate capacity,
with this gas to be sold into existing contracts with price
resets to market. This increase in production is coming at
a time when new gas supply for the East Coast market is
desperately needed.
Enterprise pipeline project
A Final Investment Decision was taken for the Enterprise
Pipeline Project, which involves connecting the Enterprise 1
well to the Otway Gas Plant. The Enterprise discovery was
drilled from an onshore well pad in FY21. The discovery
yielded liquids-rich gas and de-risked existing nearshore
exploration prospects.
Beach is targeting connection of the Enterprise discovery
to the Otway Gas Plant in mid-2023, subject to regulatory
approvals. Enterprise will provide Beach with optionality
to market these new volumes beyond existing customer
arrangements. Market engagement regarding Enterprise
volumes has commenced. Timing of this new gas supply
aligns with forecasts for increasing East Coast shortfalls.
Exploration and appraisal
Exploration and appraisal activity focused on amplitude
supported prospects in both offshore and nearshore
acreage. Beach progressed 3D seismic activity, including
planning for acquisition of new 3D seismic across the
nearshore and onshore acreage and maturing exploration
prospects in the offshore acreage. Exploration work
programs will be progressed in FY23 with potential drilling
campaigns in FY24 and FY25.
Acreage description
Otway Basin Victoria (Beach 60% and operator, O.G.
Energy 40%) includes producing licences VIC/L1(v)
which contains the Halladale, Black Watch and Speculant
nearshore gas fields, and licences VIC/L23, T/L2 and
T/L3 which contain the Geographe and Thylacine offshore
gas fields. Gas from all producing fields is processed at the
Otway Gas Plant.
The Victorian Otway Basin also includes non-producing
nearshore VIC/P42(v), containing the Enterprise gas field
and offshore licences VIC/P43, containing the Artisan
gas discovery, VIC/P73, containing the La Bella gas field
(Beach 60% and operator, O.G. Energy 40%) and T/30P
(Beach 100%). It also includes the nearshore exploration
permit VIC/P007192(v) (Beach 60% and operator,
O.G. Energy 40%).
Connection of the four
Thylacine wells and the
Enterprise discovery to the
Otway Gas Plant
Marketing of new Enterprise
gas volumes
Maturing offshore exploration
drilling prospects for
FY24/25 drilling
Planning for nearshore and
onshore 3D seismic acquisition
4.1 MMboe
FY22 production
2021 | 2.8 MMboe
67 MMboe
2P Reserves
2021 | 70 MMboe
Production
Total production of 4.1 MMboe was
47% higher than the prior year (FY21:
2.8 MMboe) and comprised 20.6 PJ of
sales gas (+47%), 35 kt of LPG (+46%)
and 287 kbbl of condensate (+61%).
Production benefited from commissioning
of the Geographe 4 and 5 development
wells in Q3 FY22 which increased well
deliverability and saw average daily
Otway Gas Plant production rates
increase to 140 TJ/day gross in Q4 FY22
(FY21: 64 TJ/day).
Beach Energy LimitedAnnual Report 2022 22
Operating
Review
Bass Basin
Contribution
5% FY22 Production
2% 2P Reserves
Prioritising near-term
opportunities for new
East Coast gas supply.
FY22 Highlights
FY23 Focus
Completion of the Yolla
wireline intervention project
Planning for drilling of
Yolla West
Acquisition of the Prion 3D
seismic survey over the Trefoil,
White Ibis and Bass discoveries
Reprocessing of existing 3D
seismic data over the Yolla field
Identification of the Yolla West
infield opportunity
Marketing strategy for new
Yolla West gas volumes
Update Trefoil, White Ibis and
Bass resource estimates from
new 3D seismic
Progress Trefoil FEED to
inform next steps
23
Commercial
In July 2021, Beach completed the acquisition of MEPAU’s
35.0% interest in the BassGas Project (comprising the
onshore BassGas Plant and offshore Yolla gas field),
as well as its 40.0% interest in the Trefoil discovery and
surrounding retention leases. The transaction had an
effective date of 1 July 2020.
Acreage description
The BassGas Project (Beach 88.75% and operator, Prize
Petroleum 11.25%) produces gas from the Yolla field,
situated approximately 140 km off the Gippsland coast in
licence T/L1. Gas from the Yolla field is piped to the Lang
Lang Gas Plant located near the township of Lang Lang,
approximately 70 km southeast of Melbourne. Beach also
holds a 90.25% operated interest in licences T/RL2, T/RL3,
T/RL4 and T/RL5, which capture the Trefoil, White Ibis and
Bass discoveries.
Development
Reprocessing of the existing 3D seismic survey over the
Yolla field revealed a previously unidentified fault block,
Yolla West, which is drillable from the existing Yolla
platform. If successful, Yolla West could be connected
to the Lang Lang Gas Plant soon after drilling. On
20 May 2022, Beach announced that drilling of Yolla
West over the 2022/23 summer was targeted, subject to
securing a suitable drill rig. Although progress was made
with a rig contractor, the suitability of the rig for the specific
conditions was still to be finalised. Beach will potentially
defer drilling to the summer of 2023/24 with planning
activities to continue.
Beach continues to undertake various performance
improvement and development initiatives to maximise
throughput and production from the Lang Lang Gas Plant.
Exploration and appraisal
Beach acquired the Prion 3D seismic survey across the
Trefoil, White Ibis and Bass discoveries. This new seismic
data has improved the imaging of these discoveries,
which will enable more informed development decisions.
Processing and interpretation will continue in FY23.
A Final Investment Decision for Trefoil was deferred
to provide more time to complete interpretation of the
Prion 3D seismic survey, refine the most cost-effective
development option and benchmark the Trefoil investment
case against other growth opportunities within Beach’s
portfolio. Consequently, the related Reserves have been
reclassified to Contingent Resources.
1.1 MMboe
FY22 production
2021 | 1.9 MMboe
5 MMboe
2P Reserves
2021 | 31 MMboe
Production
Total production of 1.1 MMboe was
42% below the prior year (FY21:
1.9 MMboe) and comprised 4.8 PJ of
sales gas (-40%), 13 kt of LPG (-50%)
and 166 kbbl of condensate (-40%).
Production was impacted by natural field
decline, downtime for the Yolla wireline
intervention project and a significant
weather event which required a turbine
replacement at the Yolla platform.
Beach Energy LimitedAnnual Report 2022 24
Operating
Review
Western Flank
Oil and Gas
Contribution
24% FY22 Production
8% 2P Reserves
Mitigating oil decline
through reservoir
management strategies
and ongoing drilling.
FY22 Highlights
FY23 Focus
Mitigation of natural oil
field decline through refined
reservoir management
strategies
Largest oil exploration
campaign since 2013, with
two commercial discoveries
and one technical success
Appraisal drilling in the
Martlet field
Five-well horizontal oil
development campaign
Single-rig drilling campaign
and workover rig activities
throughout the year
Near field oil exploration and
appraisal drilling targeting the
Namur and Birkhead reservoirs
in ex PEL 91 and ex PEL 92
Follow-up appraisal drilling in
the Martlet field
Horizontal oil development
drilling in the Bauer, Growler
and Spitfire fields
Ongoing workover and
optimisation activities
25
Acreage description
Western Flank oil producing assets include ex PEL 91 (Beach
100%), ex PEL 104/111 (Beach 100%) and ex PEL 92 (Beach
75% and operator, Cooper Energy 25%). Western Flank gas
producing assets include ex PEL 106 (Beach 100%) and the
Udacha Block – PRL 26 (Beach 100%).
Development
Beach drilled six oil development wells with a 100% success
rate. Development drilling included a five-well horizontal
oil well campaign in the Growler, Spitfire, Balgowan and
Kalladeina fields. All wells were successfully completed
and brought online. A horizontal well was drilled in the
Stunsail field and was awaiting connection at year-end.
Development activity in FY23 will include horizontal oil
campaigns in the Growler and Spitfire fields to fully develop
the Birkhead reservoir. This follows the FY22 campaigns
in these fields.
Exploration and appraisal
Beach drilled 20 oil and gas exploration and appraisal wells
with an overall success rate of 40%. Major campaigns
included a four-well gas program in ex PEL 106 which
delivered two discoveries, a three-well oil appraisal program
in the Martlet field which delivered a 100% success rate,
and oil exploration across the Western Flank which delivered
two commercial discoveries and one technical success.
The 10 well oil exploration campaign was the largest program
since 2013 and focused on near-field prospects with the
Namur reservoir as the primary objective.
Exploration and appraisal activity in FY23 will include
follow-up oil appraisal in the Martlet field, near field
exploration in ex PEL 91 and ex PEL 92 and review of
FY22 oil exploration outcomes to inform follow-up
drilling campaigns.
A three-well oil appraisal
program in the Martlet
field delivered a 100%
success rate.
Single-rig drilling campaign
and workover rig activities
throughout the year
Near field oil exploration and
appraisal drilling targeting the
Namur and Birkhead reservoirs
in ex PEL 91 and ex PEL 92
Follow-up appraisal drilling in
the Martlet field
Horizontal oil development
drilling in the Bauer, Growler
and Spitfire fields
Ongoing workover and
optimisation activities
5.2 MMboe
FY22 production
2021 | 8.9 MMboe
22 MMboe
2P Reserves
2021 | 34 MMboe
Production
Total production of 5.2 MMboe was 42% below the prior
year (FY21: 8.9 MMboe) and comprised 3.4 MMbbl of oil
(-48%), 6.7 PJ of sales gas (-26%), 36 kt of LPG (-22%) and
287 kbbl of condensate (-4%).
Production was adversely impacted by workover activity
constraints including COVID-19 border restrictions and
heavy rain across the basin, which delayed well connections
and other development activities. Despite these challenges,
oil production decline of 32% was recorded and compared
with original guidance of 35–45%. The improved decline
profile was a result of refined reservoir management
strategies, workover and optimisation activities and positive
development well results.
Beach Energy LimitedAnnual Report 2022 26
Operating
Review
Cooper Basin
JV
Contribution
32% FY22 Production
24% 2P Reserves
Decarbonising through
one of the largest
CCS projects globally.
FY22 Highlights
FY23 Focus
Final Investment Decision for
the Moomba CCS project
Participation in 64 wells with
an overall success rate of 94%
Gas exploration success at the
Merlin and Cook East fields
Five-rig drilling campaign
with a primary focus on
gas development
Ongoing production and
performance improvement
initiatives
Ongoing electrification
across the asset portfolio
Delivery of the Moomba
CCS project
27
Development
Beach participated in 53 oil and gas development wells
(excluding wells drilling ahead at year-end) with an overall
success rate of 96%. Major development programs
focused on gas development in the Moomba, Tirrawarra
and Bolah fields, and oil development in the McKinlay
field. Development drilling in FY23 will include gas
campaigns in the Moomba, Big Lake and Tirrawarra fields
and oil campaigns in the Narcoonowie, Zeus, Minos and
Tennaperra. Five wells targeting the shallow Coorikiana
reservoir in the Jena, Seccante and Isoptera complex are
also expected to be drilled. Development activities will be
supported by a fifth rig which commenced drilling in
June 2022.
Exploration and appraisal
Beach participated in 11 oil and gas exploration and
appraisal wells with an overall success rate of 82%. Gas
exploration success was achieved in the Merlin and Cook
East fields and gas appraisal success was achieved in the
Barrolka, Meranji, Pelican and Kappa fields. Exploration and
appraisal activity in FY23 will focus on oil in the Naccowlah
field, up to 10 appraisal wells in the Seccante, Isoptera,
Ulandi and Ragno complex targeting the shallow Coorikiana
reservoir, and gas exploration in the south west Queensland
acreage of the Cooper Basin.
Moomba CCS project
Beach and joint venture partner Santos announced the Final
Investment Decision for the Moomba CCS project following
the registration of the project with the Clean Energy
Regulator. The registration entitles Beach to generate
ACCUs for its sequestered CO2 over a 25-year period.
Moomba CCS will deliver a material reduction in Beach’s
CO2 emissions through use of depleted reservoirs to
sequester up to 1.7 million tonnes of CO2 per annum
(gross), representing more than 0.5 million tonnes of CO2
per annum net to Beach. The project is underway with
first injection of CO2 targeted in 2024.
Acreage description
Beach owns non-operated interests in the South Australian
Cooper Basin joint ventures (collectively 33.40% in
SA Unit and 27.68% in Patchawarra East), the South West
Queensland joint ventures (various interests of 30% to
52.2%) and ATP 299 (Tintaburra; Beach 40%), which are
collectively referred to as the Cooper Basin JV. Santos is
the operator.
Beach participated in 53 oil
and gas development wells
(excluding wells drilling ahead
at year-end) with an overall
success rate of 96%.
7.1 MMboe
FY22 production
2021 | 8.1 MMboe
68 MMboe
2P Reserves
2021 | 77 MMboe
Production
Total production of 7.1 MMboe was 13% below the prior
year (FY21: 8.1 MMboe) and comprised 1.0 MMbbl
of oil (-16%), 29.4 PJ of sales gas (-11%), 67 kt of LPG
(-16%) and 524 kbbl of condensate (-19%). Production
was impacted by natural field decline, less drilling
activity than planned due to weather related access
restrictions and operational downtime. Various
activities and initiatives are underway to address
production decline, including commencement of a
fifth rig in June to accelerate gas development drilling.
Other initiatives include in-wellbore opportunities
and maintenance optimisation activities to improve
underperforming fields.
Beach Energy LimitedAnnual Report 2022 28
Operating
Review
Taranaki Basin
Contribution
13% FY22 Production
8% 2P Reserves
Production
Total production of 2.8 MMboe was 3% higher than the
prior year (FY21: 2.7 MMboe) and comprised 12.0 PJ
of sales gas (+9%), 51 kt of LPG (+2%) and 323 kbbl of
condensate (-8%). Following completion of the Kupe inlet
compression project in Q1 FY22, production reached
plant capacity of 77 TJ/day. Since commissioning, well
deliverability declined faster than expected and impacted
the ability to reach daily capacity rates. Despite this, gas
supply has been higher than originally anticipated due to
strong customer demand.
2.8 MMboe
FY22 production
2021 | 2.7 MMboe
Development
Beach continues to assess opportunities to return the
Kupe Gas Plant to capacity production rates. Opportunities
to increase well productivity and production performance,
including in-wellbore intervention activities and development
well drilling, are being assessed. Subsurface analysis, planning
and regulatory activities progressed for the potential drilling
and connection of a development well in FY24.
Acreage description
New Zealand operations comprise Kupe (Beach 50% and
operator, Genesis 46%, NZOG 4%) in the Taranaki Basin.
Kupe produces gas from the offshore Kupe field, situated
approximately 30 km off the New Zealand North Island in
licence PML38146. Gas from the Kupe field is then piped to
the onshore Kupe Gas Plant.
Supporting
New Zealand’s
energy transition.
22 MMboe
2P Reserves
2021 | 27 MMboe
FY22 Highlights
FY23 Focus
Completion of the Kupe Inlet
Compression project with
improved plant reliability
Kupe Gas Plant rates increased
post compression project
Reliable production with Kupe
Gas Plant uptime exceeding 99%
No recordable safety incidents
Planning for potential
drilling of Kupe
development well in FY24
Ongoing productivity and
optimisation activities
29
Operating
Review
Otway Basin
(SA)
Contribution
1%
FY22 Production
Production
Total production of 0.1 MMboe was 58% below the prior
year (FY21: 0.3 MMboe) and comprised 0.7 PJ of sales gas
(-65%). Production was impacted by natural field decline
and scheduled plant maintenance. The Katnook Gas Plant
remained operational for longer than anticipated but is
expected to be shut-in during FY23 as volumes decline
below the minimum required turndown rate. The plant
will be kept available for production in the event of future
development or exploration success.
0.1 MMboe
FY22 production
2021 | 0.3 MMboe
Exploration and appraisal
The Dombey 3D seismic acquisition was completed. The
survey covers 165 square kilometres in PEL 494 and captures
the Dombey field and surrounding exploration prospects.
This newly acquired seismic aims to assess opportunities
for new gas supply through the Katnook Gas Plant. Seismic
processing is underway and interpretation of data to inform
next steps is expected to be completed in FY23.
Acreage description
Otway Basin South Australia comprises producing acreage
PPL 62 (Beach 100%) and PEL 494, which contains the
Dombey gas field, PEL 680 and PRL 32 (Beach 70% and
operator, Cooper Energy 30%).
Partnering with local
communities.
FY22 Highlights
FY23 Focus
Dombey 3D seismic
acquisition completed
Dombey 3D seismic
processing and interpretation
Katnook Gas Plant remained
operational throughout FY22
Identification of potential
drilling prospects
Annual Report 2022Beach Energy Limited 30
Reserves
Statement
Net to Beach at 30 June 2022
Other revisions included:
Beach ended FY22 with 283 MMboe of 2P oil and gas
reserves (30 June 2021: 339 MMboe). The decrease
was mainly attributable to production (-22 MMboe) and
Bass Basin revisions (-25 MMboe). The opportunity to
increase reserves was limited without exploration or
appraisal drilling outside of the Cooper Basin.
Bass Basin revisions resulted from reclassification of the
Trefoil project from reserves to contingent resources and
an associated reduction of Yolla economic life. This follows
deferral of the Trefoil development decision.
– Exploration success, appraisal of Martlet, infill drilling
and production performance at Spitfire and Growler,
offset by fracture stimulation results at Balgowan,
infill drilling at Kalladeina and production performance
at Bauer, all in Western Flank Oil
– Revised modelling assumptions in Western Flank
Gas and the Taranaki Basin
– Additional development of Moomba South and
production performance in the Cooper Basin JV
– Infill drilling and production performance in the
Otway Basin
Beach ended FY22 with 221 MMboe of 2C contingent
resources (30 June 2021: 191 MMboe). The increase was
mainly attributable to reclassification of projects from
reserves to contingent resources, particularly Bass Basin,
infill drilling and reservoir management strategies in
Western Flank Oil.
Beach recorded 2P storage capacity of 4.4 Mt and 2C
contingent storage resources of 11.6 Mt after taking a
Final Investment Decision for the Moomba CCS project.
Note
YEJ20
YEJ21
YEJ22
202
352
576
180
13.2
183
339
531
191
13.2
146
283
466
221
12.9
Key Metrics
1P reserves (MMboe)
2P reserves (MMboe)
3P reserves (MMboe)
2C contingent resources (MMboe)
2P reserves life
1
Cooper Basin
31
All Products (MMboe)
Note
YEJ21
Production
Acquisition/
Divestment
Exploration
From
Contingent
Resources
Other
YEJ22
2
3
4
5
6
7
8
Note
2
3
4
5
6
7
8
10
5
37
54
38
20
19
183
Gas
(PJ)
–
10
152
300
150
8
77
697
4
2
7
1
4
1
3
22
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1)
(0)
–
–
–
(17)
–
(18)
1
(0)
5
(1)
(3)
(1)
2
2
7
3
35
52
30
2
18
146
LPG
(kt)
Condensate
(MMbbl)
Oil
(MMbbl)
Total
Developed Undeveloped
All Products (MMboe)
–
47
275
–
286
26
341
975
–
0
3
–
2
0
2
7
7
–
4
–
–
–
–
11
7
3
35
52
30
2
18
146
6
2
28
14
11
2
16
78
0
1
7
38
20
–
2
67
All Products (MMboe)
Note
YEJ21
Production
Acquisition/
Divestment
Exploration
From
Contingent
Resources
Other
YEJ22
2
3
4
5
6
7
8
26
8
77
100
70
31
27
339
4
2
7
1
4
1
3
22
–
–
–
–
–
–
–
–
0
–
–
–
–
–
–
0
(2)
–
–
–
–
(25)
–
(27)
(2)
(3)
(2)
(0)
2
(0)
(2)
(8)
19
4
68
99
67
5
22
283
1P Reserves
Western Flank Oil
Western Flank Gas
Cooper Basin JV
Perth Basin
Otway Basin
Bass Basin
Taranaki Basin
Total
1P Reserves
Western Flank Oil
Western Flank Gas
Cooper Basin JV
Perth Basin
Otway Basin
Bass Basin
Taranaki Basin
Total
2P Reserves
Western Flank Oil
Western Flank Gas
Cooper Basin JV
Perth Basin
Otway Basin
Bass Basin
Taranaki Basin
Total
Annual Report 2022Beach Energy Limited 32
Reserves
Statement
2P Reserves
Western Flank Oil
Western Flank Gas
Cooper Basin JV
Perth Basin
Otway Basin
Bass Basin
Taranaki Basin
Total
Note
2
3
4
5
6
7
8
Gas
(PJ)
–
14
306
574
333
21
93
LPG
(kt)
Condensate
(MMbbl)
Oil
(MMbbl)
Total
Developed Undeveloped
All Products (MMboe)
–
64
509
–
636
66
408
–
1
5
–
5
1
2
19
–
7
–
–
–
–
19
4
68
99
67
5
22
15
3
51
17
16
5
19
4
1
17
82
52
–
3
1,341
1,683
13
26
283
124
159
2C Contingent
Resources
Note
YEJ21
Acquisition/
Divestment
From
Reserves
Other
YEJ22
Gas
(PJ)
LPG
(kt)
Condensate
(MMbbl)
Oil
(MMbbl)
Total
(MMboe)
All Products (MMboe)
Western Flank Oil
Western Flank Gas
Cooper Basin JV
Perth Basin
Otway Basin
Bass Basin
Taranaki Basin
Bonaparte Basin
Total Conventional
2
3
4
5
6
7
8
9
Unconventional
10
Total
12
2
59
38
31
10
5
23
179
12
191
–
–
–
–
–
–
–
–
–
–
–
2
–
–
–
–
25
–
–
27
–
27
3
(0)
1
–
(0)
–
–
–
3
(0)
3
17
1
60
38
30
35
5
23
209
12
–
4
273
222
167
149
18
128
961
41
–
21
274
–
146
423
78
–
942
200
221
1,002
1,142
–
0
2
–
1
6
1
1
11
3
14
17
–
9
–
–
–
–
–
26
–
26
17
1
60
38
30
35
5
23
209
12
221
1P Storage Capacity
Cooper Basin JV
Total
2P Storage Capacity
Cooper Basin JV
Total
2C Contingent Storage Resources
Cooper Basin JV
Total
All Products (Mt)
Acquisition/
Divestment
From
Contingent
Resources
–
–
–
–
All Products (Mt)
Acquisition/
Divestment
From
Contingent
Resources
–
–
–
–
All Products (Mt)
Acquisition/
Divestment
From
Capacity
–
–
–
–
YEJ21
Injection
–
–
–
–
YEJ21
Injection
–
–
–
–
YEJ21
–
–
Note
11
Note
11
Note
11
Other
YEJ22
3
3
3
3
Other
YEJ22
4
4
4
4
Other
YEJ22
12
12
12
12
33
Notes to the Reserves Statement
Reserves and resources estimates are prepared in
accordance with the 2018 update to the Petroleum
Resources Management System (SPE-PRMS). Storage
resources are prepared in accordance with the 2017 CO2
Storage Resources Management System (SPE-SRMS).
Both systems are sponsored by the Society of Petroleum
Engineers (SPE), World Petroleum Council, American
Association of Petroleum Geologists, Society of Petroleum
Evaluation Engineers, Society of Exploration Geophysicists,
Society of Petrophysicists and Well Log Analysts and the
European Association of Geoscientists & Engineers.
The statement presents Beach’s net economic interest
estimated at 30 June 2022 using a combination of
probabilistic and deterministic methods. Each category
is aggregated by arithmetic summation. Note that the
aggregated 1P category may be a very conservative estimate
due to the portfolio effects of arithmetic summation.
Reserves are stated net of fuel, flare and vent at reference
points defined by the custody transfer point of each
product. Waitsia reserves include 30 PJ of fuel used for
LNG processing through the NWS facilities in Karratha.
Conversion factors used to evaluate oil equivalent
quantities are sales gas and ethane: 171,940 boe per PJ,
LPG: 8.458 boe per tonne, condensate: 0.935 boe per bbl
and oil: 1 boe per bbl.
The estimates are based on, and fairly represent,
information and supporting documentation prepared by,
or under the supervision of, Qualified Petroleum Reserves
and Resources Evaluators (QPRRE) employed by Beach.
The QPRRE are Ian Cockerill, Scott Delaney, Mark Sales
and Jason Storey, who are all members of SPE.
The reserves statement as a whole is approved by
Ms Paula Pedler (Head of Reservoir Engineering). Ms Pedler
is employed by Beach and is a member of SPE; she has a
Bachelor of Engineering (Honours) degree from the
University of Adelaide and more than 30 years of relevant
experience. The reserves statement has been issued with the
prior written consent of Ms Pedler as to the form and context
in which the estimates and information are presented.
Beach prepares its reserves and resources estimates
annually as specified in the Beach reserves policy. This
policy also details the internal governance and external
audit requirements of the reserves and resources
estimation process.
An independent audit of Beach’s reserves at 30 June 2022
was conducted by Netherland, Sewell & Associates Inc.
(NSAI). In NSAI’s opinion the reserves estimates are
reasonable when aggregated at the 1P, 2P and 3P levels and
have been prepared in accordance with generally accepted
petroleum engineering and evaluation principles set forth in
the Standards Pertaining to the Estimating and Auditing of
Oil and Gas Reserves Information promulgated by the SPE.
The audit encompassed 62% of 2P reserves, including 79%
of developed reserves and 48% of undeveloped reserves.
Contingent resources have not been audited.
Material Reserves Changes
Beach has disclosed material reserves changes
throughout the year in accordance with continuous
disclosure obligations.
– Reclassification of the Trefoil Development Project
(refer to ASX announcement #014/22, 20 May 2022:
“Bass Basin Update”).
Material Contingent Resources Changes
There are no material contingent resources changes.
Notes
(1) 2P reserves life is calculated as 2P reserves divided by annual production.
(2) Western Flank Oil comprises the tenements listed in the table below. Deterministic methodologies are used to estimate reserves and resources.
1P (%)
2P (%)
ex PEL 91
36
40
ex PEL 92
22
18
ex PEL 104/111
41
41
PPL 207, PPL 209, PPL 221
1
1
(3) Western Flank Gas comprises the tenements listed in the table below. Deterministic methodologies are used to estimate reserves and resources.
1P (%)
2P (%)
ex PEL 106
65
69
PPL 270
33
28
ex PEL 91, PRL 26
2
3
(4) Cooper Basin JV comprises the Fixed Factor Agreement, Patchawarra East, SWQ Gas Unit and the Naccowlah, Aquitaine B, Total 66 and
Tintaburra blocks. Deterministic methodologies are used to estimate reserves and resources.
(5) Perth Basin comprises L1/L2, L11/L22 and EP320. Deterministic and probabilistic methodologies are used to estimate reserves and resources.
(6) Otway Basin comprises the tenements listed in the table below. Deterministic and probabilistic methodologies are used to estimate
reserves and resources.
1P (%)
2P (%)
T/L2, T/L3, VIC/L23
71
64
VIC/L1(V), VIC/P42(V)
29
36
VIC/P43, VIC/P73
–
–
PPL 62, PEL 494,
PPL 202, PPL 168, PRL 32
–
–
(7) Bass Basin comprises the tenements listed in the table below. Deterministic and probabilistic methodologies are used to estimate reserves
and resources.
1P (%)
2P (%)
T/L1
100
100
T/RL2, T/RL5
–
–
(8) Taranaki Basin comprises PML 38146. Deterministic methodologies are used to estimate reserves and resources.
(9) Bonaparte Basin comprises NT/RL1. Deterministic and probabilistic methodologies are used to estimate reserves and resources.
(10) Unconventional resources are contained within the Fixed Factor Agreement.
(11) Storage resources are contained within the Cooper Basin in GSL 1, GSL 2, GSL 3 and GSL 4.
Beach Energy LimitedAnnual Report 2022 34
Sustainability
Sustainability at Beach is about operating our
business in a responsible manner, to deliver the
maximum possible return to shareholders while
sensibly managing the economic, social and
environmental risks inherent within our industry.
The 2022 Sustainability Report details Beach’s actions
across a range of Environment, Social and Governance
activity areas, and addresses:
– Health and safety: our outcomes and responses to
keeping our people safe at work
– Environment: our performance in managing
environmental risks inherent within our business
– Cultural heritage: working alongside First Nations
people in the communities in which we operate to
protect cultural heritage
– Climate change: our commitment to addressing
climate change across our business including:
• Reducing emissions: including our new emissions
intensity reduction target of 35% by 2030
• Moomba CCS: our investment in one of the
nation’s leading emissions reduction projects
– Governance and Risk management:
our approach to addressing risks in our business
– Community investments: contributing to the
communities in which we operate
– Our people: our approach to developing and
supporting our workforce
Natural gas’ role in the energy transition
As Australia entered winter in 2022, a combination
of circumstances led to the Australian Energy Market
Operator (AEMO) warning of potential supply shortfalls in
the East Coast electricity market, as well as high spot prices
for both electricity and gas.
The factors causing these outcomes included Russia’s war
on Ukraine, maintenance on coal-fired power stations and
other circumstances impacting coal supplies, as well as
low generation from renewable energy (particularly solar).
It was natural gas that helped to meet the supply shortfall
during this energy crisis, demonstrating gas’ criticality in
delivering energy security for the nation.
Natural gas will be required in Australia’s energy mix for
many years to come, firming up energy supplies, particularly
as more coal comes offline.
In the future, large scale battery storage and hydrogen
will provide a solution, but we are many years away
from producing these at the scale and reliability that
will be required.
Beach’s investment in East Coast Gas over recent years has
become particularly important for the energy security of
Australia, with new gas supplies being connected at a time
when the nation needs it most.
Natural gas, when partnered with CCS, presents a low/zero
emissions solution that is available today, and Beach is well
positioned to take advantage of this opportunity.
Environment
People
Communities
Our Sustainability F o u n d a t i o
s
n
Operated emissions
reductions delivered
in FY22
Total contributions
(monetary and
volunteering hours)
Volunteering hours
delivered
7.4 ktCO2e
$4.1m
971
35
Case Study
Beach Awarded for fishing
sector collaboration
Beach Energy has been recognised for its approach
to collaboration with stakeholders and increasing the
evidence base around seismic survey technology.
Beach received the Award for ‘Project Environment
Excellence’ at the 2022 Australian Petroleum
Production and Exploration (APPEA) Awards for
collaborating with fishers to develop an extensive
research program into the potential impacts of
marine seismic surveys on scallop and lobster.
The research program was developed from a
consultation process Beach undertook with the
fishing sector in preparation for the Prion Seismic
Survey, which took place in the offshore Bass Basin
in Commonwealth waters approximately 73km east
of King Island in October 2021.
The first study was to assess scallop biomass and
conduct a ‘before and after’ impact assessment
on potential new scallop beds in a small part in the
south-west corner of the Prion Survey area.
The second study is a nation-leading collaborative
research project to test emerging advanced seismic
survey technologies whilst also researching the impacts
to scallop and lobster from conventional compared to
the new technologies.
Beach proposed this study to the Institute of Marine
and Antarctic Studies (IMAS) who were keen to build
upon their existing studies on scallop and lobster.
The resulting research program was supported by
the Fisheries Research and Development Corporation
(FRDC), Curtin University of Technology, the Bass Strait
Scallop Industry Association (BSSIA), and the
Department of Natural Resources, Tasmania.
Beach initiated and contributed cash and in-kind
support equal to three quarters of the cost of the
multimillion-dollar collaborative research project.
The project also attracted financial and in-kind support
from the Institute for Marine and Antarctic Studies,
Curtin University of Technology, Fisheries Research
and Development Corporation (FRDC), the Bass Strait
Scallop Industry Association and the Department of
Natural Resources and Environment, Tasmania.
Cooper Basin
Reducing emissions
The oil and gas industry has become a leader in efforts
to reduce emissions, demonstrating it has the will, the
know-how and the capital available to make a substantial
contribution to decarbonisation efforts.
Beach’s investment as a 33% non-operator of the
Moomba CCS project is one such example of our industry
leading the way when it comes to emissions reduction.
Beach has announced a new emissions intensity reduction
target of 35% by 2030 – measuring emissions intensity
from across its portfolio, including non-operated assets,
benchmarked against 2018 levels.
The new target builds upon Beach’s
aspiration to reach net zero Scope 1
and 2 emissions by 2050.
Sustainability Report
Visit the Beach Energy website to
read the 2022 Sustainability Report.
beachenergy.com.au/sustainability
2022 APPEA awards
Beach Energy LimitedAnnual Report 2022 36
Board of Directors
1
2
3
4
5
6
7
8
1.
Glenn Davis
Independent Non-Executive Chairman
LLB, BEc, FAICD
3.
Philip (Phil) Bainbridge
Independent Non-Executive Director
BSc (Hons) Mechanical Engineering, MAICD
Mr Davis has practised as a solicitor in corporate and
risk throughout Australia for over 30 years, initially in a
national firm and then a firm he founded. He has expertise
and experience in the execution of large transactions,
risk management and in corporate activity regulated by
the Corporations Act (2001) and ASX Limited. Mr Davis
has worked in the oil and gas industry as an advisor and
director for over 25 years.
Mr Davis is currently a non-executive director and Chair
of iTech Minerals Ltd.
Mr Davis’s special responsibilities include membership of
the Remuneration and Nomination Committee. Mr Davis
joined Beach on 6 July 2007 as a non-executive director.
He was appointed Non-Executive Deputy Chairman in
June 2009 and Chairman in November 2012. He was last
re-elected to the Board on 25 November 2020.
2.
Colin Beckett AO
Independent Non-Executive
Deputy Chairman
FIEA, MICE, GAICD
Mr Beckett is an experienced non-executive director and
previously held senior executive positions in Australia with
Chevron, Mobil, and BP. His experience in engineering design,
project management, commercial negotiations and gas
marketing provides him with a diverse and complementary
set of skills relevant to the oil and gas industry.
Mr Beckett read engineering at Cambridge University and
has a Master of Arts. He was awarded an honorary doctorate
from Curtin University in 2019. He was previously a fellow
of the Australian Institute of Engineers. He is a graduate
member of the Institute of Company Directors.
He is currently Chair of Western Power. He was the
Chancellor of Curtin University until end 2018. He is a
past Chairman of Perth Airport Pty Ltd and past Chairman
of the Australian Petroleum Producers and Explorers
Association (APPEA).
Mr Beckett’s special responsibilities include Chairmanship
of the Remuneration and Nomination Committee. He was
appointed to the Board on 2 April 2015, last having been
re-elected to the Board on 26 November 2019.
Mr Bainbridge has extensive industry experience
having worked for the BP Group for 23 years in a range of
petroleum engineering, development, commercial and senior
management roles in the UK, Australia and USA. From 2006,
he has worked at Oil Search, initially as Chief Operating
Officer, then Executive General Manager LNG, responsible for
all aspects of Oil Search’s interests in the $19 billion PNG LNG
project, then EGM Growth responsible for gas growth
and exploration.
He is currently the non-executive chairman of the
Global Institute of Carbon Capture and Storage,
non-executive director of Newcrest Mining Limited and
non-executive chairman of Sino Gas and Energy.
