Good morning, ladies and gentlemen. I'm Ryan Stokes, Chairman of Beach Energy. I declare the 2025 Beach Annual General Meeting open and can confirm we have a quorum present. I'll begin with some housekeeping matters. Please ensure your mobile phone is on silent. In the unlikely event of an emergency, please follow the instructions of the Convention Centre staff, who will guide us to a safe assembly point. Unauthorised recording or photography during the meeting is prohibited. Today's AGM is being webcast, and a recording will be available on the Beach website after the meeting. Welcome to our shareholders, both in the room and those viewing today via the webcast. Our compliance statements are set out on this slide for you who wish to review them later.
I'm joined today by our Managing Director and Chief Executive, Brett Woods, who will address you shortly, along with fellow directors, Sally Ann Layman, Richard Richards, Peter Moore, Sally Ann Layman, and Bruce Clement. I also welcome Shaun Gregory, who is offering himself for election to the board today. Linzi Carr from our auditor, EY, is also in attendance and is available for questions in relation to the 2025 financial accounts and remuneration report. We received several questions from shareholders in advance of the meeting, which I will address later during the formal items of business. Beach has a strong board of non-executive directors with broad commercial and technical expertise and a deep understanding of Australia's energy landscape. I am pleased to note Shaun Gregory has been recently appointed to the board.
Shaun brings nearly three decades of experience in the oil and gas and energy industry, having held a range of senior technical and executive roles at Woodside Energy. His deep technical expertise, strong commercial acumen, and strategic leadership across both traditional and emerging energy operations will be invaluable as Beach continues to evolve and grow. Shaun appointment coincides with Peter Moore's retirement at the conclusion of today's meeting. Peter has been an integral part of the board for eight years, serving as Lead Independent Director and serving on the Remuneration Committee. I'd like to sincerely thank Peter for his outstanding service to Beach.
Thank you.
Following this meeting, Sally Ann Lehman will take on the role of Lead Independent Non-Executive Director. Sally Ann has been on the board since 2019 and is an experienced company director with diverse international experience in the resource sector and financial markets.
She is standing for re-election today, and further details about her experience and expertise are set out in the notice of meeting. Brett and the executive team continue to demonstrate discipline and execution in delivering Beach's refreshed strategy. The new organizational structure introduced in June 2024 has streamlined operations and embedded accountability across the business. Through a clear focus on our core East and West Coast hubs and a relentless commitment to cost discipline, the team delivered material operational and financial improvements in FY 2025. These include a 33% reduction in headcount, an 18% reduction in field operating expenditure, and a 20% reduction in sustaining capital expenditure. This disciplined approach has supported a reduction in Beach's pre-growth Free cash flow break-even oil price to below $30 a barrel for 2025, positioning the company to better manage market volatility and deliver sustainable value-accretive growth.
I want to thank Brett and the entire Beach team for their commitment and focus throughout the year. Their efforts have strengthened the business and established a solid foundation for future performance. Beach continues to progress towards our ambition of becoming Australia's leading domestic energy company. Our strategy is clear and built on three core pillars, core hubs with a focus on Australia and our four production areas supporting the East and West Coast gas markets. We want to grow our share of the domestic gas market and ensure our assets are driving value for Beach. High margins is our focus on maximizing the performance and results from our assets. We have a commitment to continuous improvement with an emphasis on cost efficiencies to maximize returns. We're also exploring new opportunities to enhance value through gas storage and peaking electricity generation adjacencies. Sustainable growth.
We want to invest to drive growth with a focus on maximizing total shareholder returns through disciplined capital allocation. This growth will be both organic and potentially inorganic, where it is accretive to shareholder value. These pillars are supported by our four core attributes of safety first, performance-focused culture and values, and organizational structure that supports execution and a strong belief in the role gas will play to support and enable the energy transition, all backed by our focus on driving disciplined execution. We want to grow through accretive opportunities, both organic and inorganic, and we are disciplined in our approach. As a result, we will review the capital management policy in relation to dividends to ensure it enables growth and maximizes total shareholder returns. In FY 2025, we supplied 19% of all East Coast gas demand, underscoring our position as a core domestic East Coast gas energy supplier.
Our increase in market share reflects our updated strategy and was driven by the connection of Enterprise and Thylacine West in the Otway Basin, together with higher volumes from the successful work in the well-bore interventions in Bass Basin gas. On the West Coast, recent commissioning of the Waitsia Gas Plant marked completion of the most significant project in Beach's history. With this critical infrastructure now online and soon to be producing gas, Beach can increase its supply of LNG into global markets while also supporting the West Australian domestic gas market for years to come. The Moomba CCS project remains an important part of our decarbonization pathway and successfully abated over 1.3 million tonnes of CO2 equivalent in its first year of operation. It is among the most cost-effective carbon capture projects globally, delivering to nameplate and demonstrating Beach's commitment to practical emission reduction.
In FY 2025, Beach delivered significantly higher free cash flow and rewarded shareholders with a record final dividend, while strengthening its position as an efficient, resilient, and focused supplier of gas to Australia's domestic markets, with a clear commitment to long-term value creation. Beach has consistently invested to position the company as an integral supplier of domestic energy, and the benefits of this investment were clearly demonstrated in FY 2025. In June, when the national electricity market faced severe supply pressure from outages in coal-fired generation, low wind output, and mid-winter solar lows, Victoria relied on gas for 13% of its annual electricity demand over just three days. Beach's Otway Gas Plant ran at full capacity during this time and, combined with higher output from Bass Basin, delivered more than 20% of Victoria's gas supply.
Industry participants have long recognized the flexibility, scalability, and lower carbon footprint of gas relative to coal, making it the ideal firming partner enabling variable renewable energy. As Australia transitions to sustainability and a high penetration of variable renewable energy, the critical need for gas as a firming resource to support the grid will continue to grow. The federal government's 2024 Future Gas Strategy and recent policy developments signal a growing recognition of gas and its critical role in energy security, but recognition alone is not enough. Investment certainty is critical to bring new supply to market. Stable, long-term policy settings are essential to underpin exploration, development, and infrastructure investment by companies like Beach. The fundamental issue we face is one of supply. Unless this is addressed, no amount of price rhetoric or intervention will deliver the energy security we need to support Australian industry.
