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Operator: Thank you for standing by, and welcome to the Beach Energy Limited FY '26 Half Year Results. [Operator Instructions] I would now like to hand the conference over to Mr. Brett Woods, Managing Director and Chief Executive Officer. Please go ahead.
Brett Woods: Thank you. Good morning, everyone, and welcome to Beach Energy's FY '26 Half Year Results Presentation. Joining me today is Anne-Marie Barbaro our Chief Financial Officer. Together, we'll take you through our half year results and outlook for the remainder of FY '26 before I open up the lines for Q&A. This morning, I'm pleased to report a solid set of underlying results and what has been a very active first half across our core basins with great progress made on delivery of some key milestones. This half, Beach has continued to demonstrate great progress across our base business through our strong operating discipline and outstanding safety and environmental performance. We end the half year in a strengthened financial position and are well placed to pursue growth. Slide 2 sets out the compliance statements, which I'll leave to read at your leisure. Slide 3, we will begin, which highlights the key milestones achieved in the first half. Starting over in the West, first gas was achieved from the Waitsia gas plant in early December with the plant now in production ramp-up. Two gas compressors have now been commissioned, and the plant has reached peak rates of 165 terajoules a day so far. The third compressor is expected to commence commissioning in the coming weeks. And once ramped up, we will deliver the plant's nameplate capacity of 250 terajoules a day. Also on the Waitsia front, we listed 4 cargoes in the half, generating $233 million in revenue. Onshore in the Cooper Basin, the team were hard at work to restore operations from the severe flooding experienced in late FY '25. I'm pleased to report that 97% of flood impacted production has been brought back online at the end of the December quarter. This is a great outcome, which will support our second half performance. We also welcomed the Ventia 101 rig into the Western Flank to commence our 12-well oil appraisal and development program. It's fantastic to have the active group back in the Western Flank, which we'll talk through more in coming slides. Offshore, Phase 1 of the Equinox 3 campaign was delivered, the drilling of the Hercules exploration prospect as well as safe completion of 3 offshore well abandonments across Otway and Bass basins. Moomba CCS peaked over 12 months in operation, having safely stored over 1.5 million tonnes of CO2 since startup. It was pleasing to see Moomba CCS meet the Clean Energy Regulator's strict compliance standards and Beach received over 300,000 ACCUs for FY '25. This puts Beach well on track to achieve its target of 35% equity emissions intensity reduction by 2030. During the half, we also completed the refinancing of our 2025 and 2026 facility maturities and secured a new $300 million in Asian term loan, lifting total available liquidity to $925 million. This positions Beach well to pursue growth and continue our crucial role of supporting national energy security. On the marketing front, Beach delivered more than 15 petajoules of gas into spot and short-term markets, driving a 13% increase in our realized gas prices for the half year compared to the prior corresponding period. Turning now to Slide 4 and our headline financial results. Our financial results for the half were solid in a period of major project delivery and flood recovery. This is the outcome of our team's discipline across operations and focused execution against our strategic objectives. Production of 9.5 million barrels of oil equivalent was largely impacted by the 2025 Cooper Basin flood event. It is also worth calling out the positive performance of a production uplift at Bass Basin, up 29% on the prior corresponding period, providing a meaningful contribution to total production through continued success from our descaling initiatives, a great example of our owners mindset in action. Sales volumes have increased 3% to 12.7 million barrels of oil equivalent, supported by our delivery of 4 LNG cargoes during the period. Successful delivery of gas marketing strategy saw over 15 petajoules gas sold in spot and short-term markets and to a diversified customer base, resulting in that 13% uplift in our realized gas prices to $11.80, which is a 30% -- which is over a 30% increase in realized gas prices over the past 2 years. This resulted in delivery of $1 billion in total revenue for the half year. These factors, combined with ongoing structural cost reductions achieved across our operated assets helped to deliver solid first half earnings with underlying EBITDA of $558 million and free cash flow generation of $225 million. With a focus on prudent capital management and noting our dividend policy is a full year policy, today, the Board has declared an interim dividend of $0.01 per share, with a step-up in capital activity expected in the second half of FY '26. Turning to Slide 5, which demonstrates our strong safety performance achievements for the half year. Notably, we recorded no Tier 1 or 2 process safety events during this period. We've also achieved over 12 months recordable injury-free at all our operated sites, which is an outstanding result and a credit to all our staff in maintaining their dedication to safety through a period of heightened activity, including the commencement of the Equinox campaign over the winter period in offshore Victoria as well as the recent commencement of oil appraisal and development drilling in the Western Flank. To put this safety result into context, Beach activity has significantly increased half-on-half with a 43% increase in man hours and field work complexity. With such a ramp-up to be achieved with no recordable injuries is a fantastic accomplishment, achieved through focused execution, leadership and operating discipline. Our team is dedicated to maintaining this disciplined approach to safe execution across all our operations as we recommence the Equinox campaign in offshore Victoria and deliver the Western Flank drilling campaigns in the second half of FY '26. Turning now to Slide 6, I was pleased to report the Waitsia joint venture achieved the first gas milestone at the Waitsia gas plant during December. Having now completed what is the most significant project in Beach's history and a critical piece of infrastructure for the Western Australian gas [indiscernible] with nameplate capacity of 250 terajoules a day, it equates to approximately 20% of West Australia's domestic gas demand. The Waitsia joint venture experienced some minor operational issues in the early stages of ramp-up. However, with 2 compressors currently in operation, the plant has achieved its peak production rate to date of 165 terajoules a day. As the remaining compressors are identical, we will continue to work with the operator to ensure minimal disruption, as we commission in the third quarter and ramp up towards our nameplate capacity. I also wanted to take a moment to highlight the excellent work delivered through our commercial team with the operator, which saw us deliver another 4 LNG cargoes during the period, resulting in a total of 11 cargoes today and $740 million in revenue ahead of the