He was formerly the non-executive chairman of the PNG
Sustainable Development Program until 2021, non-executive
chairman of Sino Gas and Energy Holdings until 2018 and a
non-executive director of Drillsearch Energy Limited from
2013 to 2016.
Mr Bainbridge’s special responsibilities include membership
of the Risk, Corporate Governance and Sustainability
Committee and the Audit Committee. He was appointed by
the Board on 1 March 2016, last having been elected to the
Board on 26 November 2019.
4.
Richard Richards
Non-Executive Director
BComs/Law (Hons), LLM, MAppFin, CA, Admitted Solicitor
Mr Richards has been Chief Financial Officer of Seven Group
Holdings Limited (SGH) since October 2013. He is a director
of SGH Energy and is a director and Chair of the Audit and
Risk Committee of WesTrac Pty Limited and Coates Hire Pty
Limited. He is a director of Boral Limited and is a member of
their Audit and Risk and Safety Committees and he is also a
director of Flagship Property Holdings.
Mr Richards joined SGH from the diverse industrial group,
Downer EDI, where he was Deputy Chief Financial Officer
responsible for group finance across the company for three
years. Prior to joining Downer EDI, Mr Richards was CFO
for the Family Operations of LFG, the private investment
and philanthropic vehicle of the Lowy Family for two years.
Prior to that, Richard held senior finance roles at Qantas for
over 10 years.
Mr Richards is a former director and the Chair of Audit and
Risk Management Committee of KU – established in 1895 as
the Kindergarten Union of New South Wales, KU is one of the
most respected childcare providers in Australia. He was also
a member of the Marcia Burgess Foundation Committee.
Mr Richards is both a Chartered Accountant and admitted
solicitor with over 30 years of experience in business
and complex financial structures, corporate governance,
risk management and audit.
Mr Richards’ special responsibilities include membership of
the Audit Committee and of the Remuneration & Nomination
Committee. He was appointed to the Board on 4 February 2017
and was last re-elected to the Board on 25 November 2020.
37
5.
Dr Peter Moore
Independent Non-Executive Director
PhD, BSc (Hons), MBA, GAICD
7.
Margaret Hall
Non-Executive Director
BEng (Met) (Hons), GAICD, MIEAust, SPE
Ms Margaret Hall has circa 31 years of experience in
the oil and gas industry, spanning both super-major and
independent companies.
Ms Hall is currently Chief Executive Officer of SGH Energy
and holds responsibility for delivering value from the SGH
Energy oil and gas assets within Australia and the USA.
From 2011 to 2014 she held senior management roles in
Nexus Energy with responsibilities covering development,
production, operations, engineering, exploration, health,
safety and environment. This was preceded by 19 years
with ExxonMobil in Australia, across production and
development in the Victorian Gippsland Basin and Joint
Ventures across Australia.
Ms Hall is a director of SGH Energy Pty Ltd and its
subsidiary entities within Seven Group Holdings Ltd’s
group of companies.
Ms Hall’s special responsibilities include membership of the
Risk, Corporate Governance and Sustainability Committee.
She was appointed a non-executive director of Beach Energy
Limited on 10 November 2021.
8.
Robert (Rob) Jager ONZM
Independent Non-Executive Director
BE Mechanical Engineering (Hons), MBA (distinction), MAICD,
CMinstD, FENZ
Mr Jager has extensive executive, industry and board
experience following a career of more than 40 years with
Shell in a variety of executive roles, most recently as Vice
President Prelude in Perth. Prior to that, Mr Jager served as
Vice President and Country Chair for Shell’s New Zealand
business. Mr Jager has most recently been an independent
non-executive director of Air New Zealand, serving for
nearly nine years, including as Chair of the Board Health,
Safety and Security Committee.
In 2018, Mr Jager was awarded an Officer of New Zealand
Order of Merit (ONZM) for his services to business and
health and safety. During his career Mr Jager chaired the
Petroleum Exploration and Production Association of NZ
as well as the Business Leaders Health and Safety Forum.
Mr Jager’s special responsibilities include membership
of the Risk, Corporate Governance and Sustainability
Committee. He was appointed an independent
non-executive director of Beach Energy Limited on
14 December 2021.
Dr Moore has over 41 years of oil and gas industry
experience. His career commenced at the Geological Survey
of Western Australia, with subsequent appointments at
Delhi Petroleum Pty Ltd, Esso Australia, ExxonMobil and
Woodside. Dr Moore joined Woodside as Geological
Manager in 1998 and progressed through the roles of
Head of Evaluation, Exploration Manager Gulf of Mexico,
Manager Geoscience Technology Organisation and
Vice President Exploration Australia. From 2009 to 2013,
Dr Moore led Woodside’s global exploration efforts as
Executive Vice President Exploration. In this capacity, he
was a member of Woodside’s Executive Committee and
Opportunities Management Committee, a leader of its
Crisis Management Team, Head of the Geoscience function
and a director of ten subsidiary companies. From 2014 to
2018, Dr Moore was a Professor and Executive Director
of Strategic Engagement at Curtin University’s Business
School. He has his own consulting company, Norris Strategic
Investments Pty Ltd. Dr Moore is currently a non-executive
director of Carnarvon Petroleum Ltd (since 2015).
Dr Moore’s special responsibilities include chairmanship
of the Risk, Corporate Governance and Sustainability
Committee and membership of the Remuneration and
Nomination Committee. Dr Moore was appointed by the
Board on 1 July 2017 and last re-elected to the Board on
26 November 2019.
6.
Sally-Anne Layman
Independent Non-Executive Director
BEng (Mining) Hons, BCom, CPA, MAICD
Ms Layman is a company director with diverse international
experience in the resources sector and financial markets.
Previously, Ms Layman held a range of senior positions with
Macquarie Group Limited, including as Division Director
and Joint Head of the Perth office of the Metals, Mining &
Agriculture Division.
Prior to moving into finance, Ms Layman undertook
various roles with resource companies including Mount
Isa Mines, Great Central Mines and Normandy Yandal.
Ms Layman holds a WA First Class Mine Manager’s
Certificate of Competency.
Ms Layman is also a non-executive director of Imdex Ltd,
Pilbara Minerals Ltd and Newcrest Mining Ltd.
Ms Layman holds a Bachelor of Engineering (Mining)
Hons from Curtin University and a Bachelor of Commerce
from the University of Southern Queensland. Ms Layman
is a Certified Practising Accountant and is a member
of CPA Australia Ltd and the Australian Institute of
Company Directors.
Ms Layman is Chair of the Audit Committee and was
appointed to the Board in February 2019 and formally
elected to the Board on 26 November 2019.
Beach Energy LimitedAnnual Report 2022 38
Full Financial
Report
Beach Energy Limited
39
99
99
100
101
104
104
105
105
106
107
109
109
110
111
111
112
112
113
118
120
124
125
Financial and risk management
16. Finances and borrowings
17. Cash flow reconciliation
18. Financial risk management
Equity and group structure
19. Contributed equity
20. Reserves
21. Dividends
22. Subsidiaries
23. Deed of cross guarantee
24. Parent entity financial information
25. Related party disclosures
26. Acquisitions and disposals
Other information
27. Contingent liabilities
28. Remuneration of auditors
29. Subsequent events
Independent Auditor’s Report
Glossary
Schedule of Tenements
Shareholder Information
Corporate Directory
Directors’ Report
Auditor’s Independence Declaration
2022 Remuneration in Brief (Unaudited)
Remuneration Report (Audited)
Directors’ Declaration
Financial Statements
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Basis of preparation
Results for the year
1. Operating segments
2. Revenue from contracts with customers
and other income
3. Expenses
4. Employee benefits
5. Taxation
6. Earnings per share (EPS)
Capital employed
7. Inventories
8. Property, plant and equipment (PPE)
9. Petroleum assets
10. Exploration and evaluation assets
11. Intangible assets
12. Interests in joint operations
13. Provisions
14. Leases
15. Commitments for expenditure
40
54
55
57
72
73
73
74
75
76
77
77
79
79
80
81
82
83
86
87
87
87
88
90
91
92
94
96
98
Beach Energy LimitedAnnual Report 2022 40
Directors’ report
Your directors present their report for Beach Energy Limited (Beach or Company) on the consolidated accounts for the financial year ended
30 June 2022. Beach is a company limited by shares that is incorporated and domiciled in Australia.
The directors of the Company during the year ended 30 June 2022 and up to the date of this report are:
Surname
Davis
Beckett
Bainbridge
Hall
Jager
Kay
Layman
Moore
Morton
Richards
Stokes
Other Names
Glenn Stuart
Colin David
Philip James
Margaret Helen
Robert
Matthew Vincent
Sally-Anne Georgina
Peter Stanley
Joycelyn Cheryl
Richard Joseph
Ryan Kerry
Position
Independent non-executive Chairman
Independent non-executive Deputy Chairman
Independent non-executive director
Non-executive director (1)
Independent non-executive director (2)
Managing director (3)
Independent non-executive director
Independent non-executive director
Independent non-executive director (4)
Non-executive director
Alternate non-executive director (5)
(1) Appointed 10 November 2021 as a non-executive director having previously been appointed an alternate director for Mr Stokes for the period from 3 May 2021
to 10 November 2021.
(2) Appointed 14 December 2021.
(3) Resigned 2 November 2021.
(4) Retired 10 November 2021.
(5) Retired 10 November 2021 as a non-executive director. Mr Stokes was subsequently appointed as an alternate director for Ms Hall, effective from 1 December 2021.
Directors’ Interests in shares, options and rights
The relevant interest of each director in the ordinary share capital of Beach at the date of this report is:
Shares held in Beach Energy Limited
Name
G S Davis
C D Beckett
P J Bainbridge
R J Jager
S G Layman
P S Moore
R J Richards (3)
R K Stokes (4)
M H Hall (3)(4)
Shares
Rights
320,101 (2)
91,678 (1)
137,320 (2)
–
45,000 (2)
44,200 (2)
488,053 (2)
150,000 (1)
17,068 (2)
–
–
–
–
–
–
–
–
–
(1) Held directly.
(2) Held by entities in which a relevant interest is held.
(3) Mr Richards was nominated as a director by Beach’s largest shareholder Seven Group Holdings Limited (SGH) and related corporations who collectively have
a relevant interest in 30.02% of Beach shares. He is the Chief Financial Officer of SGH. Ms Hall was also nominated as a director by SGH. Ms Hall is the chief
executive officer of Seven Group Holdings Energy.
(4) Mr Stokes is an alternate director for Ms Hall. Mr Stokes is appointed until either Ms Hall ceases to be a director or until terminated in accordance with the
Beach constitution. He is Managing Director and Chief Executive Officer of SGH.
Details of the qualifications, experience, special responsibilities and meeting attendance of each of the directors are set out later in the Directors’ Report.
Director appointments and retirements
During the financial year, the following changes to Board composition occurred:
– Mr Kay resigned as the Managing Director on 2 November 2021.
– At the Annual General Meeting held on 10 November 2021 Ms Joycelyn Morton retired from the Board of Directors.
– At the Annual General Meeting held on 10 November 2021 Mr Ryan Stokes retired from the Board of Directors. Mr Stokes was subsequently
appointed an alternate director for Ms Margaret Hall on 1 December 2021.
– Ms Margaret Hall was appointed a director of Beach on 10 November 2021. Prior to this, Ms Hall was an alternate director for Mr Ryan Stokes.
– Mr Robert Jager was appointed a director on 14 December 2021 and pursuant to the constitution will be obliged to retire at the 2022 Annual General
Meeting and being eligible to seek re-election.
At as 30 June 2022, the board comprises eight directors. The approved maximum number of directors is nine.
Beach Energy Limited
Annual Report 2022
41
Principal activities
Beach Energy is an ASX listed, oil and gas, exploration and production company headquartered in Adelaide, South Australia. It has operated and
non-operated, onshore and offshore, oil and gas production from five producing basins across Australia and New Zealand and is a key supplier to
the Australian east coast gas market. Beach’s asset portfolio includes ownership interests in strategic oil and gas infrastructure and assets across
Australia and New Zealand and continues to pursue growth opportunities which align with its strategy, satisfy strict capital allocation criteria, and
demonstrate clear potential for shareholder value creation. Beach is focused on maintaining the highest health, safety and environmental standards.
Operating and Financial Review
A review of operations of Beach Energy during the financial year are set out on pages 16 – 29.
Financial results from FY22 are summarised below:
– Group profit attributable to equity holders of Beach was $500.8 million (FY21 $316.5 million).
– Sales revenue was up 15% from FY21 to $1,749.1 million due to favourable US dollar oil and liquids prices, partly offset by lower volumes.
– Cost of sales were up 3% from FY21 to $995.6 million, mainly as a result of higher royalties, third party purchases, tariff and toll charges, partly
offset by favourable inventory movements and lower depreciation.
– A net profit after tax of $500.8 million was reported reflecting higher sales revenue and no impairment or exploration expense in FY22, partly
offset by higher tax impacts, restoration expense, lower other income and higher costs of sales.
Key Results
Operations
Production
Production (pro-forma) (1)
Sales
Capital expenditure
Income
Sales revenue
Total revenue
Cost of sales
Gross profit
Other income
Net profit after tax (NPAT)
Underlying NPAT (2)
Dividends paid
Dividends announced
Basic EPS
Underlying EPS (2)
Cash flows
Operating cash flow
Investing cash flow
Financial position
Net assets
Cash balance
2022
2021
Change
MMboe
MMboe
MMboe
$m
$m
$m
$m
$m
$m
$m
$m
cps
cps
cps
cps
$m
$m
21.8
21.8
22.4
(872.3)
1,749.1
1,771.4
(995.6)
775.8
12.0
500.8
504.3
2.00
1.00
21.97
22.12
24.8
25.6
26.1
(671.3)
1,519.4
1,562.0
(967.1)
594.9
51.1
316.5
363.0
2.00
1.00
13.88
15.92
1,223.2
(897.8)
759.8
(757.8)
(12%)
(15%)
(14%)
(30%)
15%
13%
(3%)
30%
(77%)
58%
39%
0%
0%
58%
39%
61%
(18%)
As at
30 June
2022
As at
30 June
2021
Change
$m
$m
3,539.9
254.5
3,087.8
126.7
15%
101%
(1) Production (pro-forma) for 2021 includes the impact of the acquisition of Senex Energy’s Cooper Basin assets and Mitsui’s Bass Basin assets, with
an effective date 1 July 2020.
(2) Underlying results in the table above are categorised as non-IFRS financial information provided to assist readers to better understand the financial
performance of the underlying operating business. They have not been subject to audit or review by Beach’s external auditors. Please refer to the table
on page 43 for a reconciliation of this information to the financial report.
42
Directors’ report
Revenue
Sales revenue of $1,749.1 million in FY22 was $229.7 million or 15% higher than FY21, driven by higher realised prices, higher third-party sales and
favourable FX rates, partly offset by lower production volumes.
Higher US dollar oil and liquids prices increased sales revenue by $402.4 million, with the average realised liquids price increasing to US$97.81/
boe, up from US$57.55/boe in FY21. Favourable gas and ethane prices increased sales revenue by $57.4 million, higher sales from third party
product contributed an additional $30.8 million and favourable A$/US$ exchange rates in FY22 resulted in an increase of $23.1 million to sales
revenue. These are partly offset by lower production volumes, decreasing sales revenue by $284.0 million.
Sales Revenue Comparison ($m)
57.4
Gas/ethane
prices
A$/GJ
FY21 $7.35
FY22 $8.05
402.4
Oil and
liquids
prices
US$/boe
FY21 $57.55
FY22 $97.81
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
1,519.4
FY21
Average price
A$58.28/boe
Gross Profit
30.8
Third party
sales
23.1
(284.0)
FX rates
A$/US$
FY21 $0.747
FY22 $0.726
Volume/
mix
1,749.1
15%
$229.7 million
total increase
FY22
Average price
A$78.22/boe
Gross profit for FY22 of $775.8 million (FY21 $594.9 million) was up 30%, driven by higher sales, lower depreciation and inventory movements,
partly offset by higher royalties, third party purchases and tariff and tolls.
The increase in cost of sales, up 3% from FY21 to $995.6 million, is driven by a $65.3 million increase in royalties, a $30.8 million increase in third
party purchases, both principally driven by higher realised oil and liquids prices, and an increase in tariff and toll charges of $18.5 million with FY21
including favourable arbitral outcome regarding the allocation of carbon emissions under one of Beach’s long term gas sales agreements, offset
by lower Western Flank volumes. These are partly offset by a reduction in depreciation of $53.5 million as a result of lower book values following
FY21 impairments and lower production volumes, and favourable inventory movement of $36.6 million.
Gross Profit Comparison ($m)
53.5
Depreciation
209.4
Sales and
other
revenue
900
800
700
600
500
400
300
200
100
0
594.9
FY21
36.6
(30.8)
Inventory
Third party
purchases
(87.8)
Total
operating
costs
775.8
Cost of Sales ($28.5) million
30%
$180.9 million
total increase
FY22
43
Net Profit Result
Other income of $12.0 million, was $39.1 million lower than FY21, with FY21 including a gain on reversal of acquired liabilities of $35.4 million and
lower joint venture lease recoveries of $6.5 million, partly offset by foreign exchange gains in FY22 of $6.4 million.
Other expenses of $57.7 million were $146.0 million lower than FY21, with FY21 including a $117.0 million impairment expense in SA Otway and
exploration and evaluation expense of $56.7 million. This is partly offset by restoration expense of $29.5 million recognised in FY22 relating to
increased restoration provisions for assets in abandonment phase in the Cooper Basin.
The reported net profit after income tax of $500.8 million is $184.3 million higher than FY21, driven by higher gross profits primarily the result
of higher sales revenue and lower other expenses, partly offset by corresponding higher income tax expense.
By adjusting the FY22 profit to exclude the one-off provision for legal costs related to shareholder class actions, Beach’s underlying net profit
after tax is $504.3 million.
Comparison of underlying profit
Net profit after tax
Adjusted for:
Provision for legal costs related to shareholder class actions
Gain on reversal of acquired liabilities
Impairment of assets
Tax impact of above changes
Underlying net profit after tax (1)
FY22
$ million
FY21
$ million
Movement
from PCP
$ million
500.8
316.5
184.3
58%
5.0
–
–
(1.5)
–
(35.4)
117.0
(35.1)
504.3
363.0
5.0
35.4
(117.0)
33.6
141.3
39%
(1) Underlying results in this report are categorised as non-IFRS financial information provided to assist readers to better understand the financial performance
of the underlying operating business. They have not been subject to audit or review by Beach’s external auditors. All of the items being adjusted pre-tax are
separately identified within Notes 2(b) and 3(b) to the financial statements.
Underlying Net Profit After Tax Comparison ($m)
180.9
Gross profit
600
550
500
450
400
350
300
250
200
150
100
50
0
363.0
FY21
30.3
Other expenses
and income
(8.0)
Net
financing
costs
(61.9)
Tax
504.3
39%
$141.3 million
total increase
FY22
Annual Report 2022Beach Energy Limited 44
Directors’ report
Financial Position
Funding and Capital Management
Assets
Total assets increased by $419.0 million to $5,102.1 million during
the period with cash balances increased by $127.8 million to
$254.5 million, primarily due to:
– Cash inflow from operations of $1,223.2 million, offset by,
– Cash outflow from investing activities of $897.8 million,
– Cash outflow from financing activities of $199.5 million, and,
– Favourable foreign exchange impact of $1.9 million.
Receivables decreased by $132.5 million, primarily driven by timing
of liftings and Beach receipting favourable arbitral outcome regarding
the allocation of carbon emissions under one of Beach’s long term
gas sales agreements in early FY22. Other current assets increased
by $28.2 million, primarily driven prepayments for long lead items
relating to major growth projects, partly offset by a reduction in
lease receivables.
Fixed assets, petroleum and exploration assets increased by
$435.4 million, driven by capital expenditure of $818.7 million and
capitalisation of depreciation of lease assets under AASB 16 Leases
of $53.6 million, partly offset by depreciation and amortisation of
$365.6 million and decrease in restoration of $67.2 million. Lease
assets decreased $40.5 million primarily as a result of depreciation
during the period.
Liabilities
Total liabilities decreased by $33.1 million to $1,562.2 million, due to a
decrease in debt drawn of $86.8 million, lease liabilities of $70.0 million,
provisions of $37.8 million and contract liabilities of $11.6 million. This is
partially offset by an increase in payables of $70.6 million, deferred tax
liabilities of $62.0 million and current tax liabilities of $40.5 million.
As at 30 June 2022, Beach held cash and cash equivalents
of $255 million.
Beach currently has a Senior Secured Debt Facility in place for
$675 million, comprised of a three year $250 million syndicated
revolving debt facility maturing September 2024 (Facility A),
a five year $350 million syndicated revolving facility maturing
September 2026 (Facility B), and three year $75 million bilateral
Contingent Instrument facilities (CI Facilities) with a maturity date
of September 2024.
As at 30 June 2022, $90 million of Facility A was drawn with
$43 million of the CI Facilities being predominantly utilised by way
of bank guarantees.
Material Business Risks
Beach recognises that the management of risk is a critical component
in Beach achieving its purpose of sustainably delivering energy
for communities.
The Company has a framework to identify, understand, manage
and report risks. As specified in its Board Charter, the Board has
responsibility for overseeing Beach’s risk management framework
and monitoring its material business risks.
Given the nature of Beach’s operations, there are many factors that
could impact Beach’s operations and results. The material business risks
that could have an adverse impact on Beach’s financial prospects or
performance include economic risks, health, safety and environmental
risks, community and social licence risks and legal risks. These may be
further categorised as strategic risks, operational risks, commercial risks,
regulatory risks, reputational risks and financial risks. A description of
the nature of the risk and how such risks are managed is set out below.
This list is neither exhaustive nor in order of importance.
Equity
Total equity increased by $452.1 million, primarily due to a net profit
after tax of $500.8 million for the year, partly offset by dividends
paid during the period of $45.6 million.
Economic risks
Exposure to oil and gas prices
Dividends
During the financial year, the Company paid a FY21 fully franked
final dividend of 1.0 cent per share as well as an interim FY22 fully
franked dividend of 1.0 cent per share. The Company will also pay
a FY22 fully franked final dividend of 1.0 cent per share from the
profit distribution reserve.
State of affairs
A review of operations of Beach Energy during the financial year on
pages 16 – 29 sets out a number of matters that have had a significant
effect on the state of affairs of the group. Other than those matters,
there were no significant changes in the state of affairs of the group
during the financial year.
A decline in the price of oil and gas may have a material adverse effect
on Beach’s financial performance. Historically, international crude oil
prices have been very volatile. A sustained period of low or declining
crude oil prices could adversely affect Beach’s operations, financial
position and ability to finance developments. Beach uses a structured
framework for capital allocation decisions. The process provides rigorous
value and risk assessment against a broad range of business metrics
and stringent hurdles to maximise return on capital. This process is a
significant development in Beach’s continuing focus on reducing capital
and operating expenditure and improving business efficiency.
Declines in the price of oil and continuing price volatility may also lead
to revisions of the medium and longer term price assumptions for oil
from future production, which, in turn, may lead to a revision of the
carrying value of some of Beach’s assets.
45
The valuation of oil and gas assets is affected by a number of
assumptions, including the quantity of reserves and resources booked
in relation to these oil and gas assets and their expected cash flows.
An extended or substantial decline in oil and/or gas prices or demand,
or an expectation of such a decline, may reduce the expected cash
flows and/or quantity of reserves and resources booked in relation to
the associated oil and gas assets, which may lead to a reduction in the
valuation of these assets. If the valuation of an oil and gas asset is below
its carrying value, a non-cash impairment adjustment to reduce the
historical book value of these assets will be made with a subsequent
reduction in the reported net profit in the same reporting period.
Foreign exchange and hedging risk
Beach’s financial report is presented in Australian dollars. Beach
converts funds to foreign currencies as its payment obligations in
those jurisdictions where the Australian dollar is not an accepted
currency become due. Certain of Beach’s costs will be incurred in
currencies other than Australian dollars, including the US dollar and
the New Zealand dollar. Accordingly, Beach is subject to fluctuations
in the rates of currency exchange between these currencies.
The Company may use derivative financial instruments such as foreign
exchange contracts, commodity contracts and interest rate swaps to
hedge certain risk exposures, including commodity price fluctuations
through the sale of petroleum productions and other oil-linked contracts.
Ability to access funding
The oil and gas business involves significant capital expenditure in
relation to exploration and development, production, processing and
transportation. Beach relies on cash flows from operating activities
and bank borrowings and offerings of debt or equity securities to
finance capital expenditure.
If cash flows decrease or Beach is unable to access necessary
financing, this may result in postponement of or reduction in planned
capital expenditure, relinquishment of rights in relation to assets, or
an inability to take advantage of opportunities or otherwise respond
to market conditions. Any of these outcomes could have a material
adverse effect on Beach’s ability to expand its business and/or maintain
operations at current levels, which in turn could have a material adverse
effect on Beach’s business, financial condition and operations.
Beach has a Board approved financial risk management policy covering
areas such as liquidity, debt management, interest rate risk, foreign
exchange risk, commodity risk and counterparty credit risk. The policy
sets out the organisational structure to support this policy. Beach has
a treasury function and clear delegations and reporting obligations.
The annual capital and operating budgeting processes approved by the
Board ensure appropriate allocation of resources.
A dispute, or a breakdown in the relationship, between Beach and its
JVPs, suppliers or customers, a failure to reach a suitable arrangement
with a particular JVP, supplier or customer, or the failure of a JVP,
supplier or customer to pay or otherwise satisfy its contractual
obligations (including as a result of insolvency, financial stress or the
impacts of COVID-19), could have an adverse effect on the reputation
and/or the financial performance of Beach.
Operational risks
Joint Venture Operations
Beach participates in a number of joint ventures for its business
activities. This is a common form of business arrangement designed
to share risk and other costs. Under certain joint venture operating
agreements, Beach may not control the approval of work programs
and budgets and a JVP may vote to participate in certain activities
without the approval of Beach. As a result, Beach may experience
a dilution of its interest or may not gain the benefit of the activity,
except at a significant cost penalty later in time.
Failure to reach agreement on exploration, development and
production activities may have a material impact on Beach’s business.
Failure of Beach’s JVPs to meet financial and other obligations may
have an adverse impact on Beach’s business.
Beach works closely with its JVPs to minimise joint venture misalignment.
Material change to reserves and resources
The estimated quantities of reserves and resources are based upon
interpretations of geological, geophysical and engineering models
and assessment of the technical feasibility and commercial viability
of producing the reserves. Estimates that are valid at a certain point in
time may alter significantly or become uncertain when new reservoir
information becomes available through additional drilling or technical
analysis over the life of the field. As reserves and resources estimates
change, development and production plans may be altered in a way
that may adversely affect Beach’s operations and financial results.
Beach prepares its reserves and resources estimates in accordance
with the 2018 update to the Petroleum Resources Management
System sponsored by the Society of Petroleum Engineers, World
Petroleum Council, American Association of Petroleum Geologists
and Society of Petroleum Evaluation Engineers (SPE-PRMS). The
estimates are subject to periodic independent review or audit.
Exploration and development
Success in oil and gas production is key and in the normal course of
business Beach depends on the following factors: successful exploration,
establishment of commercial oil and gas reserves, finding commercial
solutions for exploitation of reserves, ability to design and construct
efficient production, gathering and processing facilities, efficient
transportation and marketing of hydrocarbons and sound management
of operations. Oil and gas exploration is a speculative endeavour and the
nature of the business carries a degree of risk associated with failure to
find hydrocarbons in commercial quantities or at all.
Beach utilises well-established prospect evaluation and ranking
methodology to manage exploration and development risks.
Annual Report 2022Beach Energy Limited 46
Directors’ report
Production risks
Any oil or gas project, including off-shore activity, may be exposed to
production decrease or stoppage, which may be the result of facility
shut-downs, mechanical or technical failure, project delays, climatic
events and other unforeseeable events. A significant failure to maintain
production could result in Beach lowering production forecasts, loss of
revenue and additional operational costs to bring production back online.
There may be occasions where loss of production may incur significant
capital expenditure, resulting in the requirement for Beach to seek
additional funding, through equity or debt. Beach’s approach to
facility design, process safety and integrity management is critical
to mitigating production risks.
Beach and its JVPs may face disruptions as a result of the restrictions
on the movement and supply of personnel and products due to
external influences such as geopolitical unrest or conflict and the
COVID-19 pandemic. A significant failure to meet production and/
or project targets could compromise Beach’s production and sales
deliverability obligations, impact operating cash flows through loss
of revenue and/or from incurring additional costs needed to reinstate
production to required levels.
Cyber Risk
The integrity, availability and confidentiality of data within Beach’s
information and operational technology systems may be subject to
intentional or unintentional disruption (for example, from a cyber
security attack). Beach continues to invest in robust processes and
technology, supported by specialist cyber security skills to prevent,
detect, respond and recover from such attacks should one occur.
This risk has escalated as a result of the increased global cyber threat
across the economy, particularly with regard to ransomware. Beach
has invested in further measures that align with the Australian Signals
Directorate (ASD) Essential 8 Maturity Framework that include
application allow listing, system hardening and retiring of legacy
systems. In addition, we have expanded validation of existing controls
through regular penetration testing, phishing simulations and cyber
exercises. The board and its committee’s consider cyber risks on at
least a quarterly basis commensurate with the evolving nature of this
risk and the level of internal activity.
Social licence to operate risks
Regulatory risk
Changes in government policy (such as in relation to taxation,
environmental protection, competition and pricing regulation and
the methodologies permitted to be used in oil and gas exploration
and production activity such as produced water disposal) or
statutory changes may affect Beach’s business operations and its
financial position. A change in government regime may significantly
result in changes to fiscal, monetary, property rights and other
issues which may result in a material adverse impact on Beach’s
business and its operations.
Companies in the oil and gas industry may also be required to pay
direct and indirect taxes, royalties and other imposts in addition to
normal company taxes. Beach currently has operations or interests
in Australia and New Zealand. Accordingly its profitability may be
affected by changes in government taxation and royalty policies or in the
interpretation or application of such policies in each of these jurisdictions.
Beach monitors changes in relevant regulations and engages with
regulators and governments to ensure policy and law changes are
appropriately influenced and understood.
Permitting risk
All petroleum licences held by Beach are subject to the granting and
approval of relevant government bodies and ongoing compliance with
licence terms and conditions.
Tenure management processes and standard operating procedures
are utilised to minimise the risk of losing tenure.
Land access, cultural heritage and Native Title
Beach is required to obtain the consent of owners and occupiers of
land within its licence areas. Compensation may be required to be paid
to the owners and occupiers of land in order to carry out exploration
and development activities.
Beach operates in a number of areas within Australia that are or may
become subject to claims or applications for native title determinations
or other third party access. Native title claims have the potential to
introduce delays in the granting of petroleum and other licences and,
consequently, may have an effect on the timing and cost of exploration,
development and production.
Native or indigenous title and land rights may also apply or be
implemented in other jurisdictions in which Beach operates outside
of Australia, including New Zealand.
Beach’s standard operating procedures and stakeholder engagement
processes are used to manage land access, cultural heritage and
native title risks.
Health, safety and environmental risks
The business of exploration, development, production and
transportation of hydrocarbons involves a variety of risks which
may impact the health and safety of personnel, the community and
the environment.
Oil and gas production and transportation can be impacted by natural
disasters, operational error or other occurrences which can result in
hydrocarbon leaks or spills, equipment failure and loss of well control.
Potential failure to manage these risks could result in injury or loss of
life, damage or destruction of wells, production facilities, pipelines and
other property, damage to the environment, legal liability and damage
to Beach’s reputation.
Losses and liabilities arising from such events could significantly
reduce revenues or increase costs and have a material adverse effect
on the operations and/or financial conditions of Beach.
Beach employs an Operations Excellence Management System to
identify and manage risks in this area. Insurance policies, standard
operating procedures, contractor management processes and facility
design and integrity management systems, amongst other things, are
important elements of the system that supports mitigation of these risks.
47
Beach seeks to maintain appropriate policies of insurance consistent
with those customarily carried by organisations in the energy sector.
Any future increase in the cost of such insurance policies, or an inability
to fully renew or claim against insurance policies as a result of the current
economic environment and the impact of COVID-19 (for example, due
to a deterioration in an insurers ability to honour claims), could adversely
affect Beach’s business, financial position and operational results.
Beach’s ability to mitigate these risks and effectively respond to health and
safety incidents may be also impaired by restrictions on the movement of
products and personnel relating to the COVID-19 pandemic.
Pandemic risk
Large scale pandemic outbreak of a communicable disease such
as COVID-19 has the potential to affect personnel, production and
delivery of projects. The Company employs its crisis and emergency
management plans, health emergency plans and business continuity
plans to manage this risk including ongoing monitoring and response to
government directions and advice. This enables the Company to take
active steps to manage risks to the Company’s staff and stakeholders
and to mitigate risks to production and progress of growth projects.
Climate change
Beach is likely to be subject to increasing regulations and costs
associated with climate change and management of carbon emissions.
Strategic, regulatory and operational risks and opportunities associated
with climate change are incorporated into Company policy, strategy
and risk management processes and practices. The Company actively
monitors current and potential areas of climate change risk and takes
actions to prevent and/or mitigate any impacts on its objectives and
activities including setting of targets to reduce carbon emissions.
Reduction of waste and emissions is an integral part of delivery of
cost efficiencies and forms part of the Company’s routine operations.
Material Prejudice
As permitted by sections 299(3) and 299A(3) of the Corporations
Act 2001, Beach has omitted some information from the above
Operating and Financial Review in relation to the Company’s
business strategy, future prospects and likely developments in
operations and the expected results of those operations in future
financial years on the basis that such information, if disclosed,
would be likely to result in unreasonable prejudice (for example,
because the information is premature, commercially sensitive,
confidential or could give a third party a commercial advantage).
The omitted information typically relates to internal budgets,
forecasts and estimates, details of the business strategy, and
contractual pricing.
Environmental regulations and performance
statement
Beach participates in projects and production activities that are
subject to the relevant exploration and development licences
prescribed by government. These licences specify the environmental
regulations applicable to the exploration, construction and operations
of petroleum activities as appropriate. For licences operated by other
companies, this is achieved by monitoring the performance of these
companies against these regulations.
There have been no known significant breaches of the environmental
obligations of Beach’s operated contracts or licences during the
financial year.
Beach reports under the National Greenhouse and Energy Reporting
Act for its Australian operations and the Climate Change Response Act
2002 for its New Zealand operations.
Forward Looking Statements
Dividends paid or recommended
This report contains forward-looking statements, including statements
of current intention, opinion and predictions regarding the Company’s
present and future operations, possible future events and future financial
prospects. While these statements reflect expectations at the date of
this report, they are, by their nature, not certain and are susceptible
to change. Beach makes no representation, assurance or guarantee as to
the accuracy or likelihood of fulfilling of such forward looking statements
(whether expressed or implied), and except as required by applicable
law or the ASX Listing Rules, disclaims any obligation or undertaking to
publicly update such forward-looking statements.
Since the end of the financial year the directors have resolved
to pay a fully franked dividend of 1.0 cent per share on
30 September 2022. The record date for entitlement to this
dividend is 31 August 2022. The financial impact of this dividend,
amounting to $22.8 million has not been recognised in the Financial
Statements for the year ended 30 June 2022 and will be recognised
in subsequent Financial Statements.