Australia's gas prices are currently ranked in the lowest quartile in the OECD. Since 2023, East Coast domestic gas prices have averaged 40% below export parity. This situation does not justify a subsidy or other direct market intervention. Comparing U.S. and Australian gas prices is misleading due to the fundamental differences in production, infrastructure, and market conditions. Claims that domestic manufacturers are paying materially more than overseas competitors are not supported by market data. Calling for price interventions and controls may sound appealing but would ultimately deter much-needed industry investment and reduce new gas supply. Such policies have failed elsewhere and would likely deliver the same poor outcomes for industry and the broader economy here. They only serve to deter investment and discourage the deployment of risk capital. The rising cost of onerous regulations also needs greater focus. The safeguard mechanism functions as a carbon tax on industry.
Like all taxes, this cost is ultimately passed through to consumers. The impact of this policy on cost and competitiveness must be fully examined. Policy uncertainty and price interventions discourage exploration and development investment. This further exacerbates the risk of structural shortfalls in an already supply-constrained market. Heavy-handed regulation will not fix what is fundamentally a supply issue. The existing regulatory frameworks increase costs and fail to recognize the inherent risks associated with investing to bring new gas to market. We continue to advocate for practical reform, removing regulatory complexity, streamlining approvals, and unlocking prospective acreage and allowing reservoir stimulation. New supply is the only sustainable solution to meet Australia's growing energy needs. More needs to be done to turn policy intent into action.
The Gas Market Review is an opportunity to finally get the settings right by streamlining approvals, improving regulation, and encouraging investment to secure gas as part of the nation's renewable future. Australian gas suppliers and manufacturers should be aligned on wanting greater supply to support demand from domestic households and industry. Beach remains focused on supporting domestic customers, including Australian manufacturers, and delivering reliable energy that supports jobs and local industry. The work done to strengthen the company's foundations has improved our ability to find and develop hydrocarbons efficiently and responsibly. Beach enters FY26 in a strong position, supported by a disciplined operating model, a robust balance sheet, and a capable and accountable management team. These strengths will be critical as we pursue new opportunities to drive long-term value creation.
I'd like to thank my fellow directors for their commitment and guidance over the past year and our shareholders for your continued support and confidence in Beach Energy. I'll now hand over to Brett for his address.
Thank you, Ryan, and good morning, everyone. This financial year was a pivotal year for Beach as we earned the right to grow. We made strong progress against our strategic review objectives and towards our vision of becoming Australia's leading domestic energy company. This past financial year, we delivered outstanding safety, environmental, financial, and operational outcomes. Pleasingly, our operated assets delivered exceptional performance. Those operations within our control and over which we apply our strict operating principles have transformed Beach Foundation, making us a more efficient, resilient business as we play an increasingly important role in both the East Coast and West Coast gas markets.
To put this into context, Beach supplied 19% of the total East Coast gas demand in last financial year. We are now an integral player in the domestic energy landscape, and we are focused on continuing investment to support national energy security. I am incredibly proud of what we achieved last financial year, and I'm looking forward to sharing the highlights with you this morning. I'll begin with our strategic review objectives and the strong progress we have made. In last financial year, we delivered the base horizon of Beach's business strategy, as outlined in the strategic review outcomes presented in June last year. Implementation of these asset-based organizational structure and appointment of my full executive leadership team were the first steps in delivering a profitable and resilient foundation for sustainable growth.
Since then, we've been unwavering in the pursuit of our strategic objectives, which is evident in the financial year 2025 outcomes. We delivered lower costs and higher margins, with AUD 130 million in cost out through a 20% reduction in sustaining capital expenditure and an 18% reduction in unit operating costs. This is against the backdrop of high inflationary pressures. We maintained a strong balance sheet with low gearing and supported by a significant reduction in our Free cash flow break-even to well below $30 a barrel. From a commercial perspective, we have repositioned our gas contract portfolio to achieve greater balance between contracted gas and spot market exposure. This makes our gas more available for when the market needs it, which therefore benefits from near-term pricing dynamics. These benefits were evident in our last quarterly report, which showed an average realised gas price of AUD 11.70 per gigajoule.
This is an approximately 30% higher than our realised pricing at the start of last calendar year. Our disciplined gas marketing strategy and recontracting efforts have also seen a diversification of our East Coast customer base across the industrial sector, retailers, and gas-fired power generators. From supplying one core customer from our Cooper Basin anchorage at the beginning of this financial year, we now have a portfolio of over eight customers for the next financial year. On the drilling front, we refreshed our drilling inventory with the first phase of our offshore Victoria Equinox rig campaign now complete, and the Western Flank Oil Appraisal and Development campaign is about to commence. Lastly, we delivered our sustainability objectives in large part due to the nationally significant Moomba CCS project. Turning to our headline results, which show material growth across all key metrics.
Total production increased 9% to 19.7 million barrels of oil equivalent in the Otway Basin. A 64% increase in production to 6.8 million barrels of oil equivalent was driven by the connection of the Enterprise Field in June 2024 and the Thylacine West development wells in October 2024. It is great to see that this momentum continues in the first quarter of FY 2026, with a 12% quarter-on-quarter increase in Otway production. In the Bass Basin, a low-cost initiative to improve well performance underpinned a 91% increase in production to 1.4 million barrels from that asset. This strong production in Victoria was partially offset by severe flooding in the Cooper Basin, which has impacted performance in the fourth quarter of FY 2025. While the impacts of the floods are continuing through the first half of this financial year, we are working very hard to restore operations as floodwaters recede.
