Ann: Investor Update Presentation , page-17

Huntleys (Morningstar)are very impressed with the Chevron deal and Halifax flow rate. They have just updated their SP val on BPT. They work in millions of barrels of oil equivalent. Note the comparison to Woodside - puts some perspective into the ICN asset. They put a valuation on the BPT's shale asset. Some of the relevant commentary to ICN is as follows quoting:

"We remain favourably disposed to Beach and soften our fair value uncertainty rating from extreme – or speculative – to very-high. This dictates re-instatement of our fair value estimate which we determine as AUD 1.50 per share. We think the Chevron cash injection and project carry reduces the portion of fair value predicated on shale gas exploration success to AUD 500 million or AUD 0.40, just over a quarter of total. Long term assumptions are an AUD 100 per barrel oil price and a 12% weighted average cost of capital assuming 15% cost of equity. Our fair value estimate conservatively assumes modestly declining conventional production from fiscal 2015 pending demonstration otherwise. Beach's goal is to double production and reserves in the next two to five years from existing conventional reserves and capacity outside the Chevron JV acreage.


At the current share price, annualised 1H13 earnings place Beach on a PE of 14 which seems reasonable given company guidance for 15% to 20% production growth in fiscal 2013 to 8.1-8.5mmboe. That should translate into earnings growth with the company unlikely to issue new shares any time soon, thanks to Chevron. Beach is well cashed up with net cash worth AUD 18 cents per share at end December with a further USD 95 million or AUD 8 cents in up front cash to come from Chevron. That's one fifth of the current share price. The other critical element, cash flow, is positive and has been growing since fiscal 2008.


Importantly, contingent (2C) resources of 464 million barrels of oil equivalent (mmboe) gas and gas liquids hint at upside. Success at Holdfast-1 and Encounter-1 shale gas wells saw the company book 1.3Tcf (210mmboe) in contingent gas resources. And as we write, Beach reports a very impressive constrained 3.2 million cubic feet of gas per day (mmscfd) flow from its Halifax -1 shale well on the Queensland portion of the Chevron JV acreage. That is likely to add to 2C.


Beach has said the South Australian Chevron acreage has 300 trillion cubic feet (Tcf) shale gas potential of which 10-20% might be recoverable. Woodside's annual share of North West Shelf JV LNG production for example amounts to 0.13Tcf. And it's possible that might be replicable on the Queensland side. Beach's diluted share of the potential is 3-6 billion barrels of oil equivalent. Our fair value estimate attributes AUD 10-15 cents per barrel of oil equivalent (boe) for that high side estimate and a heftier though still modest AUD 4.00 per boe of currently booked equity 2C shale gas resources.


The likelihood Beach this time will deliver sustainable returns to shareholders we think is greater. Chevron's cheque book has arrived allowing the potential for not so much equity to end up back in the ground. It's far too early though to speculate on whether this will ever earn Beach a moat rating".