The details in relation to dividends paid during the reporting period are set out below:
Dividend
FY21 Final
FY22 Interim
Record Date
31 August 2021
28 February 2022
Date of payment
30 September 2021
31 March 2022
Cents per share
Total Dividends
1.0
1.0
$22.8 million
$22.8 million
For Australian income tax purposes, all dividends were fully franked and were not sourced from foreign income.
Share options and rights
Beach does not have any options on issue at the end of financial year and has not issued any during FY22.
Share rights holders do not have any right to participate in any issue of shares or other interests in the Company or any other entity. There have
been no unissued shares or interests under option of any controlled entity within the Group during or since the reporting date. For details of
performance rights issued to executives as remuneration, refer to the Remuneration Report. During the financial year, the following movement
in share rights to acquire fully paid shares occurred:
Annual Report 2022Beach Energy Limited 48
Directors’ report
Executive Performance Rights
Throughout FY22, Beach issued the following Long Term Incentive (LTI) unlisted performance rights under the Executive Incentive Plan
(EIP): 87,203 on 30 September 2021; 2,112,784 on 31 December 2021; 958,735 on 31 March 2022; and 327,702 on 30 June 2022.
87,203 performance rights, which expire on 30 November 2025, are exercisable for nil consideration and are not exercisable before 1 December 2023.
3,399,221 performance rights, which expire on 30 November 2026, are exercisable for nil consideration and are not exercisable before
1 December 2024.
Rights
2017 LTI unlisted rights
Balance at
beginning
of financial
year
Issued
during the
financial
year
Vested/
exercised
during the
financial
year
Expired/
lapsed
during the
financial
year
Balance
at end of
financial
year
Issued 1 December 2017 and 9 April 2018
1,214,294
–
(1,214,294)
–
2018 LTI unlisted rights
Issued 14 December 2018 and 19 December 2019
1,642,447
2018 STI unlisted rights
Issued 19 December 2019
2019 LTI unlisted rights
Issued 19 December 2019 and 14 December 2021
2019 STI unlisted rights
Issued 25 November 2021
2020 LTI unlisted rights
275,109
1,224,112
213,665
–
–
–
–
Issued 14 December 2020, 31 May 2021 and 30 September 2021
2,312,232
87,203
2021 LTI unlisted rights
Issued 31 December 2021, 31 March 2022 and 30 June 2022
–
3,399,221
–
–
–
–
(1,642,447)
(275,109)
–
–
(419,890)
804,222
(111,504)
(28,997)
73,164
–
–
(782,465)
1,616,970
(263,811)
3,135,410
Total
6,881,859 3,486,424 (1,600,907)
(3,137,610) 5,629,766
Employee share plan
An employee share plan (Plan) was approved by shareholders in November 2019. Under the terms of the Plan, employees who buy shares under
the Plan will have those shares matched by Beach, provided any relevant conditions determined by the Board are satisfied. Eligible Employees are
employees of the Group, other than a non-executive director and any other person determined by the Board as ineligible to participate in the Plan.
The Board has the discretion to set an annual limit on the value of shares that participants may purchase under the Plan, not exceeding $5,000.
Purchased Shares have been acquired periodically at the prevailing market price. Participants pay for their Purchased Shares using their own funds
which may include salary sacrifice. To receive Matched Shares, a participant must satisfy the conditions determined by the Board at the time of
the invitation. Full terms can be found in the Notice of 2018 Annual General Meeting released on 19 October 2018.
Rights
FY20 employee share plan (1)
Issued up to 30 June 2020
FY21 employee share plan (2)
Issued up to 30 June 2021
FY22 employee share plan (3)
Issued up to 30 June 2022
Total
(1) 3–year restriction period end on the first practicable date after 30 June 2022.
(2) 3–year restriction period end on the first practicable date after 30 June 2023.
(3) 3–year restriction period end on the first practicable date after 30 June 2024.
Balance at
beginning
of financial
year
Issued
during the
financial
year
Vested
during the
financial
year
Expired/
lapsed
during the
financial
year
Balance
at end of
financial
year
502,503
799,977
–
–
–
709,379
1,302,480
709,379
–
–
–
–
(68,617)
433,886
(101,390)
698,587
(38,465)
670,914
(208,472)
1,803,387
49
Information on Directors
The names of the directors of Beach who held office during the financial year and at the date of this report are:
Glenn Stuart Davis
Independent non-executive Chairman – LLB, BEc, FAICD
Experience and expertise
Mr Davis has practiced as a solicitor in corporate and risk throughout
Australia for over 30 years initially in a national firm and then a firm
he founded. He has expertise and experience in the execution of large
transactions, risk management and in corporate activity regulated by
the Corporations Act (2001) and ASX Limited. Mr Davis has worked in
the oil and gas industry as an advisor and director for over 25 years.
Current and former listed company directorships
in the last 3 years
Mr Davis is currently a director of ASX listed company iTech Minerals
Ltd (ITM) (since 2021).
Responsibilities
His special responsibilities include Chairmanship of the Board and
membership of the Remuneration and Nomination Committee.
Date of appointment
Mr Davis joined Beach on 6 July 2007 as a non-executive director.
He was appointed non-executive Deputy Chairman in June 2009 and
Chairman in November 2012. He was last re-elected to the Board on
25 November 2020.
Colin David Beckett, AO
Independent non-executive Deputy Chairman – FIEA,
MICE, GAICD
Experience and expertise
Mr Beckett is an experienced non-executive director and previously
held senior executive positions in Australia with Chevron, Mobil,
and BP. His experience in engineering design, project management,
commercial negotiations and gas marketing provides him with a
diverse and complementary set of skills relevant to the oil and gas
industry. Mr Beckett read engineering at Cambridge University and
has a Master of Arts. He was awarded an honorary doctorate from
Curtin University in 2019. He was previously a fellow of the Australian
Institute of Engineers. He is a graduate member of the Institute of
Company Directors. He is currently Chair of Western Power. He
was the Chancellor of Curtin University until end 2018. He is a past
Chairman of Perth Airport Pty Ltd and past Chairman of the Australian
Petroleum Producers and Explorers Association (APPEA).
Current and former listed company directorships
in the last 3 years
Nil.
Responsibilities
His special responsibilities include Chairmanship of the Remuneration
and Nomination Committee.
Date of appointment
Mr Beckett was appointed to the Board on 2 April 2015 and last
re-elected to the Board on 26 November 2019.
Philip James Bainbridge
Independent non-executive director – BSc (Hons)
Mechanical Engineering, MAICD
Experience and expertise
Mr Bainbridge has extensive industry experience having worked for the
BP Group for 23 years in a range of petroleum engineering, development,
commercial and senior management roles in the UK, Australia and USA.
From 2006, he has worked at Oil Search, initially as Chief Operating
Officer, then Executive General Manager LNG, responsible for all aspects
of Oil Search’s interests in the $19 billion PNG LNG project, then EGM
Growth responsible for gas growth and exploration.
He is currently the non-executive chairman of the Global Institute
of Carbon Capture and Storage and was formally a non-executive
chairman of Sino Gas and Energy until 2018.
Current and former listed company directorships
in the last 3 years
Mr Bainbridge is currently a non-executive director of Newcrest
Mining Ltd (since April 2021).
Responsibilities
His special responsibilities include membership of the Audit Committee
and the Risk, Corporate Governance and Sustainability Committee.
Date of appointment
Mr Bainbridge was appointed to the Board on 1 March 2016 and was
last re-elected to the Board on 26 November 2019.
Sally-Anne Layman
Independent non-executive director – BEng (Mining) Hons,
BCom, CPA, MAICD
Experience and expertise
Ms Layman is a company director with diverse international experience
in the resources sector and financial markets. Previously, Ms Layman
held a range of senior positions with Macquarie Group Limited, including
as Division Director and Joint Head of the Perth office of the Metals,
Mining & Agriculture Division. Prior to moving into finance, Ms Layman
undertook various roles with resource companies including Mount Isa
Mines, Great Central Mines and Normandy Yandal. Ms Layman holds
a WA First Class Mine Manager’s Certificate of Competency, a Bachelor
of Engineering (Mining) Hons from Curtin University and a Bachelor of
Commerce from the University of Southern Queensland. Ms Layman is
a Certified Practising Accountant and is a member of CPA Australia Ltd
and the Australian Institute of Company Directors.
Current and former listed company directorships
in the last 3 years
Ms Layman is on the board of Newcrest Mining Ltd (since September
2020), Imdex Ltd (since February 2017) and Pilbara Minerals Ltd
(since April 2018) and was previously on the board of Perseus Mining
Ltd (from September 2017 until October 2020).
Responsibilities
Her special responsibilities include Chair of the Audit Committee.
Date of appointment
Ms Layman was appointed to the Board on 25 February 2019 and
elected to the Board on 26 November 2019.
Annual Report 2022Beach Energy Limited 50
Directors’ report
Peter Stanley Moore
Independent non-executive director – PhD, BSc (Hons),
MBA, GAICD
Experience and expertise
Dr Moore has over forty one years of oil and gas industry experience.
His career commenced at the Geological Survey of Western Australia,
with subsequent appointments at Delhi Petroleum Pty Ltd, Esso
Australia, ExxonMobil and Woodside. Dr Moore joined Woodside
as Geological Manager in 1998 and progressed through the roles of
Head of Evaluation, Exploration Manager Gulf of Mexico, Manager
Geoscience Technology Organisation and Vice President Exploration
Australia. From 2009 to 2013, Dr Moore led Woodside’s global
exploration efforts as Executive Vice President Exploration. In this
capacity, he was a member of Woodside’s Executive Committee
and Opportunities Management Committee, a leader of its Crisis
Management Team, Head of the Geoscience function and a director
of ten subsidiary companies. From 2014 to 2018, Dr Moore was a
Professor and Executive Director of Strategic Engagement at Curtin
University’s Business School. He has his own consulting company,
Norris Strategic Investments Pty Ltd.
Current and former listed company directorships
in the last 3 years
Dr Moore is currently a non-executive director of Carnarvon Petroleum
Ltd (since 2015).
Responsibilities
His special responsibilities include Chairmanship of the Risk, Corporate
Governance and Sustainability Committee and membership of the
Remuneration and Nomination Committee.
Date of appointment
Dr Moore was appointed by the Board on 1 July 2017 and then elected
to the Board on 26 November 2019.
Richard Joseph Richards
Non-executive director – BComs/Law (Hons), LLM,
MAppFin, CA, Admitted Solicitor
Experience and expertise
Mr Richard Richards has been Chief Financial Officer of Seven Group
Holdings Limited (SGH) since October 2013. He is a director of SGH
Energy and is a director and Chair of the Audit and Risk Committee
of WesTrac Pty Limited and Coates Hire Pty Limited. He is a director
of Boral Limited and is a member of their Audit and Risk and Safety
Committees and he is also a director of Flagship Property Holdings.
Mr Richards joined SGH from the diverse industrial group, Downer
EDI, where he was Deputy Chief Financial Officer responsible for
group finance across the company for three years. Prior to joining
Downer EDI, Mr Richards was CFO for the Family Operations of LFG,
the private investment and philanthropic vehicle of the Lowy Family
for two years. Prior to that, Richard held senior finance roles at Qantas
for over 10 years.
Mr Richards is a former director and the Chair of Audit and Risk
Management Committee of KU – established in 1895 as the
Kindergarten Union of New South Wales, KU is one of the most
respected childcare providers in Australia. He was also a member of
the Marcia Burgess Foundation Committee.
Current and former listed company directorships
in the last 3 years
Boral Limited during October 2021 and was reappointed during
August 2022.
Responsibilities
His special responsibilities include membership of the Audit Committee
and a member of the Remuneration and Nomination Committee.
Date of appointment
Mr Richards was appointed to the Board on 4 February 2017 and was
last re-elected to the board on 25 November 2021.
Margaret Helen Hall
Non-executive director – BEng (Met) Hons, MIEAust,
GAICD, SPE
Experience and expertise
Ms Hall is the chief executive officer of Seven Group Holdings Energy,
a subsidiary of Seven Group Holdings Limited. Ms Hall has over 31
years of experience in the oil and gas industry having worked at both
super-major and independent companies. From 2011 to 2014 Ms Hall
held senior management roles in Nexus Energy with responsibilities
covering Development, Production Operations, Engineering,
Exploration, Health, Safety and Environment. This was preceded by 19
years with ExxonMobil in Australia, across production and development
in the Victorian Gippsland Basin and joint ventures across Australia.
Current and former listed company directorships
in the last 3 years
Nil.
Responsibilities
Her special responsibilities include membership of the Risk, Corporate
Governance and Sustainability Committee.
Date of appointment
Ms Hall was appointed to the Board on 10 November 2021.
Robert Jager, ONZM
Independent Non-executive Director – BE Mechanical
Engineering (Hons), MBA (distinction), MAICD,
CMinstD, FENZ
Experience and expertise
Mr Jager has extensive executive, industry and board experience
following a career of more than 40 years with Shell in a variety of
executive roles, most recently as Vice President Prelude in Perth. Prior
to that, Mr Jager served as Vice President and Country Chair for Shell’s
New Zealand business. Mr Jager has most recently been an independent
non-executive director of Air New Zealand, serving for nearly nine years,
including as chair of the Board Health, Safety and Security Committee.
In 2018, Mr Jager was awarded an Officer of New Zealand Order of
Merit (ONZM) for his services to business and health and safety.
During his career Mr Jager chaired the Petroleum Exploration and
Production Association of NZ as well as the Business Leaders Health
and Safety Forum.
Current and former listed company directorships in the last
3 years
Mr Jager was formerly a director of Air New Zealand Limited until
October 2021.
Responsibilities
His special responsibilities include membership of the Risk, Corporate
Governance & Sustainability Committee.
Date of appointment
Mr Jager was appointed to the Board on 14 December 2021.
51
Responsibilities
Managing Director & Chief Executive Officer until 2 November 2021.
Date of appointment/resignation
Mr Kay was appointed managing director of Beach Energy Limited
on 25 February 2019 and elected to the Board on 26 November 2019.
Mr Kay resigned as a director on 2 November 2021.
Joycelyn Cheryl Morton
Independent non-executive director – BEc, FCA, FCPA, FIPA,
FCIS, FAICD
Experience and expertise
Ms Morton has extensive experience in finance and taxation having
begun her career with Coopers & Lybrand (now PwC), followed
by senior management roles with Woolworths Limited and global
leadership roles in Australia and internationally within the Shell Group
of companies.
Ms Morton was National President of both CPA Australia and
Professions Australia, has served on many committees and councils
in the private, government and not-for-profit sectors and held
international advisory positions. She holds a Bachelor of Economics
degree from the University of Sydney. She is also a non-executive
director of ASC Pty Ltd (since 2017 to 30 June 2022) and Snowy
Hydro Limited (since 2012).
In addition, Ms Morton has valuable board experience across a range
of industries, including previous roles as a non-executive director
and Chair of both Thorn Group Limited (from 2011 to 2018) and Noni
B Limited (from May 2009 to February 2015) and a non-executive
director of Crane Group Limited (from October 2010 to April 2011),
Count Financial Limited (from 2006 to 2011) and InvoCare Limited
(from August 2015 to May 2018).
Current and former listed company directorships
in the last 3 years
Ms Morton is currently a non-executive director of Argo Investments
Limited (since 2012), Argo Global Listed Infrastructure Limited
(since March 2015) and Felix Group Holdings (since July 2022).
She previously was non-executive director of Snowy Hydro (until
June 2022) and non-executive director and Chair of Thorn Group
Limited (from 2011 to 2018) and non-executive director of InvoCare
Limited (from 2015 to 2018).
Responsibilities
Her special responsibilities included membership of the Audit
Committee.
Date of appointment/resignation
Ms Morton was appointed a non-executive director of Beach Energy
Limited on 21 February 2018 and then elected to the Board on
23 November 2018. She retired on 10 November 2021.
Ryan Kerry Stokes, AO – alternate director
Non-executive director – BComm, FAIM
Alternate for Margaret Hall
Experience and expertise
Mr Stokes is the Managing Director and Chief Executive Officer
of Seven Group Holdings Limited (SGH). SGH is a listed diverse
investment company involved in Industrial Services, Media and Energy.
SGH interests include 30.02% of Beach Energy, WesTrac Pty Limited,
Coates Hire, 69.9% of Boral Limited (as at 30 July 2022) and 41% of
Seven West Media Limited. Mr Stokes is Chairman of Boral Limited,
Chairman of Coates Hire, and a director of WesTrac Pty Limited and
Seven West Media.
Mr Stokes is Chief Executive Officer of Australian Capital Equity Pty
Limited (ACE). ACE is a private company with its primary investment
being an interest in SGH. Mr Stokes is Chairman of the National
Gallery of Australia and is an Officer of the Order of Australia. He is
also a member of the International Olympic Committee Education
Commission. His previous roles include Chairman of the National
Library of Australia, member of the Prime Ministerial Advisory
Council on Veterans’ Mental Health, Founding Chair Headspace,
Youth Mental Health Foundation.
Current and former listed company directorships
in the last 3 years
Mr Stokes is an executive director of Seven Group Holdings (since
2010) and a non-executive director of Seven West Media (since 2012)
and a director and Chairman of Boral Limited (since Sep 2020).
Date of appointment
Mr Stokes was appointed a Director in July 2016 and ceased to be a
Director in November 2021. Mr Stokes was appointed an alternate
Director for Margaret Hall on 1 December 2021.
The details of the directors of Beach who held office during the
financial year and are no longer on the Board are:
Matthew Vincent Kay
Managing director & Chief executive officer – BEc, MBA,
FCPA, GAICD
Experience and expertise
Mr Kay joined Beach in May 2016 as Chief Executive Officer. Mr Kay
has circa 30 years’ experience in energy and resources and prior
to joining Beach, served as Executive General Manager, Strategy
and Commercial at Oil Search, a position he held for two years.
In that role he was a member of the executive team and led the
strategy, commercial, supply chain, economics, marketing, M&A and
legal functions.
Prior to Oil Search, Mr Kay spent 12 years with Woodside Energy
in various leadership roles, including Vice President of Corporate
Development, General Manager of Production Planning leading over
80 operations professionals, and General Manager of Commercial
for Middle East and Africa. In these roles Mr Kay developed extensive
leadership skills across LNG, pipeline gas and oil joint ventures, and
developments in Australia and internationally.
Current and former listed company directorships
in the last 3 years
Nil.
Annual Report 2022Beach Energy Limited 52
Directors’ report
Directors’ meetings
The number of Directors’ meetings and meetings of Committees of Directors held during the financial year and the number of meetings attended
by each of the directors is set out below:
Directors’ Meetings
Audit Committee
Meetings
Remuneration and
Nomination Committee
Meetings
Risk, Corporate
Governance and
Sustainability Committee
Meetings
Held (1)
Attended
Held (1)
Attended
Held (1)
Attended
Held (1)
Attended
15
15
15
8
15
15
8
15
8
6
8
15
14
15
8
15
15
8
15
8(2)
6
7(3)
–
–
4
–
6
–
3
6
–
–
–
–
–
4
–
6
–
3
6
–
–
–
6
6
–
–
–
6
–
2
–
–
3
6
6
–
–
–
6
–
2
–
–
3
–
6
7
–
–
7
–
6
1
1
–
–
6
7
–
–
7
–
6
1
1
–
Name
G S Davis
C D Beckett
P J Bainbridge
M V Kay
S G Layman
P S Moore
J C Morton
R J Richards
M H Hall
R Jager
R K Stokes
(1) Number of Meetings held during the time that the director was appointed to the Board or committee.
(2) Ms Hall attended one meeting during the year in her capacity as an alternate director. All other meetings attended relate to the period from 10 November 2021
whilst Ms Hall was a director.
(3) Mr Stokes was not required to attend any meetings for Ms Hall as an alternate director. All meetings attended relate to the period prior to 10 November 2021,
whilst Mr Stokes was a director.
Board Committees
Chairmanship and current membership of each of the board committees at the date of this report are as follows:
Committee
Audit
Remuneration and Nomination
Risk, Corporate Governance & Sustainability
Chairman
S G Layman
C D Beckett
P S Moore
(1) Mr Bainbridge was appointed a committee member on 29 October 2021.
(2) Mr Richards commenced as a committee member on 24 March 2022.
(3) Ms Hall and Mr Jager commenced as committee members on 24 March 2022.
Indemnity of Directors and Officers
Members
P J Bainbridge (1), R J Richards
G S Davis, P S Moore, R J Richards (2)
P J Bainbridge, M Hall (3), R Jager (3)
Beach has arranged directors’ and officers’ liability insurance policies that cover all the directors and officers of Beach and its controlled entities.
The terms of the policies prohibit disclosure of details of the amount of the insurance cover, the nature thereof and the premium paid.
53
Company Secretary
Proceedings on behalf of Beach
Daniel Murnane
Company Secretary – BA/LLB
Mr Murnane joined Beach in May 2018 as Senior Legal Counsel and
was appointed to Company Secretary on 2 March 2021. He has more
than 16 years’ experience, including over 12 years advising resources
companies. Mr Murnane has worked as a senior associate in private
legal practice predominately for energy companies on mergers and
acquisitions, major projects, capital raisings and commercial disputes.
In addition, Mr Murnane has held various in-house roles spanning legal
and corporate governance environments, including with a NYSE listed
oil and gas company.
Mr Murnane is qualified as a solicitor in New South Wales and Papua
New Guinea and holds a Bachelor of Arts and a Bachelor of Laws.
Non-audit services
Beach may decide to employ the external auditor on assignments
additional to their statutory audit duties where the auditor’s expertise
and experience with Beach are important.
The Board has considered the position and is satisfied that the
provision of the non-audit services is compatible with the general
standard of independence for auditors imposed by the Corporations
Act 2001. The directors are satisfied that the provision of non-audit
services by the auditor as set out below, did not compromise the
audit independence requirement of the Corporations Act 2001 for
the following reasons:
– All non-audit services have been reviewed by the Audit Committee
to ensure they do not impact the impartiality and objectivity of
the auditor.
– None of the services undermine the general principle relating to
auditor independence as set out in APES 110 Code – Code of Ethics
for Professional Accountants, including reviewing or auditing the
auditor’s own work, acting in a management or a decision making
capacity for Beach, acting as advocate for Beach or jointly sharing
economic risk and reward.
Details of the amounts paid or payable to the external auditors, Ernst
& Young, for audit and non-audit services provided during the year are
set out at Note 28 to the financial statements.
Rounding off of amounts
Beach is an entity to which ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191 issued by the Australian
Securities and Investments Commission applies relating to the
rounding off of amounts. Accordingly, amounts in the directors’
report and the financial statements have been rounded to the nearest
hundred thousand dollars, unless shown otherwise.
No person has applied to the Court under Section 237 of the
Corporations Act 2001 for leave to bring proceedings on behalf of Beach,
or to intervene in any proceedings to which Beach is a party, for the
purpose of taking responsibility on behalf of Beach for all or part of
those proceedings.
No proceedings have been brought or intervened in on behalf of Beach
with leave of the Court under Section 237 of the Corporations Act 2001.
Matters arising subsequent to the end of
the financial year
On 8 August 2022, Beach announced the finalisation and signing
of the LNG Sale and Purchase Agreement (SPA) with BP Singapore Pte.
Limited, a subsidiary of BP plc (bp). The LNG SPA will see bp purchase
all 3.75 million tonnes of Beach’s expected LNG volumes from the
Waitsia Stage 2 project. Supply is targeted to commence in the second
half of 2023 and will continue for approximately five years. Terms
include flexibility around the commencement of supply, ensuring
alignment with Waitsia Stage 2 construction and commissioning
activities. The LNG SPA contains a hybrid pricing structure linked to
both Brent and Japan Korea Marker (JKM) indices. Pricing parameters
agreed support Beach’s exposure to the current commodity cycle
prices and do not restrict upside price participation. The SPA also
includes a downside price protection mechanism.
Other than the matter described above there has not arisen in the
interval between 30 June 2022 and up to the date of this report,
any item, transaction or event of a material and unusual nature likely,
in the opinion of the directors, to affect substantially the operations
of the Group, the results of those operations or the state of affairs of
the Group in subsequent financial years, unless otherwise noted in
the financial report.
Audit independence declaration
Section 307C of the Corporations Act 2001 requires our auditors, Ernst
& Young, to provide the directors of Beach with an Independence
Declaration in relation to the audit of the full year financial statements.
This Independence Declaration is made on the following page and
forms part of this Directors’ Report.
This Directors’ Report is signed in accordance with a resolution of
directors made pursuant to section 298(2) of the Corporations Act 2001.
On behalf of the directors
G S Davis
Chairman
Adelaide, 15 August 2022
Annual Report 2022Beach Energy Limited 54
Auditor’s Independence
Declaration
Ernst & Young
121 King William Street
Adelaide SA 5000 Australia
GPO Box 1271 Adelaide SA 5001
Tel: +61 8 8417 1600
Fax: +61 8 8417 1775
ey.com/au
Auditor’s independence declaration to the directors of Beach Energy
Limited
As lead auditor for the audit of the financial report of Beach Energy Limited for the financial year
ended 30 June 2022, I declare to the best of my knowledge and belief, there have been:
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit.
This declaration is in respect of Beach Energy Limited and the entities it controlled during the financial
year.
Ernst & Young
Anthony Jones
Partner
15 August 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
2022 Remuneration in Brief
(Unaudited)
55
Remuneration to executive key management personnel in FY22
Consistent with FY22 remuneration outcomes, Board and management have sought to ensure FY22 remuneration takes into account broader
economic conditions which have impacted Beach and acknowledging key outcomes achieved throughout the year.
A summary of the audited cost to the Company of executive key management personnel (KMP) remuneration is provided in Table 8.
FY22 remuneration outcomes at a glance
Fixed Remuneration
NO CHANGE
Short Term Incentive (STI)
STI AWARDED
Long Term Incentive (LTI)
LTI LAPSED
2021 AGM Remuneration Report
95.28% ‘YES VOTE’
No fixed remuneration increases for non-executive directors or senior executives,
including KMP.
Acting KMP received increases in their base TFR commensurate with higher duties.
The Board awarded an STI to senior executives.
The level of at-risk participation in the STI for senior executives increased from 45%
to 65% to further correlate company outcomes with remuneration.
The 2018 and 2019 STI performance rights converted automatically to shares on the
retention condition being met on 1 July 2021.
The 2018 LTI performance rights lapsed as the performance conditions were not
met on 30 November 2021.
Beach received more than 95% of ‘yes’ votes on a poll to adopt its Remuneration
Report for the 2021 financial year. No specific feedback on Beach’s remuneration
practices was received at the 2021 annual general meeting.
Disclosures required in the remuneration report by the Corporations Act, particularly the inclusion of accounting values for LTI performance rights
awarded but not vested, can vary significantly from the remuneration actually paid to senior executives. This is because the Accounting Standards
require a value to be placed on a right at the time it is granted to a senior executive and then reported as remuneration even if ultimately the senior
executive does not receive any actual value, for example because performance conditions are not met and the rights do not vest.
Annual Report 2022Beach Energy Limited 56
2022 Remuneration in Brief
(Unaudited)
The following table is a summary of remuneration actually paid or payable to executive KMP for FY22. It is not audited.
Table 1: Remuneration to executive key management personnel (non-IFRS and unaudited)
Name
M Engelbrecht (2)
Chief Executive Officer
I Grant
Chief Operating Officer
AM Barbaro (3)
Acting Chief Financial Officer
S Algar
Group Executive Exploration & Subsurface
T Nador
Group Executive Development
P Hogarth (3)
Acting Group Executive Corporate Strategy & Commercial
Former KMP
M V Kay (4)
Former Managing Director and Chief Executive Officer
L Marshall (5)
Former Group Executive Corporate Strategy & Commercial
Total
Total Fixed Remuneration
Salary
$
Super
$
STI cash
bonus (6)
$
1,014,257
27,500
276,937
629,500
27,500
88,079
221,648
15,062
29,893
Other (1)
$
–
–
–
Total Cash
$
1,318,694
745,079
266,603
629,500
27,500
90,748
54,750
802,498
470,500
27,500
–
97,274
–
12,972
–
–
498,000
110,246
412,833
27,500
132,236
862,712
1,435,281
357,104
27,500
–
52,485
437,089
3,832,616
180,062
630,865
969,947
5,613,490
(1) Other remuneration includes the payment of accrued employee entitlements, payment of salary during notice periods where no work is being performed
but the employee remains employed and allowances paid under the terms and conditions of employment such as relocation and retention allowances.
(2) Mr Engelbrecht, previously Chief Financial Officer, was appointed Acting Chief Executive Officer on 2 November 2021 and subsequently appointed as
Chief Executive Officer on 19 May 2022.
(3) Ms Barbaro and Mr Hogarth both became KMP with effect from 15 November 2021 and 11 April 2022 respectively with their remuneration only shown for the
period from their appointment until 30 June 2022.
(4) Mr Kay ceased to be KMP on 2 November 2021 although continued to be employed with no decision making rights during his 6 month notice period until 2 May 2022.
(5) Mr Marshall ceased to be KMP on 10 April 2022 although continued to be employed during the remainder of his notice period with no decision making rights
until 13 May 2022.
(6) This amount represents the cash portion of the STI for FY22, which is expected to be paid in October 2022.
Remuneration Report (Audited)
57
This report has been prepared in accordance with section 300A of the Corporations Act 2001 (Cth) (Corporations Act) for the consolidated
entity for the financial year ended 30 June 2022. It has been audited as required by section 308(3C) of the Corporations Act and forms part of the
Directors’ Report.
Key management personnel
The Company’s KMP are listed in Table 2. They are the Company’s non-executive directors (NED) and executive KMP who have authority and
responsibility for planning, directing and controlling the activities of the Company, directly or indirectly.
Table 2: Key management personnel during FY22
Name
Executive KMP
M Engelbrecht
I Grant
AM Barbaro
S Algar
T Nador
P Hogarth
Non-executive Directors
G S Davis
P J Bainbridge
C D Beckett
S G Layman
P S Moore
J C Morton
R J Richards
R K Stokes
M H Hall
R Jager
Former KMP
M V Kay
L Marshall
Position
Period as KMP during the year
Chief Executive Officer (CEO)/Acting Chief Executive
Officer (CEO), Chief Financial Officer (1)
Chief Operating Officer
Chief Financial Officer (2)
Group Executive Exploration and Subsurface
Group Executive Development
Acting Group Executive Corporate Strategy and
Commercial
All of FY22 (2 November 2021 – 30 June 2022
and 1 July 2021 – 1 November 2021 respectively)
All of FY22
15 November 2021 – 30 June 2022
All of FY22
All of FY22
11 April 2022 – 30 June 2022
Independent Chairman
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director/Alternate Director
Alternate Director/Non-executive Director
Non-executive Director
All of FY22
All of FY22
All of FY22
All of FY22
All of FY22
1 July 2021 – 10 November 2021
All of FY22
1 July 2021 – 10 November 2021 and
1 December 2021 – 30 June 2022 respectively
All of FY22
14 December 2021 – 30 June 2022
Former Managing Director & Chief Executive Officer
Former Group Executive Corporate Strategy and
Commercial
1 July 2021 – 2 November 2021
1 July 2021 – 10 April 2022
(1) Mr Engelbrecht was Acting Chief Executive Officer during the period from 2 November 2021 until 30 June 2022. Previously, Mr Engelbrecht was Chief Financial
Officer during the period from 1 July 2021 to 1 November 2021. He has since been appointed CEO.
(2) Ms Barbaro was Acting Chief Financial Officer from 15 November 2021 until year end. She has since been appointed CFO.
Annual Report 2022Beach Energy Limited 58
Remuneration Report (Audited)
Beach’s remuneration policy framework
Beach’s vision is to be Australia’s premier multi-basin upstream oil and gas company.
Beach’s remuneration framework seeks to focus executives on delivering that purpose:
– Fixed remuneration aligns to market practice and prevailing economic conditions. It seeks to attract, motivate and retain executives
focused on delivering Beach’s purpose.
– ‘At risk’ performance-based incentives link to shorter- and longer-term Company goals. The goals contribute to the achievement of
Beach’s purpose.
– Longer term ‘at risk’ incentives align with shareholder objectives and interests. Beach benchmarks shareholder returns against peers
considered to be alternative investments to Beach. Beach offers share based rather than all cash rewards to executives.
– Beach may recover remuneration benefits paid if there has been fraud or dishonesty.
– The Corporations Act and Beach’s Share Trading Policy prohibit hedging. Hedging is where a person enters a transaction to reduce the risk of
an ‘at risk’ incentive. Beach has a process to track compliance with its no hedging policy. Beach’s Share Trading Policy is available at Beach’s
website: www.beachenergy.com.au.
How Beach makes decisions about remuneration
The Board decides Beach’s KMP remuneration. It decides that remuneration based on recommendations by its Remuneration and Nomination
Committee. The Committee’s members are all non-executive directors. Its charter is available at Beach’s website: www.beachenergy.com.au.
Beach’s CEO may attend Committee meetings by invitation in an advisory capacity. Other executives may also attend by invitation. The
Committee excludes executives from any discussion about their own remuneration.
External advisers and remuneration advice
Beach follows a protocol to engage an adviser to make a remuneration recommendation. The protocol ensures the recommendation is free from
undue influence by management. The Board or Committee chair engages the adviser. The Board or Committee chair deals with the adviser on all
material matters. Management involvement is only to the extent necessary to coordinate the work.
The Board and Committee seek recommendations from the CEO about executive remuneration. The CEO does not make any recommendation
about his own remuneration.
The Board and Committee have regard to industry benchmarking information.
How Beach links performance to incentives
Beach’s remuneration policy includes short term and long-term incentive plans. The plans seek to align management performance with
shareholder interests.
The LTI links to an increase in total shareholder return over an extended period.
The STI has equal proportions of cash and performance rights. Performance rights may convert to Beach shares.
The following table shows some key shareholder wealth indicators.
KPI and STI awards for FY21 and FY22 are detailed in Table 8.
Table 3: Shareholder wealth indicators FY18 – FY22
Total revenue
Net profit/(loss) after tax
Underlying net profit after tax
Share price at year-end
Dividends declared
Reserves
Production
FY18
FY19
FY20
FY21
FY22
$1,267.4m
$198.8m
$301.5m
175.5 cents
2.00 cents
313 MMboe
19.0 MMboe
$2,077.7m
$577.3m
$560.2m
198.5 cents
2.00 cents
326 MMboe
29.4 MMboe
$1,728.2m
$499.1m
$459.3m
152.0 cents
2.00 cents
352 MMboe
26.7 MMboe
$1,562.0m
$316.5m
$363.0m
124.0 cents
2.00 cents
339 MMboe
25.6 MMboe
$1,771.4m
$500.8m
$504.3m
172.5 cents
2.00 cents
283 MMboe
21.8 MMboe
59
Senior executive remuneration structure
This section details the remuneration structure for senior executives.
Remuneration mix
Remuneration for senior executives is a mix of a fixed cash salary component and an ‘at risk’ component. The ‘at risk’ component means that
specific targets or conditions must be met before a senior executive becomes entitled to it.