Roughly one quarter of impacted wells in the Cooper Basin joint venture are now back online. Sales volumes rose 16% to 24.7 million barrels of oil equivalent, which, as you can see, is materially higher than our production. This is in part due to the great work done by our commercial team in securing early Waitsia LNG cargoes. The AUD 352 million of revenue generated from the Waitsia LNG cargoes clearly shows the value to be created once the Waitsia gas plant is up and online and exporting gas. A 13% increase in sales revenue to AUD 2 billion benefited from the LNG cargoes and a 13% increase in the average realised gas price. Underlying EBITDA increased 20% year on year to AUD 1.1 billion, while underlying NPAT increased 32% to AUD 451 million.
The underlying EBITDA margin improved by 300 basis points to 57%, reflecting the structural cost savings I mentioned and the improved commercial outcomes. These results culminated in a much higher cash flow generation, with a four-times increase in pre-growth free cash flow to AUD 657 million. In recognition of this higher Cash flow generation, the board declared a fully franked interim dividend of AUD 0.03 per share and a fully franked final dividend of AUD 0.06 per share. Now turning to health and safety and the environment. Over the past year, we launched several targeted safety campaigns aimed at increasing awareness and strengthening compliance with critical safety procedures. We delivered outstanding safety and environmental performance, recording our best personal safety result in 14 years with no hydrocarbon spills of consequence. On the safety front, we recorded just one tier two process safety event and one recordable injury.
These are satisfying results given the heightened focus Beach has placed over recent years on improving our safety culture. It is also a credit to all our staff in maintaining their dedication as the organization went through a period of significant change. It is imperative we continue this high standard performance in this financial year. This slide highlights several sustainability milestones that Beach achieved in this past financial year. First and foremost, the key highlight was the completion of the Minos CCS project. Minos CCS has now been in operation for over 12 months and is the key driver of Beach's emissions reduction pathway. Minos CCS is safely and reliably storing CO2 and has already abated more than 1.3 million tonnes, equivalent to removing more than 500,000 cars from Australian roads.
It has put Beach well on track to achieve its target of a 35% equity emissions intensity reduction by 2030. It was also great to see Minos CCS recognized at the 2025 APAC Energy Awards in Singapore, as well as recently receiving its first issuance of carbon credits. In FY 2025, we set and achieved a new methane emissions intensity reduction target, reinforcing our commitment to safe and efficient operations. Achieving a methane intensity of just 0.05% is an outstanding result and reflects our team's year-round focus on minimizing fugitive emissions from our facilities. Turning now to our major gas project, in the West, first gas from the Waitsia Gas Plant into the pipeline network is expected imminently. This will mark completion of the most significant project in Beach's history and a proud moment for everyone involved. The Waitsia Gas Plant reached the important ready-for-startup milestone last week.
This marked completion of all critical commissioning activities within the plant. The plant is now online and final engineering sign-offs are underway to allow export of gas into the pipeline network. Integral to completion of construction commissioning has been the secondment of more than 20 senior Beach personnel from across Australia and New Zealand operating areas. Our employees played a critical role in supporting the final stages of project construction and commissioning works and mitigating significant scheduled delays. A small number of Beach secondees will remain at the project to support early stage operations and production ramp-up. The Waitsia Gas Plant will be a critical piece of infrastructure for the West Australian market. Its nameplate capacity of 250 terajoules a day equates to approximately 20% of the West Australian domestic gas demand.
Beach will soon be able to increase the frequency of high-margin LNG cargoes sold while our export licence is on foot before pivoting to domestic supply when supply gaps begin to emerge in the West. On the East Coast, as Ryan highlighted earlier, legacy gas supply is declining while demand remains strong over the longer term. This sees widening structural supply deficits from late this decade onwards, not to mention the seasonal supply deficits which periodically impact the East Coast and are expected to continue. Beach has long seen the supply-demand imbalance coming. In response, we have invested heavily with roughly AUD 2 billion of capital invested in successful campaigns over the past five years. During this time, we have discovered and developed new gas supply, created jobs for local communities, and supported energy security across the East Coast.
It is this investment which underpins the 19% East Coast gas market share I spoke of earlier. Beach is not resting. We are committed to continued investment in new gas supply across the East Coast market. Since the end of the financial year, we commenced the Equinox rig campaign in offshore Victoria, having already plugged and abandoned three legacy wells and drilled the Hercules gas exploration wells. Hercules was a moderate to high-risk target and failed to intersect hydrocarbons. The second phase of the Beach Equinox rig campaign is expected to commence in Q3 this current financial year. While not mentioned on this slide, we are excited to soon be commencing a 12-well oil development and appraisal and development campaign in the Western Flank of the Cooper Basin.
This will target undeveloped reserves in the McKinley and Burkhead reservoirs and aims to address some of the decline we've seen over recent years. An oil exploration campaign has been worked up, and we hope this will soon follow the appraisal and development campaign. We'll have more to say on our exploration progress later this year when we sanction that investment. To conclude, I would like to reinforce the compelling value proposition for Beach. The hard work we've put in over the past 12 months has strengthened Beach's foundation for growth. We have materially lowered operating costs, expanded margins, and finished the year with a strong balance sheet. This puts us in a great shape to deliver our existing pipeline of opportunities, return cash flow to shareholders, and be well positioned for growth. The strategy we announced in 2024 is clear and simple.
We have focused on our core East and West Coast hubs as we work to our vision of becoming Australia's leading domestic energy company. An owner's mindset has become ingrained in the culture at Beach. We have restructured the business, taken structural costs out, improved our margins and cash flows, and have driven our pre-growth free cash flow break-even to well below $30 a barrel. In the field, we deliver great outcomes from our operated assets, including completing the offshore Otway development program, phase one of the Equinox campaign, and reviving production in the Bass Basin. We did all this while achieving our best safety performance in 14 years, which is really a credit to my team.