Waitsia first gas. These cargoes were facilitated through a combination of gas from Xyris plant production, gas time swaps and purchase and listing arrangements with the North West Shelf. West Australian government remains supportive of the Waitsia joint venture achieving its agreed export volumes and the facility now affords a compelling pathway for Perth Basin gas to market, cementing Beach in a strong position. Now turning to Slide 7 and the East Coast gas market. As we know, East Coast gas supply is in steep decline with demand remaining strong over the longer term. It's important to highlight the current demand outlooks provided don't yet contemplate the material increase in demand expected from emerging industries, including data centers and AI. Over the last 5 years, Beach has invested over $2 billion in capital to develop new supply to the East Coast market. And for the first half of FY '26, we supplied more than 18% of East Coast gas demand, delivering 100% of our production to domestic customers. Our gas marketing strategy and recontracting efforts have diversified our East Coast customer base across the industrial sector, retailers, gas-fired power generators and delivered an uplift in realized gas prices of 30%. In late December, the government released its gas market review report centered around a recommendation to develop a reservation policy model. We expect further consultation to commence shortly and culminate in legislative process in the first half of FY '27. Beach is supportive of prospective domestic gas reservation policy. To be successful, however, it must be paired with streamlined approvals and other incentives to drive exploration and development. Domestic-only producers need to be prioritized, incentivized and not constrained in delivering new projects nor should we be impacted by pricing or regulatory constraints as it is the domestic focused companies like Beach, who are delivering the much needed gas to the Australian manufacturers, supporting and in power generation, which in turn bolsters Australian jobs. While there is a lot of focus on supply from the north, there is also significant infrastructure transport capacity constraints, which make the gas less attractive and high cost. Opening up new plays, faster approval times and a fit-for-purpose fiscal setting in the Southern Basin must be a key outcome for the review. Best gas for the market is always going to be that which is produced closest to where it's used. Pleasingly, all relevant governments recognize the need for further exploration and development. Governments must stay focus on supporting upstream investment by domestic focused companies such as Beach to ensure a balanced long-term solution for Australia's energy security. On the East Coast, we continue to invest in our core onshore and offshore assets, targeting new gas -- while 8 new East Coast gas supply. Our operated facilities have been operating at over 99% reliability this half and provide us with the ability to leverage our existing infrastructure to support future market requirements. We have been busy offshore having safely completed Phase 1 of the Equinox campaign with a successful plug and abandonment of 3 legacy wells and the drilling of Hercules exploration prospects. As we announced through quarter 1 results, the Hercules well was moderate to high-risk target and failed to intercept hydrocarbons. We're now awaiting the return of Equinox rig at the end of the third quarter when we kick off Phase 2 of the offshore campaign with a well intervention at Thylacine West, followed by the drill and completion of La Bella 2 development well and undertake the completion of Artisan 1. This will be followed by the final abandonment in the Bass Basin to complete the campaign towards the end of FY '26. Looking forward, we are targeting FID on the Artisan and La Bella connections in the second half of FY '26. Both discoveries currently sit within our contingent resources, subject to final investment decision, gas production will be targeted for FY '29. We're also progressing the assessment of nearshore drilling and exploration opportunities. This will likely be a multi-well campaign drilled from the enterprise pad and in a success case, tied into existing infrastructure. Onshore in the Cooper Basin, we're working closely with operator Santos to complete our active drilling campaign with 4 rigs drilling in the basin, roughly equating to 100 wells per year. Beach's ongoing investment in new supply will be a key contributor to the East Coast market in the medium to long term. Now turning to the Western Flank on Slide 9. In December, we commenced our 12-well appraisal and development program targeting undeveloped reserves in the McKinlay and Birkhead reservoirs with the aim to add new production following the drilling hiatus I imposed over 2 years ago to enable Beach to refresh and deliver new drilling inventory. We've had early success in the Callawonga field with the results of our first 3 development wells. And as of last Friday, Callawonga 26 was brought online just 33 days from rig release, which is a real credit to the focused planning efficiencies achieved by the team. We have facilitated these rapid online times by pre-laying flow lines, utilizing a faster rig and driving end-to-end synergies throughout the process. This significant improvement will see the next 2 wells, Callawonga 24 and 25 be brought online within the next week. A very pleasing 100% success rate from our first 6 wells, which we look forward to continuing through the remainder of our appraisal and development program. The program remains on budget and most importantly, safely executed and continues to support possible future work programs. For our fit-for-purpose onshore rig is operating with 20% less man hours than its comparable rig in FY '24 and a 60% reduction in Beach personnel, a remarkable outcome for our Beach team in conjunction with our contract partners, delivering on our strict operating principles. On completion of development and appraisal campaign, we will continue -- we will commence a 10-well oil exploration program planned for late FY '26 and carrying into FY '27. The campaign forms part of our focus to rebuild 2P and 2C resources across the Western Flank and secondly to refresh with a view to build high-quality inventory for future exploration campaigns. Turning now to Slide 10 for a look at our second half priorities. On the West Coast, production ramp-up for the Waitsia gas plant is our key priority as the operator commissioned third and fourth sales gas compressors in Q3 FY '26 to bring the plant up towards nameplate capacity. Offshore, we look forward to commencing Phase 2 of the Equinox campaign with the Thylacine well intervention, drilling and completion of La Bella 2 development well and the undertaking of the completion at Artisan. In the Cooper Basin, we look forward to successfully drilling the remaining well in the oil development and appraisal campaign and kicking off our 10 oil well exploration campaign in the Western Flank, along with continued exploration appraisal and development drilling in our non-operated Cooper Basin joint venture. On the marketing front, we'll continue to expand commercial marketing with industrial sector and gas power generators. And on that note, I'll hand over to Anne-Marie to discuss our financial performance.