What is the balance between fixed and ‘at risk’ remuneration?
The remuneration structure and packages offered to senior executives for the period were:
– Fixed remuneration.
– ‘At risk’ remuneration comprising:
Short term incentive (STI) – an annual cash and equity-based incentive, which may be offered at the discretion of the Board, linked to Company
and individual performance over a year.
Long term incentive (LTI) – equity grants, which may be granted annually at the discretion of the Board, linked to performance conditions
measured over three years.
The balance between fixed and ‘at risk’ remuneration depends on the senior executive’s role. The CEO has the highest level of ‘at risk’
remuneration reflecting the greater level of responsibility of this role.
Table 4 sets out the relative proportions of the three elements of the executives KMP’s total remuneration packages for FY21 and FY22.
Table 4: Remuneration mix (1)
Position
CEO (2)
2022
2021
Other Executive KMP
2022
2021
Performance based
Remuneration
STI
%
33
33
30
23
LTI
%
33
33
23
26
Total
‘at risk’
%
66
66
53
49
Fixed
Remuner-
ation
%
34
34
47
51
(1) The remuneration mix assumes maximum ‘at risk’ awards. Percentages shown later in this report reflect the actual incentives paid as a percentage of total fixed
remuneration, movements in leave balances and other benefits and share based payments calculated using the relevant accounting standards.
(2) A reference to the CEO also includes a CEO who was also an MD.
Fixed remuneration
What is fixed remuneration?
Senior executives are entitled to a fixed cash remuneration amount inclusive of the guaranteed superannuation
contribution. The amount is not based upon performance. Senior executives may decide to salary sacrifice part
of their fixed remuneration for additional superannuation contributions and other benefits.
How is fixed remuneration
reviewed?
Fixed remuneration is determined by the Board based on independent external review or advice that takes account
of the role and responsibility of each senior executive. It is reviewed annually against industry benchmarking
information including the National Rewards Group Incorporated remuneration survey.
Fixed remuneration for
the year
Total fixed remuneration (TFR) of KMP are provided in Table 1 and Table 8. Table 8 reports on the remuneration
for KMP as required under the Corporations Act. Table 1 shows the actual realised cash remuneration that
KMP received.
Annual Report 2022Beach Energy Limited 60
Remuneration Report (Audited)
Short Term Incentive (STI)
What is the STI?
How does the STI
link to Beach’s
objectives?
The STI is part of ‘at risk’ remuneration offered to senior executives. It measures individual and Company performance
over a 12-month period. The period coincides with Beach’s financial year. It provides equal parts of cash and equity that
may vest subject to extra retention conditions. It is offered to senior executives at the discretion of the Board.
The STI is an at risk opportunity for senior executives. It rewards senior executives for meeting or exceeding key
performance indicators. The key performance indicators link to Beach’s key purpose. The STI aims to motivate senior
executives to meet Company expectations for success. Beach can only achieve its purpose if it attracts and retains high
performing senior executives. An award made under the STI has a retention component. Half is paid in cash and half is
issued as performance rights with service conditions attached.
What are the
performance
conditions or KPIs?
Beach’s key performance indicators (KPIs) are set by the Board for each 12-month period beginning at the start of a
financial year. They reflect Beach’s financial and operational goals that are essential to it achieving its purpose. Senior
executives also have individual KPIs to reflect their particular responsibilities.
For the reporting period, the performance measures comprised:
STI Measures
Company KPIs
Production
Underlying NPAT
Reserves replacement
Field operating cost/boe
Personal safety
Process safety
Environment
Individual KPIs
Weighting
75%
15%
15%
15%
15%
5%
5%
5%
25%
Refer to Table 6 for more information.
Individual KPIs link to Beach’s strategy and strategic plan. Individual KPIs relate to areas where senior executives are able
to influence or control outcomes. KPIs may include: gender diversity targets; delivery of cost savings; development of
project specific plans to align with Beach’s strategic pillars; specific initiatives for developing employee capability; funding
capacity; improvements in systems to achieve efficiencies; specific commercial or corporate milestones; or specific safety
and environmental and sustainability targets.
Are there different
performance levels?
The Board sets KPI measures at threshold, target and stretch levels. A participant must achieve the threshold level
to entitle them to any payment for an individual KPI. The stretch level is the greatest performance outcome for an
individual KPI.
What is the value of
the STI award that
can be earned?
How are the
performance
conditions assessed?
Is there a threshold
level of performance
or hurdle before an
STI is paid?
Incentive payments are based on a percentage of a senior executive’s fixed remuneration.
The CEO can earn up to a maximum of 100% of his fixed remuneration.
The Senior Executives can earn up to a maximum of 65% of their fixed remuneration. Following an independent review on
external comparators and as determined by the Board, this has increased from 45% in FY21, to further incentivise Senior
Executives to drive company performance and shareholder value.
The KPIs are reviewed against an agreed target.
The Board assesses the extent to which KPIs were met for the period after the close of the relevant financial year and
once results are finalised. The Board assesses senior executive performance on the CEO’s recommendation. The Board
assesses the achievement of the KPIs for the CEO.
Yes. At the end of Beach’s financial year there is a two-tiered test applied as set out in Table 5 below.
Table 5: Two-tiered test
Hurdle measures
Green
Red
One year Relative Total Shareholder Return against the ASX 200 Energy Index
(Index Return) for the Performance Period
Return on capital (1)
> = Index return
> = 10%
< Index return
< 10%
(1) Return on capital (ROC) is based on statutory NPAT/average total equity (being the average total equity at the beginning and end
of the financial year).
The following determines the impact of the hurdle measures on the STI calculation:
– If both hurdle measures are met, then up to 100% of the STI award calculation is available;
– If one hurdle measure is met, then up to 50% of STI award calculation is available;
– If both hurdle measures are not met, then no STI award will be calculated
61
What happens if an
STI is awarded?
On achievement of the relevant KPIs, Beach pays half of the STI award in cash. Beach includes cash awards in its financial
statements for the relevant financial year. Beach pays cash awards after the end of its financial year, usually in October.
Beach issues the remaining half of the STI award value in performance rights. Performance rights vest over one and two
years if the senior executive remains employed by Beach at each vesting date. If a senior executive leaves Beach before the
vesting date the performance rights lapse. The Board may exercise its discretion for early vesting if the senior executive
leaves Beach due to death or disability. The Board may exercise its discretion for early vesting in the event of a change of
control of Beach. The Board also has a general discretion to allow early vesting of performance rights. The Board needs
exceptional circumstances to consider exercising that general discretion.
STI Performance for the year
At the completion of the financial year the Board tested each senior executive’s performance against the STI performance conditions set for the
year. The results of the two hurdle measures were:
FY22 measures
One year Relative Total Shareholder Return against ASX 200 Energy Total Return Index
at the end of the Performance Period
Return on capital at the end of the Performance Period
Outcome
Hurdle
42.3%
15.1%
24.5%
10.0%
The percentage of the maximum STI that will be paid or forfeited for the period for each executive KMP was as follows (paid/forfeited):
Mr Kay 25%/75%, Mr Engelbrecht 44%/56%, Ms Barbaro 39%/61%, Mr Grant 41%/59%, Mr Hogarth 39%/61%, Mr Algar 43%/57%.
The STI awards made reflect Beach’s performance for FY22, with outcomes of the Company related performance conditions that make up a fixed
percentage of the STI KPIs provided in Table 6.
Table 6: Outcome of FY22 STI Company KPIs
STI Measure
Production
Underlying NPAT
Link to Beach’s strategy
Performance and score
Production is fundamental to Beach’s earnings and profit.
Beach’s full year production was 21.8 MMboe.
Underlying NPAT reflects the financial performance
of Beach’s underlying operating business. Stretch
performance is achieved through strong sales revenue
and cost reduction.
Score – threshold not met.
In FY22 Beach delivered Underlying NPAT of $504 million.
Score – stretch met.
Reserves replacement Replacing reserves is fundamental to Beach’s longer
term financial sustainability.
Beach’s 2P reserves decreased by 35 MMboe (excluding
production) to 283 MMboe.
Score – threshold not met.
Field operating
cost/boe
Personal safety
Process safety
Maintaining a cost and efficiency focus in order to optimise
our core production hubs and maintain financial strength
are key strategic pillars.
Beach’s field operating cost/boe for FY22 was $11.74.
Score – threshold not met.
Beach’s key value is that ‘Safety takes precedence in
everything we do’. Beach is focused on ensuring it and
its contractors operate in a safe manner. Beach has
included other safety and reliability measures in the
annual Sustainability Report. The Sustainability Report
is available on Beach’s website.
Beach achieved a total recordable injury frequency rate
(TRIFR) of 4.4.
Score – threshold not met.
Beach recorded two Loss of Primary Containment events
during the year.
Score – threshold met.
Environment
Beach strives to reduce the environmental impact
of its activities.
Beach recorded one loss of hydrocarbon event in FY22.
Score – target met.
STI performance rights relating to the 2018 and 2019 performance periods converted automatically to shares because the relevant senior executives
remained employed by the Company on 1 July 2021. A total of 386,613 shares were transferred.
Annual Report 2022Beach Energy Limited 62
Remuneration Report (Audited)
STI performance rights issued or in operation in FY22
The fair value of services received in return for STI rights (see Table 13) granted is measured by reference to the fair value of STI rights granted
calculated using the Binomial or Black-Scholes Option Pricing Models. The contractual life of the STI rights is used as an input into the valuation
model. The expected volatility is based on the historic volatility (calculated based on the weighted average remaining life of the rights), adjusted
for any expected changes to future volatility due to publicly available information. The risk free rate is based on Commonwealth Government bond
yields relevant to the term of the performance rights.
Long Term Incentive (LTI)
What is the LTI?
The LTI is an equity based ‘at risk’ incentive plan. The LTI aims to reward results that promote long term growth in
shareholder value or total shareholder return (TSR).
Beach offers LTIs to senior executives at the discretion of the Board.
How does the LTI
link to Beach’s key
purpose?
The LTI links to Beach’s key purpose by aligning the longer term ‘at risk’ incentive rewards with outcomes that match
shareholder objectives and interests by:
– benchmarking shareholder returns against a group of companies considered alternative investments to Beach;
– giving share based rather than cash-based rewards to executives. This links their own rewards to shareholder
expectations of dividends and share price growth.
How are the number
of rights issued to
senior executives
calculated
The number of performance rights granted to the executives under the LTI is calculated as fixed remuneration at
1 November of the Financial year times the relevant percentage divided by the market value. The Market Value is the
market value of a fully paid ordinary share in the Company, calculated using a five day VWAP, up to and including the date
the performance rights are granted. This method of calculating the number of performance rights does not discount for
the value of anticipated dividends during the performance period.
What equity based
grants are given and
are there plan limits?
Beach grants performance rights using the formula set out above. If the performance conditions are met, senior executives
have the opportunity to acquire one Beach share for every vested performance right. There are no plan limits as a whole
for the LTI. This is due to the style of the plan and advice by external remuneration consultants about individual plan limits.
Individual limits for the plans that are currently operational are set out in Table 8.
What is the
performance
condition?
The performance condition is based on Beach’s Total Shareholder Return (TSR) relative to the ASX 200 Energy Total
Return Index. The initial out-performance level is set at the Index return plus 5.5% compound annual growth rate (CAGR)
over the three year performance period, such that:
– < the Index return – 0% vesting;
– = the Index return – 50% vesting;
– between the Index return and Index + 5.5% – a prorated number will vest;
– = or > Index return + 5.5% – 100% vesting.
TSR is a measure of the return to shareholders over a period of time through the change in share price and any dividends
paid over that time. The dividends are notionally reinvested to perform the calculation. Beach chose this performance
condition to align senior executive remuneration with increased shareholder value. The Board has reinforced that
alignment by imposing two more conditions. First, the Board sets a threshold level for the executive to meet before making
an award. Secondly, the Board will not make an award if Beach’s TSR is negative.
During FY22 a review of the appropriateness of the LTI metric was undertaken by the Remuneration and Nomination
Committee in conjunction with an independent external consultant. The review also included consideration of alternative
or additional metrics, and concluded that the current TSR metric remained appropriate and had not been positively or
negatively impacted by recent market activities associated with the ASX Energy 200 Index. The Committee will keep the
appropriateness of the current metric under review.
All entitlements to shares on the vesting of LTI performance rights are currently satisfied by the purchasing of shares on
market which does not result in any dilution to shareholders equity.
The Board reserves the discretion for early vesting in the event of a change of control of the Company. Adjustments to a
participant’s entitlements may also occur in the event of a company reconstruction and certain share issues.
Why choose this
performance
condition?
Is shareholders
equity diluted
when shares are
issued on vesting
of performance
rights or exercise
of options?
What happens to
LTI performance
rights on a change
of control?
63
Table 7: Details of LTI equity awards issued, in operation or tested during the year
Details
Type of grant
2018, 2019, 2020 and 2021 Performance Rights
Performance rights
Calculation of grant limits for senior executives Max LTI is 100% of Total Fixed Remuneration (TFR) for CEO
Grant date
Max LTI is 50% of TFR for other senior executives
2021 Performance Rights
31 Dec 2021/31 Mar 2022/30 Jun 2022
2020 Performance Rights
14 Dec 2020/31 May 2021/30 Sep 2021
2019 Performance Rights
19 Dec 2019/14 Dec 2020
2018 Performance Rights
14 Dec 2018/19 Dec 2019
Issue price of performance rights
Granted at no cost to the participant
Performance period
Note: the date immediately after the end of the
performance period is the first date that the
performance rights vest and become exercisable
2021 Performance Rights
1 Dec 2021 – 30 Nov 2024
2020 Performance Rights
1 Dec 2020 – 30 Nov 2023
2019 Performance Rights
1 Dec 2019 – 30 Nov 2022
2018 Performance Rights
1 Dec 2018 – 30 Nov 2021
Expiry/lapse
Expiry date
Performance rights lapse if vesting does not occur on testing of performance condition
2021 Performance Rights
30 Nov 2026
2020 Performance Rights
30 Nov 2025
2019 Performance Rights
30 Nov 2024
2018 Performance Rights
30 Nov 2023
Exercise price on vesting
Not applicable – provided at no cost
What is received upon vesting and exercise?
One ordinary share in Beach for every performance right
Status
2021 Performance Rights
In progress
2020 Performance Rights
In progress
2019 Performance Rights
In progress
2018 Performance Rights
Testing complete. Resulted in lapsing of performance rights
Annual Report 2022Beach Energy Limited 64
Remuneration Report (Audited)
Details of LTI performance rights issued or in operation in FY22
The fair value of services received in return for LTI performance rights (see Table 13) granted is measured by reference to the fair value of LTI
performance rights granted calculated using the Binomial or Black-Scholes Option Pricing Models. The estimate of the fair value of the services
received for the LTI performance rights and options issued are measured with reference to the expected outcome, which may include the use of
a Monte Carlo simulation. The contractual life of the LTI performance rights is used as an input into this model. Expectations of early exercise are
incorporated into a Monte Carlo simulation method where applicable. The expected volatility is based on the historic volatility (calculated based
on the weighted average remaining life of the rights or options), adjusted for any expected changes to future volatility due to publicly available
information. The risk free rate is based on Commonwealth Government bond yields relevant to the term of the performance rights.
Employment agreements – senior executives
The senior executives have employment agreements with Beach.
The provisions relating to duration of employment, notice periods and termination entitlements of the senior executives are as follows:
Chief Executive Officer
The CEO’s employment agreement commenced on 19 May 2022 and is ongoing until terminated by either Beach or Mr Engelbrecht on six
months’ notice. Beach may discharge such notice obligation by payment in lieu. Beach may terminate the CEO’s employment at any time for
serious misconduct or breach without notice. In certain circumstances Beach may terminate the employment on notice of not less than three
months for issues concerning the CEO’s performance that have not been satisfactorily addressed.
Other senior executives
Other senior executives have employment agreements that are ongoing until terminated by either Beach or the senior executive upon six months’
notice. Beach may terminate a senior executive’s appointment for cause (for example, for serious breach) without notice. Beach must pay any
amount owing but unpaid to the employee whose services have been terminated at the date of termination, such as accrued leave entitlements.
In certain circumstances Beach may terminate employment on notice of not less than between one and three months for issues concerning the
senior executive’s performance that have not been satisfactorily addressed. If Beach terminates the senior executive’s appointment other than
for cause or he or she resigns due to a permanent relocation of his or her workplace to a location other than their location of hire, then they are
entitled to an amount up to one time their final annual salary.
Former Senior Executives
Mr Kay stepped down as Managing Director and Chief Executive Officer on 2 November 2021 and remained an employee for the duration of
his 6 month notice period until 2 May 2022 with salary payments made to him during this time of $619,250 and a further $243,462 in employee
entitlements paid following the cessation of his employment. At the time of his cessation, Mr Kay was eligible to participate in a number of
tranches under the Executive Incentive Scheme. The impact on each is set out below: (a) 2018 LTI was tested on 1 December 2021 and no
performance rights vested; (b) 2019 LTI is due to be tested on 1 December 2022; (c) 2019 STI, the two year tranche will vest on 1 July 2022; (d)
2020 LTI is due to be tested on 1 December 2023. Pro-ration based on the period of employment of Mr Kay, against relevant performance periods
has been applied to items (b) and (d) above, resulting in the cancellation of those rights which could not vest even where performance conditions
are met. Details of rights remaining are set out in Table 13. The board determined that Mr Kay retaining rights post cessation of employment was
appropriate having regard to Mr Kay’s contractual rights, service period, contribution to the company and proportionate in the circumstances.
65
Details of total remuneration for KMP calculated as required under the Corporations Act for
FY21 and FY22
Details of the remuneration package by value and by component for senior executives in the reporting period and the previous period are set out
in Table 8. These details differ from the actual payments made to senior executives for the reporting period that are set out in Table 1.
Table 8: Senior executives’ remuneration for FY21 and FY22 required under the Corporations Act
Short Term Employee Benefits
Share based
payments (1)
Fixed
Remuner-
ation (2)
$
Annual
Leave (3)
$
STI (4)
$
LTI
Rights
$
Name
Year
M Engelbrecht (6) 2022 1,041,757
570,954
2021
187,666
29,387
276,937
–
329,930
174,929
I Grant
A Barbaro (7)
S Algar
T Nador
P Hogarth (7)
2022
2021
2022
2021
2022
2021
657,000
680,804
236,710
–
711,750
287,437
2022 498,000
2021
174,614
2022
2021
97,274
–
Former Senior Executives
M Kay (8)
2022
2021
440,333
1,202,864
L Marshall (9)
G J Barker
J L Schrull
Total
2022
2021
2022
2021
2022
2021
384,604
524,703
–
293,557
–
319,934
2022 4,067,428
2021 4,054,867
49,184
29,192
16,665
–
49,820
18,829
63,541
2,018
7,696
–
69,023
22,092
29,575
7,441
–
(16,810)
–
(10,297)
473,170
81,852
88,079
–
29,893
–
90,748
–
–
–
12,972
–
132,236
–
–
–
–
–
–
–
99,163
36,349
–
–
64,360
2,292
54,579
6,553
5,913
–
525,964
736,372
(83,965)
154,969
–
(88,815)
–
(97,347)
630,865
–
995,944
925,302
STI
Rights (5)
$
124,149
50,465
75,410
126,165
12,456
–
150,163
72,421
–
–
5,406
–
28,374
208,961
(13,216)
41,018
–
16,201
–
(58,817)
382,742
456,414
Other
long term
benefits
Long
Service
Leave (3)
$
73,000
13,669
–
–
609
–
–
–
–
–
268
–
–
4,210
–
10,005
16,314
85,447
Other
Termination
Payments (10)
$
Total
at risk
%
Total
$
Total
issued in
equity
%
– 2,033,439
839,404
–
–
–
–
–
–
–
–
–
–
–
968,836
872,510
296,333
–
1,066,841
380,979
616,120
183,185
129,529
–
1,762,451
2,223,018
346,626
732,965
–
208,343
–
163,478
–
–
–
–
653,712
–
7,220,175
5,603,882
40
28
27
19
14
–
29
20
9
4
19
–
36
45
–
27
–
–
–
–
28
26
22
27
18
19
4
–
20
20
9
4
9
–
31
43
–
27
–
–
–
–
19
25
(52,729)
52,729
(4,834)
4,834
619,250
–
34,462
–
(1)
In accordance with the requirements of the Australian Accounting Standards, remuneration includes a proportion of the notional value of equity compensation
granted or outstanding during the year. The fair value of equity instruments are determined as at the grant date and then progressively expensed over the
vesting period. The amount included as remuneration is not related to or indicative of the benefit (if any) that individuals may ultimately realise should the rights
vest. The fair value of the rights as at the date of their grant has been determined in accordance with principles set out in Note 4 to the Financial Statements.
(2) Fixed remuneration comprises base salary and superannuation and other contractual payments treated as remuneration including retention and relocation
payments where applicable.
(3) This amount represents the movement in the relevant leave entitlement provision during the year.
(4) This amount represents the cash portion of the STI for FY22, which is expected to be paid in October 2022.
(5) Mr Grant and Mr Algar are entitled to retention payments on the first and third anniversary of their commencement dates. The retention payments are payable
in shares, equal to $100,000 for Mr Grant and $125,000 for Mr Algar respectively, divided by a 5 day VWAP as calculated on the relevant anniversary date.
(6) Mr Engelbrecht, previously Chief Financial Officer, was appointed Acting Chief Executive Officer on 2 November 2021 and subsequently appointed as Chief
Executive Officer on 19 May 2022.
(7) Ms Barbaro and Mr Hogarth both became KMP with effect from 15 November 2021 and 11 April 2022 respectively with their remuneration only shown for the
period from their appointment until 30 June 2022.
(8) Mr Kay ceased to be KMP on 2 November 2021 although continued to be employed with no decision making rights until 2 May 2022.
(9) Mr Marshall ceased to be KMP on 10 April 2022 although continued to be employed with no decision making rights until 13 May 2022.
(10) Termination payments includes the payment of salary during notice periods where no work is being performed but the employee remains employed.
Annual Report 2022Beach Energy Limited
66
Remuneration Report (Audited)
Remuneration policy for non-executive directors
The fees paid to non-executive directors are determined using the following guidelines. Fees are:
– not incentive or performance based but are fixed amounts;
– determined by reference to the nature of the role, responsibility and time commitment required for the performance of the role including
membership of board committees;
– are based on independent advice and industry benchmarking data; and
– driven by a need to attract a diverse and well-balanced group of individuals with relevant experience and knowledge.
Following a review by the Remuneration & Nomination Committee a recommendation was made to, and approved by the Board, to leave all
non-executive director’s fees unchanged in FY22.
The remuneration of Beach non-executive directors remains within the aggregate annual limit of $1,500,000 approved by shareholders at the
2016 annual general meeting.
The remuneration for non-executive directors comprises directors’ fees, board committee fees and superannuation contributions to meet Beach’s
statutory superannuation obligations.
Directors who perform extra services for Beach or make any special exertions on behalf of Beach may be remunerated for those services in
addition to the usual directors’ fees. Non-executive directors are also entitled to be reimbursed for their reasonable expenses incurred in the
performance of their directors’ duties. Alternate directors do not receive any remuneration for those services. However, Beach will reimburse
any reasonable expense incurred in attending board meetings as an alternate.
Details of the fees payable to non-executive directors for Board and committee membership for FY22 are set out in Table 9.
Table 9: FY22 non-executive directors’ fees and board committee fees per annum
Board (1)
Board Committee
Chairman/
Deputy
Chairman
$
305,000/
122,500
Member
$
Chairman
Audit
$
Member
Audit
$
Chairman
Remuneration
and
Nomination
$
Member
Remuneration
and
Nomination
$
Chairman Risk,
Corporate
Governance
and
Sustainability
$
Member Risk,
Corporate
Governance
and
Sustainability
$
122,500
25,000
15,000
25,000
15,000
25,000
15,000
(1) The Chairman does not receive additional fees for committee work. The fees shown are inclusive of the statutory superannuation contribution.
67
Following a review of directors’ fees at the conclusion of FY22, an increase in directors fees’ commencing on 1 July 2022 has been agreed. See
Remuneration Lookahead for FY23 on page 71.
Table 10: Non-executive directors’ remuneration for FY21 and FY22
Name
G S Davis (1)
P J Bainbridge (2)
C D Beckett (3)
S G Layman (4)
P S Moore (5)
J C Morton (6)
R J Richards (7)
R K Stokes (8)
M H Hall (9)
R J Jager (10)
Total
Directors Fees
(inc committee fees)
$
Superannuation
$
305,000
289,750
134,145
127,968
144,022
144,154
147,500
131,167
147,727
132,306
50,000
124,660
138,636
122,965
50,000
130,625
74,995
–
65,036
–
1,257,061
1,203,595
–
–
13,414
12,157
14,402
10,221
–
8,958
14,773
12,569
–
5,965
13,864
11,682
–
–
7,500
–
6,504
–
70,457
61,552
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Total
$
305,000
289,750
147,559
140,125
158,424
154,375
147,500
140,125
162,500
144,875
50,000
130,625
152,500
134,647
50,000
130,625
82,495
–
71,540
–
1,327,518
1,265,147
(1) No superannuation contributions were made on behalf of Mr Davis. Director’s fees for Mr Davis are paid to a related entity. Mr Davis does not receive
additional fees for committee work.
(2) Mr Bainbridge is both a member of the Risk, Corporate Governance and Sustainability Committee and the Audit Committee. Having been appointed to
the Audit committee on 29 October 2021.
(3) Mr Beckett is Deputy Chairman and chair of the Remuneration and Nomination Committee. He was a member of the Risk, Corporate Governance and
Sustainability Committee until 24 March 2022.
(4) Ms Layman is chair of the Audit Committee.
(5) Dr Moore is the chair of the Risk, Corporate Governance and Sustainability Committee and a member of the Remuneration and Nomination Committee.
(6) Ms Morton was a member of the Audit Committee. Ms Morton retired as a director on 10 November 2021.
(7) Mr Richards is a member of both the Audit Committee and the Remuneration and Nomination Committee. Mr Richards ceased to be a member of the Risk,
Corporate Governance and Sustainability Committee on 24 March 2022.
(8) Mr Stokes was a member of the Remuneration and Nomination Committee until he retired as a director on 10 November 2021. Mr Stokes was subsequently
appointed as an alternate director for Ms Hall. He does not derive any separate remuneration for this role.
(9) Ms Hall was appointed a director on 10 November 2021, prior to this Ms Hall was an alternate Director for Mr Stokes and did not receive any separate
remuneration for this role. Ms Hall was appointed a member of the Risk, Corporate Governance and Sustainability Committee on 24 March 2022.
(10) Mr Jager was appointed a director on 14 December 2021. Mr Jager was appointed a member of the Risk, Corporate Governance and Sustainability Committee
on 24 March 2022.
Annual Report 2022Beach Energy Limited 68
Remuneration Report (Audited)
Other KMP disclosures
The following three tables show the movements during the reporting period in shares and performance rights over ordinary shares in the Company
held directly, indirectly or beneficially by each KMP and their related entities.
Performance rights held by KMP
The following table details the movements during the reporting period in performance rights over ordinary shares in the Company held directly,
indirectly or beneficially by each KMP and their related entities.
Table 11: Movements in performance rights held by key management personnel
Rights
CEO
M Engelbrecht
Senior executives
I Grant
A Barbaro
S Algar
T Nador
P Hogarth
Former senior executives
M V Kay (2)
L Marshall
Total
Opening
balance
Granted
Vested/
exercised
Lapsed
Other (1)
Closing
balance
772,688
1,058,529
(291,642)
(174,430)
–
1,365,145
181,492
–
167,736
111,420
–
274,666
–
274,666
208,194
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
144,809
456,158
–
442,402
319,614
144,809
3,105,102
441,513
–
204,427
(1,045,522)
(36,685)
(1,254,125)
(609,255)
–
–
805,455
–
4,779,951 2,020,482 (1,373,849) (2,037,810)
144,809
3,533,583
(1) Relates to changes resulting from individuals becoming KMP during the period.
(2) As at 30 June 2022, Mr Kay retained a total of 805,455 performance rights which are subject to performance testing on 1 July 2022, 1 December 2022 and
1 December 2023.
69
The following table details the movements during the reporting period in ordinary shares in the Company held directly, indirectly or beneficially by
each KMP and their related entities.
Table 12: Shareholdings of key management personnel
Ordinary Shares
Directors
G S Davis
P J Bainbridge
C D Beckett
S G Layman
P S Moore
J C Morton
R J Richards
R K Stokes (2)
M H Hall
R J Jager
CEO
M Engelbrecht
Senior executives
I Grant
A Barbaro
S Algar
T Nador
P Hogarth
Former senior executives
M V Kay (4)
L Marshall (5)
Total
Opening
balance
Purchased
Issued on
exercise of
perform-
ance rights
Sold
Other
320,101
137,320
91,678
45,000
44,200
74,000
388,053
–
17,068
–
463,223
–
–
76,826
–
–
–
–
–
–
–
–
100,000
150,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
291,642
(175,000)
–
–
–
–
–
(74,000) (1)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
78,679 (3)
–
83,949 (3)
–
–
Closing
balance
320,101
137,320
91,678
45,000
44,200
–
488,053
150,000
17,068
–
579,865
78,679
–
160,775
–
–
3,918,255
271,752
–
–
1,045,522
36,685
– (4,963,777) (1)
(308,437) (1)
–
–
–
5,847,476
250,000
1,373,849
(175,000) (5,183,586)
2,112,739
(1) Relates to changes resulting from individuals becoming or ceasing to be KMPs during the period.
(2) Mr Stokes is an alternate director for M Hall.
(3) Mr Grant and Algar are contractually entitled to retention payments on the first and third anniversary of their respective commencement dates. Each issuance
relates to the first anniversary retention payments which are payable in shares, equal to $100,000 for Mr Grant and $125,000 for Mr Algar respectively.
(4) Mr Kay ceased to be a KMP on 2 November 2021.
(5) Mr Marshall ceased to be a KMP on 10 April 2022.
Specific details of the number of LTI and STI performance rights granted, vested/exercised and lapsed in FY22 for KMP are set out in Table 13.
Annual Report 2022Beach Energy Limited 70
Remuneration Report (Audited)
Table 13: Details of LTI and STI Performance Rights
Perform-
ance
rights on
issue at
30 June
2021
247,642
174,430
29,321
125,961
14,679
14,679
165,976
–
–
772,688
181,492
–
181,492
167,736
–
167,736
46,691
64,729
–
111,420
–
–
–
–
849,057
781,759
148,909
530,818
47,556
47,555
699,448
3,105,102
Date
of grant
1 Dec 2017
14 Dec 2018
19 Dec 2019
19 Dec 2019
25 Nov 2020
25 Nov 2020
14 Dec 2020
31 Mar 2022
30 Jun 2022
14 Dec 2020
31 Dec 2021
31 May 2021
31 Dec 2021
14 Dec 2020
31 May 2021
31 Dec 2021
19 Dec 2019
14 Dec 2020
31 Dec 2021
1 Dec 2017
14 Dec 2018
19 Dec 2019
19 Dec 2019
25 Nov 2020
25 Nov 2020
14 Dec 2020
Fair
Value
$
0.6161
1.0181
2.5300
1.4600
1.8100
1.7900
1.0300
0.8600
1.0500
1.0300
0.6900
0.4100
0.6900
1.0300
0.4100
0.6900
1.4600
1.0300
0.6900
0.6161
1.0181
2.5300
1.4600
1.8100
1.7900
1.0300
Name
M Engelbrecht
Total
Total ($)
I Grant
Total
Total ($)
S Algar
Total
Total ($)
T Nador
Total
Total ($)
P Hogarth
Total
Total ($)
M V Kay (2)
Total
Total ($)
–
274,666
274,666
189,520
–
274,666
274,666
189,520
–
–
208,194
208,194
143,654
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Perform-
ance rights
on issue at
30 June
2022
Date
perform-
ance rights
vest and
become
exercisable
–
1 Dec 2020
–
1 Dec 2021
–
1 Jul 2021
125,961
1 Dec 2022
–
1 Jul 2021
1 Jul 2022
14,679
165,976 1 Dec 2023
788,678 1 Dec 2024
269,851
1 Dec 2024
1,365,145
181,492 1 Dec 2023
274,666 1 Dec 2024
456,158
167,736 1 Dec 2023
274,666 1 Dec 2024
442,402
46,691
1 Dec 2023
64,729 1 Dec 2023
208,194 1 Dec 2024
319,614
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Lapsed
Other (1)
Granted
–
–
–
–
–
–
–
788,678
269,851
1,058,529
Vested/
Exercised
(247,642)
–
(29,321)
–
(14,679)
–
–
–
–
(291,642)
961,607
253,323
–
(174,430)
–
–
–
–
–
–
–
(174,430)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
33,359
43,956
67,494
144,809
33,359 1 Dec 2022
43,956 1 Dec 2023
67,494 1 Dec 2024
144,809
(849,057)
–
(148,909)
–
(47,556)
–
–
–
(781,759)
–
(103,160)
–
–
(369,206)
(1,045,522)
(1,254,125)
985,920
–
–
–
–
–
–
–
–
–
–
–
1 Dec 2020
1 Dec 2021
1 Jul 2021
427,658 1 Dec 2022
1 Jul 2021
1 Jul 2022
330,242 1 Dec 2023
–
47,555
805,455
Perform-
ance
rights on
issue at
30 June
2021
156,157
25,607
102,514
11,078
11,077
Date
of grant
14 Dec 2018
19 Dec 2019
19 Dec 2019
25 Nov 2020
25 Nov 2020
14 Dec 2020
135,080
31 Dec 2021
–
441,513
Fair
Value
$
1.0181
2.5300
1.4600
1.8100
1.7900
1.0300
0.6900
Name
L Marshall
Total
Total ($)
Granted
Vested/
Exercised
Lapsed
Other (1)
–
–
–
–
–
–
–
(25,607)
(156,157)
–
–
(102,514)
(11,078)
–
–
–
(11,077)
(135,080)
(204,427)
(609,255)
204,427
204,427
–
(36,685)
141,055
84,837
–
–
–
–
–
–
–
–
71
Date
perform-
ance rights
vest and
become
exercisable
1 Dec 2021
1 Jul 2021
1 Dec 2022
1 Jul 2021
1 Jul 2022
1 Dec 2023
1 Dec 2024
Perform-
ance rights
on issue at
30 June
2022
–
–
–
–
–
–
–
(1) Relates to changes resulting from individuals becoming KMP during the period.
(2) As at 30 June 2022, Mr Kay retained a total of 805,455 performance rights which are subject to performance testing on 1 July 2022, 1 December 2022 and
1 December 2023.
Looking ahead – Remuneration and related
issues for 2023
Leadership Development and Culture Development
Beach remains focused on building a diverse, flexible, and safe culture.
In support, the following was implemented:
– Finalisation of Front-Line Leader program for Health, Safety and
Environment and Drilling and Completions Managers;
– Implementing Unconscious Bias and Cultural Awareness training;
– Implementing psychological safety training at some sites;
– Achieved our target of a minimum of 30% female candidates
shortlisted for externally recruited roles at Beach; and
– Established a membership with Supply Nation as part of our
commitment to enabling contracts and procurement diversity.
