Beach Energy announces quarterly activities report to 31 December 2011

On 7 November 2011, Beach announced a 20 cent per share on-market takeover offer for Adelaide Energy Limited, valuing the company at $94 million. By the close of the bid, on 22 December 2011, Beach had a relevant interest in Adelaide Energy of 96.99%, at which time Beach lodged a Notice of Compulsory Acquisition with ASIC, allowing the remaining shares in Adelaide Energy to be compulsorily acquired.

In October, Beach signed a formal agreement with private company, Territory Oil and Gas Pty Limited (TOAG), to earn up to 90% in TOAG's onshore Bonaparte Basin areas, EP 126 and EPA 138, as well as up to 55% in the offshore areas EPA 135 and NTC/P 10.

In December, Beach continued to rebalance its portfolio through the relinquishment of its interests in the Ebro Basin in Spain and the Durresi Block in Albania, with the South East July concession in Egypt allowed to expire.

It is unlikely that there will be material impairment charges associated with these withdrawals. In relation to the Spanish concession, agreement to relinquish was made by both joint venture partners, with the area released back to the government.

Production during the quarter was 1.72 MMboe, 1% lower than the previous quarter (1.73 MMboe), primarily due to: access issues from localised rains and spot fires in the Santos operated areas; offset by improved oil production as a result of the reinstatement of the Tantanna pipeline in November; and the recommencement of production from the Growler oil field (PEL 104).

Prior to the reinstatement of the Tantanna pipeline, oil production from operated permits on the Western flank were being trucked at approximately 4,500 bopd (3,375 bopd net). Current production is approximately 6,500 bopd gross (4,875 bopd net) made up of 5,900 bopd gross (4,425 bopd net) through the Tantanna pipeline and a further 600 bopd gross (450 bopd net) from trucking.

All four Senex operated Growler wells were back on line during the quarter, with access restored due to abating floodwaters. Production from Growler is currently around 1,400 bopd (560 bopd net).

Full access to operating areas within the Cooper Basin is now available. As a result, the production guidance for the 2012 financial year of 7.5 MMboe remains, with increased production expected in the second half of the financial year.

Construction of the Lycium to Moomba pipeline (15,000 bopd capacity) commenced during the quarter and is now approximately 50% complete. The Growler to Lycium pipeline will commence construction in February 2012. The pipelines remain on schedule to be commissioned in the second half of 2012. Construction of the Butlers oil production facility was completed during the quarter. The facility will process oil from the Germein-1 well and the Butlers oil field in PEL 92.