Anne-Marie Barbaro: Thank you, Brett. Good morning all, and thank you again for joining us today. Our headline financial metrics are set out on Slide 12. Our first half results reflect solid performance as we made significant progress on flood recovery, delivered first gas at Waitsia and completed the first phase of the Equinox campaign in offshore Victoria during the period. Results for the half were underpinned by 4 Waitsia LNG cargoes, continued progress on structural cost reductions through our operated assets and delivery on our gas marketing strategy, which resulted in an increase in realized gas prices during the period. Earnings were impacted by lower production in the flood-impacted Cooper Basin and a softer Brent price. Our average realized oil price was 12% lower compared to the prior corresponding period at AUD 110 per barrel, whilst average realized gas prices rose 13% to $11.80. Underlying EBITDA of $558 million and underlying NPAT of $219 million were down 5% and 8%, respectively. Statutory earnings were impacted by the expensing of the unsuccessful [indiscernible] exploration well drilled during the half year as well as costs associated with unutilized Northwest Shelf processing capacity. Slide 13 steps out movements in underlying NPAT, which, as mentioned, was 8% below the prior corresponding period. Sales revenue was largely in line at $982 million with lower production and softer Brent prices offset by 2 additional Waitsia LNG cargoes and strengthened gas prices. Higher cost of sales, including third-party purchases, tolling and inventory movements facilitated the 4 Waitsia LNG cargoes listed during the half. Field operating costs were 8% lower than the prior corresponding period, reflecting ongoing cost discipline across our operated assets. Notably, our operated assets delivered a unit operating cost of $10 per barrel of oil equivalent for the half year, reflecting that the operations within our control and over which we apply our strict operating principles continues to strengthen Beach's base business. Higher other income reflects the revaluation of the condensate overlift liability recognized at the time we lifted our one-off cargo at Waitsia in the first half of FY '24. With a higher proportion now expected to be returned in volume in the future, this reduces the cash settlement component in addition to the foreign exchange gains made in the half. Slide 14 shows movements in cash during the year, which resulted in closing cash reserves of $235 million. Operating cash flow of $442 million includes around $1 billion in receipts from customers for the half and also includes $107 million in restoration payments, reflecting the delivery of 3 offshore abandonment wells during the period. Total payments for capital expenditure for the half was $377 million, reflecting Waitsia Stage 2 completion, drilling of the Hercules well in offshore Victoria, ongoing drilling throughout the period of the Cooper Basin joint venture and the commencement of our Western Flank oil development and appraisal campaign. Slide 15 reiterates Beach's strong financial position. We ended the half year with $925 million of available liquidity and have maintained our low leverage position reflected through 12% net gearing reported at the end of the period. As Brett spoke to earlier, we have announced an interim dividend of $0.01 per share, reflecting capital management discipline and to acknowledge the heightened capital activity and spend across offshore Victoria and the Cooper Basin in the second half. As our dividend policy is an annual policy, we will revisit this at the full year. On that note, I'll hand back to Brett.
Brett Woods: Thank you, Anne-Marie. Now look at what's coming up in the second half of FY '26. Slide 17 sets out the FY '26 guidance update. For production, we maintain our guidance of between 19.7 million and 22.5 million barrels of oil equivalent. Our first half production performance is on track to deliver in line with our guidance. As mentioned throughout quarterly, 97% of flood impacted production has been restored across the Cooper Basin, with remaining impacted wells to come online over the next quarter. Our Otway acreage continued performing strongly with the Otway gas plant producing at close to 205 terajoules a day nameplate capacity for extended periods during winter. The second half expectations back to traditional nomination levels. For capital expenditure, we maintain our guidance between $675 million to $775 million with no significant changes to the capital program discussed and guided at the full year results. Key activities in the second half include Phase 2 of the Equinox 3 campaign, continuing the Western Flank oil appraisal and development campaign, which will be followed by the 10-well exploration campaign and the commencement of Moomba Central optimization in the Cooper Basin joint venture, which is forecast to deliver significant operating and capital cost efficiency once completed. Regarding sustaining capital expenditure, we maintain our guidance of below our $450 million operating principle, which is a material reduction from recent years. I will now close out the presentation before we turn to Q&A. Our FY '26 half year results demonstrate continued progress and solid performance against our strategic objectives. We have strength in our balance sheet enabled us to invest in growth across our core hubs. We've delivered strong safety, operational and cost discipline across our operating assets. We made significant progress on growth across our core hubs, including the successful commissioning of the Waitsia gas plant, which is now well progressed through ramp-up, successful completion of Phase 1 of the Equinox campaign, ongoing drilling in the Cooper Basin joint venture and commencement of our oil appraisal drilling in the Western Flank. And we've now delivered an uplift in gas pricing through effective commercial strategies during the period. We are carrying this momentum into the second half to execute and deliver on what will be an active period across our core East and West Coast hubs. And on that note, I'll open up the lines for Q&A.
Operator: Your first question today comes from Tom Allen from UBS.
Tom Allen: So the interim dividend reflects a much lower payout of your pre-growth free cash flow policy, implying that the Board is prioritizing building capacity to fund growth over dividends. So can you please clarify further how investors should interpret your current dividend policy? I think Anne-Marie just called out higher CapEx over the second half with some drilling spend. So are you saying that investors should not expect a strong payout of second half cash flows in the final dividend that would meet your policy over the full year?
Brett Woods: I'll let Anne-Marie go with that one, if you like.
Anne-Marie Barbaro: Thanks, Tom. So very similar to last year, obviously, our dividend policy is over a full year basis. And whilst we sort of have a good understanding of what activities we've got in the second half, we've been quite prudent for the first half of the payout to ensure that we can true this up at the full year. There has been currently no change to the dividend policy. We are still maintaining that policy. Obviously, that does get revisited on a regular basis. But at this time, the payout sort of reflects more of a sort of balanced approach of prudent capital management for the second half activities levels.
Tom Allen: Thank you, Anne-Marie. Beach has previously mentioned that management and the Board are scouring the market for domestic growth opportunities in new long-cycle projects that can help add some length to Beach's remaining reserve life. Can you please clarify how investors should interpret the geographic breadth and the asset classes that Beach are looking for? And is the preference for greenfield developments or projects already generating cash flow?