Competency Development
Completion of the Beach Technical competency assessment process
occurred in January 2022 across 16 technical disciplines in support of
creating a safe and compliance workplace along with building ongoing
careers for Beach employees.
Flexible Work Arrangements
New Flexible Work Arrangements (FWA) procedures and leader
guides remain an important way to offer an environment which
supports diversity and inclusion at work, whilst also ensuring
the business meets legislative requirements in Australia and
New Zealand operations.
Non-executive directors’ fee increase
Effective from 1 July 2022, non-executive director fees were increased
by 3.0% (inclusive of superannuation) excluding the remuneration of
the Chairman which will remain unchanged. This fee increase takes
into account the market comparators, the length of time since the last
fee increase, the existing fee cap and the potential impact on future
director recruitment.
Superannuation guarantee
Effective from 1 July 2022, the Superannuation Guarantee (SG)
minimum compulsory rate for all Australian employees is legislated to
increase from 10% to 10.5%. In respect of all Australian employees,
Beach has increased total fixed remuneration so that no employee
suffers any real remuneration decrease as a consequence of the
legislative change. The total fixed remuneration of non-executive
directors is set out above.
Employee Retention
The ability to attract and retain the workforce will remain of critical
importance as Beach seeks to ensure our planning and engagement
practices are optimised to deliver operational and project priorities.
Activities in areas including engagement, performance and
remuneration, wellbeing and resourcing practices will continue to be
optimised with any improvement opportunities identified in these areas
being applied. During the course of 2022, Beach has also implemented
a contractual bonus scheme for employees, where employees, can
earn up to a maximum of 15% of their Total Fixed Remuneration (TFR),
subject to company and individual performance. Note: Participation in
this scheme does not include employees engaged under an Enterprise
Agreement arrangement, Non-Executive Directors, nor employees
participating to other existing Short Term Incentive Schemes.
Annual Report 2022Beach Energy Limited 72
Directors’ Declaration
1. In the directors’ opinion:
(a) the financial statements and notes set out on pages 73 – 112 are in accordance with the Corporations Act 2001, including:
(i) complying with accounting standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2022 and of its performance for the financial year
ended on that date; and
(b) there are reasonable grounds to believe that Beach will be able to pay its debts as and when they become due and payable.
2. The attached financial statements are in compliance with International Financial Reporting Standards, as noted in the Basis of Preparation
which forms part of the financial statements.
3. At the time of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group identified in note 23
will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described
in note 23.
4. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the
Corporations Act 2001 for the financial year ended 30 June 2022.
Signed in accordance with a resolution of the directors made pursuant to section 295(5) of the Corporations Act 2001 on behalf of the directors.
G S Davis
Chairman
Adelaide
15 August 2022
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the financial year ended 30 June 2022
Revenue
Cost of sales
Gross profit
Other income
Other expenses
Operating profit before financing costs
Interest income
Finance expenses
Profit before income tax expense
Income tax expense
Net profit after tax
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss
Net gain/(loss) on translation of foreign operations
Other comprehensive income/(loss), net of tax
Total comprehensive income after tax
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
The accompanying notes form part of these financial statements.
73
Consolidated
2022
$million
1,771.4
(995.6)
775.8
12.0
(57.7)
730.1
0.2
(13.7)
716.6
(215.8)
500.8
(5.5)
(5.5)
495.3
21.97¢
21.94¢
2021
$million
1,562.0
(967.1)
594.9
51.1
(203.7)
442.3
0.9
(6.4)
436.8
(120.3)
316.5
0.3
0.3
316.8
13.88¢
13.87¢
Note
2(a)
3(a)
2(b)
3(b)
16
16
5
6
6
Annual Report 2022Beach Energy Limited 74
Consolidated Statement
of Financial Position
As at 30 June 2022
Current assets
Cash and cash equivalents
Receivables
Inventories
Current tax asset
Contract assets
Other
Total current assets
Non-current assets
Property, plant and equipment
Petroleum assets
Exploration and evaluation assets
Intangible assets
Lease assets
Contract assets
Other
Total non-current assets
Total assets
Current liabilities
Payables
Provisions
Current tax liabilities
Lease liabilities
Contract liabilities
Total current liabilities
Non-current liabilities
Payables
Provisions
Interest bearing liabilities
Deferred tax liabilities
Lease liabilities
Contract liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
The accompanying notes form part of these financial statements.
Consolidated
Note
2022
$million
2021
$million
17
18
7
8
9
10
11
14
18
13
14
18
13
16
5
14
19
20
254.5
222.5
101.4
–
15.6
101.8
695.8
6.2
3,759.5
444.7
77.1
31.7
26.8
60.3
4,406.3
5,102.1
334.9
89.4
48.3
14.7
4.3
491.6
3.4
855.2
87.3
106.4
18.3
–
1,070.6
1,562.2
3,539.9
1,862.3
815.6
862.0
3,539.9
126.7
355.0
99.4
3.9
16.2
73.6
674.8
8.6
3,431.6
334.8
77.1
72.2
38.8
45.2
4,008.3
4,683.1
263.2
42.9
7.8
77.0
12.0
402.9
4.5
939.5
174.1
44.4
26.0
3.9
1,192.4
1,595.3
3,087.8
1,859.5
867.1
361.2
3,087.8
Consolidated Statement
of Changes in Equity
For the financial year ended 30 June 2022
Balance as at 30 June 2020
Profit for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
Transactions with owners in their capacity
as owners:
Shares issued during the year
Shares purchased on market, net of tax
(Treasury shares)
Utilisation of Treasury shares on vesting
of shares and rights under employee and
executive incentive plans
Final dividend paid
Interim dividend paid
Increase in share based payments reserve
Transactions with owners
Balance as at 30 June 2021
Profit for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss) for the year
Transactions with owners in their capacity
as owners:
Shares issued during the year
Shares purchased on market, net of tax
(Treasury shares)
Utilisation of Treasury shares on vesting
of shares and rights under employee and
executive incentive plans
Final dividend paid
Interim dividend paid
Increase in share based payments reserve
Transactions with owners
75
Total
$million
2,817.8
316.5
0.3
316.8
0.2
(4.0)
–
(22.8)
(22.8)
2.6
(46.8)
–
–
–
–
–
–
(22.8)
(22.8)
–
(45.6)
835.6
3,087.8
–
–
–
–
–
–
(22.8)
(22.8)
–
(45.6)
500.8
(5.5)
495.3
1.0
(0.7)
–
(22.8)
(22.8)
2.1
(43.2)
Note
Contributed
equity
$million
1,861.2
Share
based
payment
reserve
$million
Foreign
currency
translation
reserve
$million
Profit
distribution
reserve
$million
36.0
(5.3)
881.2
Retained
earnings
$million
44.7
316.5
–
316.5
–
–
–
–
–
–
–
–
–
–
0.2
(4.0)
2.1
–
–
–
(1.7)
1,859.5
–
–
–
361.2
500.8
–
500.8
1.0
(0.7)
2.5
–
–
–
2.8
–
–
–
–
–
–
–
19
19
19
21
21
19
19
19
21
21
–
–
–
–
–
(2.1)
–
–
2.6
0.5
36.5
–
–
–
–
–
(2.5)
–
–
2.1
(0.4)
36.1
–
0.3
0.3
–
–
–
–
–
–
–
(5.0)
–
(5.5)
(5.5)
–
–
–
–
–
–
–
Balance as at 30 June 2022
1,862.3
862.0
The accompanying notes form part of these financial statements.
(10.5)
790.0
3,539.9
Annual Report 2022Beach Energy Limited 76
Consolidated Statement
of Cash Flows
For the financial year ended 30 June 2022
Cash flows from operating activities
Receipts from customers and other
Payments to suppliers and employees
Receipt on settlement of arbitration
Payments for restoration
Interest received
Financing costs
Income tax paid
Net cash provided by operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for petroleum assets
Payments for exploration and evaluation assets
Payments for intangible assets
Proceeds on sale of joint operations interests
Proceeds from sale of non-current assets
Payments for acquisition of joint operations
Completion adjustment on acquisition of joint interest
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payment of the principal portion of lease liabilities
Proceeds from employee incentive loans
Payment for shares purchased on market (Treasury shares)
Dividends paid
Net cash provided by/(used in) financing activities
Net increase/(decrease) in cash held
Cash at beginning of financial year
Effects of exchange rate changes on the balances
of cash held in foreign currencies
Cash at end of financial year
The accompanying notes form part of these financial statements
Consolidated
Note
2022
$million
2021
$million
2,017.4
(701.5)
42.2
(15.9)
0.4
(9.5)
(109.9)
1,223.2
–
(796.2)
(111.1)
(5.5)
1.0
0.4
–
13.6
(897.8)
145.0
(230.0)
(68.9)
1.0
(1.0)
(45.6)
(199.5)
125.9
126.7
1.9
254.5
1,624.3
(692.6)
–
(12.7)
0.2
(6.5)
(152.9)
759.8
(1.1)
(529.2)
(139.4)
(3.9)
–
–
(84.2)
–
(757.8)
260.0
(145.0)
(42.9)
0.2
(5.7)
(45.6)
21.0
23.0
109.9
(6.2)
126.7
17
26
17
17
21
Notes to the Financial Statements
Notes to and forming part of the Financial Statements for
the financial year ended 30 June 2022
77
Basis of preparation
This section sets out the basis upon which the Group’s (comprising
Beach Energy Limited and its subsidiaries) financial statements
are prepared as a whole. Significant accounting policies and key
judgements and estimates of the Group that summarise the
measurement basis used and assist in understanding the financial
statements are described in the relevant note to the financial
statements or are otherwise provided in this section.
Beach Energy Limited (Beach) is a for profit company limited by
shares, incorporated in Australia and whose shares are publicly
listed on the Australian Securities Exchange (ASX). The nature
of the Group’s operations are described in the segment note.
The consolidated general purpose financial report of the Group for
the financial year ended 30 June 2022 was authorised for issue
in accordance with a resolution of the directors on 15 August 2022.
This general purpose financial report:
– Has been prepared in accordance with Australian Accounting
Standards and other authoritative pronouncements of the
Australian Accounting Standards Board and the Corporations
Act 2001. The financial statements comply with International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
– Has been prepared on a going concern and accruals basis and
is based on the historical cost convention, except for derivative
financial instruments, debt and equity financial assets, and
contingent consideration that have been measured at fair value.
– Is presented in Australian dollars with all amounts rounded to the
nearest hundred thousand dollars unless otherwise stated, in
accordance with ASIC (Rounding in Financial/Directors’ Reports)
Instrument 2016/191 issued by the Australian Securities and
Investment Commission.
– Has been prepared by consistently applying all accounting policies
to all the financial years presented, unless otherwise stated.
– The consolidated financial statements provide comparative
information in respect of the previous period. Where there
has been a change in the classification of items in the financial
statements for the current period, the comparative for the previous
period has been reclassified to be consistent with the classification
of that item in the current period.
Notes to the financial statements
The notes include information which is required to understand the
financial statements that is material and relevant to the operations,
financial position or performance of the Group. Information is
considered material and relevant where the amount is significant
in size or nature, it is important in understanding changes to the
operations or results of the Group or it may significantly impact
on future performance.
Key judgements and estimates
In the process of applying the Group’s accounting policies, management
has had to make judgements, estimates and assumptions about future
events that affect the reported amounts of assets and liabilities,
revenue and expenses. These estimates and judgements incorporate
the impact of the ongoing uncertainties associated with the COVID–19
pandemic and other material business risks. The reasonableness
of these estimates and underlying assumptions are reviewed on
an ongoing basis. Actual results may differ from these estimates.
The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial
statements are found in the following notes:
Note 2 – Revenue from contracts with customers
Note 3 – Expenses
Note 5 – Taxation
Note 9 – Petroleum assets
Note 10 – Exploration and evaluation assets
Note 11 – Intangible assets
Note 13 – Provisions
Note 14 – Leases
Climate change
In preparing the Financial Report, management has considered the
impact of climate change and current climate-related legislation.
Beach is committed to managing climate risk and delivering a
sustainable business model in a low-carbon world. Beach reports on
its climate strategy, climate transition action plans, annual emissions
and emissions targets in the Beach sustainability report which Beach
has published annually since 2017 in accordance with the Financial
Stability Board’s Task Force on Climate-Related Disclosures (“TCFD”)
recommendations on climate-related financial disclosures.
The impacts of climate change include estimates of a range of
economic and climate-related scenarios. This includes market supply
and demand profiles, carbon emissions reduction profiles, legal
impacts and technological impacts. These are factored into discount
rates, commodity price forecasts, and demand and supply profiles,
all of which are impacted by the global demand profile of the economy
as a whole. A carbon price is included in Beach’s economic modelling
of projects and the portfolio as applicable. The estimates and forecasts
used by the Group are in accordance with current climate-related
legislation and policy. The impact of climate change is considered in
the significant judgements and key estimates in a number of areas
in the Financial Report including:
– asset useful lives and carrying values for petroleum assets and
exploration and evaluation assets through determination of
valuations considered for impairment – refer notes 9 and 10;
– restoration obligations, including the timing of such activities –
refer note 13; and
– deferred taxes, primarily related to asset carrying values and
restoration obligations – refer note 5;
Beach continues to monitor climate-related policy and its impact on
the Financial Report.
Going concern
The Group ended FY22 with $255 million in cash, drawn debt
of $90 million and net working capital of $204 million (current
assets less current liabilities). Available liquidity was $765 million,
comprising $255 million in cash and $510 million in undrawn debt
facilities. Management has prepared cash flow forecast scenarios
that represent reasonably possible downside scenarios relating to
the business from potential economic scenarios that could arise
over the next 12 months, which have been reviewed by the directors.
These forecasts demonstrate that the Group has sufficient cash, other
liquid resources and undrawn credit facilities to enable the Group to
meet its obligations as they fall due. As such the directors considered
it appropriate to adopt the going concern basis of accounting in
preparing the full year financial statements.
Annual Report 2022Beach Energy Limited 78
Notes to the Financial Statements
Basis of consolidation
The consolidated financial statements are those of Beach and its
subsidiaries (detailed in Note 22). Subsidiaries are those entities
that Beach controls as it is exposed, or has rights, to variable returns
from its involvement with the subsidiary and has the ability to affect
those returns through its power over the subsidiary. In preparing
the consolidated financial statements, all transactions and balances
between Group companies are eliminated on consolidation, including
unrealised gains and losses on transactions between Group companies.
Where unrealised losses on intra-group asset sales are reversed on
consolidation, the underlying asset is also tested for impairment from
a Group perspective. Profit or loss and other comprehensive income
of subsidiaries acquired or disposed of during the year are recognised
from the date Beach obtains control for acquisitions and the date Beach
loses control for disposals, as applicable. The acquisition of businesses
is accounted for using the acquisition method of accounting.
Foreign currency
Both the functional and presentation currency of Beach is Australian
dollars. Some subsidiaries have different functional currencies which
are translated to the presentation currency. Transactions in foreign
currencies are initially recorded in the functional currency by applying
the exchange rate ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are retranslated at the
foreign exchange rate ruling at the reporting date. Foreign exchange
differences arising on translation are recognised in the profit or loss.
Non monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the exchange
rate at the date of the initial transaction. Non monetary assets and
liabilities denominated in foreign currencies that are stated at fair value
are translated to the functional currency at foreign exchange rates
ruling at the dates the fair value was determined. Foreign exchange
differences that arise on the translation of monetary items that form part
of the net investment in a foreign operation are recognised in equity in
the consolidated financial statements. Revenues, expenses and equity
items of foreign operations are translated to Australian dollars using the
exchange rate at the date of transaction while assets and liabilities are
translated using the rate at balance date with differences recognised
directly in the Foreign Currency Translation Reserve.
Adoption of new and revised accounting standards
In the current year, the Group has adopted all of the new and revised
Standards and Interpretations issued by the Australian Accounting
Standards Board that are relevant to its operations and effective for
the current annual reporting period. Information on relevant new
standards is provided below, with no immediate material impact
on the Group’s consolidated financial statements.
AASB 2020-8 Amendments to Australian Accounting
Standards – Interest Rate Benchmark Reform – Phase 2
This amendment is in response to the Interbank offered rates (IBOR)
reforms. The second phase of the project focuses on issues that
might affect financial reporting upon replacement of existing interest
rate benchmarks, and amends the requirements in AASB 9 Financial
Instruments, AASB 139 Financial Instruments: Recognition and
Measurement, AASB 7 Financial Instruments: Disclosures, AASB 4
Insurance Contracts and AASB 16 Leases. The objective of the
amendments is to minimise the financial reporting consequences
of a change in benchmark interest rates that Australian Accounting
Standards may otherwise require, such as the derecognition or
remeasurement of financial instruments, and the discontinuation
of Hedge accounting.
These amendments have not had a significant or immediate impact
on the Group’s annual consolidated financial statements.
Standards, amendments, and interpretations to existing
standards that are not yet effective and have not been
adopted early by the Group
At the date of authorisation of these financial statements, certain
new standards, amendments and interpretations to existing
standards have been published but are not yet effective, and have
not been adopted early by the Group in preparing these consolidated
financial statements. Management anticipates that all of the relevant
pronouncements will be adopted in the Group’s accounting policies for
the first period beginning after the effective date of the pronouncement.
The Group’s assessment of the impact of these new standards,
amendments to standards and interpretations is set out below.
i) Amendments to AASB 116 – Property, Plant and
Equipment: Proceeds before intended use
The amendment prohibits entities from deducting from the cost of an
item of property, plant and equipment (“PP&E”), any proceeds of the
sale of items produced while bringing that asset to the location and
condition necessary for it to be capable of operating in the manner
intended by management. Instead, an entity recognises the proceeds
from selling such items, and the costs of producing those items, in
profit or loss. These amendments apply from 1 July 2022 and are
not expected to materially impact the Group’s annual consolidated
financial statements.
ii) Amendments to AASB 137 – Onerous Contracts – Costs
of Fulfilling a contract
The amendments provide clarification on which costs an entity
needs to include when assessing whether a contract is onerous
or loss-making. The amendments apply a ‘directly related cost
approach’. These amendments apply from 1 July 2022 and are not
expected to materially impact the Group’s annual consolidated
financial statements.
iii) Amendments to AASB 112 – Deferred Tax related to
Assets and Liabilities arising from a Single Transaction
The amendments narrow the scope of the initial recognition exception
under AASB 112, so that it no longer applies to transactions that give
rise to equal taxable and deductible temporary differences. These
amendments apply from 1 July 2023 and It is yet to be determined
what the impact on the Group would be as a result of this amendment
to the standard.
Several other amendments to standards and interpretations will
apply on or after 1 July 2022, and have not yet been applied, however
they are not expected to impact the Group’s annual consolidated
financial statements.
79
Results for the year
This section explains the results and performance of the Group including additional information about those individual line items in the financial
statements most relevant in the context of the operations of the Group, including accounting policies that are relevant for understanding the items
recognised in the financial statements and an analysis of the Group’s result for the year by reference to key areas, including operating segments,
revenue, expenses, employee costs, taxation and earnings per share.
1. Operating segments
The Group has identified its operating segments to be its South Australian, Western Australian, Victorian and New Zealand interests based on the
different geographical regions and the similarity of assets within those regions. This is the basis on which internal reports are provided to the Chief
Executive Officer for assessing performance and determining the allocation of resources within the Group.
The Group operates primarily in one business, namely the exploration, development and production of hydrocarbons. Revenue is derived from the
sale of gas and liquid hydrocarbons. Gas sales contracts are spread across major Australian and New Zealand energy retailers and industrial users
with liquid hydrocarbon product sales being made to major multi-national energy companies based on international market pricing.
Details of the performance of each of these operating segments for the financial years ended 30 June 2022 and 30 June 2021 are as follows:
SA
WA
Victoria
New Zealand
Total
2022
$million
2021
$million
2022
$million
2021
$million
2022
$million
2021
$million
2022
$million
2021
$million
2022
$million
2021
$million
1,219.2
1,158.7
32.6
19.1
317.2
207.1
180.1
134.5
1,749.1
1,519.4
736.1
(227.1)
–
699.4
(256.2)
(117.0)
509.0
326.2
20.3
(9.5)
–
10.8
10.4
(11.1)
–
(0.7)
235.6
(111.0)
–
124.6
134.8
(117.3)
–
17.5
126.4
(17.3)
–
109.1
125.9
(33.6)
–
92.3
1,118.4
(364.9)
–
753.5
22.3
12.0
(13.5)
(57.7)
716.6
(215.8)
500.8
970.5
(418.2)
(117.0)
435.3
42.6
51.1
(5.5)
(86.7)
436.8
(120.3)
316.5
2,535.2
2,529.3
603.1
438.4
1,387.6
1,224.9
243.9
291.7
4,769.8
4,484.3
538.1
565.2
19.8
18.9
361.8
506.4
121.2
110.7
1,040.9
1,201.2
332.3
198.8
5,102.1
4,683.1
521.3
394.1
1,562.2
1,595.3
66.2
288.6
354.8
95.1
316.7
411.8
1.0
122.2
123.2
1.6
32.6
34.2
26.1
286.5
312.6
45.2
261.7
306.9
–
9.7
9.7
0.7
23.1
23.8
93.3
707.0
800.3
142.6
634.1
776.7
6.7
33.4
807.0
810.1
Segment revenue
Sales revenue (1)
Segment results
Gross segment result before
depreciation, amortisation
and impairment
Depreciation and amortisation
Impairment expense
Other revenue
Other income
Net financing costs
Other expenses
Profit/(loss) before tax
Income tax expense
Net profit/(loss) after tax
Segment assets
Total corporate and
unallocated assets
Total consolidated assets
Segment liabilities
Total corporate and
unallocated liabilities
Total consolidated liabilities
Additions and acquisitions
of non-current assets
Exploration and evaluation
assets
Petroleum assets
Total corporate and
unallocated assets
Total additions and acquisitions
of non-current assets
(1) During the year revenue from three customers amounted to $1,220 million (2021: $989 million from three customers) arising from sales from SA, WA, Victoria
and New Zealand segments.
Annual Report 2022Beach Energy Limited 80
Notes to the Financial Statements
1. Operating segments (continued)
Non-current assets
Australia
New Zealand
Total
2022
$million
4,203.4
2021
$million
3,798.6
2022
$million
202.9
2021
$million
2022
$million
2021
$million
209.7
4,406.3
4,008.3
2. Revenue from contracts with customers and other income
Revenue from contracts with customers is recognised in the statement of profit or loss and other comprehensive income when the performance
obligations are considered met, which is when control of the hydrocarbon products or services provided are transferred to the customer. Revenue
is recognised at an amount that reflects the consideration the Group expects to be entitled to, net of goods and services tax or similar taxes.
Product sales
Sales revenue is recognised using the “sales method” of accounting. The sales method results in revenue being recognised based on volumes
sold under contracts with customers, at the point in time where performance obligations are considered met. Generally, regarding the sale of
hydrocarbon products, the performance obligation will be met when the product is delivered to the specified measurement point (gas) or point
of loading/unloading (liquids).
The Group’s sales of crude oil, liquefied natural gas, ethane, condensate, LPG, and in some contractual arrangements, natural gas, are based
on market prices. In contractual arrangements with market base pricing, at the time of the delivery, there is only a minimal risk of a change in
transaction price to be allocated to the product sold. Accordingly, at the point of sale where there is not a significant risk of revenue reversal
relative to the cumulative revenue recognised, there is no constraining of variable consideration.
Where the sales price is not final at the point the performance obligations are met, any subsequent measurement of these provisionally priced
sales is not revenue from customers and has been recognised as other sales revenue.
Contract liabilities and contract assets
A contract liability for deferred revenue is recorded for obligations under sales contracts to deliver natural gas in future periods for which payment
has already been received. Where the period between when payment is received and performance obligations are considered met, is more than
12 months, an assessment will be made for whether a significant financing component is required to be accounted for. Deferred revenue liabilities
unwind as “revenue from contracts with customers”, with reference to the performance obligation, and if a significant financing component
associated with deferred revenue exists, an interest expense will also be recognised over the life of the contract.
On acquisition of the Lattice and Toyota Tsusho interests, pre-existing revenue contracts were fair valued, resulting in contract assets and
liabilities being recognised. Both the contract assets and liabilities represent the differential in contract pricing and market price, and will be
realised as performance obligations are considered met in the underlying revenue contract. To the extent a contract asset or liability represents
the fair value differential between contract price and market price, it will be unwound through “other operating revenue or expense”.
Net contract assets and liabilities have decreased by $1.0 million to $38.1 million, with $4.5 million included in other expense and $0.5 million
in FCTR less $4.0 million unwind of discount included in finance expenses.
(a) Revenue
Crude oil
Sales gas and ethane
Liquefied petroleum gas
Condensate
Gas and gas liquids
Revenue from contracts with customers
Crude oil – revaluation of provisionally priced sales
Sales Revenue (1)
Other operating revenue
Total revenue
(1) Provisionally priced oil sales revenue recorded as a receivable at 30 June 2022 totalled $53.4 million (FY21 $110.9million).
Consolidated
2022
$million
2021
$million
625.7
673.8
202.0
214.3
1,090.1
1,715.8
33.3
1,749.1
22.3
1,771.4
613.6
609.4
130.5
143.6
883.5
1,497.1
22.3
1,519.4
42.6
1,562.0
81
Consolidated
2022
$million
2021
$million
0.7
–
0.3
3.3
0.7
6.4
0.6
12.0
–
35.4
–
9.8
5.3
–
0.6
51.1
(b) Other income
Gain on sale of joint operations interests
Gain on reversal of acquired liabilities
Gain on sale of non-current assets
Other income related to joint venture lease recoveries
Government grants received
Foreign exchange gains
Other
Total other income
3. Expenses
The Group’s significant expenses in operating the business are described below split between cost of sales and other expenses including
impairment and corporate and other costs.
(a) Cost of sales
Field operating costs
Tariffs and tolls
Royalties
Total operating costs
Depreciation and amortisation of petroleum assets (Note 9)
Depreciation of leased assets (Note 14)
Third party oil and gas purchases
Decrease/(increase) in product inventory
Total cost of sales
(b) Other expenses
Impairment
Impairment of petroleum assets (Note 9)
Impairment of exploration and evaluation assets (Note 10)
Total impairment expense
Other
Exploration expense
Restoration expense
Loss on sale of non-current assets
Depreciation of leased assets (Note 14)
Foreign exchange losses
Unwind of acquired contract assets and liabilities
Provision for legal costs related to shareholder class actions
Corporate expenses (1)
Other expenses
Total other expenses
Consolidated
2022
$million
2021
$million
255.8
94.5
182.2
532.5
357.1
7.6
99.2
(0.8)
995.6
–
–
–
(0.2)
29.5
0.2
3.6
–
4.5
5.0
15.1
57.7
57.7
251.8
76.0
116.9
444.7
405.6
12.6
68.4
35.8
967.1
35.3
81.7
117.0
56.7
–
1.7
3.5
8.9
–
–
15.9
86.7
203.7
(1)
Includes depreciation of property, plant and equipment and amortisation of software costs of $7.9 million (FY21 $7.3 million) as shown in Note 8 and 11, and
share based payments expense of $2.1 million (FY21 $2.6 million).
Annual Report 2022Beach Energy Limited 82
Notes to the Financial Statements
4. Employee benefits
Provision is made for the Group’s employee benefits liability arising from services rendered by employees to the end of the reporting period.
These benefits include wages, salaries, annual leave and long service leave. Where these benefits are expected to be settled within 12 months
of the reporting date, they are measured at the amounts expected to be paid when the liabilities are settled. Expenses for non-vesting personal
leave are recognised when the leave is taken and are measured at the rates paid or payable. Liabilities for long service leave and annual leave that
is not expected to be taken wholly before 12 months after the end of the reporting period in which the employee rendered the related service,
are recognised and measured as the present value of the estimated future cash outflows to be made in respect of employees’ services up to the
reporting date. The obligation is calculated using expected future increases in wage and salary rates, experience of employee departures and
periods of service. The estimated future payments have been discounted using Australian corporate bond rates. The obligations are presented as
current liabilities in the statement of financial position if the Group does not have the unconditional right to defer settlement for at least 12 months
after the reporting date, regardless of when the actual settlement is expected to occur.
Superannuation commitments – Each employee nominates their own superannuation fund into which Beach contributes compulsory
superannuation amounts based on a percentage of their salary.
Termination benefits – Termination benefits may be payable when employment is terminated before the normal retirement date, without
cause, or when an employee accepts voluntary redundancy in exchange for these benefits. Beach recognises termination benefits when it is
demonstrably committed to making these payments.
Equity settled compensation
Employee Incentive Plan – The Group operates an Employee Incentive Plan, approved by shareholders. Shares are allotted to employees under
this plan at the Board’s discretion. Shares acquired by employees are funded by interest free non-recourse loans for a term of 10 years which are
repayable on cessation of employment with the consolidated entity or expiry of the loan term. The fair value of the equity to which employees
become entitled is measured at grant date and recognised as an expense over the vesting period with a corresponding increase in equity. The fair
value of shares issued is determined with reference to the latest ASX share price. Rights are valued using an appropriate valuation technique such
as the Binomial or Black-Scholes Option Pricing Models which takes into account the vesting conditions.
The following employee shares are currently on issue
Balance as at 30 June 2020
Loans repaid during 2021 financial year
Balance as at 30 June 2021
Loans repaid during 2022 financial year
Balance as at 30 June 2022
Number
1,538,288
(150,850)
1,387,438
(709,838)
677,600
No new shares were issued to employees during the financial year, pursuant to this plan.
The closing ASX share price of Beach fully paid ordinary shares at 30 June 2022 was $1.725 as compared to $1.24 as at 30 June 2021.
Employee Share Plan – The group operates an employee share plan, approved by shareholders. Employees who buy shares under the Plan will
have those shares matched by Beach, provided any relevant conditions determined by the Board are satisfied. Eligible Employees are employees
of the Group, other than a non-executive director and any other person determined by the Board as ineligible to participate in the Plan. The Board
has the discretion to set an annual limit on the value of shares that participants may purchase under the Plan, not exceeding $5,000. Purchased
Shares have been acquired periodically at the prevailing market price. Participants pay for their Purchased Shares using their own funds which may
include salary sacrifice. To receive Matched Shares, a participant must satisfy the conditions determined by the Board at the time of the invitation.
Details of shares purchased and utilised under this plan are detailed in Note 19.
Incentive Rights – The Group operates an Executive Incentive Plan (EIP) providing both Short Term Incentives (STIs) and Long Term Incentives
(LTIs). The STI is part of ‘at risk’ remuneration offered to senior executives. It measures individual and Company performance over a 12 month
period coinciding with Beach’s financial year. It is provided in equal parts of cash and equity that may or may not vest subject to additional
retention conditions. It is offered annually to senior executives at the discretion of the Board. The LTI is an equity based ‘at risk’ incentive plan.
The LTI is intended to reward efforts and results that promote long term growth in shareholder value or total shareholder return (TSR). LTIs are
offered to senior executives at the discretion of the Board. The fair value of performance rights issued are recognised as an employee benefits
expense with a corresponding increase in equity. The fair value of the performance rights are measured at grant date and recognised over the
vesting period during which the senior executives become entitled to the performance rights. The fair value of the STIs is measured using the
Black-Scholes Option Pricing Model and the fair value of the LTIs is measured using Monte Carlo simulation, taking into account the terms and
conditions upon which these rights were issued.
83
Details of the key assumptions used in determining the valuation of unlisted performance rights issued during the year are outlined below.
Grant date
Vesting date
Expiry date
Share price at grant date (A$)
Exercise price (A$)
Expected volatility (average)
Vesting Period (years)
Risk free rate
Dividend yield
Number of securities issued
Fair value of security at grant date (A$)
Total fair value at grant date
2020
LTI Rights
2021
LTI Rights
2021
LTI Rights
2021
LTI Rights
FY22
ESP (1)
30 Sep 2021
1 Dec 2023
30 Nov 2025
1.50
Nil
52.7%
2.2
0.25%
1.34%
87,203
0.82
71,506
31 Dec 2021
1 Dec 2024
30 Nov 2026
1.26
Nil
50.8%
2.9
2.26%
1.59%
2,112,784
0.69
1,457,821
31 Mar 2022
1 Dec 2024
30 Nov 2026
1.56
Nil
52.9%
2.7
2.18%
1.29%
958,735
0.86
824,512
30 Jun 2022
1 Dec 2024
30 Nov 2026
1.73
Nil
50.4%
2.4
3.19%
1.16%
327,702
1.05
344,087
Up to
30 Jun 2022
1 Jul 2024
n/a
1.05 – 1.73
Nil
n/a
2.0 – 2.9
n/a
1.16% – 1.90%
709,379
0.99 – 1.69
956,810
(1) Matched Share Rights under the Employee Share Plan are acquired periodically throughout the year. Details show the range of valuation inputs during the year.
Movements in unlisted performance rights are set out below:
Balance at beginning of period
Issued during the period
Forfeited during the period
Vested/Exercised during the period
Balance at end of period
Consolidated
2022
number
2021
number
8,184,339
4,195,803
(3,346,082)
(1,600,907)
7,437,135
3,757,017
(1,414,684)
(1,595,129)
7,433,153
8,184,339
5. Taxation
Taxation on the profit or loss for the year comprises current and deferred tax. Taxation is recognised in profit or loss except to the extent that it
relates to items recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates and laws enacted or substantively enacted at the
reporting date, and any adjustments to tax payable in respect of previous years.
Deferred tax is determined using the statement of financial position approach on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the statement of financial position. Deferred tax assets are recognised to the extent that it is probable
that future taxable profits will be available against which the temporary differences or unused tax losses and tax offsets can be utilised.
Deferred tax is not recognised for temporary differences arising from goodwill or from the initial recognition of assets and liabilities (other than
a business combination) in a transaction that affects neither accounting profit nor taxable income.
Deferred tax assets and liabilities are measured at the tax rates that are expected to be applied when the asset is realised or the liability is settled,
based on the laws that have been enacted or substantively enacted at the reporting date.
Current and deferred tax assets and liabilities are offset when there is a legally enforceable right to offset and when the tax balances are related
to taxes levied by the same tax authority and the entity intends to settle its tax assets and liabilities on a net basis.
Annual Report 2022Beach Energy Limited 84
Notes to the Financial Statements
5. Taxation (continued)
Petroleum Resource Rent Tax (PRRT)
PRRT is considered, for accounting purposes, to be a tax based on income. Accordingly, current and deferred PRRT expense is measured and
disclosed on the same basis as income tax.
The impact of future augmentation on expenditure is included in the determination of future taxable profits when assessing the extent to which
a deferred tax asset for PRRT can be recognised in the statement of financial position.
Australian income tax consolidation
Beach and its wholly owned Australian subsidiaries are consolidated for Australian income tax purposes with Beach responsible for recognising
the current and deferred tax assets and liabilities for the income tax consolidated group.
Beach is responsible for recognising the current tax liability, current tax assets and deferred tax assets arising from unused tax losses and credits
for the income tax consolidated group. The Group has applied the separate taxpayer approach in determining the appropriate amount of current
taxes and deferred taxes to allocate to members of the tax consolidated group.