Our commercial focus on extracting maximum value for our molecules has seen a material proportion of Cooper Basin joint venture gas recontracted while retaining some volumes to capture value upside through seasonal spot demand. In summary, all elements of our strategy progressed well this past year as we earn the right to grow. As we look ahead, we will continue to take measured, value-driven risks. We pursue growth across our core East and West Coast hubs. In doing so, we will continue our critical role of supporting energy security, providing significant contributions to the Australian economy. On that note, I'd like to hand back to Ryan. Thank you very much.
Thank you, Brett. Ladies and gentlemen, we now turn to the formal items of business on the agenda. The notice of meeting dated 10 October 2025 has been made available to all shareholders in accordance with the Corporations Act and the Constitution, and is also available on Beach's website. The notice of meeting will be taken as read. All resolutions will be voted on by poll rather than a show of hands. As Chairman, I've called that poll. I propose to put all resolutions to the meeting and then conduct the poll on all resolutions together at the end of the meeting. Shareholders and proxy holders would have received on registration a blue voting paper that provides for the holding of the poll on today's resolutions. I'll provide more details shortly on when the poll is to be conducted. All results will be determined by our share registry after the close of the meeting and then announced on the ASX.
The company has received close to 1.5 billion proxy votes, representing 65.24% of valid securities voted. As we move through each resolution today, the proxies received will be displayed on the screens. Proxies have been reviewed by our share registry manager, Boardroom Limited. I note that I have cast all undirected proxies given to me as the Chairman in favor of all resolutions. The first item of business is a receipt and consideration of the financial report, the Director's report, and the Auditor's report of the company and the group for the financial year ended 30 June 2025. There is no requirement to approve the financial statements, so I will not be putting a resolution to the meeting. We'll now take some time to address any questions regarding the accounts or our operations generally, or if you have any questions for the company's Auditor.
Shareholders, this is your opportunity to ask any questions you may have regarding the company or other than the subject of the specific resolutions that we put to the meeting shortly. There will be time for shareholders to ask further questions that they may have about those matters when the resolutions are put to the meeting. To begin with, please allow me to answer questions which we received prior to today's meeting. The first set of questions are shown on the screens behind me. To answer the first question, Beach is focused on becoming Australia's leading domestic energy company. To do this, we will continue to take measured, value-driven risks to pursue growth across our core East and West Coast hubs. We will continue to explore for and develop gas and oil for Australian households.
The investments we have made in both East and West Coast markets, coupled with our expectation of future gas prices, position Beach constructively to support and benefit from the current energy transition. Moving to the second question, Beach recognizes data centers are a growing source of energy demand. We have the capability to support gas, supply gas to all major demand centers across the East Coast, and contract directly with end users. Beach already sells direct to customers in the industrial sector, retailers, and gas power generators. As Brett outlined in the strategic review outcomes presentation last year, Beach is advancing these capabilities to contract directly with end users and access new markets. Beach has also diversified its East Coast gas pricing exposure and now has an electricity market linkage to one of our new gas contracts.
We'll continue to assess new opportunities as part of our disciplined gas marketing strategy, including strategic adjacencies such as gas peaking power and engaging with both small and large gas users to ensure we deliver gas to where it is most needed. Regarding question three and our full year dividend, Beach made a record payment that recognizes a strong Free cash flow generation in FY 2025. However, it is unlikely to be repeated in FY 2026 given we've commenced a capital and abandonment expenditure intensive program in the Otway and Bass Basins, and we want to retain financial capability to grow through accretive opportunities, both organic and inorganic. As a result, we will review the capital management policy in relation to dividends to ensure it enables future growth to maximize total shareholder returns.
Turning to question four, Beach has set an ambition rather than a commitment to reach net zero Scope 1 and 2 emissions by 2050. We call it ambition as it will be based on viable solutions that are sustainable commercially and environmentally as they evolve over time. We regularly evaluate opportunities which are not yet sanctioned, for example, a potential expansion of Moomba CCS and those that may require technologies that are not currently available. This approach is aligned with the intent of the Paris Agreement and the Australian government's ambition to reach net zero by 2050. As Brett outlined, we've made significant progress to reduce our emissions intensity. We are on track to achieve our 2030 emission reduction target and will provide more detail on our long-term strategy as we progress towards 2050.
To answer question five, six, and seven together, I want to make it clear that Beach believes in a just transition. It's important that we support and improve living standards as we transition to a lower carbon economy. The environmental, commercial, and social impacts of any sustainability solution must be considered to ensure energy remains accessible, reliable, and affordable for all Australians. The Australian government's future gas strategy highlights the need of continued investment in new gas supply and underscores the gas industry's critical role in the energy transition to net zero by 2050 and beyond. The best way Beach can support the national energy landscape is through the efficient exploration and production of hydrocarbons. This requires a stable and pragmatic policy environment that encourages investments and supports long-term energy security. Beach is an experienced operator and is fully licensed to do so and is committed to compliant reporting.
We will continue to operate within the regulatory environment as we explore for and develop new gas and oil projects. Significant investments in projects like Moomba CCS demonstrate Beach's commitment to emissions abatement. Beach will continue to assess other opportunities to further decarbonise guided by our strict operating principles and disciplined investment framework. This slide details two questions directed to our auditors, EY. As required by the Corporations Act, we have made copies of these questions available at the registration desk. Before I hand to EY, I'll ask Anne-Marie Barbaro, Beach's Chief Financial Officer, to briefly address each question. Anne-Marie.
Thank you, Ryan. The first question on the screen behind me addresses Beach's approach to restoration provisions and specifically the treatment of offshore pipelines. The second question queries EY's confidence that our restoration provisions are appropriate.
The act is clear that title holders must plan for full removal of all infrastructure. Beach is compliant with this requirement and has engineering scopes and estimates that consider both the full removal of the pipeline as well as remaining in situ. Whilst the removal of offshore pipelines is the default requirement under current legislation, the existing guidelines provide options other than complete removal if the title holder can demonstrate that the alternative approach delivers equal or better environmental safety and well integrity outcomes. Beach has developed a basis for decommissioning which accounts for different scopes of work required, industry experience, and technology availability for execution. Beach maintains internal technical expertise and reviews decommissioning assumptions on a cyclical basis, which includes engagement of independent external experts to validate our assessments.