Brett Woods: Yes. Cheers. Thanks, Tom. I'll go to that. I think we don't really have a preference on whether it's greenfield or existing cash flow generating assets. I think that helps us manage our own cash flow. But if my guidance would be if it was a greenfield type opportunity, we would look to be able to manage that within our 25% gearing objectives. And if it had some production element to it, we probably think about maybe expanding that to upwards to, say, 35% gearing as long as the cash flow helps support degearing in a relatively quick basis. I think if you reflect on the Lattice transaction, it was a very similar model to that model. We have built a very strong balance sheet, and we have capacity within the balance sheet. So we are very confident that we can utilize our balance sheet to deliver growth opportunities. And in terms of preference, as indicated before and previously, certainly, our main focus is across the East Coast of Australia. We're not looking anywhere offshore. So whether it be opportunities that are emerging in Queensland, opportunities that are emerging in the southern markets, we're looking at opportunities such as that. But critically, it goes to your point, reserve growth, portfolio longevity are the objectives I'm looking at solving for. And we're going to be very prudent with our capital, very prudent with the opportunities we're looking at and continue to chase opportunities or look at opportunities that we see as TSR accretive for shareholders.
Operator: Your next question comes from Adam Martin from E&P.
Adam Martin: Just a question on Waitsia. It looks January came in a bit lower than probably what people would have thought a few months back. You sort of touched on that. But how confident are you on the Feb, March uplift that you've got there in the pack Slide 6, that looks encouraging just confidence there. Maybe you can talk through that, please.
Brett Woods: Yes. So what's inside the pack on Slide 6 is the operator forecast that goes to the AEMO website on a weekly basis. So what you can see through the -- from bringing the plant online to where we are today, we've got the 2 compressors online. we had that peak rate of 165, and we've had some minor operational issues, and I can be more specific about them. It's mostly been cleanliness. So we've had to do a lot of strainer swap outs and clean the front end of the plant. And that's typical when you're commissioning to get dirt and debris at the front end through the plant. So as the system cleans up, we'll see that production sustain. Over the next short period, our third and fourth compressors will be commissioned. So we're looking forward to seeing the outcomes of that over the next period, and that will drive us to full rate. So we still guide to 3 to 4 months' worth of our ramp-up schedule. And the forecast that you see there is the operator forecast is slightly more aggressive than that to achieve the first gas. And in terms of my sense of it, every day gets better and better through the ongoing cleanup work that we're doing through the plant. We've had a few minor vibration issues, but they have been rectified as well. So we continue to see better and better performance every day through the operator.
Adam Martin: Good to see. And then the second question, just on the Otway, I suppose the asset continues to sort of underperform versus the sort of upstream capacity, partly due to the contracts you've got. Where you're at in terms of other opportunities there, whether it's partnering with companies in the basin or further exploration. Can you just talk us through that because that's a real opportunity if you can get it right.
Brett Woods: Yes, we've got production capacity headroom at the plant at the moment. And when the market calls for the gas, we can deliver up to the 205 capacity a day. So we're obviously constrained through nominations through the plant on a daily basis, particularly when the weather is mild or the sun is shining. In terms of our opportunities, what I'm particularly excited about is our nearshore campaign that will extend from our enterprise well pad. That looks like a great opportunity to make sure that we've got additional well capacity later this decade as the pad-- plant looks -- as the existing well capacity starts to decline. And then also, we have the finalizing of the Otway offshore Equinox campaign, which will have a completion at Artisan and an intervention at Thylacine West will add some more production as well as the drilling of the La Bella 2 well, which gives us good optionality for connecting those again later this decade. In terms of opportunities outside and abroad, it was fantastic to see ConocoPhillips have a great discovery with their Essington opportunity. And obviously, our plan is well placed in support of that. And similarly, our friends next door Amplitude looks like there a very exciting drilling campaign coming up. So we look forward to hopefully seeing some discoveries there, gives the whole region a bit of optionality about where things can be developed and opportunities to move forward. So there's plenty of opportunities organically as well as inorganically in the region that we'll continue to observe and potentially pursue.
Operator: Your next question comes from Henry Meyer from Goldman Sachs.
Henry Meyer: Just a follow-up on Waitsia. The accounting treatment for all of the cargoes is getting quite complicated. So hoping you can step through, I guess, first of all, when the volumes that have been overlifted swaps or purchased will be returned and then how revenue costs and cash flow will be recognized for those cargoes, please?
Brett Woods: I'll let Anne-Marie start with this one.
Anne-Marie Barbaro: Thanks, Henry. I'll try to summarize it for you. So I think previously, we've talked to sort of that rough -- so for the cargoes today, roughly sort of 30% of those have been delivered through Xyris gas production with 70% of those cargoes being delivered through swaps and purchases. So effectively at the moment that the profile is sort of phased relatively evenly over the period till FY '29 in terms of return of those volumes. And I guess what I would note is we have tried to, through the quarterly reports, articulate how much is sort of purchased volumes. So for those that we have paid a third-party purchase, when we return those, we'll actually get sales revenue for that at the domestic gas price in the future. So that's sort of quite a simple high-level overview of how that is being returned. So when we go and produce that gas for return either for the purchases or the swaps, obviously, from a P&L perspective, you'll need to recognize the cost to produce those molecules for that. And obviously, for a portion, there will be no revenue. And then for a portion that we've articulated through the quarterly, there will be a revenue component on that return.
Henry Meyer: Sticking on Waitsia, I guess, the Perth Basin has seen various reserve downgrades over the past few years and the geology has been proven to be quite complex. Could you just share how production and pressure depletion has compared against original expectations now that we're producing a bit more? And do you have enough data gathered yet to infer reserve estimates? Or will we need to wait for the full year process to come out in August?
Brett Woods: Yes. Unfortunately, it's still too early to comment on depletion across the field. What we're seeing is great capacity across wells. We've only got a few wells operating at the moment because we only need a few wells. So the delivery of those wells has been very strong. So as we bring on the other compressors, we'll bring on additional wells. And then as we trend towards full year results, we'll start to see the pressure response across those wells to understand where we are. We feel pretty confident where we are at the moment. We're not seeing any red flags through that production. So it's all looking good at this point in time.