Beach has entered into a tax sharing agreement with its wholly owned subsidiaries whereby each company in the Group contributes to the income
tax payable in proportion to their contribution to the net profit before tax of the tax consolidated group.
Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
– When the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised
as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
– Receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement
of Financial Position.
Cash flows are included in the Consolidated Statement of Cash Flows on a gross basis.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(a) Income tax expense
Income tax recognised in the statement of profit or loss of the Group is as follows:
Recognised in the statement of profit or loss
Current tax expense
Current year
Adjustments for prior years
Total current tax expense
Deferred tax expense
Origination and reversal of temporary differences
Adjustments for prior years
Total deferred tax expense
Total income tax expense
Consolidated
2022
$million
2021
$million
157.0
(3.8)
153.2
56.2
6.4
62.6
215.8
99.2
(25.6)
73.6
20.7
26.0
46.7
120.3
85
(b) Numerical reconciliation between tax expense and prima facie tax expense
A reconciliation between income tax expense calculated on profit before tax to income tax expense included in the statement of profit or loss:
Consolidated
2022
$million
716.6
215.0
2021
$million
436.8
131.0
0.9
(2.7)
–
2.6
0.9
(2.1)
(9.9)
0.4
215.8
120.3
Consolidated
2022
$million
2021
$million
(0.2)
2.4
(1.7)
–
Accounting profit before income tax
Prima facie tax on accounting profit before tax at 30%
Adjustment to income tax expense due to:
Non-deductible expenditure
Impact of tax rates applicable outside Australia
Non assessable income
Adjustments for prior years
Income tax expense reported in the Statement of Profit or Loss
(c) Income tax related to items charged or credited to equity ($million)
Share based equity
Foreign Currency Translation Reserve
(d) Deferred tax assets and liabilities ($million)
Current financial year
Oil & Gas Assets
Provisions
Employee benefits
Tax Losses
Leases
Other Items
Tax assets/(liabilities)
Set-off of tax
Net deferred tax assets/(liabilities)
Assets
Liabilities
Net
2022
$million
2021
$million
2022
$million
2021
$million
2022
$million
2021
$million
–
274.7
6.6
1.3
9.9
5.5
298.0
–
287.0
6.1
2.8
30.9
8.1
334.9
(298.0)
(334.9)
–
–
(346.7)
–
–
–
(9.5)
(48.2)
(404.4)
298.0
(106.4)
(301.8)
–
–
–
(10.1)
(67.4)
(379.3)
334.9
(44.4)
(346.7)
274.7
6.6
1.3
0.4
(42.7)
(106.4)
–
(301.8)
287.0
6.1
2.8
20.8
(59.3)
(44.4)
–
(106.4)
(44.4)
(e) Deferred tax assets have not been recognised in respect of the following items:
Revenue losses – non-Australian
Capital losses
Petroleum rights
Petroleum Resource Rent Tax, net of income tax
Total
Consolidated
2022
$million
2.6
28.7
43.4
1,661.6
1,736.3
2021
$million
2.6
28.7
43.4
1,212.4
1,287.1
Annual Report 2022Beach Energy Limited 86
Notes to the Financial Statements
6. Earnings per share (EPS)
The Group presents basic and diluted EPS for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by
adjusting the statement of profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares for the dilutive
effect, if any, of outstanding share rights which have been issued to employees.
Earnings after tax used in the calculation of EPS is as follows:
Basic EPS and Diluted EPS
2022
$million
500.8
2021
$million
316.5
Weighted average number of ordinary shares and potential ordinary shares used in the calculation of EPS is as follows:
Basic EPS
Share rights
Diluted EPS
Calculation of EPS is as follows:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
2022
Number
2021
Number
2,279,696,899
2,279,860,248
3,350,862
2,118,934
2,283,047,761
2,281,979,182
21.97¢
21.94¢
13.88¢
13.87¢
2,421,192 (FY21 5,178,791) potential ordinary shares relating to performance rights that were not considered dilutive during the period as vesting
would not have occurred based on the status of the required vesting conditions at the end of the relevant reporting period. Accordingly, these have
been excluded from the calculation of diluted EPS.
87
Capital employed
This section details the investments made by the Group in exploring for and developing its petroleum business including inventories, property,
plant and equipment, petroleum assets, joint operations, leases and any related restoration provisions as well as an assessment of asset
impairment and details of future commitments.
7. Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course
of business, less the estimated costs of completion and selling expenses. Cost is determined as follows:
(i) Drilling and maintenance stocks, which include plant spares, consumables, maintenance and drilling tools used for ongoing operations,
are valued at weighted average cost; and
(ii) Petroleum products, which comprise extracted crude oil, liquefied petroleum gas, condensate and naphtha stored in tanks and pipeline
systems and process sales gas and ethane stored in sub-surface reservoirs, are valued using the absorption cost method.
Petroleum products
Drilling and maintenance stocks
Less provision for obsolescence
Total current inventories at lower of cost and net realisable value
Petroleum products included above which are stated at net realisable value
Consolidated
2022
$million
2021
$million
40.4
68.7
(7.7)
101.4
–
37.7
65.5
(3.8)
99.4
–
8. Property, plant and equipment (PPE)
PPE is measured at cost less depreciation and impairment losses. The carrying amount of PPE is reviewed bi-annually for impairment triggers.
The cost of PPE constructed within the Group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of
fixed and variable overheads. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the statement of profit or loss during the financial period in which they are incurred.
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. Gains and losses on disposals are
determined by comparing proceeds with the carrying amount and are included in the profit or loss.
The depreciable amount of all PPE is depreciated using a straight line basis over their useful lives commencing from the time the asset is held
ready for use. The depreciation rates used in the current and previous period for each class of depreciable asset are between 3–33%.
Property, plant and equipment
Plant and equipment
Plant and equipment under construction
Less accumulated depreciation
Total property, plant and equipment
Reconciliation of movement in property, plant and equipment:
Balance at beginning of financial year
Additions
Depreciation expense
Total property, plant and equipment
Consolidated
2022
$million
2021
$million
13.3
3.0
(10.1)
6.2
8.6
–
(2.4)
6.2
14.4
2.0
(7.8)
8.6
9.6
0.7
(1.7)
8.6
Annual Report 2022Beach Energy Limited 88
Notes to the Financial Statements
9. Petroleum assets
Petroleum assets are stated at cost less accumulated depreciation and impairment charges. They include initial cost, with an appropriate
proportion of fixed and variable overheads, to acquire, construct, install or complete production and infrastructure facilities such as pipelines and
platforms, capitalised borrowing costs, transferred exploration and evaluation assets and development wells. Subsequent capital costs, including
major maintenance, are included in the asset’s carrying amount only when it is probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured reliably. The depreciable amount of all onshore production facilities, field and other
equipment excluding freehold land is depreciated using a straight line basis over the lesser of their useful lives and the life of proved and probable
reserves commencing from the time the asset is held ready for use. Offshore production facilities and field equipment are depreciated based on
a units of production method using proved and probable reserves. The depreciation rates used in the current and previous period for each class
of depreciable asset are 1–67% for onshore production facilities, field and other equipment.
Subsurface assets are amortised using the units of production method over the life of the area according to the rate of depletion of the proved and
probable reserves. Retention of petroleum licences is subject to meeting certain work obligations/commitments as detailed in Note 15. The assets
residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. Gains and losses on disposals are determined by
comparing proceeds with the carrying amount and are included in the profit or loss.
Estimates of reserve and resource quantities
The estimated quantities of reserves and resources reported by the Group are integral to the calculation of amortisation (depletion) expense and
to assessments of possible impairment or impairment reversal. The estimated quantities of reserves and resources are based upon interpretations
of geological, geophysical and engineering models and assessment of the technical feasibility and commercial viability of production. Beach
prepares its reserves and resources estimates in accordance with the 2018 update to the Petroleum Resources Management System sponsored
by the Society of Petroleum Engineers, World Petroleum Council, American Association of Petroleum Geologists and Society of Petroleum
Evaluation Engineers (SPE-PRMS).
All estimates of reserves and resources reported by Beach are prepared by, or under the supervision of, a qualified petroleum reserves and
resources evaluator. Over half of Beach’s 2P reserves as at 30 June 2022 have been independently audited by Netherland, Sewell & Associates
Inc. in accordance with Beach’s reserves policy. Reserves and resources estimates require assumptions regarding future development and
production costs, commodity prices, exchange rates and fiscal regimes. Estimates may change from period to period as the economic
assumptions used to prepare the estimates can change from period to period, and as additional geological and engineering information
becomes available through additional drilling or technical analysis. Estimates are reviewed annually or when there are significant changes in the
circumstances impacting specific assets or asset groups. These changes may impact depreciation, asset carrying values, restoration provisions
and deferred tax balances. If reserves estimates are revised downwards, earnings could be affected by higher depreciation expense or an
immediate write-down of the asset’s carrying value.
Field land and buildings
Land and buildings at cost
Less accumulated depreciation
Total field land and buildings
Reconciliation of movement in field land and buildings:
Balance at beginning of financial year
Additions
Depreciation expense
Foreign exchange movement
Total field land and buildings
Production facilities and field equipment
Production facilities and field equipment
Production facilities and field equipment under construction
Less accumulated depreciation
Total production facilities and field equipment
Consolidated
2022
$million
2021
$million
81.0
(24.6)
56.4
56.4
2.8
(2.3)
(0.5)
56.4
78.7
(22.3)
56.4
54.8
4.0
(2.3)
(0.1)
56.4
2,210.4
107.7
(1,066.6)
2,090.9
89.9
(996.4)
1,251.5
1,184.4
89
Consolidated
2022
$million
2021
$million
1,184.4
150.1
0.9
–
(78.8)
(0.2)
(4.9)
1,251.5
1,166.8
105.4
30.2
(17.7)
(98.1)
(0.2)
(2.0)
1,184.4
4,385.3
633.2
(2,566.9)
2,451.6
4,031.8
451.0
(2,292.0)
2,190.8
2,190.8
554.7
0.8
(70.3)
–
–
7.5
–
(276.3)
–
44.4
2,451.6
3,759.5
1,764.9
406.8
87.7
53.3
180.8
(17.6)
7.1
(0.1)
(305.2)
(1.5)
14.6
2,190.8
3,431.6
Reconciliation of movement in production facilities, field and other equipment:
Balance at beginning of financial year
Additions
Acquisition of assets and joint operation interests (Note 26)
Impairment of production facilities and field equipment
Depreciation expense
Disposals
Foreign exchange movement
Total production facilities and field equipment
Subsurface assets
Subsurface assets at cost
Subsurface assets under construction
Less accumulated depreciation
Total subsurface assets
Reconciliation of movement in subsurface assets
Balance at beginning of financial year
Additions
Acquisition of assets and joint operation interests (Note 26)
Increase/(decrease) in restoration
Transfer from exploration and evaluation assets
Impairment of subsurface assets
Borrowing costs capitalised
Foreign exchange movement
Amortisation expense
Disposals
Capitalised depreciation of lease assets
Total subsurface assets
Total petroleum assets
The carrying amounts of petroleum assets are assessed half yearly to determine whether there is an indication of impairment or impairment
reversal for those assets which have previously been impaired. Indicators of impairment and impairment reversals include changes in future
selling prices, future costs and reserves. When assessing potential indicators of impairment or reversals the Group models scenarios and a
range of possible future commodity prices is considered. If any such indication exists, the asset’s recoverable amount is estimated. Petroleum
assets are assessed for impairment indicators on a cash generating unit (CGU) basis. Following review of interdependencies between the various
operations within the Group, it has been determined that the operational CGUs are Cooper Basin, Perth Basin, Victoria Otway, South Australia
Otway, Bass Gas and Kupe. Where the carrying value of a CGU includes goodwill, the recoverable amount of the CGU is estimated regardless
of whether there is an indicator of impairment or not.
The recoverable amount of an asset or CGU is determined as the higher of its value in use and fair value less costs of disposal. Value in use
is determined by estimating future cash flows based on reserves after taking into account the risks specific to the asset and discounting it to its
present value using an appropriate discount rate. Fair value less costs of disposal also considers value attributable to additional resource and
exploration opportunities beyond reserves based on production plans as well as costs of disposal. If the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset or CGU is written down and an impairment loss is recognised in the statement of profit or loss. For
assets previously impaired, if the recoverable amount exceeds the carrying amount and the indicators driving the increase in value are sustained
for a period of time, the impairment loss is reversed, except in relation to goodwill. The carrying amount of the asset or CGU is increased to the
revised estimate of its recoverable amount, but only to the extent that the asset’s carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Future cash flow information used for the recoverable amount calculations is based on the Group’s latest reserves, budget, five-year plan and
project economic plans which includes information sourced and reviewed from operators of our non-operated interests.
Annual Report 2022Beach Energy Limited 90
Notes to the Financial Statements
9. Petroleum assets (continued)
Impairment and impairment reversal indicator modelling
In determining whether there is an indicator of impairment, in the
absence of quoted market prices, estimates are made regarding
the present value of future cash flows for each CGU. These estimates
require significant management judgement and are subject to risk
and uncertainty, and hence changes in economic conditions can also
affect the assumptions used and the rates used to discount future cash
flow estimates. Current climate change legislation is also factored into
the calculation and future uncertainty around climate change risks
continue to be monitored. These risks may include a proportion of a
CGU’s reserves becoming incapable of extraction in an economically
viable fashion; demand for the Group’s products decreasing, due
to policy, regulatory (including carbon pricing mechanisms), legal,
technological, market or societal responses to climate change and
physical impacts related to acute risks resulting from increased
severity of extreme weather events, and those related to chronic
risks resulting from longer-term changes in climate patterns. In most
cases, the present value of future cash flows is most sensitive to the
assumptions outlined below. An evaluation of climate risk is reflected
in Beach’s assumptions on carbon cost pricing, including carbon
pricing slope of $34/tCO2e increasing to A$61/tCO2e by 2030 then
increasing to A$70/tCO2e by 2040 (real) and incorporating the
benefits of CCS and the delivery of other committed projects which
is applicable to Australian emissions that exceed facility-specific
baselines in accordance with Australian regulations. Beach continues
to monitor the uncertainty around climate change risks and will revise
carbon pricing assumptions accordingly. The present value of future
cash flows for each CGU were estimated using the assumptions
below with reference to external market forecasts at least bi-annually.
The assumptions applied have regard to contracted prices and
observable market data including forward values and external market
analyst’s forecasts.
For the current financial year, the following assumptions were used
in the assessment of the CGU’s recoverable amounts:
– Brent oil price (real) of US$102.50/bbl in FY23, US$87.50/bbl for
FY24, US$83.75/bbl for FY25, US$81.25/bbl for FY26 and
US$70/bbl for FY27 and beyond.
– A$/US$ exchange rate of 0.74 for FY23 and 0.75 for FY24
and beyond.
– A$/NZ$ exchange rate of 1.07 for FY23 and beyond.
– Post-tax real discount rate of 7%.
For impairment reversals, the present value of future cash flows are
considered using lower oil price scenarios based on a Monte-Carlo
simulation of Reuters Mean and a 10% reduction in life of asset
production, assuming production loss under a long-term oil-price
constrained environment.
In the event that future circumstances vary from these assumptions,
the recoverable amount of the Group’s petroleum assets could change
materially and result in impairment losses or the reversal of previous
impairment losses. Due to the interrelated nature of the assumptions,
movements in any one variable can have an indirect impact on others
and individual variables rarely change in isolation. Additionally,
management can be expected to respond to some movements, to
mitigate downsides and take advantage of upsides, as circumstances
allow. Consequently, it is impracticable to estimate the indirect impact
that a change in one assumption has on other variables and hence, on
the likelihood, or extent, of impairments, or reversals of impairments,
under different sets of assumptions in subsequent reporting periods.
In the prior year, an impairment expense of $35.3 million was recorded
against the carrying value of petroleum assets for the SA Otway CGU
which is part of the SA operating segment due to the suspension of
operations at the Katnook Gas Plant. This impairment charge was
recognised within other expenses in the statement of profit or loss and
other comprehensive income.
10. Exploration and evaluation assets
Expenditure on exploration and evaluation is accounted for in
accordance with the area of interest method. Areas of interest are
based on a geological area. These costs are only carried forward
to the extent that they are expected to be recouped through the
successful development or sale of the area or where activities in
the area have not yet reached a stage that permits reasonable
assessment of the existence of proved and probable hydrocarbon
reserves and where the rights to tenure of the area of interest are
current. The costs of acquiring interests in new exploration and
evaluation licences are capitalised. The costs of drilling exploration
wells are initially capitalised pending the results of the well. Costs are
expensed where the well does not result in the successful discovery
of economically recoverable hydrocarbons and the recognition of an
area of interest. Subsequent to the recognition of an area of interest, all
further evaluation costs relating to that area of interest are capitalised.
Upon approval for the commercial development of an area of interest,
accumulated expenditure for the area of interest is transferred to
petroleum assets.
Area of interest
An area of interest (AOI) is defined by Beach as an area defined by
major geological structural elements that has a discrete exploration
strategy and has largely independent costs for exploration and
evaluation from other geological areas.
Impairment of exploration and evaluation assets
The recoverability of the carrying amount of the exploration and
evaluation assets is dependent on successful development and
commercial exploitation, or alternatively, sale of the respective AOI.
Each potential or recognised AOI is reviewed half-yearly to determine
whether economic quantities of reserves have been found or whether
further exploration and evaluation work is underway or planned
to support continued carry forward of capitalised costs. Where
a potential impairment is indicated, assessment is performed using a
fair value less costs to dispose method to determine the recoverable
amount for each AOI to which the exploration and evaluation
expenditure is attributed.
This assessment requires management to make certain estimates
and apply judgement in determining assumptions as to future
events and circumstances, in particular, the assessment of whether
economic quantities of reserves have been found. Any such estimates
and assumptions may change as new information becomes available.
If, after having capitalised expenditure under the policy, the Group
concludes that it is unlikely to recover the expenditure by future
exploitation or sale, then the relevant capitalised amount will be
written off to the statement of profit or loss. Retention of exploration
assets is subject to meeting certain work obligations/exploration
commitments as detailed in Note 15.
Government grants received in relation to the drilling of exploration
wells are recognised as a reduction in the carrying value of the
exploration permit as expenditure is incurred.
91
In the prior year, an impairment expense of $81.7 million was recorded against the carrying value of exploration and evaluation assets for the
SA Otway CGU which is part of the SA operating segment. This impairment charge was recognised within other expenses in the statement
of profit or loss and other comprehensive income.
Exploration and evaluation assets at beginning of financial year
Additions
Increase/(decrease) in restoration
Acquisition of assets and joint operation interests (Note 26)
Transfer to petroleum assets
Impairment of exploration and evaluation assets
Exploration and evaluation expenditure expensed
Disposal of joint operation interests
Foreign exchange movement
Capitalised depreciation of lease assets
Total exploration and evaluation assets
11. Intangible assets
Goodwill
Consolidated
2022
$million
2021
$million
334.8
100.1
3.1
(2.3)
–
–
0.2
(0.3)
(0.1)
9.2
444.7
462.4
126.5
4.2
48.8
(180.8)
(81.7)
(56.7)
(0.4)
(0.2)
12.7
334.8
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired
business combination accounted at the date of acquisition. Goodwill on acquisitions is included in intangible assets. Goodwill is not amortised,
but instead tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is
carried at cost less accumulated impairment losses. Gains or losses on the disposal of an entity include the carrying amount of goodwill relating
to the entity sold. Goodwill is allocated to CGUs for the purpose of impairment testing. An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable amount. The recoverable amount of an asset or CGU is the greater of its value-in-use and
its fair value less cost of disposal. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Goodwill acquired in a
business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination. Impairment losses are
recognised in profit or loss unless the asset has previously been revalued, in which case the impairment is recognised as a reversal to the extent
of that previous revaluation with any excess recognised in profit or loss. Refer to Note 9 for further information regarding critical accounting
estimates and judgements used for impairment testing.
Software
Software is stated at historical cost less accumulated amortisation. Where costs incurred to configure or customise Software as a Service (SaaS)
arrangement result in the creation of a resource which is identifiable, and where the company has the power to obtain the future economic
benefits flowing from the underlying resource and to restrict the access of others to those benefits, such costs are recognised as a separate
intangible software asset. In all other cases, SaaS costs are expensed as incurred. All capitalised software costs are amortised over the useful life
of the software on a straight-line basis. The amortisation is reviewed at least at the end of each reporting period and any changes are treated as
changes in accounting estimates.
Annual Report 2022Beach Energy Limited 92
Notes to the Financial Statements
11. Intangible assets (continued)
Amortisation methods and useful lives
The group amortises software assets with a limited useful life using the straight-line method over 5 years.
Goodwill
Goodwill at cost
Less accumulated amortisation
Total goodwill
Software
Software at cost
Less accumulated amortisation
Total software
Reconciliation of movement in software:
Balance at beginning of financial year
Additions
Amortisation expense
Total software
Total intangibles
Consolidated
2022
$million
2021
$million
57.1
–
57.1
45.6
(25.6)
20.0
20.0
5.5
(5.5)
20.0
77.1
57.1
–
57.1
39.8
(19.8)
20.0
21.7
3.9
(5.6)
20.0
77.1
12. Interests in joint operations
Exploration and production activities are conducted through joint arrangements governed by joint operating agreements, production sharing
contracts or similar contractual relationships. A joint operation involves the joint control, and often the joint ownership, of one or more assets
contributed to, or acquired for the purpose of the joint operation and dedicated to the purposes of the joint operation. The assets are used to
obtain benefits for the parties to the joint operation. Each party may take a share of the output from the assets and each bears an agreed share of
expenses incurred. Each party has control over its share of future economic benefits through its share of the joint operation. The interests of the
Group in joint operations are brought to account by recognising in the financial statements the Group’s share of jointly controlled assets, share of
expenses and liabilities incurred, and the income from the sale or use of its share of the production of the joint operation in accordance with the
Group’s revenue policy.
Accounting for interests in other entities
Judgement is required in assessing the level of control obtained in a transaction to acquire an interest in another entity; depending upon the facts
and circumstances in each case, Beach may obtain control, joint control or significant influence over the entity or arrangement. Judgement is
applied when determining the relevant activities of a project and if joint control is held over them. Relevant activities include, but are not limited
to, work program and budget approval, investment decision approval, voting rights in joint operating committees, amendments to permits and
changes to joint arrangement participant holdings. Transactions which give Beach control of a business are business combinations.
If Beach obtains joint control of an arrangement, judgement is also required to assess whether the arrangement is a joint operation or a
joint venture. If Beach has neither control nor joint control, it may be positioned to exercise significant influence over the entity, which is then
accounted for as an associate.
93
The Group has a direct interest in a number of unincorporated joint operations with those significant joint operation interests shown below.
Joint Operation
Oil and Gas interests
Australia
Cooper Basin (South Australia)
Ex PEL 92 (PRLs 85-104)
Ex PEL 513 (PRLs 191-206)
Ex PEL 632 (PRLs 131-134)
PEL 630
SA Fixed Factor Area
SA Unit
Cooper Basin (Queensland)
Naccowlah Block
ATP 299 (Tintaburra)
Total 66 Block
SWQ Unit
Otway Basin (Victoria/Tasmania)
Otway Gas Project
Bass Basin (Tasmania)
BassGas Project
Trefoil
Perth Basin (Western Australia)
Beharra Springs
Waitsia Gas Project
International
Taranaki Basin (New Zealand)
Kupe Gas Project
Principal activities
Oil production
Gas production and exploration
Gas production and exploration
Oil and gas exploration
Oil and gas production
Oil production
Oil production
Oil production
Oil production
Gas production
Gas production
Gas production
Gas development
Gas production
Gas production
% interest
2022
2021
75.0
40.0
40.0
–
33.4
33.4
38.5
40.0
30.0
39.9
75.0
40.0
40.0
50.0
33.4
33.4
38.5
40.0
30.0
39.9
60.0
60.0
88.8
90.3
50.0
50.0
88.8
90.3
50.0
50.0
Gas production
50.0
50.0
Details of commitments for expenditure and contingent liabilities incorporating the Group’s interests in joint operations are shown in Notes 15 and
27 respectively.
Annual Report 2022Beach Energy Limited 94
Notes to the Financial Statements
13. Provisions
A provision for rehabilitation and restoration is provided by the
Group where there is a present obligation as a result of exploration,
development, production, transportation or storage activities having
been undertaken, and it is probable that an outflow of economic
benefits will be required to settle the obligation. The estimated future
obligations include the costs of removing facilities, abandoning
wells and restoring the affected areas once petroleum reserves are
exhausted. Restoration liabilities are discounted to present value and
capitalised as a component part of petroleum assets and exploration
and evaluation assets. The capitalised costs are amortised over the life
of the petroleum assets. Any changes in the estimate are reflected in
the present value of the restoration provision at the reporting date,
with a corresponding change in the cost of the associated asset. In
the event the restoration provision is reduced, the cost of the related
petroleum or exploration asset is reduced by an amount not exceeding
its carrying value. If the decrease in restoration provision exceeds the
carrying amount of the asset, the excess is recognised immediately
in the statement of profit or loss as other income. The unwinding of
discounting on the provision is recognised as a finance cost through the
statement of profit or loss as the discounting of the liability unwinds at
the end of each reporting period.
Estimate of restoration costs
The Group holds provisions for the future removal costs of offshore
and onshore oil and gas platforms, production facilities and pipelines
at different stages of the development, construction and end of their
economic lives. Most of these decommissioning events are many years
in the future and the precise requirements that will have to be met when
the removal event occurs are uncertain. Decommissioning technologies
and costs are constantly changing, as are political, environmental,
safety and public expectations. The timing and amounts of future cash
flows are subject to significant uncertainty and estimation is required in
determining the amounts of provisions to be recognised.
The Group’s restoration obligations are based on compliance with
the requirements of relevant regulations which vary for different
jurisdictions and are often non-prescriptive. Australian legislation
requires removal of structures, equipment and property, or alternative
arrangements to removal which are satisfactory to the regulator. The
Group maintains technical expertise to ensure that industry learnings,
scientific research and local and international guidelines are reviewed
in assessing its restoration obligations.
The provision for restoration requires judgement regarding
removal date, environmental legislation and regulations, the extent
of restoration activities required, the engineering methodology for
estimating cost, removal technologies in determining the removal
cost, and inflation and discount rates to determine the present value
of these cash flows. It represents the Group’s best estimate based
on current industry practice, current legislation and regulations,
technology, price levels and expected plans for end of life remediation.
Within Beach’s provision the following costs have been provided:
– For offshore assets provision has been made for installation of
permanent well barriers, sever casings and conductors, recovery
of nearshore subsea flowlines, umbilicals and manifolds, platform
preparation, jacket and topside removal, cutting of piles, removal
and disposal of recovered components. It is currently the Group’s
intention to leave all subsea pipelines in-situ.
– For onshore assets provision has been made for demolition
and removal of facilities, removal of aboveground pipelines and
services, flush and clean and leave in-situ below ground pipelines,
removal of contaminated soil, site contouring and revegetation.
– For non-operated joint venture assets, the provision recorded
represents the Group’s share of the relevant Joint Venture operator
estimate as responsibility for the restoration will reside with
the operator who has the best knowledge and understanding of the
assets. The Group regularly assesses the operator estimates with
the assistance of Group appointed experts.
Elements composed of steel, or steel and concrete, with hydrocarbons
removed have previously been accepted by the Australian regulator
to be decommissioned in-situ where it has been demonstrated there
is an acceptable impact to the environment and to current and future
marine users (i.e. fishing, shipping and other activities).
The basis of the restoration provision for assets with approved
decommissioning plans or general directions issued by the regulator
can differ from the assumptions disclosed above. Whilst the provisions
reflect the Group’s best estimate based on current knowledge and
information, further studies and detailed analysis of the restoration
activities for individual assets will be performed near the end of their
operational life and/or when detailed decommissioning plans
are required to be submitted to the relevant regulatory authorities.
Actual costs and cash outflows can materially differ from the current
estimate as a result of changes in laws & regulations and their
application, prices, discovery and analysis of site conditions, public
expectations, further studies, timing of restoration and changes in
removal technology. These uncertainties may result in actual costs
and cash outflows differing from amounts included in the provision
recognised as at 30 June 2022. The timing and amount of future costs
relating to decommissioning and environmental liabilities are reviewed
annually, together with the inflation and discount rates. The discount
rates used to determine the obligations at 30 June 2022 reflected in
the statement of financial position were within the range 2.4% to 4.0%
(2021 within the range 0.0% to 2.2%), and were based on applicable
government bonds with a tenure aligned to the tenure of the liability.
Changes in assumptions in relation to the Group’s restoration provision
could result in a material change in their carrying amounts within the
next financial year. A 0.5% change in the nominal discount rate or
inflation rate could have an impact of approximately -$56/+$61 million
respectively on the value of the Group’s restoration provision. If the
cost estimates were increased by 10% then the provision would be
$78 million higher.
Estimated costs in the provision currently assume that all major
sub-sea pipelines will be left in-situ noting that, whilst the removal of
offshore pipelines is the default requirement under current legislation,
the existing guidelines provide options other than complete removal
if the titleholder can demonstrate that the alternative approach
delivers equal or better environmental, safety and well integrity
outcomes. The Group currently has plans that we believe would deliver
these equal or better outcomes and have prepared the provision
using our best estimate of these plans. In addition, cost savings have
also been embedded in the cost estimates assuming that restoration
activities can be undertaken in an efficient manner, such as part of a
campaign. Should the future outcome of negotiations with regulators
change these plans or impact our ability to realise the campaign cost
savings, these decommissioning activities may need to be expanded
or brought forward which may result in additional costs of up to
$270 million which are not included in our best estimate and the
associated provision recorded at 30 June 2022.
95
Estimate of employee entitlements
Annual and long service leave is measured at the present value of benefits accumulated up to the end of the reporting period. The liability is
discounted using an appropriate discount rate. Management requires judgement to determine key assumptions used in the calculation including
future increases in salaries and wages, future on-cost rates and future settlement dates of employees’ departures.
Current
Employee entitlements
Restoration
Other Provisions
Total
Non-Current
Employee entitlements
Restoration
Total
Movement in the Group’s provisions are set out below:
Balance at 1 July 2021
Provision made or reversed during the year
Provision paid/used during the year
Unwind of discount
Foreign exchange movements
Balance at 30 June 2022
Consolidated
2022
$million
2021
$million
21.2
63.7
4.5
89.4
0.9
854.3
855.2
19.5
23.4
–
42.9
0.8
938.7
939.5
Other
provisions
$million
Restoration
$million
Employee
entitle-
ments
$million
–
5.0
(0.5)
–
–
4.5
962.1
(49.4)
(14.4)
17.1
2.6
918.0
20.3
10.3
(8.5)
–
–
22.1
Annual Report 2022Beach Energy Limited 96
Notes to the Financial Statements
14. Leases
Recognition and measurement as a lessee
Leases are recognised as a lease asset and a corresponding liability
at the date at which the leased asset is available for use by the
Group. A lease is a contract (i.e., an agreement between two or more
parties that creates enforceable rights and obligations), or part of a
contract, that conveys the right to use an asset for a period of time in
exchange for consideration. To be a lease, a contract must convey the
right to control the use of an identified asset. Contracts may contain
both lease and non-lease components. The Group allocates the
consideration in the contract to the lease and non-lease components
based on their relative stand-alone prices. The Group has lease
contracts for various items of plant, machinery, vehicles, buildings
and other equipment used in its operations. The Group has several
lease contracts that include extension and termination options.
These options are negotiated by management to provide flexibility
in managing the leased-asset portfolio and align with the Group’s
business needs. Management exercises significant judgement in
determining whether these extension and termination options are
reasonably certain to be exercised.
Lease assets are measured at cost, less any accumulated depreciation,
and adjusted for any remeasurement of lease liabilities and for
impairment losses, assessed in accordance with the Group’s
impairment policies. The cost of lease assets includes the amount
of lease liabilities recognised, initial direct costs incurred, and lease
payments made at or before the commencement date less any lease
incentives received. The recognised lease assets are depreciated
on a straight-line basis over the shorter of its estimated useful life
and the lease term. Contracts may contain both lease and non-lease
components. The Group allocates the consideration in the contract
to the lease and non-lease components based on their relative
stand-alone prices. Judgement is required to determine the Group’s
rights and obligations for lease contracts within joint operations, to
assess whether lease liabilities are recognised gross (100%) or in
proportion to the Group’s participating interest in the joint operation.
This includes an evaluation of whether the lease arrangement contains
a sublease with the joint operation. Instances where the payments
regarding a lease contract are part of a joint operations and the Group
is the responsible party for payment, the Group recognises the full
lease liability, and recognises other income for the portion of payment
that is recovered through other parties within the joint venture
arrangement. Instances where a sublease is entered into, the Group
recognises the full lease liability, and recognises a sublease receivable
for the portion of payment that is recovered through other parties
within the sublease arrangement.
At the commencement date of the lease, the Group recognises lease
liabilities measured at the present value of lease payments to be made
over the lease term. In calculating the present value of lease payments,
the lease payments are discounted using the interest rate implicit in
the lease. If that rate cannot be readily determined, which is generally
the case for leases in the Group, the Group’s incremental borrowing
rate is used, being the rate that the Group would have to pay to borrow
the funds necessary to obtain an asset of similar value to the lease
asset in a similar economic environment with similar terms, security
and conditions. After the commencement date, the amount of lease
liabilities is increased by the interest cost and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in the lease term,
a change in the in-substance fixed lease payments or a change in the
assessment to purchase the underlying asset. Lease liabilities include
the net present value of the following lease payments:
– Fixed payments (including in-substance fixed payments), less any
lease incentives receivable;
– Variable lease payment that are based on an index or a rate, initially
measured using the index or rate as at the commencement date;
– Amounts expected to be payable by the Group under residual
value guarantees;
– The exercise price of a purchase option if the Group is reasonably
certain to exercise that option;
– Lease payments to be made under reasonably certain extension
options; and
– Payments of penalties for terminating the lease, if the lease term
reflects the Group exercising that option.
The Group is exposed to potential future increases in variable lease
payments based on an index or rate, which are not included in the
lease liability until they take effect. When adjustments to lease
payments based on an index or rate take effect, the lease liability
is reassessed and adjusted against the lease asset.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease period to
produce a constant periodic rate of interest on the remaining balance
of the liability for each period. Instances where the underlying costs
regarding a lease contract would previously have been capitalised, the
depreciation on the lease asset is capitalised. Payments associated with
short-term leases and all leases of assets considered to be of low value
are recognised on a straight-line basis as an expense in profit or loss.
Short-term leases are leases with a lease term of 12 months or less.
Set out below are the carrying amounts of lease assets recognised and the movements during the period:
Lease Assets at the beginning of the financial year
Additions
Lease remeasurement
Depreciation expense (1)
Total Lease Assets
97
Consolidated
2022
$million
2021
$million
72.2
24.1
0.2
(64.8)
31.7
58.7
70.2
(13.3)
(43.4)
72.2
(1)
Instances where the underlying costs regarding a lease contract would previously have been capitalised, the depreciation on the lease asset is capitalised. The
Group capitalisation of depreciation is $53.6m.