Beach has plans that we believe would deliver equal or better outcomes, and our provision has been prepared reflecting our best estimate of the future cost of these plans. This is consistent with the actual experience in the Gulf of Mexico and the North Sea, where there is significant relevant decommissioning experience. I cannot comment on other domestic industry participants and the confidence they may have in their restoration provisions. However, we are comfortable with Beach's approach. This is exemplified by the plug and abandonment campaign recently conducted in the Otway and Bass Basins. Phase one of the campaign was delivered safely, without environmental incidents, and the scope was completed in line with budget, indicating that our approach to provisioning is robust.
The restoration provision is subject to the rigors of an annual financial statement audit, where our independent external auditors address key matters surrounding the accounting for restoration provisioning, including assessment of competency, capability, and objectivity. I'll now hand over to Linzi Carr from our auditor, EY, to comment further.
Thank you, Chair, and thank you, shareholders, for the question. Before I answer the question, I must state for the record that my role under the Corporations Act as the lead independent auditor here today is to answer questions related to the conduct of the audit, the content of the auditor's report, and the independence of the auditor. My role as the independent auditor is to opine on the financial statements taken as a whole.
We identify restoration provisions as a separate key audit matter in our audit report and have performed extensive audit procedures which contribute to our forming an overall independent opinion on the financial statements taken as a whole. Notes 13 and 26 of the financial statements set out the company's accounting policy and other relevant information related to restoration. This specifically calls out that the balance is an estimate and sets out that significant judgments and uncertainties are associated with the estimate. Our audit report set out on page 138 of the annual report includes a detailed description as to why accounting for restoration provisions was a key audit matter and the procedures that we undertook to audit the provision, including assessing the reasonableness of the judgments, estimates, and assumptions made and the policies and practices as a whole.
Our procedures include, but are not limited to, understanding the processes and controls in place, including the extent of third-party specialists being used by the company to support management or to assess the work undertaken by management, assessing the reasonableness of the key gross cost inputs and timing and market-based inputs such as inflation, discount, and foreign exchange rates, engaging our internal sustainability and engineering specialists in the audit process to assist the audit team in assessing the reasonableness of the gross cost estimates and to assess the work undertaken by the internal and third-party specialists used by Beach. This is an important step in our process, given the gross cost estimates are an engineering cost assessment and that they follow engineering standards, including with respect to levels of contingency recommended for inclusion in the estimate.
Ensuring the cost assumptions are regularly updated for the most recent available information on aspects such as rig or vessel rates, labor rates, and days required to undertake the activity. With respect to the in-situ question in particular, there are a few aspects to consider, some of which the CFO has touched on. The first is that there is little precedent in Australian waters of large diameter offshore pipelines being decommissioned, and hence little evidence that these pipelines will or will not be required to be removed. On the other hand, there is extensive precedent in other jurisdictions, including the Gulf of Mexico and the North Sea. International precedent overwhelmingly sees operators in the industry leave large diameter pipelines in situ. The second aspect is that the actual outcome will only be known when final decommissioning plans are required to be submitted and approved by the offshore regulator.
These plans will include consideration of many factors, including, but not limited to, environmental health, safety, and ecological impacts of removing versus leaving in situ. The regulatory guidance does specifically contemplate consideration of international precedent and practices like that of Europe, the U.K., and others. Ongoing engagement also continues between Beach, NOPSEMA, the Department of Industry, Science and Resources, and the broader industry through industry groups, including on the decommissioning framework. I reiterate that under the accounting standard, the amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation based on information available at the end of the reporting period. The additional disclosure included in the financial statements is included to provide further information on outcomes that are considered possible, but not probable, the outcome of which will only be known well into the future.
With respect to the second question, I can't comment on the estimation processes undertaken by the operator of the Minerva Field or the reasons why the work programme costs substantially more than planned. There is never a guarantee that there will be unplanned costs, but we are satisfied with the processes undertaken by Beach to estimate the cost of planned programmes that make up the decommissioning provision.
Thank you. Thank you, Anne-Marie, and thank you, Linzi. Ladies and gentlemen, I'm now asking you to make your way to the microphones, which are located to my right and my left in front of the room. If you'd like to ask a question for the company or to auditor, one of our staff will be there to introduce you. You will need to show your blue or white card and ask a question.
In the interest of time, I politely request that any questions shown on the screens are not to be asked again. Thank you.
Good morning, Mr. Chair. Hello. May I speak? Sorry. I'll take it first. Okay. Good morning, Mr. Chair. My name is James Hunt. I represent the Australian Shareholders Association and am proxy voting 1.2 million shares on behalf of 45 shareholders. Thanks for meeting with me and Michael and discussing issues relevant to our organization. Our intent is to vote yes for all motions, but we have a couple of points. In operations, Waitsia was an issue to us, but you've just made an announcement to say that it's pretty well on track, so we'll just accept general information. The other issue that we would like some or believe it should be brought up and spoken about a little bit more.
We note the Beach Energy P2 reserves are now at 173 million barrel equivalents, which is about 8.8 years reserves. This is down from 205 last year and 339 in 2021. The question is, do you believe that this is satisfactory? If not, what are your intentions to solve the steady decline in reserves?
Thank you. James, thank you for your question and engagement with the ASA. I deal to the first point you raised about Waitsia. We announced that the ready for start-up phase last Friday, which is a key milestone. It is fair to say that the length of time that a project's taken to get to that point is a disappointment for us. We are not operator, but we are working to support the operator to get that project up as quickly as we can. Once it gets into production, it will enable us to continue to grow.