Operator: Your next question comes from Gordon Ramsay from RBC Capital Markets.
Gordon Ramsay: My question relates to strategy, Brett, and it's more in line with the treatment of the Hercules exploration well in that you've expensed it and treated it as an abnormal item and the [indiscernible] company, the project scale and infrequent nature of exploration activities in the rationale, that kind of implies to me that you're not looking at the drill bit in terms of adding reserves, resources and reserves to grow the company and you're leaning to M&A. The upsize of the debt facility by $300 million, can you explain if that's been solely done for your war chest for M&A and to grow the company and to buy actual projects and production assets instead of using the drill bit?
Brett Woods: I think our offshore Victoria, there's quite a few resources that are available, and we are infrequently drilling exploration wells in that region. There's plenty of discovered resource, and I expect there'll be more discovered resource coming up from the upcoming drilling to give us that optionality. So new discoveries, new additional discoveries for us past the Artisan, La Bella opportunities really only come live for us mid-next decade. So we don't see that we need to invest significantly moving forward across exploration in the offshore, particularly given there has been great opportunities being discovered nearby. So I think we've got good optionality to align with other joint ventures there to deliver long stated value across the Otway. And we're obviously reflecting on the outcomes at Hercules to understand what our organic portfolio looks like as well. What I'm particularly excited with is our nearshore assets. They have a relatively low risk in terms of their Amplitude response, can be connected through the enterprise well pad. So in terms of rates of return, they're very strong projects, which will add additional volumes or additional organic volumes to our portfolio. So they make a lot of sense for me. And I just want to be cautious about investing in offshore expensive exploration given any overhang around the East Coast gas market pressures. So we're making sure that whatever we chase can deliver sufficient margin to make sure that we get strong outcomes for all shareholders. And in terms of our facilities, we had some maturities. We need to just make sure that we recycle that and wanted to have the capital available for our ongoing work. We have our opportunities across the Western Flank. We have opportunities, obviously, in offshore Victoria. And we're looking at how we can deploy that capital best in a disciplined manner. Obviously, I've been honest the whole time I've been at this organization. I do see it's important for Beach to grow. We're certainly working very hard on our organic portfolio and how we grow within that. But ultimately, I think you can all be assured that some component of M&A is required for us to give that longevity in the portfolio. But we'll only do that in a very disciplined approach. And I think the fact that I've been maintaining that [ and ] so far is a demonstration of that. We've only just got Waitsia online, and that was always a key metric for me to make sure that we deliver that to give us that line of sight of long-term cash flows in support of our strategy. So hopefully, I've answered your question there, Gordon.
Gordon Ramsay: Just one more for me. Activity is picking up at the Western Flank. You've got your 12-well appraisal development program followed by 10 exploration wells. What's your target in that program? Do you expect to actually grow production? Or are you just hopeful to limit the decline -- pretty aggressive decline rate that we've seen from that area more recently?
Brett Woods: I think the appraisal and development will do both should stop the decline and having 100% outcome of our wells drilled there so far is good. We're seeing some positivity in those results. And I'd hope to see some growth as well. So we still got 6 to go and looking forward to getting those connected quickly and seeing the response of those wells. If you look at Slide 9, there is a color, I think it's yellow, which represents some of the exploration targets we're chasing. And what you would observe from that, there are a little bit of step outs from some of the core areas that we've chased in the past. Again, some really good technical work has gone on to unlock what we think is some pretty exciting opportunities there and that's supporting the scale. So that's really about growing reserves and growing our future development portfolio of optionality. So with this -- this phase is really about being liquids focused. We've also done a great piece of work about looking at our gas portfolio and how we can lean into the area around Milton in future campaigns. So I'm really pleased where we've got to technically in understanding the Western Flank from a period a few years ago, where our success rate fell circa that 10%. Now we're looking at an opportunity to unlock some volume. And my objective here in the Western Flank is to build an asset base that is self-sustaining that we can continue to keep maturing inventory as we drill and continue to get that good liquids yield because the Western Flank does deliver a high-yielding piece of business if we operate it effectively. And that's really our objective to get that balance right. And super pleased with what the team has done in terms of doing it with less resources, getting a faster rig. Our operational execution has been fantastic. I'm so proud of what the team is delivering out in the Western Flank.
Operator: Your next question comes from Saul Lawrence Kavonic from MST Marquee.
Saul Kavonic: First question is just on Waitsia, assuming this is ramping up on target, are there any plans or need to do infill well drilling or another well campaign or some compression over the next 18 months? And is that likely -- if it's true, is that likely to put any pressure on the $450 million sustaining CapEx for FY '27 and FY '28?
Brett Woods: Yes. So always -- we'll start with the wells. So we always plan to drill another 3 development wells in the future. So they're planning to come in around '27, '28 time line. So they effectively should deliver the 2P resources that are currently booked in the campaign. So we haven't had to look through infill drilling at this point in time. We are looking at an exploration campaign with -- Bill and the team have done a really good job on highlighting some other opportunities at scale within our existing portfolio that we may look to do again later this decade, probably on the back of that development well campaign. But in addition, you're correct, our inlet compression has always been a part of the plan across the Perth Basin Waitsia assets. So we would look to bring inlet compression online late this decade. So the commencement of the inlet compression project is probably in the order of 12 to 18 months away, which will be ordering a large turbine in support of lowering the production rate -- production pressure through the field. That assumes that these -- the compartments across the field effectively a depletion drive mostly, and that enables us to recover additional resources. So inlet compression was always a plan, and that is certainly -- we're not moving away from that. It's not -- we're not starting that at the moment. That's still some time away from commencement.
Saul Kavonic: And is the cost of these things included within your $450 million sustaining annual CapEx guidance? Or would that be something in addition to that?
Brett Woods: The wells are included within our sustaining guidance. We're just waiting to get the cost of the inlet compression, and I'll be able to update you with that in the future.