Set out below are the carrying amounts of lease liabilities and the movements during the period:
Lease Liabilities at the beginning of the financial year
Additions
Repayments (2) (3)
Lease remeasurement
Accretion of interest
Foreign exchange movements
Total Lease Liabilities
Current Liabilities
Non-current Liabilities
Consolidated
2022
$million
2021
$million
103.0
24.1
(101.5)
5.6
1.5
0.3
33.0
14.7
18.3
62.1
103.7
(53.8)
(13.3)
2.0
2.3
103.0
77.0
26.0
(2) Instances where the payments regarding a lease contract are part of a joint arrangement and the Group is the responsible party for payment, the Group
recognises the full lease liability, and recognises other income for the portion of payment that is recovered through other parties within the joint venture
arrangement. The Group recognised $3.3m of other income relating to joint venture recoveries.
(3) Instances where the payments regarding a lease contract are part of sublease arrangement and the Group is the responsible party for payment, the Group
recognises the full lease liability, and recognises a sublease receivable for the portion of payment that is recovered through other parties within the sublease
arrangement. The Group received $25.6m of sublease repayments from other parties and no longer holds a sublease receivable at 30 June 2022.
Payments of $7.7 million (FY21 $42.0 million) for short-term leases (lease term of 12 months or less) and payments of $0.1 million (FY21: $6 million)
for leases of low value assets were also accounted for in the year ended 30 June 2022.
Other income associated with lease arrangements
Where it has been determined that the Group directs the use of the leased asset, and is the only party with legal obligation to pay the lessor,
the Group recognises other income for any amount of the lease payments that are recoverable from other parties, representing “other income
related to joint venture lease recoveries” in other income. For the year ending 30 June 2022, the amount recognised was $3.3 million.
Annual Report 2022Beach Energy Limited 98
Notes to the Financial Statements
15. Commitments for expenditure
Capital Commitments
The Group has contracted the following amounts for capital expenditure at the end of the reporting period
for which no amounts have been provided for in the financial statements.
Due within 1 year
Due within 1–5 years
Due later than 5 years
Consolidated
2022
$million
2021
$million
154.0
–
–
154.0
69.6
–
–
69.6
Minimum Exploration Commitments
The Group is required to meet minimum expenditure requirements of various government regulatory bodies and joint arrangements. These
obligations may be subject to renegotiation, may be farmed out or may be relinquished and have not been provided for in the financial statements.
Due within 1 year
Due within 1–5 years
Due later than 5 years
Consolidated
2022
$million
2021
$million
35.4
45.0
2.1
82.5
35.2
47.0
4.2
86.4
The Group’s share of the above commitments that relate to its interest in joint arrangements are $152.6 million (FY21 $68.3 million) for capital
commitments and $23.3 million (FY21 $25.0 million) for minimum exploration commitments.
Default on permit commitments by other joint arrangement participants could increase the Group’s expenditure commitments over the
forthcoming 5 year period and/or result in relinquishment of tenements. Any increase in the Group’s commitments that arises from a default
by a joint arrangement party may be accompanied by a proportionate increase in the Group’s equity in the tenement concerned.
99
Financial and risk management
This section provides details on the Group’s debt and related financing costs, interest income, cash flows and the fair values of items in the
Group’s statement of financial position. It also provides details of the Group’s market, credit and liquidity risks and how they are managed.
16. Finances and borrowings
Borrowings are recognised initially at fair value, net of directly attributable transaction costs incurred. Subsequent to initial recognition, borrowings
are stated at amortised cost with any difference between cost and redemption being recognised in the profit or loss over the period of the
borrowings on an effective interest basis. Transaction costs are amortised on a straight line basis over the term of the facility. The unwinding of
present value discounting on debt and provisions is also recognised as a finance cost.
Borrowing costs relating to major oil and gas assets under development are capitalised as a component of the cost of development. Where funds
are borrowed specifically for qualifying projects, the actual borrowing costs incurred are capitalised. Where the projects are funded through general
borrowings, the borrowing costs are capitalised based on the weighted average cost of borrowing. Borrowing costs incurred after commencement
of commercial operations are expensed to the statement of profit or loss and other comprehensive income.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months
after the end of the reporting period. Interest income is recognised in the profit or loss as it accrues using the effective interest method and if not
received at balance date, is reflected in the statement of financial position as a receivable.
Net finance expenses/(income)
Finance costs
Interest expense
Discount unwinding on net present value assets and liabilities
Finance costs associated with lease liabilities
Less borrowing costs capitalised
Total finance expenses
Interest income
Net finance expenses
Non-current Borrowings
Bank debt
Less debt issuance costs
Total non-current borrowings
Consolidated
2022
$million
2021
$million
4.3
2.2
13.1
1.6
(7.5)
13.7
(0.2)
13.5
90.0
(2.7)
87.3
4.4
2.3
4.8
2.0
(7.1)
6.4
(0.9)
5.5
175.0
(0.9)
174.1
On 27 September 2021, Beach refinanced the existing $525 million Senior Secured Debt Facility, with a $675 million Senior Secured Debt Facility
comprised of a three year $250 million syndicated revolving debt facility maturing September 2024 (Facility A), a five year $350 million syndicated
revolving facility maturing September 2026 (Facility B), and three year $75 million bilateral Contingent Instrument facilities (CI Facilities) with a
maturity date of September 2024. As at 30 June 2022 $90 million of Facility A was drawn with $43 million of the CI Facilities being predominantly
utilised by way of bank guarantees. Bank debt bears interest at the relevant reference rate plus a margin, with the Group’s average interest rate on
interest bearing liabilities in FY22 of 1.42% (FY21 1.48%).
Annual Report 2022Beach Energy Limited 100
Notes to the Financial Statements
17. Cash flow reconciliation
For the purpose of the statement of cash flows, cash and cash equivalents includes cash on hand, cash at bank, term deposits with banks, and
highly liquid investments in money market instruments, net of outstanding bank overdrafts subject to them being an insignificant risk of change
in value and a short term maturity.
(a) Reconciliation of cash and cash equivalents
Cash at bank
Cash and cash equivalents
(b) Reconciliation of net profit to net cash provided by operating activities
Net profit after tax
Less items classified as investing/financing activities:
– Loss/(gain) on disposal of non-current assets
– Loss/(gain) on sale of joint operation interests
Add/(less) non-cash items:
– Share based payments
– Depreciation and amortisation
–
Impairment expense
– Exploration expense
– Restoration expense
– Foreign exchange loss
– Discount unwinding on provision for restoration
– Discount unwinding on acquired contract assets and liabilities
– Provision for stock obsolescence movement
– Gain on reversal of acquired liabilities
– Capitalised borrowing costs
– Amortisation of borrowing costs
Net cash provided by operating activities before changes in assets and liabilities
Changes in assets and liabilities net of acquisitions/disposal of subsidiaries:
– Decrease/(increase) in trade and other receivables
– Decrease/(increase) in inventories
– Decrease/(increase) in other current assets
– Decrease/(increase) in other non-current assets
– Decrease/(increase) in deferred tax assets
–
–
–
–
–
–
Increase/(decrease) in provisions
Increase/(decrease) in current tax liability
Increase/(decrease) in deferred tax liability
Increase/(decrease) in trade and other payables
Increase/(decrease) in debt establishment fees
Increase/(decrease) in net contract liabilities
Net cash provided by operating activities
(c) Reconciliation of liabilities arising from financing activities to financing cash flows
Opening Balance
Financing cash flows (1)
Non-cash changes
Operating cash flows (2)
Closing Balance
Consolidated
2022
$million
2021
$million
254.5
254.5
126.7
126.7
500.8
316.5
(0.1)
(0.7)
500.0
2.2
376.2
–
(0.2)
29.5
(0.8)
17.1
(4.0)
4.0
–
(7.5)
1.7
918.2
115.2
(5.3)
0.8
(13.8)
–
(9.6)
44.4
62.1
114.9
(3.4)
(0.3)
0.8
0.9
318.2
2.6
429.5
117.0
56.7
–
0.8
8.1
(3.3)
(0.7)
(35.4)
(6.6)
2.4
889.3
(96.5)
14.6
(28.6)
(18.8)
33.6
(10.6)
(80.9)
15.1
65.5
–
(22.9)
1,223.2
759.8
174.1
(85.0)
1.7
(3.4)
87.4
56.7
115.0
2.4
–
174.1
(1) Financing cash flows consist of the net amount of proceeds from borrowing $145 million (FY21: $260 million) and repayments of borrowings $230 million
(FY21: $145 million) in the statement of cash flows.
(2) Operating cash flows consist of the debt establishment fees ($3.4 million).
101
18. Financial risk management
The Group’s activities expose it to a variety of financial risks
including currency, commodity, interest rate, credit and liquidity risk.
Management identifies and evaluates all financial risks and may enter
into financial risk instruments such as foreign exchange contracts,
commodity contracts and interest rate swaps to hedge certain
risk exposures and minimise potential adverse effects of these risk
exposures in accordance with the Group’s financial risk management
policy as approved by the Board. The Group does not trade in
derivative financial instruments for speculative purposes.
The Board actively reviews all financial risks and any hedging on a
regular basis with updates provided to the Board from independent
consultants/banking analysts to keep them fully informed of the
current status of the financial markets. Reports providing detailed
analysis of any hedging in place are monitored against the Group’s
financial risk management policy on a regular basis.
The Group classifies its financial instruments in the following
categories: financial assets at amortised cost, financial assets at fair
value through profit or loss (FVTPL), financial assets at fair value
through other comprehensive income (FVOCI), financial liabilities at
amortised cost and derivative instruments. The classification depends
on the purpose for which the financial instruments were acquired,
which is determined at initial recognition based upon the business
model of the Group and the characteristics of the contractual cash
flows of the instrument.
With the exception of trade receivables, the Group initially measures a
financial asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs. Trade receivables
are measured at the transaction price determined under AASB 15.
Financial assets at amortised cost: A financial asset is classified in this
category if the asset is held with the objective of collecting contractual
cash flows and the contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest. These assets
are subsequently measured using the effective interest (EIR) method
and are subject to impairment. Gains and losses are recognised in profit
or loss when the asset is derecognised, modified or impaired.
Financial assets at fair value through other comprehensive income:
A financial asset is classified in this category if it relates to debt
securities where the contractual cash flows are solely principal and
interest and the objective of the Group’s business model is achieved
both by collecting contractual cash flows and selling financial assets.
Upon disposal, any balance within the OCI reserve for these debt
investments is reclassified to the statement of profit or loss.
Financial assets at fair value through profit or loss: A financial asset is
classified in this category if it is held for trading, designated upon initial
recognition at fair value through profit or loss, or mandatorily required
to be measured at fair value. Financial assets are classified as held for
trading if they are acquired for the purpose of selling or repurchasing
in the near term. Derivatives are also classified as held for trading
unless they are designated as effective hedging instruments. Financial
assets with cash flows that are not solely payments of principal and
interest are classified and measured at fair value through profit or loss,
irrespective of the business model. A financial asset is classified in this
category if acquired principally for the purpose of selling in the near
term. Realised and unrealised gains and losses arising from changes
in the fair value of these assets are included in profit or loss in the
period in which they arise.
Financial liabilities: On initial recognition, the Group measures a
financial liability at its fair value minus, in the case of a financial liability
not at fair value through profit or loss, transaction costs that are
directly attributable to the issue of the financial liability. After initial
recognition, these financial liabilities are stated at amortised cost.
Policies for the recognition and subsequent measurement of derivative
liabilities are as outlined below.
Derivative instruments: Derivative financial instruments may be
entered into by the Group for the purpose of managing its exposures
to market risks arising in the normal course of business. Any such
instruments would be assessed for hedge accounting. The principal
derivatives that may be used are commodity derivatives, forward foreign
exchange contracts and interest rate swaps. The use of derivative
financial instruments is subject to a set of policies, procedures and
limits approved by the Board of Directors. The Group does not trade
in derivative financial instruments for speculative purposes.
(a) Fair values
Certain assets and liabilities of the Group are recognised in the
statement of financial position at their fair value in accordance with
accounting standard AASB 13 Fair Value Measurement. The methods
used in estimating fair value are made according to how the available
information to value the asset or liability fits with the following fair
value hierarchy:
– Level 1 – the fair value is calculated using quoted prices in active
markets for identical assets or liabilities;
– Level 2 – the fair value is estimated using inputs other than quoted
prices included in Level 1 that are observable for substantially the
full term of the asset or liability; and
– Level 3 – the fair value is estimated using inputs for the asset or
liability that are not based on observable market data.
Annual Report 2022Beach Energy Limited 102
Notes to the Financial Statements
18. Financial risk management (continued)
(a) Fair values (continued)
The Group’s financial assets and financial liabilities measured and recognised fair value is set out below:
Carrying amount
Financial assets
Cash and cash equivalents
Receivables
Financial liabilities
Payables
Lease liabilities
Interest bearing liabilities
Financial assets/financial
liabilities at amortised cost
2022
2021
Note
$million
$million
254.5
222.5
477.0
338.3
33.0
90.0
461.3
126.7
355.0
481.7
267.7
103.0
175.0
545.7
14
16
The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period.
The following summarises the significant methods and assumptions used in estimating the fair values of financial instruments:
The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 30 June 2022 and there have been
no transfers between the levels of the fair value hierarchy during the year ended 30 June 2022.
The Group also has a number of other financial assets and liabilities including cash and cash equivalents, receivables and payables which are
recorded at their carrying value which is considered to be a reasonable approximation of their fair value.
(b) Market Risk
The Group is exposed to commodity price fluctuations through the sale of petroleum products and other oil-linked contracts. Derivatives may be
used by the Group to manage its forward commodity risk exposure. The Group policy to manage commodity price exposure may include the use
of Australian dollar denominated oil options. Changes in fair value of these derivatives are recognised immediately in the profit or loss and other
comprehensive income, having regard to whether they are defined as accounting hedges.
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not
the entity’s functional currency. The Group sells a portion of its products and commits to some contracts in US dollars or NZ dollars. Australian
dollar oil option contracts may be used by the Group to manage its foreign currency risk exposure. Any foreign currencies held which are surplus
to forecast needs are converted to Australian dollars as required.
There were no commodity hedges outstanding at 30 June 2021 or 30 June 2022.
The Group’s interest rate risk arises from the interest bearing cash held on deposit and its bank loan facility which is subject to variable interest
rates. The interest rate profile of the Group’s interest-bearing financial instruments is as follows:
Variable rate instruments:
Cash and cash equivalents
Interest bearing liabilities
Sensitivity analysis for all market risks
Consolidated
2022
$million
2021
$million
254.5
(90.0)
164.5
126.7
(175.0)
(48.3)
The following table demonstrates the estimated sensitivity to changes in the relevant market parameter, with all variables held constant, on post
tax profit and equity, which are the same as the profit impact flows through to equity. These sensitivities should not be used to forecast the future
effect of a movement in these market parameters on future cash flows which may be different as a result of the Group commodity hedge book.
103
Consolidated
2022
$million
2021
$million
59.4
(59.4)
(54.1)
66.1
(0.7)
0.1
88.5
(90.2)
(46.4)
56.7
(0.7)
(0.2)
Impact on post-tax profit and equity
US$ oil price – increase of $10/bbl
US$ oil price – decrease of $10/bbl
A$/$US – 10% increase in Australian/US dollar exchange rate
A$/$US – 10% decrease in Australian/US dollar exchange rate
Interest rates – increase of 1%
Interest rates – decrease of 1%
(c) Credit risk
Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well
as credit exposures to customers, including outstanding receivables and committed transactions, and represents the potential financial loss if
counterparties fail to perform as contracted. Management monitors credit risk on an ongoing basis. Gas sales contracts are spread across major
Australian and New Zealand energy retailers and industrial users with liquid hydrocarbon products sales being made to major multi-national
energy companies based on international market pricing.
The Group applied the simplified approach to providing for expected credit losses prescribed by AASB 9, which permits the use of the lifetime
expected loss provision for all trade receivables and contract assets. Under this method, determination of the loss allowance provision and
expected loss rate incorporates past experience and forward-looking information, including the outlook for market demand and forward-looking
interest rates. As the expected loss rate at 30 June 2022 is 0.1% (FY21 0.1%), a loss allowance has been recorded at 30 June 2022 of $0.2 million
(FY21 $0.2 million).
Ageing of Receivables:
Receivables not yet due
Receivables past due
Considered impaired
Total Receivables
Consolidated
2022
$million
2021
$million
222.5
0.2
(0.2)
222.5
355.0
0.2
(0.2)
355.0
The Group manages its credit risk on financial assets by predominantly dealing with counterparties with an investment grade credit rating.
Customers who wish to trade on unsecured credit terms are subject to credit verification procedures.
Cash is placed on deposit amongst a number of financial institutions to minimise the risk of counterparty default.
(d) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an
adequate amount of committed credit facilities and the ability to close out market positions. The Group aims at maintaining flexibility in funding
to meet ongoing operational requirements, exploration and development expenditure, and small-to-medium-sized opportunistic projects and
investments, by keeping committed credit facilities available. Details of Beach’s financing facilities are outlined in Note 16.
The Group’s exposure to liquidity risk for each class of financial liabilities is set out below:
Carrying amount
Less than
1 year
1 to 5
years
Greater than
5 years
Total
Note
2022
$million
2021
$million
2022
$million
2021
$million
2022
$million
2021
$million
2022
$million
2021
$million
14
16
334.9
14.7
263.2
77.0
–
–
349.6
340.2
3.0
18.3
90.0
111.3
2.5
18.3
175.0
195.8
0.4
–
–
0.4
2.0
7.7
–
9.7
338.3
33.0
90.0
461.3
267.7
103.0
175.0
545.7
Financial liabilities
Payables
Lease liabilities
Interest bearing
liabilities
Annual Report 2022Beach Energy Limited 104
Notes to the Financial Statements
Equity and group structure
This section provides information which will help users understand the equity and group structure as a whole including information on equity,
reserves, dividends, subsidiaries, the parent company, related party transactions and other relevant information.
19. Contributed equity
Ordinary shares are classified as equity. Transaction costs of an equity transaction are accounted for as a reduction to the proceeds received,
net of any related income tax benefit. Transaction costs are the costs that are incurred directly in connection with the issue of those equity
instruments and which would not have been incurred had those instruments not been issued.
Issued and fully paid ordinary shares at 30 June 2020
Issued during the FY21 financial year
Shares issued on vesting/exercise of unlisted performance rights
Repayment of employee loans and sale of employee shares
Shares purchased on market (Treasury shares), net of tax
Utilisation of Treasury shares on vesting of shares and rights under
employee and executive incentive plans
Issued and fully paid ordinary shares at 30 June 2021
Issued during the FY22 financial year
Repayment of employee loans and sale of employee shares
Shares purchased on market (Treasury shares), net of tax
Utilisation of Treasury shares on vesting of shares and rights under
employee and executive incentive plans
Issued and fully paid ordinary shares at 30 June 2022
Treasury shares
Number of
Shares
2,280,808,177
$million
1,861.2
525,479
–
–
–
–
0.2
(4.0)
2.1
2,281,333,656
1,859.5
–
–
–
1.0
(0.7)
2.5
2,281,333,656
1,862.3
Treasury shares are held to satisfy the obligations under the employee and executive incentive plans. Shares are accounted for at the weighted
average cost for the period. During the year $1.0 million (FY21: $5.6 million) of Treasury shares were purchased on market.
Movement in Treasury shares
Balance at 30 June 2020
Shares purchased on market during FY21
Utilisation of Treasury shares on vesting of rights under executive incentive plan
Balance at 30 June 2021
Shares purchased on market during FY22
Utilisation of Treasury shares on vesting of rights under executive incentive plan
Balance at 30 June 2022
Number
520,325
3,523,725
(1,069,650)
2,974,400
709,379
(1,763,535)
1,920,244
In accordance with Corporations Act 2001 shares issued do not have a par value as there is no limit on the authorised share capital of the Company.
All shares issued under the Company’s employee incentive plan are accounted for as a share-based payment (refer Note 4 and 20 for further
details). Shares issued under the Company’s dividend reinvestment plan and employee incentive plan represent non-cash investing and financing
activities. On a show of hands, every person qualified to vote, whether as a member or proxy or attorney or representative, shall have one
vote. Upon a poll, every member shall have one vote for each ordinary share held. Pursuant to the employee share plan trust, the trustee shall not
vote any shares held in respect of the employee incentive plan or executive incentive plan, except where it is incidental to providing shares to the
participants in the plan.
Details of shares and rights issued and outstanding under the Employee Incentive Plan and Executive Incentive Plan are provided in Note 4.
105
Dividend Reinvestment Plan
The Board suspended the operation of the Dividend Reinvestment Plan on 21 August 2017 on the basis that this form of capital management
is not required at this time.
Capital management
Management is responsible for managing the capital of the Group, on behalf of the Board, in order to maintain an appropriate debt to equity
ratio, provide shareholders with adequate returns and ensure the Group can fund its operations with secure, cost-effective and flexible sources
of funding. The Group debt and capital includes ordinary shares, borrowings and financial liabilities supported by financial assets. Management
effectively manages the capital of the Group by assessing the financial risks and adjusting the capital structure in response to changes in these
risks and in the market. The responses include the management of debt levels, dividends to shareholders and share issues. The Group net gearing
ratio is 1.5% (FY21 1.5%). Net gearing has been calculated as interest bearing liabilities less cash and cash equivalents, as a proportion of these
items plus shareholder’s equity.
20. Reserves
The share based payments reserve is used to recognise the fair value of shares, options and rights issued to employees of the Company.
The Foreign currency translation reserve is used to record foreign exchange differences arising from the translation of the financial statements
of subsidiaries with functional currencies other than Australian dollars.
The Profit distribution reserve represents an amount allocated from retained earnings that is preserved for future dividend payments.
Share based payments reserve
Foreign currency translation reserve
Profit distribution reserve
Total reserves
Consolidated
2022
$million
2021
$million
36.1
(10.5)
790.0
815.6
36.5
(5.0)
835.6
867.1
21. Dividends
A provision is recognised for dividends when they have been announced, determined or publicly recommended by the directors on or before the
reporting date.
Final dividend of 1.0 cent (2021 1.0 cent)
Interim dividend of 1.0 cent (2021 1.0 cent)
Total dividends paid or payable
Consolidated
2022
$million
2021
$million
22.8
22.8
45.6
22.8
22.8
45.6
Franking credits available in subsequent financial years based on a tax rate of 30% (2021: 30%)
549.5
475.3
Annual Report 2022Beach Energy Limited 106
Notes to the Financial Statements
22. Subsidiaries
Name of Company
Beach Energy Limited (1)
Beach Petroleum (NZ) Pty Ltd
Beach Oil and Gas Pty Ltd
Beach Production Services Pty Ltd
Beach Petroleum (Cooper Basin) Pty Ltd
Beach (Tanzania) Pty Ltd
Beach Petroleum (Tanzania) Limited
Beach Energy (Operations) Limited (1)
Beach Energy (Perth Basin) Pty Ltd (1)
Beach Energy (Bonaparte) Pty Ltd
Beach Energy (Bass Gas) Limited
Beach Energy Services Pty Ltd
Beach Energy Finance Pty Ltd
Beach Energy (Offshore) Pty Ltd
Beach Energy (Otway) Limited
Beach Petroleum (NT) Pty Ltd
Territory Oil & Gas Pty Ltd
Adelaide Energy Pty Ltd
Australian Unconventional Gas Pty Ltd
Deka Resources Pty Ltd
Well Traced Pty Ltd
Australian Petroleum Investments Pty Ltd (1)
Delhi Holdings Pty Ltd
Delhi Petroleum Pty Ltd (1)
Impress Energy Pty Ltd(1)
Impress (Cooper Basin) Pty Ltd (1)
Springfield Oil and Gas Pty Ltd (1)
Mazeley Ltd
Mawson Petroleum Pty Ltd
Drillsearch Energy Pty Ltd (1)
Circumpacific Energy (Australia) Pty Ltd
Drillsearch Gas Pty Ltd
Drillsearch (Field Ops) Pty Ltd
Drillsearch (513) Pty Ltd
Drillsearch (Central) Pty Ltd
Ambassador Oil & Gas Pty Ltd
Ambassador (US) Oil & Gas LLC
Ambassador Exploration Pty Ltd
Acer Energy Pty Ltd
Great Artesian Oil & Gas Pty Ltd (1)
Beach Energy Resources NZ (Holdings) Limited
Beach Energy Resources NZ (Kupe) Limited
Beach Energy (Kupe) Limited
Kupe Mining (No.1) Limited
Beach Energy Resources NZ (Clipper) Limited
Beach Energy Resources NZ (Tawhaki) Limited
Beach Energy Resources NZ (Tawn) Limited
Beach Energy Resources NZ (Wherry No.1) Limited
Beach Energy Resources NZ (Wherry No.2) Limited
Place of incorporation
South Australia
South Australia
New South Wales
South Australia
Victoria
Victoria
Tanzania
South Australia
Australian Capital Territory
South Australia
UK
Victoria
Victoria
South Australia
UK
Victoria
Northern Territory
South Australia
South Australia
South Australia
South Australia
Victoria
Victoria
South Australia
Western Australia
Victoria
Western Australia
Liberia
Queensland
Victoria
New South Wales
Queensland
New South Wales
New South Wales
Victoria
Victoria
USA
Victoria
Queensland
New South Wales
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
All shares held are ordinary shares, other than Mazeley Ltd which is held by a bearer share.
(1) Company in Closed Group in FY21 and FY22 (refer Note 23).
Percentage of shares held
%
2022
%
2021
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
107
23. Deed of cross guarantee
Pursuant to ASIC (wholly-owned companies) Instrument 2016/785, certain wholly-owned subsidiaries can be relieved from the Corporations Act
2001 requirements for preparation, audit and lodgement of their financial reports.
As a condition of the Class Order, Beach and each of the subsidiaries that opted for relief during the year (the Closed Group) entered into a Deed
of Cross Guarantee (Deed). The effect of the Deed is that Beach has guaranteed to pay any deficiency in the event of winding up of any of the
subsidiaries under certain provisions of the Corporations Act 2001. The Subsidiaries have also given a similar guarantee in the event that Beach is
wound up. Those companies in the Closed Group for each year are referred to in Note 22.
The consolidated statement of profit or loss and other comprehensive income, summary of movements in retained earnings/(accumulated
losses) and statement of financial position of the Closed Group are as follows:
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Revenue
Cost of sales
Gross profit
Other income
Other expenses
Operating profit before financing costs
Interest income
Finance expenses
Profit before income tax expense
Income tax expense
Profit after tax for the year
Other comprehensive income/(loss) net of tax
Total comprehensive income/(loss) after tax
Summary of movements in the Closed Group’s retained earnings/(accumulated losses)
Retained earnings at beginning of the year
Net profit for the year
Retained earnings/(accumulated losses) at end of the year
Closed Group
2022
$million
2021
$million
1,504.3
(885.1)
619.2
0.8
(37.8)
582.2
–
(18.1)
564.1
(174.5)
389.6
–
389.6
76.3
389.6
465.9
1,382.3
(867.6)
514.7
11.6
(68.7)
457.6
0.2
(11.8)
446.0
(131.1)
314.9
–
314.9
(238.6)
314.9
76.3
Annual Report 2022Beach Energy Limited 108
Notes to the Financial Statements
23. Deed of cross guarantee (continued)
Consolidated Statement of Financial Position
Current assets
Cash and cash equivalents
Receivables
Inventories
Other
Total current assets
Non-current assets
Property, plant and equipment
Petroleum assets
Exploration and evaluation assets
Lease assets
Intangible Assets
Other financial assets
Other
Total non-current assets
Total assets
Current liabilities
Payables
Provisions
Current tax liability
Lease liabilities
Contract liabilities
Total current liabilities
Non-current liabilities
Payables
Provisions
Lease liabilities
Contract liabilities
Deferred Tax Liability
Interest bearing liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings/(accumulated losses)
Total equity
Closed Group
2022
$million
2021
$million
243.3
229.7
92.1
99.4
664.5
7.1
3,470.4
334.9
30.4
75.7
291.7
60.2
4,270.4
4,934.9
306.7
78.0
14.0
14.3
–
413.0
524.9
671.6
17.3
–
88.3
87.3
1,389.4
1,802.4
3,132.5
1,862.3
804.3
465.9
3,132.5
113.0
411.2
92.6
71.2
688.0
8.6
3,173.8
213.0
70.1
77.1
266.0
–
3,808.6
4,496.6
209.5
38.5
10.1
76.4
12.0
346.5
408.9
730.6
24.5
3.9
1.3
174.1
1,343.3
1,689.8
2,806.8
1,857.8
872.7
76.3
2,806.8
24. Parent entity financial information
Selected financial information of the parent entity, Beach Energy Limited, is set out below:
Financial performance
Net profit/(loss) after tax
Other comprehensive income/(loss), net of tax
Total comprehensive income after tax
Total current assets
Total assets
Total current liabilities
Total liabilities
Issued capital
Share based payments reserve
Profits distribution reserve
Other reserve
Retained earnings
Total equity
Expenditure Commitments
109
Parent
2022
$million
2021
$million
44.8
–
44.8
34.0
–
34.0
1,161.9
963.3
2,753.0
2,532.8
947.9
1,128.6
1,862.3
36.1
790.0
0.6
(1,064.6)
626.1
910.0
1,859.5
36.5
835.6
0.6
(1,109.4)
1,624.4
1,622.8
The Company’s contracted expenditure at the end of the reporting period for which no amounts have been provided for in the financial statements.
Capital expenditure commitments
Minimum exploration commitments
Contingent liabilities and guarantees
Parent
2022
$million
2021
$million
14.1
–
1.3
–
Details of contingent liabilities for the Company in respect of service agreements, bank guarantees and parent company guarantees are disclosed
in Note 27.
Beach Energy Limited and a number of its wholly owned subsidiaries are parties to a Deed of Cross Guarantee as disclosed in Note 23. The effect
of the Deed is that Beach Energy Limited has guaranteed to pay any deficiency in the event of winding up of any of the listed subsidiary companies
under certain provisions of the Corporations Act 2001.
Parent entity financial information has been prepared using the same accounting policies as the consolidated financial statements except for
investments in controlled entities which are included in other financial assets and are initially recorded in the financial statements at cost.
These investments may have subsequently been written down to their recoverable amount determined by reference to the net assets of the
controlled entities at the end of the reporting period where this is less than cost.
25. Related party disclosures
Transactions with related parties are on normal commercial terms and conditions no more favourable than those available to other parties
unless otherwise stated.
Remuneration for Key Management Personnel
Short term benefits
Share based payments
Other long term benefits
Termination payments
Total
Consolidated
2022
$
2021
$
6,498,981
1,378,686
16,314
653,712
5,401,866
1,381,716
85,447
–
8,547,693
6,869,029
Annual Report 2022Beach Energy Limited 110
Notes to the Financial Statements
25. Related party disclosures (continued)
Subsidiaries
Interests in subsidiaries are set out in Note 22.
Transactions with other related parties
During the financial year ended 30 June 2022, Beach paid $624,877 (FY21 $847,529) to Coates Hire Operations Pty Ltd, an entity of which
Ryan Stokes and Richard Richards are both directors, for the hire of equipment on arm’s length commercial terms.
Directors fees payable to Mr Davis for the year ended 30 June 2022 of $305,000 (FY21 $289,750) were paid directly to DMAW Lawyers.
26. Acquisitions and disposals
The acquisition method of accounting is used to account for all business combinations, including business combinations involving entities or
businesses under common control, regardless of whether equity instruments issued or liabilities incurred or assumed at the date of exchange.
Where equity instruments are issued in an acquisition, the fair value of the instruments is their published market price as at the date of
exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair
value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of
equity instruments are recognised directly in equity. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. Transaction
costs incurred in relation to the business combination are expensed as incurred to the statement of profit or loss. The excess of the cost of
acquisition over the fair value of the consolidated entity’s share of the identifiable net assets acquired is recorded as goodwill.
Asset acquisitions which are not business combinations are accounted for by allocating the purchase consideration, including capitalised
transaction costs, against identifiable assets and liabilities acquired, based on their relative fair values determined on acquisition date.
In the previous financial year, Beach executed an asset purchase agreement with Senex Energy to acquire Senex’s Cooper Basin assets for a
cash consideration of $87.5 million. The transaction was subject to a number of conditions precedent and completed on 1 March 2021 with
an adjustment made to the acquisition price based on cash flows from 1 July 2020 to the completion date.
Beach also entered into an asset purchase agreement in January 2021 with Mitsui subsidiaries AWE Petroleum Pty Ltd and AWE (Bass Gas)
Pty Ltd to acquire all of its interests in the Bass Basin. These assets include Mitsui’s 35.0% interest in the BassGas Project (comprising the
onshore Lang Lang Gas Plant and Yolla gas field), as well as its 40.0% interest in the Trefoil development project and surrounding retention
leases. The transaction, the terms of which are confidential, was subject to regulatory approvals and third-party consents and completed on
31 July 2021 with an adjustment made to the acquisition price based on cash flows from 1 July 2020 to the completion date.
Both acquisitions have been accounted for in the prior financial year as asset acquisitions as they meet the requirements of the optional
concentration test under AASB 3 Business Combinations. Details of the combined purchase consideration and purchase price allocation
to net identifiable assets acquired for both acquisitions are as follows:
Purchase consideration
Transaction costs
Total purchase consideration
Fair Value of assets acquired
Assets and liabilities held at acquisition date:
– Receivables
Inventory
–
– Petroleum assets
– Exploration and evaluation assets
– Current payables
– Restoration provision
– Other non-current provisions
Net assets acquired
Purchase consideration
Add amount to be received on completion
Less accrued transactions costs
Net cash outflow on acquisition
2021
$million
71.7
4.6
76.3
8.1
5.2
117.9
48.8
(5.4)
(98.1)
(0.2)
76.3
76.3
11.6
(3.7)
84.2
111
Other information
Additional information required to be disclosed under Australian Accounting Standards.
27. Contingent liabilities
The directors are of the opinion that the recognition of a provision is
not required in respect of the following matters, as it is not probable
that a future sacrifice of economic benefits will be required or the
amount of the obligation cannot be measured with sufficient reliability.
Service agreements
Service agreements exist with executive officers under which
termination benefits may, in appropriate circumstances, become
payable. The maximum contingent liability at 30 June 2022 under
the service agreements for the executive officers is $1,961,077
(FY21 $2,083,910).
Bank guarantees
As at 30 June 2022, Beach has been provided with a three year
$75 million bilateral Contingent Instrument facilities (CI Facilities),
of which $43 million had been utilised by way of bank guarantees
or letters of credit as security predominantly for our environmental
obligations and work programs (refer Note 16 for further details on the
corporate debt facility).
Estimated costs in the provision currently assume that all major
sub-sea pipelines will be left in-situ noting that, whilst the removal of
offshore pipelines is the default requirement under current legislation,
the existing guidelines provide options other than complete removal if
the titleholder can demonstrate that the alternative approach delivers
equal or better environmental, safety and well integrity outcomes.