We look forward to that. In relation to your point on reserves, we absolutely are focused on how we can grow our reserves, again with a very specific focus on ensuring that that is an innovative investment. The team are constantly looking at areas where we can invest to expand either through exploration or develop opportunities to grow at that reserve profile. The ambition for Beach, if we come to our core ambition of being a leading Australian energy company, requires us to grow that reserve profile. Yes, that is a focus for us with the proviso that it is done with that very strict investment discipline. Yeah, we will be looking to do that. We would like to think and see our reserve profile grow.
There are opportunities that Beach has within the existing portfolio to unlock additional reserves, and we'll be looking at how we can do that. Some of those require certain regulatory support, and we'll be working constructively to see how we can accelerate that activity. Thank you. Yes. Yes.
Hello. Thank you. My name's Rob Ferris, and I have a question about scope 3 emissions. In July, the International Court of Justice issued a landmark opinion that a state's legal obligations now extend to include scope 3 emissions.
Australia is put on notice that it may face increasing legal risks for the climate harm caused by the Scope 3 emissions of the large amounts of fossil fuels it continues to export, exporting which may become "internationally wrongful acts." The court clarified that although the decision applied to states, states are expected to take appropriate measures to regulate private actors such as this company. My question is, given the importance of this International Court of Justice decision and its clear implication of future increased regulatory burden and legal liabilities in relation to the Scope 3 emissions of all Beach's LNG and oil exports to Northeast Asia in particular, how does this company propose to manage these escalating risks?
Thank you for the question. Firstly, just in relation to the court, I'm not sure its formal role and the right it has in setting a jurisdiction to oversee Australian legislation. Thankfully, as a sovereign nation, we will set our own legislation, and we are monitoring the regulatory environment as to the reporting obligations with scope 3. It's still not clear what would be incorporated in a scope 3 measure, so we'll be watching as that goes forward. As required, we'll be including that if and when that gets set as a regulatory requirement. From a risk perspective, we don't see that as a fundamental risk to our business, nor do we see it as a fundamental risk to the exploration development of oil and gas in Australia. Thank you. Thank you. Yes.
Thanks, Chair. My name's Amanda Holly. A significant portion of the company's restoration provision assumes that major subsea pipelines will be left in place. Considering the clear regulatory default in Australia for full removal and the growing scrutiny on the issue, can the board confirm if NOPSEMA or any state regulator has granted formal approval for the in-situ abandonment of any of the company's subsea pipelines deviating from the full removal base case?
Thank you. I would say both the CFO and our auditor have addressed some of the core premise of the question. It is certainly an element we work with the regulator. There are enough precedents to give us comfort around our provisions as they are set from a restoration perspective. There are close reviewers to the materials associated within the infrastructure that we have in situ and analysis to environmental impact, etc.
We do look into that and feel very comfortable with the position we've taken with engagement with the regulator. Thank you. It sounds like you don't have formal approval then. I'm not sure that they don't sign our accounts, nor do we need formal approval for how we determine our profile, but we do engage with them in relation to that process. As far as any abandonment work we do, at that point, we'll have approval for that.
Why then does the board consider it appropriate to leave AUD 348 million of restoration liabilities off the books when the base case standard practice is full removal of subsea pipelines?
I'm not sure that is a base case standard practice, nor is that our view that that's required. Therefore, we believe, and having gone through the analysis of materials associated with that infrastructure, our base position is, as set out in our provisions, we are very comfortable with what we would propose with our restoration plan. Before any project is undertaken, that is a point where we'll have regulatory approval. We are engaging with the regulator on a consistent basis as to how we look at our long-term plans. Up until the point we actually embark on that abandonment process is when we'll get that formal approval. We are comfortable with the position. It's something that the board spends a significant amount of time considering at each point. We are very comfortable with the position we've taken.
Thank you, Chair.
Thank you.
Sorry. Come out. Yeah. Hello. I'm Claire Astral, and my question is for you, Chair. Okay. I note the current year provision for restoration has risen materially from AUD 63.7 million last year, an amount that has been relatively consistent, to AUD 211 million this year. Could you please specify the factors that caused this AUD 147.3 million increase?
I think it's quite a specific impact. I'm not sure of that detail, but I might hand to Anne-Marie to answer that question.
Thank you. In relation to the current provision increase, that is associated with the current offshore abandonment activity that we have actually commenced this financial year in the Otway and Bass Basins. Hence the reason for this move from a non-current provision to a current provision because it's being executed in this 12-month period.
Thank you.
Thank you. Thank you, Anne-Marie. Next question.
My name's Chris Warren. I have a question for the auditor. Note 13 to Beach Energy's financial report refers to a potential additional AUD 348 million in restoration costs if decommissioning requirements change, for example, if regulators require the removal of all subsea pipelines. Given how material that amount is relative to the existing restoration provision and the current statutory requirement for removal of infrastructure, what audit evidence did you obtain to support management's conclusion that the AUD 348 million did not meet the recognition criteria for inclusion in the restoration provision AASB 137?
Thank you. Thank you for the question. That was addressed in the answer that was provided earlier, so I won't put that to the auditor given it is essentially the same question in relation to the provision and the auditor's assessment of the provision. I think that that question has been addressed. Thank you. Thank you.
Good morning. David Hansman is my name. Like many shareholders, I imagine we were pleasantly surprised by the very substantial increase in dividend and correspondingly disappointed to learn that it's probably not sustainable. In that respect, it might have been better if a more modest increase had been arranged, which would be more sustainable for the long-suffering shareholders of this company. I think that this uncertainty is probably having a depressing effect on the share price. Thank you. I'm trying to unpick the question you'd like us to address. Yes. Could you be more specific about whether the future dividends will be reduced to their previous level or will they be at an intermediate stage between the three cents and the increase?
Thank you, David. I think the point around the capital management strategy is one that we want to ensure we're delivering and maximizing total shareholder returns. Now, in our view, that will come through share price appreciation and the reward through capital management, particularly through dividends. When we think about growth, that may require investment, and we set a capital management policy with dividend policy that ultimately paid out a proportion of Free cash flow. We have a strong Balance sheet, and we have the ability to grow. Our view is the balance between reward and dividend and invest to grow is an important element. We want to make sure we get right to drive returns for the immediate term in dividends and long-term growth for shareholders. We'll always be looking to balance that. Believe me, the board and management are committed to driving shareholder returns and want to see that translate into a healthy dividend stream and one that shareholders feel properly rewards the investment as well as growing the company.