Saul Kavonic: And just coming back to Western Flank. When do you think you'll be in a position to actually provide color to market on what that sustaining rate might be? Because I think this is an asset which the market has risked quite severely and there could be some upside here once the market has some confidence on what a sustained rate and capital spend for it might be?
Brett Woods: Yes. Super good question. I think what we have -- what we'll have by the full year is effectively the rates and delivery of the development appraisal campaign. But on the exploration campaign, we'll probably be somewhere about 1/4 of the way through the exploration campaign. So the rigs that we've got drilled in the development campaign leases for several months. and then it's coming back to do the exploration campaign. And I think on the back of the exploration campaign, looking at some of those larger scale opportunities that we're chasing along there as well as some of those opportunities [ just along board ] from fields such as Snatcher and Martlet and Growler, we can -- we'll see what this new part of exploration campaign can do. And ultimately, each of those discoveries have a lot of follow-up. And that will give us a real good sense of where we are. So I don't expect to see a reserve write-up of any significance at full year. But following the exploration campaign, I think we'll get a really good sense on what a standard sustaining business looks like in the Western Flank. Western Flank delivers great returns for us in terms of the money spent, really, really high double-digit rates of return across those opportunities. So it's -- for me, it's about operational skill and execution. And the time that we've given the subsurface team to kind of rebuild their inventory has been very important. And now we're going to test it. So testing it will come through this exploration campaign. We've acquired new seismic. We've done a lot of reprocessing. We've done a lot of very good technical work in support of the upcoming campaign. And I think probably over this calendar year, we'll be in a really good position to have a better understanding of what long-term longevity looks like across the oil part of the business. And then in the following year, we'll probably be drilling some exploration wells around the gas infrastructure and see what longevity looks like for our own gas infrastructure through that area.
Operator: Your next question comes from Nik Burns from Jarden Australia.
Nik Burns: Just look back on Waitsia. Is there any update on Waitsia being allowed to export LNG beyond the current date of end CY '28? And when will we know whether this is locked in?
Brett Woods: Yes. So Premier WA has given us its support. So we're still in negotiations with -- across the Northwest Shelf to secure processing at the right cost and that we'll work on that over the upcoming periods. So very confident in terms of the government support for us to continue to do that as being a good domestic player in Western Australia, and we've got a lot of engagement with them on that. And I think it's the final commercial part of the arrangement in terms of supply throughput and what the tolls look like is probably the final part of the equation before we can clearly pick that one off.
Nik Burns: Got it. Just stepping back on Perth Basin in terms of reserves at the end of FY '25, your developed undeveloped reserve split on 2P is around 60% of the reserve that was classified as developed. So that 40%, I'd imagine most of that is within Waitsia. You mentioned before about 3 more development wells and inlet compression. Will that investment get all the undeveloped 2P reserves at Waitsia into the developed category?
Brett Woods: Yes, that's certainly the intent. The inlet compression is a large piece of that. And then the 3 additional wells into parts that haven't been drilled at the moment should get that -- some of those wells will look at their responses of the current production wells to see if there's parts of compartmentalization or not, whether those wells are needed. But at the moment, it's in the base case assessment for the reserves.
Nik Burns: Got it. Do we have any sense about the scale of that compression investment?
Brett Woods: Yes. Well, it's in the circa $100 million level. I'm pretty sure that's what I told you last time. That's the number that we're working towards.
Nik Burns: Just -- maybe just one more quick one, if I can. Just on Otway Basin, I was a little surprised that JV has yet to sanction the drilling of La Bella and the completion of Artisan, given you get the rig very shortly. Assuming that you do move ahead and drill and complete those wells, can you give us an indication about how much the connection cost for those wells will be? You talked about bringing them online in FY '29. And then just beyond that, further offshore exploration drilling, it sounds like you're less enamored with that now, Brett, and focusing more on nearshore. But I'm conscious you did have a commitment well offshore. I'm just wondering what's happened to that commitment well as well.
Brett Woods: Yes. Just -- I'm sorry if I was confusing before. The joint venture is fully committed to drilling the Artisan, La Bella wells, that's all lined up. So we will be drilling La Bella 2 and completing. We'll be completing Artisan, which was already drilled. So that is already in track. What hasn't been sanctioned at this point in time is the final connections. So we're working with the operators adjacent to get the lowest price connection solution that we can. With Hercules not being added to the program, I previously guided some numbers for the connections. And effectively, without the Hercules piece, we're probably talking more about the 300 to 400 level to get the connections done for Artisan, La Bella. We haven't made that final investment decision on whether we will connect, but that should come towards the end of this half year. And in terms of -- subsequent part to your question, my challenge has always been in the offshore is unlocking scale. It's not cheap operating offshore in the Otway, even with all the synergies we've delivered so far. So one of the great things about our position in the nearshore is we can deliver those with an onshore rig with all effectively all available onshore kind of technology, which unlocks a lot of value. So I look at a lot of those opportunities. They're very encouraging. We can manage our balance sheet very easily. There's not any balance sheet stress that we put -- need to put ourselves in under to unlock those. And I look at opportunities that have been discovered in the region as probably offering a better solution or a simpler solution for bringing additional gas over the facility. In terms of the exploration well we had in a different prospect, so we've effectively deferred that and looking for other things to do with that option in the rig. We'll effectively deliver all our rig days through our ongoing current program. So we don't believe there's an obligation to drill that subsequent well.
Operator: Your next question comes from Dale Koenders from Barrenjoey.
Dale Koenders: A couple of quick ones. Just Waitsia spot cargoes, is that a thing of the past now that you've got an inventory position to unwind and you're getting close to nameplate capacity?
Brett Woods: Yes. So I believe so, Dale. We effectively have got ourselves to a point, where we just get the next 2 compressors online and the project will be hopefully hitting peak rate tests in the not-too-distant future. And then we'll be effectively fully commissioned and under -- properly under the arrangements that we have across the joint venture. So there are requirement to do further swaps or anything is massively diminished. And so we'll unwind our small overlift position that we have at the end of the half and deliver our cargoes moving forward. And the quicker I can get those 2 compressors online, the happier I'll be.
