The oil output, equivalent to an average of 10,200 barrels of oil per day, is the highest quarterly production ever achieved by Beach Petroleum and was driven by a rising contribution from the Beach Petroleum operated oil fields on the western flank of the Cooper basin.
A string of six exploration successes in exploration permit, PEL 92, in the western Cooper region, has so far yielded recoverable reserves of around 8 million barrels with a new, six-well, exploration program due to begin in late May targeting potentially up to another 7 million barrels of recoverable reserves. Beach Petroleum holds a 75% equity in PEL 92 and operates it and associated production licenses.
The stronger oil production helped Beach Petroleum generate first quarter 2009 sales revenue of AUD129 million. Although sales revenue was down 14% compared with the previous quarter, the effects of lower oil prices have been mitigated because oil sales were made in accordance with the Tapis benchmark, which continues to trade at a premium to the commonly quoted West Texas Intermediate (WTI) price. Together with cash receipts from hedging, the average received oil price was effectively AUD80 per barrel.
Beach Petroleum continues to have protection from lower oil prices with 510,000 barrels of next quarter’s sales hedged at a minimum of $60 per barrel (including 150,000 barrels at a minimum of $80 per barrel).
Shortly after the end of the quarter Beach Petroleum strengthened its financial position with the sale of its coal seam gas assets in Queensland in a deal worth of up to a total of AUD400 million.
Beach Petroleum managing director, Reg Nelson, said, “The March quarter result was a very creditable performance despite the tough global financial markets and considerably lower oil prices.
“The stand-out performance of the Beach Petroleum’s oil discoveries on the western flank of the Cooper Basin, where we hope to continue discovering more oil reserves, is creating substantial value for Beach Petroleum shareholders.
“Despite the tough financial market conditions Beach Petroleum now stands in a good position to take advantage of any opportunities that might arise.”
In the first quarter 2009 Beach Petroleum drilled two exploration wells in PEL 92 (Beach Petroleum 75%) resulting in the discovery of the Perlubie oil field 2.5 kilometers south of the Parson oil field. The well is expected to start producing in May.
Perlubie is the sixth commercial oil discovery made in PEL 92 since 2002 where total recoverable reserves of around 8 million barrels have so far been discovered by Beach Petroleum.
A new 6 well exploration drilling program, targeting around up to 7 million barrels of recoverable reserves is planned to start in late May 2009 in the region abutting the Perlubie and Parsons/Callawonga discoveries.
Nelson said, “Our success rate on the western flank has always been good, but we believe that 3D seismic has improved that rate significantly.
“The targets chosen for the next round of drilling are based on the results of large regional 3D seismic surveys that we have carried out in recent times.”
Coal seam gas sale
After the March quarter ended Beach Petroleum announced the sale of its 40% joint venture interest in the producing Tipton West gas field and associated tenements in Queensland, to Arrow Energy Limited, under a tiered payment structure.