We are very conscious around that, setting that policy framework right. We'll have more to communicate on that capital management policy, probably at the half-year results. I appreciate your question. Thank you. Thank you.
Neil McNally's my name. How are you going, Neil? Hi, Neil. Okay. First, I want to apologize for last year when I sort of took you to task on the Drillsearch in Beach. We were together when we took over the Lattice. Secondly, I want to thank you for the dividend. In saying that, if I was a Drillsearch shareholder, I'd be 25% better off with the dividend too. Anyway, just before there, you said that future replenishment of the reserves can be done by existing assets. Yet all the time in the paper, and even I think maybe last week, you were mentioned as saying you're on the hunt for assets, including coal seam gas assets. Your question is to. Yeah. I mean, you're saying before that we can replenish our supplies with existing assets, but yet there's always this chatter around who's on the lookout for, and they're talking coal seam gas assets now.
Yeah. Let me provide more context to that prior answer. Our existing assets won't provide us the indefinite reserve opportunity that we'd like to grow the company. But there are opportunities to grow our reserve within the existing assets that we have. That is a constant focus.
When we look at or reiterate the points earlier, it is both organic, which those existing assets would represent, and some potential inorganic opportunities that will get us that growth. Opportunities which we consider kind of a greenfield investment and the like, we'd probably move into that more organic type investment. This is part of just regular business. There might be a field or tenement that we will participate in that will provide growth opportunity. That could be coal seam gas assets that play into that East Coast gas opportunity. We'll look at both. We know we want to grow that reserve profile because it's going to be important for us to grow production and ultimately important for us to grow value for shareholders. We need to be disciplined in how we do that. It won't be one single option.
It'll be a combination of others. When it comes to other opportunities, and yes, there is a lot of noise around what Beach might and might not do, we think we have a pretty unique opportunity given the strength of balance sheet, frankly, the operating strength of the management team, and other aspects within our core assets that we have that enable us to look at opportunities. We need to be disciplined. We do not need to go and ambush growth for growth's sake. We want to find the right opportunities that are going to create value for shareholders. I think it is trying to strike that balance. I remember the dialogue from a year ago. The Lattice acquisition was an accretive acquisition for Beach. That generated a strong return for shareholders.
I think the dividends that came out of FY 2025 were a result of some of the production growth and cash flow ultimately from those assets that we acquired through Lattice. We have to look at all options in order to grow. The key message and the key theme through today's discussion presentation is around that discipline. We want to do that in a way which is accretive and ultimately creates value for all shareholders.
Any future acquisitions, you can sort of give a guarantee that will not be too dilutive to any existing shareholders?
They will not give any guarantees, but I would say for the board to consider it a sensible transaction, we would need to be very comfortable that it is accretive. Absolutely. Yeah. We will work and do our best to make sure it is. Sure. Thank you. Thanks, Neil. Thank you.
We'll now move to the resolutions. The first resolution is a non-binding ordinary resolution in respect to the remuneration report for the financial year ended 30 June 2025. The remuneration report is found in the 2025 annual report at pages 73 to 89 and contains information about the remuneration arrangements of the non-executive directors and senior executives who are key management personnel. The proxy results shown for this resolution are on the screens. I now move resolution one as set out in the notice of meeting and as previously seen in the screens behind me. Are there any questions or comments in respect of this motion? If there are no questions, I move to the next resolution. Resolution two, part A, is an ordinary resolution regarding the election of Mr. Shaun Gregory as a director. Mr.
Gregory was appointed to the board on 1 September 2025 and is a member of the technical committee. Mr. Gregory is a strategic technology and energy executive with over three decades of experience spanning geophysics, digital transformation, and sustainable energy. He has served in multiple senior leadership roles at Woodside Energy, including Executive Vice President, New Energy, and Chief Technology Officer, where he led global teams and multi-billion dollar initiatives across exploration, technology, carbon, and digital domains. Further details of Mr. Gregory's biography are set out in the notice of meeting in accordance with the constitution. He retires from the board at this meeting and, being eligible, offers himself for election. The board unanimously supports the election of Mr. Gregory. Say a few words about his election. Words about his election.
Good morning, all. Thanks, Ryan. I won't elaborate on my CV . Look, just a little bit more about me personally. I'm a mathematician by education, a geophysicist by trade through 35 years. I think the last 12 years as an executive of Woodside has helped me position to provide experience to the Beach board across all aspects of the energy sector in Australia. I've had a lot of experience in due diligence as well, which I think will be very useful as we look to profitably grow the company. When I look at Beach, for me, what makes me excited and kind of proud to be up for election today is I'm born and bred Australian, and Beach is focused in Australia to provide Australian energy. For me personally, I think that's very important.
As you saw, some of the graphs today around the energy sector on both the West and East Coast have structural problems and undersupply, and Beach is an important company in the Australian landscape to fix that issue. I am very excited at the opportunity to join the Beach board, and with your support, look forward to profitably growing the company. Thanks, Ryan.
Thank you. Are there any questions or comments in respect of this motion? There are no questions. I move to the next resolution. Resolution part B, or to part B, is an ordinary resolution regarding the re-election of Sally Ann Lehman as a director. Ms. Lehman was appointed by the board on 25 February 2019 and re-elected to the board on 16 November 2022. She is Chair of the ordinary risk committee and a member of the remuneration and nomination committee. Ms.