Dale Koenders: And then on Page 6 of the slide deck, where you're showing the Waitsia gas ramp-up, there's a gap between your nameplate and production. Does that mean we don't quite get to nameplate capacity? Is that an availability assumption? Or can you explain that to me, please?
Brett Woods: Yes. So that's just running aligned to guidance. So we've been effectively saying 90% of nameplate capacity is our number. So we've just been again -- so and you will also see there's a shutdown in March. So we're currently working on that. That's probably going to be moved to align with the Northwest shutdown in the April period. So there's a few moving pictures. This is -- the operator's forecast ramp-up profile gets changed every week. It's not a static view. It's just the -- I know that you all look at the AEMO reports, you message me about it a lot. So I thought I'd share that to see where we are versus what the operator had as their ramp-up profile. But no, obviously, my objective is to try and deliver better than that. And certainly, we'll get -- I expect that the shutdown in March will shift into April coincident with the Northwest Shelf shutdown.
Dale Koenders: Just for clarity, is that 90% availability, the operator's long-term assumption as well?
Brett Woods: No, no. This is just for the first FY. Our gas plants are currently across the Otway and across running -- and New Zealand are running at 99%. So expectation would be we trend towards that high 90s level in the not-too-distant future. It's just being a bit conservative in the first year of production.
Operator: Your next question comes from Sarah Kerr from Argonaut.
Sarah Kerr: Good morning from Perth, but I have a question about the Otway Basin. Our friends at 3D Energy had quite unexpected cost overruns with the Equinox on their 2-well campaign. Is that of particular concern for you now that you've got the rig?
Brett Woods: Not particularly. I think they had reservoir and pressure issues, which we're not expecting to have at our drilling. We've used the Equinox rig for the Hercules well and the 3 abandonments, and we had fantastic performance across that rig. And even though we had to face material weather issues, we've been able to deliver those pieces of work effectively on budget. So I've actually been really pleased with the performance of the Equinox rig and pleased with our technical work to understand what we're drilling into and what that looks like. So I don't -- I expect us to continue to deliver as per our promise.
Sarah Kerr: That's good to hear. Just one quick question. Just staying in Victoria, are you talking to any data centers? I think you mentioned that in one of the slides for direct gas sales? Or is it mostly the utilities that you're talking to?
Brett Woods: Well, the heavy part of our -- what we've done, we've moved from effectively having nearly 2 customers across the East Coast to have 15. So we've really diversified our gas buyers. And we're starting to see quite a lot of interest from people who are trying to get support for things like data centers. I'm not sure if there's been a lot of government support for that at this present time, but I can see a strong growing demand coming in that area. We're certainly supporting a lot of power producers in terms of their gas requirements, and that seems to be a growing demand center for us, which has been great. very much aligned with our objective is to be out of play and to open up a lot of our gas into being uncontracted, and that's given us a great opportunity to deliver improvements in our realized gas prices. And that I'm super proud of is we've delivered in the last 2 years, a 30% increase in our realized gas prices and it's fundamentally being through the East Coast of Australia. And that's on the back of our gas strategy, where we're not taking long-term commitments. We're kind of supporting the producers as and when they need it, and we've been able to continue to chase value for our molecules. And I think that's super important as a domestic-only producer across the East Coast of Australia.
Operator: Your next question comes from Rob Koh from Morgan Stanley.
Robert Koh: Congratulations on the results. So first question is in relation to the gas market review, which you've called out some of the points on it and obviously, a little bit to go before legislation. Can you talk about how that interacts with your growth aspiration and investment? Are there things that you want to see out of this review before you make decisions? Or are the opportunities before you kind of enable you to make no regret type calls?
Brett Woods: It's a really good question. I'll be transparent with you. I have some concerns about what the outcome could be to the East Coast gas market review. So I'm engaging heavily on -- in support of the domestic producers to get the right outcome for us. We would like to see that domestic producers are protected through particularly the winters in the southern markets that we don't get some of the higher-margin periods in our sector taken away through LNG producers playing the arbitrage between the North Asian and southern markets at higher gas prices. That would be disappointing if that's -- if they effectively open up the opportunity for LNG producers to deliver higher value through the winters in the southern market. We've been sitting there offering gas to the market, representing only 18% in the last half of the domestic supply, which has been critical. So we would expect to see strong support from the government for the domestic-only producers. What I would also like to see is that we get our legislative change through so that we can make the approvals process and all the overhead that we have in trying to get opportunities up moving forward. So for me, the uncertainty about what the East Coast gas market could look like is very much at heart of our strategy, delivering low-cost and high-margin businesses. So in terms of the opportunities I'm trying to chase, I'm trying to deliver those molecules that have full in development and production costs in that $8 to $9 a gigajoule maximum level. If there is downward pressure on pricing that's come through an oversupply from Northern gas, I want to make sure that Beach is in a good position to continue to deliver value for shareholders and TSR accretion by maintaining margin. And that's why I like the onshore part of the Otway because it gives us that ability to manage costs, deliver low cost, but have molecules coming in at the right place. It's always going to be cheaper to have molecules developed close to where the demand centers are. So the Otway onshore certainly offers that. And our offshore portfolio because much of it has already been developed outside of the flow lines, we can deliver that at fairly good rates of return or strong rates of return, I should say. And moving forward in terms of our future development, we're looking at things probably slightly more lean to onshore than offshore that we can guarantee ourselves that we can maintain margin, i.e., deliver that all-in cost at a competitive rate that we can, irrespective of what happens to East Coast gas review, we can deliver rates of return.
Robert Koh: My second question relates to the abandonment expenditure and activities there. That kind of feels like that's going according to plan so far this year, and I hope that, that remains the case. Can you maybe comment on any learnings you've had from the process and implications that has for the future non-current provisions? And then maybe if you could -- if there's any big ticket items we should be bearing in mind over, say, FY '27, FY '28, please?