The Group currently has plans that we believe would deliver these
equal or better outcomes and have prepared the provision using
our best estimate of these plans. In addition, cost savings have also
been embedded in the cost estimates assuming that restoration
activities can be undertaken in an efficient manner, such as part of a
campaign. Should the future outcome of negotiations with regulators
change these plans or impact our ability to realise the campaign cost
savings, these decommissioning activities may need to be expanded
or brought forward which may result in additional cost which are not
included in our best estimate and the associated provision recorded
at 30 June 2022.
The Offshore Petroleum and Greenhouse Gas Storage Amendment
(Titles Administration and Other Measures) Act 2021 (Titles
Administration Act) became law on 2 September 2021 and in force
from 2 March 2022. The Bill has been developed after consultation
with industry, regulators and the public.
Joint Venture Operations
The bill amendments are as follows:
In the ordinary course of business, the Group participates in a number
of joint ventures which is a common form of business arrangement
designed to share risk and other costs. Failure of the Group’s joint
venture partners to meet financial and other obligations may have an
adverse financial impact on the Group.
Tax obligations
In the ordinary course of business, the Group is subject to audits from
government revenue authorities which could result in an amendment
to historical tax positions.
– oversight of changes in company control (such as through
a corporate merger or acquisition);
– an expansion of existing powers to ‘call back’ previous titleholders
to decommission and remediate the environment (also known as
trailing liability);
– the inclusion of decision making criteria and expanded information
gathering powers to assess suitability of companies operating in
the offshore oil and gas regime; and
– minor and technical amendments to improve the operation of
the OPGGS Act, including enabling for electronic lodgement
of applications.
Parent Company Guarantees
Beach has provided parent company guarantees in respect of
performance obligations for certain exploration interests.
Restoration obligations (refer Note 13)
The Group holds provisions for the future removal costs of offshore
and onshore oil and gas platforms, production facilities and pipelines
at different stages of the development, construction and end of their
economic lives. Most of these decommissioning events are many
years in the future and the precise requirements that will have to be
met when the removal event occurs are uncertain. Decommissioning
technologies and costs are constantly changing, as are political,
environmental, safety and public expectations. The timing and
amounts of future cash flows are subject to significant uncertainty and
estimation is required in determining the amounts of provisions to be
recognised with the provision representing the Group’s best estimate
based on current industry practice, regulations, technology, price
levels and expected plans for end of life remediation.
Under the current framework a titleholder can only be ‘called back’
when a title has ceased through termination, expiration, revocation,
cancellation or has been surrendered. The enhanced framework
would empower the regulator and the responsible Commonwealth
Minister to ‘call back’ a previous titleholder to remediate the title
area, regardless of how its interest in the title ceased. Requiring a
former titleholder to decommission and remediate the environment
is intended to be an option of last resort where all other regulatory
options have been exhausted.
This legislation does not materially impact the financial position
or performance of the Group at 30 June 2022.
Annual Report 2022Beach Energy Limited 112
Notes to the Financial Statements
27. Contingent liabilities (continued)
Shareholder class action
One of two competing shareholder class actions filed against Beach in November 2021 has been dismissed. The remaining claim is proceeding
in the Victorian Supreme Court.
At this stage, it is not possible to determine what financial impact, if any, this claim may have on Beach’s financial position. In respect of the
substance of the claim, Beach considers that it has at all times complied with its disclosure obligations, denies any liability and will vigorously
defend the proceedings.
Legal proceedings and claims
The Group may be involved in various other legal proceedings and claims in the ordinary course of business, including contractual, third party,
contractor and regulatory claims. While the outcome of these legal proceedings and claims cannot be predicted with certainty, it is the directors’
opinion that as of the date of this report, it is unlikely these claims will have a material adverse impact on the Group.
28. Remuneration of auditors
Fees to Ernst & Young (Australia)
Auditing or reviewing the financial statements of the Group
Other assurance services required by legislation
Other assurance services not required by legislation
Other services
Total fees to Ernst & Young (Australia)
Fees to other overseas member firms of Ernst & Young (Australia)
Auditing the financial statements of controlled entities
Other assurance services not required by legislation
Total fees to other overseas member firms of Ernst & Young (Australia)
Fees to other audit firms
Auditing financial statements of controlled entities
Total fees to other firms
Total auditor’s remuneration
Consolidated
2022
$000
2021
$000
800
40
152
–
992
80
30
110
17
17
801
35
74
225
1,135
135
20
155
14
14
1,119
1,304
29. Subsequent events
On 8 August 2022, Beach announced the finalisation and signing of the LNG Sale and Purchase Agreement (SPA) with BP Singapore Pte. Limited,
a subsidiary of BP plc (bp). The LNG SPA will see bp purchase all 3.75 million tonnes of Beach’s expected LNG volumes from the Waitsia Stage 2
project. Supply is targeted to commence in the second half of 2023 and will continue for approximately five years. Terms include flexibility around
the commencement of supply, ensuring alignment with Waitsia Stage 2 construction and commissioning activities. The LNG SPA contains a
hybrid pricing structure linked to both Brent and Japan Korea Marker (JKM) indices. Pricing parameters agreed support Beach’s exposure to the
current commodity cycle prices and do not restrict upside price participation. The SPA also includes a downside price protection mechanism.
Other than the matter described above there has not arisen in the interval between 30 June 2022 and up to the date of this report, any item,
transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the operations of the Group,
the results of those operations or the state of affairs of the Group in subsequent financial years, unless otherwise noted in the financial report.
Independent Auditor’s Report
113
Ernst & Young
121 King William Street
Adelaide SA 5000 Australia
GPO Box 1271 Adelaide SA 5001
Tel: +61 8 8417 1600
Fax: +61 8 8417 1775
ey.com/au
Independent auditor’s report to the members of Beach Energy Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Beach Energy Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at
30 June 2022, the consolidated statement of profit or loss and comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended,
notes to the financial statements, including a summary of significant accounting policies, and the
directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022
and of its consolidated financial performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
A member firm of Ernst & Young Global Limited
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Annual Report 2022Beach Energy Limited 114
Independent Auditor’s Report
Page 2
Carrying value of petroleum assets
Why significant
How our audit addressed the key audit matter
At 30 June 2022 the Group had petroleum assets of
$3,759.5 million.
Australian Accounting Standards require the Group to assess
throughout the reporting period whether there is any
indication that an asset may be impaired, or that reversal of
a previously recognised impairment may be required. If any
such indication exists an entity shall estimate the
recoverable amount of the asset.
The Group identified impairment indicators in respect of
certain petroleum asset cash generating units (‘CGUs’).
Impairment testing was undertaken which resulted in no
impairment charge being recorded for the year.
The assessment of indicators of impairment and reversal of
impairment is judgemental and includes an assessment of a
range of external and internal factors which could impact the
recoverable amount of the CGUs.
Where impairment indicators are identified, forecasting
cashflows for the purpose of determining the recoverable
amount of a CGU involves critical accounting estimates and
judgements and is affected by expected future performance
and market conditions. The key forecast assumptions such
as, discount rates, foreign exchange rate, and commodity
prices used in the Group’s impairment assessment are set
out in the Financial Report in Note 9.
As a result, we considered the impairment testing of the
Group’s petroleum asset CGUs and the related disclosures in
the financial report to be a key audit matter.
In completing our audit procedures, we:
• Assessed the Group’s definition of CGU in accordance
with Australian Accounting Standards.
• Evaluated the assumptions, methodologies and
conclusions used by the Group in assessing for indicators
of impairment and impairment reversal, in particular,
those relating to the forecast cash flows and inputs used
to formulate them. This included assessing, in
conjunction with our valuation specialists, the discount
rates, foreign exchange rates and commodity prices with
reference to market prices (where available), market
research, market practice, market indices, broker
consensus and historical performance.
• Used the work of the Group’s internal and external
experts with respect to the hydrocarbon reserve
assumptions used in the cash flow forecasts. This
included understanding the reserve estimation processes
carried out, and assessing the qualifications, competence
and objectivity of the Group’s experts, the scope and
appropriateness of their work.
• Analysed forecast cost assumptions against historical
performance and the latest approved budgets and
forecasts.
• Considered the Group’s market capitalisation.
• Considered the carrying value of producing assets against
recent comparable market transactions and the market
value of comparable companies, where available.
• Assessed the adequacy of the disclosures in Note 9 and
basis of preparation of the financial report
Impairment assessment of capitalised exploration and evaluation expenditure
Why significant
How our audit addressed the key audit matter
At 30 June 2022 the Group had exploration and evaluation
assets of $444.7 million.
For exploration and evaluation assets, in completing our
audit procedures, we:
The carrying value of exploration and evaluation assets is
subjective based on the Group’s ability and intention, to
continue to explore the assets. The carrying value may also
be impacted by the results of exploration work indicating
that the oil and gas resources may not be commercially
viable for extraction. The Group is required to assess
whether any indicators of impairment are present.
Key assumptions, judgements and estimates used in the
impairment indicator assessment can lead to significant
changes in respect to whether economic quantities of
hydrocarbons can be commercialised or whether further
exploration and evaluation work is underway or planned to
support the continued carry forward of capitalised costs.
At 30 June 2022, the Group did not identify impairment
indicators in respect of its exploration and evaluation assets
and consequently no impairment charge was recorded
during the year.
• Assessed whether any impairment indicators, as set out
in AASB 6 Exploration for and Evaluation of Mineral
Resources, were present, and assessed the conclusions
reached by management.
• Assessed the Group’s definition of area of interest in
accordance with Australian Accounting Standards.
• Considered the Group’s right to explore in the relevant
exploration area which included obtaining and assessing
supporting documentation such as license agreements
and correspondence with relevant government agencies.
• Considered the Groups intention to carry out significant
exploration and evaluation activities in relevant
exploration areas or plans to transfer the assets to
petroleum assets. This included the assessment of the
Group’s forecasts with comparison to approved budgets
and enquiries with senior exploration management and
directors as to the intentions and strategy of the Group.
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115
Page 3
Why significant
How our audit addressed the key audit matter
As a result, we considered the impairment assessment of the
Group’s exploration and evaluation assets and the related
disclosures in the financial report to be a key audit matter
• Assessed the carrying value of exploration and evaluation
assets where recent exploration activity, in a given
licensed area, provided negative indicators as to the
recoverability of amounts capitalised.
• Considered the commercial viability of results relating to
the exploration and evaluation activities carried out in the
relevant licensed areas.
• Assessed the Group’s ability to finance any planned
future exploration and evaluation activity.
• Assessed the adequacy of the disclosures in Note 10 of
the financial report.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2022 annual report, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A member firm of Ernst & Young Global Limited
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Annual Report 2022Beach Energy Limited 116
Independent Auditor’s Report
Page 4
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
► Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
► Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
► Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
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117
Page 5
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 57 to 71 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the Remuneration Report of Beach Energy Limited for the year ended 30 June 2022,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Anthony Jones
Partner
Adelaide
15 August 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Annual Report 2022Beach Energy Limited 118
Glossary
A$ or $
2C
3D
1P
2P
3P
AASB
ACCU
AGM
AOI
ASX
ATP
BassGas Project
bbl
Bcf
Beach
Beharra Springs
boe
Board
Bridgeport
CAGR
CCS
CGU
Company
Cooper Energy
Cooper Basin
CBJV (Cooper
Basin JV)
DBNGP
DTA
Australian dollars
Best estimate of contingent resources
(petroleum or storage)(1)
Three dimensional
Low estimate of reserves or capacity (proved)(1)
Best estimate of reserves or capacity (proved
plus probable)(1)
High estimate of reserves or capacity (proved
plus probable plus possible)(1)
Australian Accounting Standards Board
Australian Carbon Credit Unit
Annual General Meeting
Area of interest
Australian Securities Exchange
Authority To Prospect (Qld)
The BassGas Project (Beach 88.75% and
operator, Prize Petroleum International 11.25%),
produces gas from the offshore Yolla gas field
in the Bass Basin in production licence T/L1.
Beach also holds a 90.25% operated interest
in licenses TR/L2, TR/L4 and TR/L5
Barrels
Billion cubic feet
Beach Energy Limited
Beach 50% and operator, MEPAU 50%.
Consists of the Beharra Springs, Redback
Terrace and Tarantula gas fields and the
Beharra Springs gas processing facilities
Barrels of oil equivalent – the volume of
hydrocarbons expressed in terms of the volume
of oil which would contain an equivalent volume
of energy
Board of Directors of Beach
Bridgeport (Cooper Basin) Pty Ltd
Compounded annual growth rate
Carbon capture and storage
Cash generating unit
Beach and its subsidiaries
Cooper Energy Ltd
Includes both Cooper and Eromanga Basins
The various joint venture interests owned by
Beach’s wholly owned subsidiaries Delhi and
Beach Energy (Operations) in the SACB JVs and
SWQ JVs
Dampier to Bunbury Natural Gas Pipeline
Deferred tax assets
EBITDA
EIP
EP
EPS
Ex PEL 91
Ex PEL 92
Ex PEL 104/111
Ex PEL 106
Ex PEL 513
Ex PEL 632
FEED
FID
Free cash flow
FY22
Genesis
Group
GSA
GJ
HBWS
H1 FY22
HoA
IFRS
JV
kbbl
kboe
kbopd
km
KMP
KPI
kt
Kupe
LNG
LPG
LTI
Earnings before interest, tax, depreciation and
amortisation
Executive Incentive Plan
Exploration Permit (NT)
Earnings per share
PRLs 151 to 172 and various production licences
PRLs 85 to 104 and various production licences
PRLs 136 to 150 and various production
licences
PRLs 129 and 130 and various production
licences
PRLs 191 and 206 and various production
licences
PRLs 131 to 134 and various production licences
Front-End Engineering Design
Final investment decision
Operating cash flow less investing cash flow
(excluding acquisitions and divestitures)
Financial year 2022
Genesis Energy Limited and its subsidiaries
Beach and its subsidiaries
Gas sales agreement
Gigajoule
Halladale/Black Watch/Speculant fields in the
offshore Otway Basin in licenses VIC/L1(v) and
VIC/P42(v)
First half year period of FY22
Heads of Agreement
International Financial Reporting Standards
Joint Venture
Thousand barrels of oil
Thousand barrels of oil equivalent
Thousand barrels of oil per day
Kilometre
Key management personnel
Key performance indicator
Thousand tonnes
Kupe Gas Project. Beach 50% and operator,
Genesis 46%, NZOG 4%. Consists of offshore
Kupe gas field in the Taranaki Basin, the
Kupe offshore platform, Kupe gas plant and
associated infrastructure
Liquefied natural gas
Liquefied petroleum gas
Long term incentive
(1) A full list of reserves, storage and contingent resources definitions are contained within the Petroleum Resources Management System (SPE-PRMS) and
Storage Resources Management System (SPE-SRMS).
119
MEPAU
Mitsui
MMbbl
MMboe
MMscf
MMscfd
Mt
Net Gearing
NPAT
NZ
NZOG
O.G. Energy
OGP
OMV
Origin
PCP
PEL
PEP
Perth Basin
PL
PPL
PJ
Prize
PRL
PRMS
PRRT
Q1 FY22
ROC
Mitsui E&P Australia
Mitsui &Co., Ltd and its subsidiaries
Million barrels of oil
Million barrels of oil equivalent
Million standard cubic feet of gas
Million standard cubic feet of gas per day
Million tonnes
The ratio of net debt/(cash) to the sum of net
debt/(cash) and total book equity
Net profit after tax
New Zealand
New Zealand Oil & Gas Limited and
its subsidiaries
O.G. Energy Holdings Limited, a member of the
Ofer Global group of companies
Otway Gas Project. Beach 60% and operator.
Consists of offshore gas fields Thylacine and
Geographe, the Thylacine Well Head Platform,
Otway Gas Plant and associated infrastructure
OMV Group and its subsidiaries
Origin Energy Limited and its subsidiaries
Prior corresponding period
Petroleum Exploration Licence (SA)
Petroleum Exploration Permit (Victoria and NZ)
Includes Beach’s assets Waitsia and
Beharra Springs
Petroleum Lease (QLD)
Petroleum Production Licence (SA)
Petajoule
Prize Petroleum Licence
Petroleum Retention Licence (SA)
Petroleum Resources Management System
Petroleum Resource Rent Tax
First quarter of FY22
Return on capital
SACB JVs
South Australian Cooper Basin Joint Ventures
South Australian
Cooper Basin Joint
Ventures
The Fixed Factor Area (Beach 33.4%, Santos
66.6%) and the Patchawarra East Block (Beach
27.68%, Santos 72.32%)
Santos
SA
Senex
SGH
SPA
SPE
STI
Santos Limited and its subsidiaries
South Australia reporting segment
Senex Energy Limited
Seven Group Holdings Limited
Sale and Purchase Agreement
Society of Petroleum Engineers
Short Term Incentive
SWQ JVs
South West Queensland Joint Ventures
South West
Queensland Joint
Ventures
Includes the SWQ Gas Unit and exploration
and oil production licences – various equity
interests (Beach 30–52.2%)
Tcf
TFR
TJ
TRIFR
TSR
Trillion cubic feet
Total Fixed Remuneration
Terajoule
Total recordable injury frequency rate
Total shareholder return
Udacha Block
PRL 26
US$
WA
Waitsia
YEJ21
YEJ22
United States $
Western Australia reporting segment
Beach 50%, MEPAU 50% and operator.
The project consists of the Waitsia Gas Project,
an interest in the Xyris production facility and
other in-field pipelines
30 June 2021
30 June 2022
Beach Energy LimitedAnnual Report 2022 120
Schedule of Tenements
For the year ended 30 June 2022
Cooper/Eromanga – Queensland
Subsidiary Company
Tenement
Maw 6.50%
Delhi 32%
Delhi 22.5%
BE(OP)L 25%
Delhi 20%
BE(OP)L 25%
Delhi 25.2%
BE(OP)L 27%
Delhi
Delhi
Delhi 28.8%
BE(OP)L 10%
Delhi
Delhi 23.2%
BE(OP)L 16.7375%
ATP 1189 ex ATP 259
(Naccowlah Block) 1
ATP 1189 ex ATP 259
(Aquitaine A Block) 2
ATP 1189 ex ATP 259
(Aquitaine B Block) 3
ATP 1189 ex ATP 259
(Aquitaine C Block) 4
ATP 1189 ex ATP 259
(Innamincka Block) 5
ATP 1189 ex ATP 259
(Total 66 Block) 6
ATP 1189 ex ATP 259
(Wareena Block) 7
PL 55 (50/40/10)
SWQ Gas Unit 8
Circumpacific
ATP 940
DLS
PLs (Tintaburra Block) 9
Cooper/Eromanga – South Australia
Subsidiary Company
Tenement
Impress (CB)
PPL 203 (Acrasia Oil Field)
BPT
BPT
Impress (CB)
Impress (CB)
Impress (CB)
BPT
Impress (CB)
BPT 40%
DLS 30%
GAOG 30%
Impress (CB)
Impress (CB)
Impress (CB)
Impress (CB)
Impress (CB)
BPT
PPL 204 (Sellicks Oil Field)
PPL 205 (Christies Oil Field)
PPL 207 (Worrior Field)
PPL 208 (Derrilyn West Field) 10
PPL 209 (Harpoono Field)
PPL 210 (Aldinga Oil Field)
PPL 211 (Regg Sprigg West Field) 11
PPL 212 (Kiana Oil Field)
PPL 213 (Mirage Field)
PPL 214 (Ventura Field)
PPL 215 (Toparoa Field) 10
PPL 217 (Arwon West Field)
PPL 218 (Arwon East Field)
PPL 220 (Callawonga Oil Field)
Impress (CB)
PPL 221 (Padulla Field)
%
38.5%
47.5%
45%
52.2%
30%
30%
38.8%
40%
39.9375%
100%
40%
%
100%
75%
75%
70%
100%
100%
50%
100%
100%
100%
100%
100%
100%
100%
75%
100%
75%
100%
BPT
BPT 50%
GAOG 50%
Impress (CB) 85%
Springfield 15%
PPL 224 (Parsons Oil Field)
PPL 239
(Middleton/Brownlow Fields)
PPL 240 (Snatcher Oil Field)
100%
Impress (CB)
PPL 241 (Vintage Crop Field)
Impress (CB) 85%
Springfield 15%
PPL 242 (Growler Oil Field)
100%
100%
75%
75%
75%
75%
75%
75%
100%
100%
100%
100%
100%
100%
100%
Impress (CB) 85%
Springfield 15%
PPL 243 (Mustang Oil Field)
100%
BPT
BPT
BPT
BPT
BPT
BPT
PPL 245 (Butlers Oil Field)
PPL 246 (Germein Oil Field)
PPL 247 (Perlubie Oil Field)
PPL 248 (Rincon Oil Field)
PPL 249 (Elliston Oil Field)
PPL 250 (Windmill Oil Field)
Impress (CB)
PPL 251 (Burruna Field)
BPT 40%
GAOG 60%
BPT 40%
GAOG 60%
BPT 40%
GAOG 60%
BPT 50%
GAOG 50%
Impress (CB) 85%
Springfield 15%
BPT 40%
GAOG 60%
BPT 40%
GAOG 60%
BPT 40%
GAOG 60%
Impress (CB) 85%
Springfield 15%
Impress (CB) 85%
Springfield 15%
Impress (CB) 85%
Springfield 15%
Impress (CB) 85%
Springfield 15%
Impress (CB) 57%
Acer 43%
PPL 253 (Bauer/Bauer-North/
Chiton/Arno Oil Fields)
PPL 254 (Congony/Kalladeina/
Sceale Oil Fields)
PPL 255 (Hanson/Snelling
Oil Fields)
PPL 257 (Canunda/Coolawang
Fields)
PPL 258 (Spitfire Oil Field)
PPL 260 (Stunsail Oil Field)
PPL 261 (Pennington Oil Field)
100%
PPL 262 (Balgowan Oil Field)
100%
PPL 263 (Martlett North Oil Field)
100%
PPL 264 (Martlett Oil Field)
100%
PPL 265 (Marauder Oil Field)
100%
PPL 266 (Breguet Oil Field)
100%
PPL 268 (Vanessa Gas Field)
100%
Impress (CB)
PPL 270 (Gemba Field)
Impress (CB) 85%
Springfield 15%
PRL 15 (Growler Block)
Impress (CB)
BPT 25%
DLS Gas 30%
GAOG 45%
BPT
Impress (CB)
Impress (CB)
Impress (CB)
BPT
Impress (CB)
PRL 16 (Dunoon-2)
PRL 26 (Udacha Unit)
PRLs 35, 37, 38, 41, 43-45, 48, 49
(ex PEL 218 Permian)
PRL 73 (ex PEL 90C)
PRLs 76 to 77 (ex PEL 102)
PRLs 78 to 84 (ex PEL 113)
PRLs 85 to 104 (ex PEL 92)
PRLs 105, 106, 116, 117
(ex PEL 115)
100%
100%
100%
100%
100%
100%
100%
100%
75%
100%
121
%
70%
70%
100%
100%
100%
100%
100%
70%
100%
70%
%
10%
10%
50%
%
60%
60%
100%
60%
%
60%
60%
60%
%
9.7637%
%
50%
5.75%
10%
5.75%
Impress (CB)
PRLs 245 to 246 (ex PEL 90k)
Impress (CB)
Impress (CB)
BPT 50%
GAOG 50%
GAOG
Impress (CB) 57%
Acer 43%
Impress (CB) 85%
Springfield 15%
BPT 40%
GAOG 60%
Acer
BPT 40%
DLS 20%
GAOG 40%
Impress (CB)
DLS (513)
Impress (CB)
Impress (CB)
Impress (CB)
Impress (CB)
Impress (CB) 57%
Acer 43%
BPT 50%
Impress (BCB) 15%
BPT
Impress (CB) 57%
Acer 43%
Impress (CB)
Ambassador
BPT
Impress (CB)
BPT
BPT 25%
DLS Gas 30%
GAOG 45%
BPT 50%
GAOG 50%
BPT 40%
GAOG 60%
BPT 40%
DLS 20%
GAOG 40%
Delhi 17.14%
BE(OP)L 10.536%
Delhi 17.14%
BE(OP)L 10.536%
Delhi 20.21%
BE(OP)L 13.19%
Delhi 20.21%
BE(OP)L 13.19%
PRLs 108 to 110 (ex PEL 105)
PRLs 120 and 128 (ex PEL 514)
PRLs 129 and 130 (ex PEL 106)
PRLs 131 to 134 (ex PEL 632)
PRL 135 (Vanessa Gas Field)
PRLs 136 to 150
(ex PEL 104 and PEL 111)
PRLs 151 to 172 (ex PEL 91)
PRLs 173 to 174 (ex PEL 101)
PRLs 175 to 179 (ex PEL 107)
PRLs 183 to 190 (ex PEL 110)
PRLs 191 to 206 (ex PEL 513)
PRLs 207 to 209 (ex PEL 100)
100%
100%
100%
40%
100%
100%
100%
100%
100%
80%
40%
55%
PRLs 210, 212 to 220 (ex PEL 637)
100%
PRL 211 (ex PEL 637) 12
PRLs 231 to 233 and 237
(ex PEL 93) 13
15%
70%
Otway – South Australia
Subsidiary Company
Tenement
ADE
ADE
ADE
ADE
ADE
ADE
ADE
ADE
ADE
ADE
PEL 494
GSEL 654
PPL 62 (Katnook)
PPL 168 (Redman)
PPL 202 (Haselgrove)
PRL 1 (Wynn)
PRL 2 (Limestone Ridge)
PRL 32 (ex PEL 255)
GSRL 27
PEL 680
Onshore Otway – Victoria
Subsidiary Company
Tenement
BPT
BPT
BPT
PPL 6 (McIntee Gas Field)
PPL 9 (Lavers Gas Field)
PEP 168
Nearshore Otway Victoria
PRLs 238 to 244 (ex PEL 182)
100%
Subsidiary Company
Tenement
BE(OP)L
BE(OP)L
BE(OP)L
BE(OP)L
Vic/L1(V)
Vic/P42(V)
Vic/P007192(V) 17
Vic/L007745(V)
Offshore Otway – Victoria
Subsidiary Company
Tenement
BE(OP)L
BE(OP)L
BE(OP)L 55%
BE(Ot)L 5%
Vic/P43
Vic/P73
Vic/L23
Browse – Western Australia
Subsidiary Company
Tenement
BPT
WA-80-R
Bonaparte Basin – Western Australia
Subsidiary Company
Tenement
BE(OP)L
BE(B)PL
BE(O)PL
BE(B)PL
WA-454-P
WA-6-R 17
WA-545-P
WA-548-P
PEL 94
PEL 95
PEL 182
PEL 516
PEL 570
PEL 630 14
PEL 639
GSEL 634 (ex PEL 92)
GSEL 645 (ex Udacha Unit)
GSEL 646 (ex PEL 106)
GSEL 648 (ex PEL 91)
GSEL 653 (ex PEL 107)
100%
65%
50%
100%
100%
33.3333%
50%
100%
75%
100%
100%
100%
100%
PPL 194 Reg Sprigg West Unit
27.676%
Patchawarra East 15
27.676%
Fixed Factor Agreement 16
SA Unit
33.4%
33.4%
Annual Report 2022Beach Energy Limited 122
Schedule of Tenements
Otway (Offshore) – Tasmania
Subsidiary Company
Tenement
BE(OP)L
BE(OP)L 55%
BE(Ot)L 5%
BE(OP)L 55%
BE(Ot)L 5%
BE(OP)L
T/30P
T/L2 (Thylacine)
T/L3 (Thylacine South)
%
100%
60%
60%
T/L4 (Thylacine West Extension)17
100%
Bass Basin – Tasmania
Subsidiary Company
Tenement
BE(OP)L 72.5%
T/L1 (Yolla)
BE(BG)L 5%
BPT 11.25%
BE(OP)L 79%
BPT 11.25%
BE(OP)L 79%
BPT 11.25%
BE(OP)L 79%
BPT 11.25%
T/RL2
T/RL4
T/RL5
Perth Basin – Western Australia
Subsidiary Company
Tenement
BE(PB)PL
BE(PB)PL
BE(PB)PL
EP 320
L11/L22 (Beharra Springs)
L1/L2 (Waitsia Excluding
Dongara, Mondarra and
Yardarino)
Bonaparte – Northern Territory
Subsidiary Company
Tenement
BE(B)PL
BE(B)PL
NT/P88
NT/RL117
Taranaki Basin – New Zealand
Subsidiary Company
Tenement
BERNZKL 32.1875%
PML 38146 (Kupe)
Kupe Mining No.1 Ltd
17.8125%
%
88.75%
90.25%
90.25%
90.25%
%
50%
50%
50%
%
5.75%
5.75%
%
50%
(1) The Naccowlah Block consists of ATP 1189 ex ATP 259 (Naccowlah) and
PLs 23–26, 35, 36, 62, 76–78, 79 (PLA 1078 replacement), 82 (PL 1079
replacement), 87 (PLA 1080 replacement), 133 (PLA 1085 replacement),
149, 175, 181, 182, 287, 302, 495, 496, 1026. PLAs 1047, 1060, 1078, 1079,
1085, 1093. Note sub-leases of PLs (gas) to SWQ Unit and PCAs 269, 271.
(2) The Aquitaine A Block consists of ATP 1189 ex ATP 259 (Aquitaine A) and
PLs 86, 131, 146, 177, 254, 1051, PLA 1058. Note sub-leases of part PLs
(gas) to SWQ Unit and PCA 276.
(3) The Aquitaine B Block consists of ATP 1189 ex ATP 259 (Aquitaine B) and
PLs 59 60 (PLA 1072 replacement), 61 (PLA 1073 replacement), 81, 83
(PLA 1092 replacement), 85, 108, 111 (PLA 1090 replacement), 112, 132
(PLA 1091 replacement), 135, 139, 147 (PLA 1075 replacement), 151, 152,
155, 205 (PLA 1076 replacement), 288, 508, 509, 1013, 1014, 1035. PLA
1108. Note sub-leases of part of PLs (gas) to SWQ Unit and PCAs 248,
270, 251, 281.
(4) The Aquitaine C Block consists of ATP 1189 ex ATP 259 (Aquitaine C) and
PLs 138 and 154.
(5) The Innamincka Block consists of ATP 1189 ex ATP 259 (Innamincka) and
PLs 58, 80, 136, 137, 156, 159, 249, 1087. Note sub-leases of part PLs (gas)
to SWQ Unit and PCAs 278, 282, 283.
(6) The Total 66 Block consists of ATP 1189 ex ATP 259 (Total 66) and PLs 34,
37, 63, 68, 75, 84, 88, 110 (PL 497 replacement), 129, 130, 134, 140, 142,
143 (PLA replacement 1057), 144, 150, 186, 193 (PLA 513 replacement),
241, 255, 301, 497, 502, 1046, 1056 and 1077. Note sub-leases of part of
PLs (gas) to SWQ Unit and PCAs 252, 253, 254, 275, 279, 280.
(7) The Wareena Block consists of ATP 1189 ex ATP 259 (Wareena) and PLs
141, 145, 148, 153, 158 (PLA 1105 replacement), 187, 1016, 1054, 1055 and
1107. Note sub-leases of part of PLs (gas) to SWQ Unit and PCAs 250, 251,
268, 272, 273,274, 277, 281.
(8) The SWQ Gas Unit consists of subleases of PLs within the gas production
area of Naccowlah Block, Aquitaine A Block, Aquitaine B Block, Innamincka
Block, Wareena Block and Total 66 Block.
(9) Ex ATP 299 (Tintaburra) consists of PLs 29, 38, 39, 52, 57, 95, 169, 170,
295, PLA 1027, PLA 1029.
(10) Derrilyn Unitisation Agreement for PPL 206, PPL 208 and PPL 215 –
Impress (CB) 35% interest.
(11) Regg Sprigg West Unitisation Agreement for well consists of PPL 211
(Impress CB) and PPL 94 (Patchwarra East).
(12) The divestment of PRL 211 is included in the accounts, transfer of interest is
subject to Government approvals.
(13) PRL 237 Impress CB 56% interest.
(14) The relinquishment of PEL 630 is included in the accounts and subject to
Government approvals.
(15) Patchawarra East consists of PPLs 26, 76, 77, 118, 121–123, 125, 131, 136, 147,
152, 156, 158, 167, 182, 187, 194, 201 and 229.
(16) The Fixed Factor Agreement consists of PPLs 6–20, 22–25, 27, 29–33,
35–48, 51–61, 63–70, 72–75, 78–81, 83, 84, 86–92, 94, 95, 98–111, 113–117,
119, 120, 124, 126–130, 132–135, 137–140, 143–146, 148–151, 153–155,
159–166, 172, 174–180, 189, 190, 193, 195, 196, 228 and 230–238.
(17) Transfer of interest subject to Government approvals.
123
Subsidiary Company
Acer
Acer Energy Pty Ltd
Ambassador
Ambassador Exploration Pty Ltd
ADE
BPT
BE(Op)L
BE(B)PL
BE(Ot)L
BE(PB)PL
BERNZ(K)L
BE(BG)L
BE(O)PL
Adelaide Energy Pty Ltd
Beach Energy Limited
Beach Energy (Operations) Limited
Beach Energy (Bonaparte) Pty Limited
Beach Energy (Otway) Limited
Beach Energy (Perth Basin) Pty Limited
Beach Energy Resources NZ (Kupe) Limited
Beach Energy (Bass Gas) Limited
Beach Energy (Offshore) Pty Ltd
Circumpacific
Circumpacific Energy (Australia) Pty Ltd
Delhi
DLS (513)
DLS
DLS Gas
GAOG
Delhi Petroleum Pty Ltd
Drillsearch (513) Pty Ltd
Drillsearch Energy Ltd
Drillsearch Gas Pty Ltd
Great Artesian Oil & Gas Pty Ltd
Impress (CB)
Impress (Cooper Basin) Pty Ltd
Maw
Springfield
Mawson Petroleum Pty Ltd
Springfield Oil and Gas Pty Ltd
Tenements Acquired
T/L4, Vic/L007745(V)
Tenements Divested
NT/P82, PPL 256
Annual Report 2022Beach Energy Limited 124
Shareholder Information
Share details – Distribution as at 3 August 2022
Range
1 – 1000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 Over
Rounding
Rounding Total
Unmarketable Parcels
Minimum $ 500.00 parcel at $ 1.8000 per unit
Total holders
Units
% Units
9,102
12,169
5,483
7,643
557
4,628,104
33,315,936
41,654,992
215,885,636
1,985,848,988
0.21
1.46
1.83
9.46
87.05
0.00
34,954
2,281,333,656
100.00
Minimum
Parcel Size
278
Holders
2,154
Units
152,671
Substantial shareholders as disclosed by notices received by Beach as at 3 August 2022
Name
Seven Group Holdings and others
Australian Capital Equity Pty Ltd, Wroxby Pty Ltd, North Aston Pty Ltd and others (ACE Group);
Ashblue Holdings Pty Ltd, Tiberius (Seven Investments) Pty Ltd, Tiberius Pty Ltd and others (Tiberius Group);
Mr Kerry Matthew Stokes AC and Kemast Investments Pty Ltd
Twenty largest shareholders as at 3 August 2022
Rank Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NETWORK INVESTMENT HOLDINGS PTY LTD
NETWORK INVESTMENT HOLDINGS PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
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