Brett Woods: Yes. So we set out to abandon 5 wells offshore. Normally, on an annual basis, we kind of participate in about circa $20 million to $30 million worth of standard abandonment, particularly across our onshore portfolios, and that seems to be a fairly regular and static number. So the offshore abandonments being effectively very episodic. We don't have any more offshore abandonments until next decade after we complete the next 2 wells. So I'm very pleased that we've been able to deliver the 3 wells so far as per our guided numbers in our accounts. And it really depends our position in terms of the cost of which we need to execute these offshore abandonments. So very pleasing. I would have loved to have done some of them outside of the winter. And if there was a magic learning that I could have had would have been that the rig arrived about 6 months earlier than it did. So it could have got all that done without losing some winter days. Outside of that, I think the quality of the rig and the crew was exceptional. I've got to give hats off to Transocean. Also, I think the other part that's worked very well has been the consortium. We've been working very well with groups like Amplitude, Energy, Woodside and ConocoPhillips about sharing helicopters, sharing boats, sharing all the infrastructure, and that's helped us deliver a fairly strong outcome in terms of cost. But for me, offshore execution is expensive. And moving forward, we need to work in this consortium model and get the support to get these approvals quickly. So we don't burn capital on 5 years' worth of approval delays, things like that, just erode value from all parties.
Robert Koh: Can I ask specifically for the future offshore activities that you've highlighted maybe next decade in the '30s, which projects are those? Is there -- are you able to help us with that?
Brett Woods: No, no, sorry, that -- what I was talking to is Bass abandonment. So the Yolla field is probably online to commence decommissioning early next decade. So that would require a re-coming back around that time line. We'll coincide that with the abandonment for the other major operators in the region to make sure we get the synergies through that. But a great outcome for us was the work we've done on increasing production out of the Yolla field through our interventions there with asset washing. And that's given us an uplift in production and turn that asset to something that's going to strongly that will be delivering for us until the end of this decade.
Robert Koh: Yes. I guess, there's not much risk that you'll get a direction to decommission that earlier while it's still going. So that's good.
Brett Woods: [ I think we have ] no directions. So really pleased with that.
Operator: Your next question comes from Baden Moore from CITIC CLSA.
Baden Moore: Just in mind with your Western Flank reinvestment, do you have an idea or a target in terms of your overall mix of oil and gas leverage going forward? Is there a medium-term target you could talk to and how quickly you would like to get there? And just a follow-on question from one of the capital management questions you answered before. Is it right you're still doing a broader capital management review of your business, which includes the dividend policy?
Brett Woods: I'll start with the one first. Yes, absolutely. I think working closely with the Board on the dividend policy. We're looking at opportunities to grow the business. And as a consequence, there may be some great opportunities ahead of us. So we're just looking at being very prudent with that. And at this point in time, there was no requirement for us to make a change. So we thought it would be wise to offer a dividend to shareholders at this point in time. But we'll certainly be looking at as we do all the time moving into the full year results to give a more fulsome update on where we are with our capital management. And what -- sorry, what was the other part of the question?
Baden Moore: Just in terms of your mix around oil versus gas leverage, just with the East Coast market moving around a little bit, I guess, and you're reinvesting pretty heavily into the Western Flank. Do you have an idea in terms of weighting into oil production in your portfolio and how quickly you'd like to get there? And a small follow-on as well, we've got a review on the safeguard mechanism coming up as well. Do you have any hopes out of the expansion, what you might be looking for?
Brett Woods: Yes. I think for us, across the Western Flank, we love to see that liquids yield. That liquids yield helps lower our overall costs across the basin and that protects margins. So the more liquids you can get in the Western Flank, the better. I'd be happy with liquids in other basins as well. But our predominant focus really is gas on the East Coast. and gas on the West Coast. That is -- so we haven't really got an internal solver equation for what proportion of that portfolio is liquids. We recently entered an AMI with Omega and Tri-Star for an opportunity in Queensland called the Taroom Basin. And hopefully, there's a decision of that over the next few weeks. But opportunities like that, that have liquids associated with them can help you lower your cost of your combined product and as a consequence, can deliver you essentially a lower cost gas delivered. So a bit like Henry -- why is Henry Hub so cheap, all the associated liquids in the United States Hub deliver low cost of gas. Australia doesn't have that benefit from many basins, but opportunities such as the Western Flank, the Taroom's and potentially opportunities in Western Australia do have liquids. So we look at those and look at those quite carefully to see which ones can add value. But to answer your question properly, our real focus is gas, gas in the East Coast and gas through our plant in Western Australia across the West Coast.
Baden Moore: And any expectations out of the safeguard review?
Brett Woods: Well, I would like the safeguard to be considerate of where we are as a country in terms of our manufacturing. I would hope that the government would be a bit -- given where we are in inflation and given where we are as an economy, that we could kind of effectively lead the safeguard mechanism where it is. But I know that's not where the government is trending. So fortunately, we've done more than we need to with our Moomba CCS project to give us plenty of headroom. So at the moment, our priority is investment in traditional oil and gas to deliver gas to the market because gas is one of the best things to decarbonize. So getting recognition for that, I think, will be important. That would be a great outcome for the safeguard review.
Operator: Your next question comes from Declan Bonnick from Euroz Hartleys.
Declan Bonnick: So you mentioned no current cut to the dividend policy is planned. If you don't execute M&A in the next 6 months, do you see that second half dividend lifting to hit that 40%, 50% payout ratio?
Brett Woods: We'll address that at the full year. Certainly, I'm not going to do a deal for deal's sake. So we're going to be very prudent with our capital management. And if opportunities don't eventuate, well, then the Board will obviously look at opportunities to return value to shareholders. I think that's something that I've always said that, that is part of our agenda. We'll only do things that are truly TSR accretive. If not, we'll look at returning capital. That would be certainly top of mind for myself and for the Board.
Operator: There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.