Layman is a company director with diverse international experience in the resource sector and financial markets. She is a non-executive director of Index Limited, PLS, and Newmont Corporation. Her executive career included a range of senior positions with Macquarie Group Limited, including as divisional director and joint head of the Perth office of the Metals, Mining, and Agriculture Division. Further details of Ms. Lehman's biography are set out in the notice of meeting. In accordance with the constitution, she retires from the board at this meeting and, being eligible, offers herself for re-election. The board unanimously supports the re-election of Ms. Lehman. The proxy results for this resolution are shown on the screens. I'll put the resolution as set out in the notice of meeting and as previously seen on the screens behind me. Are there any questions or comments in respect of this motion?
If there are no questions, I move to the next resolution. I will hand over the chair to Sally Ann, who will conduct the proceedings for the next resolution, which relates to my re-election as the board director of Beach.
Thank you, Ryan. Resolution two, part C, is an ordinary resolution regarding the re-election of Mr. Ryan Stokes AO as a director. Mr. Stokes first served on the board from July 2016 to November 2021. He was reappointed as a non-executive director on the 23rd of July 2023 and appointed to the chair of the board on the 17th of October 2024. He is also a member of the remuneration and nomination committee. Mr. Stokes is a Managing Director and Chief Executive Officer of SGH, a leading Australian diversified operating and investment group with market-leading businesses and investments in industrial services, media, and energy.
These include WesTrac, Coates, Boardroom, Seven West Media, and Beach. He has extensive experience leading large private and public organizations, including experience with corporate transactions, operational discipline, and performance. Further details of Mr. Stokes' biography are set out in the notice of meeting. In accordance with the constitution, Mr. Stokes retires and offers himself for re-election at this meeting. The board unanimously supports the re-election of Mr. Stokes. The proper results for this resolution are shown on the screen. I will now put the resolution as set out in the notice of meeting and as previously seen on the screen behind me. Are there any questions or comments in respect of this motion?
Yes. James Hunt from the Australian Shareholders Association again. We discussed with Mr. Stokes at our meeting about his workload. Although we're voting for Mr. Stokes' re-election, could he please explain to the meeting how he views his current workload and how this can be managed? Thank you.
Thank you, James. One thing is we reiterated when we caught up from my perspective, Beach is a big investment for SGH. It's what I consider part of the day job in that context. Ensuring I and my fellow colleague, Richard Richards, can support Beach is part of what we do. From my core role at SGH, my day job, so to speak, it is important that we're providing the support through the board role that we have and support management through that role that's ultimately aligned to driving shareholder value. We have an absolute alignment around wanting to see share price appreciation and see returns to shareholders, and that is that contribution we make.
As far as the broader commitments, yes, I acknowledge the point, but if you turn that into this is not a side hobby. This is part of my primary role, our primary role in wanting to support Beach. I rest assured it is a priority time allocation for us.
Yes, thank you for that.
Thank you, James. If there are no further questions, I'll hand back to Mr. Stokes to conduct the meeting.
Thank you, Sally Ann. Thank you, shareholders, for your support. I'll now move to the next resolution. The third resolution is an ordinary resolution relating to the issue of performance rights to the Managing Director and Chief Executive Officer, Brett Woods, under the Beach 2025 long-term incentive offer.
The board views Beach's long-term incentive plan and the performance-based conditions for vesting of the rights issued under it as an appropriate link between a portion of an executive's remuneration and generation of long-term growth in shareholder value. Approval is now sought from shareholders for Mr. Woods' participation in the 2025 long-term incentive offer. A detailed explanation of the terms of the proposed long-term incentive offer to Mr. Woods is set out in the notice of meeting. The board considers that the grant of performance rights aligns Mr. Woods' remuneration with the interests of shareholders. The proxy results for this resolution are shown on the screens. I'll now put the resolution as set out in the notice of meeting as previously seen on the screens behind me. Are there any questions or comments in respect of this motion? If there are no questions, I move to the next resolution.
The fourth resolution is an ordinary resolution relating to the issue of performance rights to the Managing Director and Chief Executive Officer, Brett Woods, under the Beach FY 2025 short-term incentive offer. Mr. Woods received a short-term incentive bonus for the achievements of various targets during the financial year ended 30 June 2025. Half of the bonus was paid in cash, and the other half was paid in performance rights vesting as Beach shares in one and two years. This creates an appropriate link between Mr. Woods' remuneration and the generation of long-term growth in shareholder value. Approval is now sought from shareholders for the grant of performance rights to Mr. Woods under the FY 2025 short-term incentive offer. A detailed explanation of the terms of the proposed grant of performance rights to Mr. Woods is set out in the notice of meeting.
The board considers that the grant of performance rights aligns Mr. Woods' remuneration with the interests of shareholders. The proxy results for this resolution are shown on the screens. I'll now put the resolution as set out in the notice of meeting and as previously seen on the screens behind me. Are there any questions or comments in respect of this motion? If there are no questions, I'll move to the next resolution. The fifth resolution is a special resolution relating to the reinstatement of the proportional takeover provisions in our constitution. The resolution is set out in the notice of meeting. Rule 14 of the constitution deals with proportional or partial takeovers. A proportional or partial takeover is a bid made for a specified portion of each shareholder's shares.
Broadly, Rule 14 provides that a partial takeover for Beach's shares may only proceed after a resolution is passed by shareholders approving the bid. Rule 14 was last approved at Beach annual general meeting held on 16 November 2022. In accordance with the Corporations Act and the constitution, the partial takeover provisions in Rule 14 expire three years after that annual general meeting and at that time cease to have effect. The directors consider that it is in the interest of Beach's shareholders to have a partial takeover rule in the constitution, and shareholders are therefore asked to consider passing a resolution to renew Rule 14 in identical terms for a further period of three years from the date of this meeting. The proxy results for this resolution are shown on the screens.
I'll now put the resolution as set out in the notice of meeting and as previously seen on the screens behind me. Are there any questions or comments in respect of this motion? If there are no questions, I'll now move to the poll on all resolutions. Ladies and gentlemen, we'll now conduct the poll on the resolution set out in the notice of meeting. Firstly, if there is any person present who believes they are entitled to vote but has not yet registered to vote and does not hold a blue admission card, would you please raise your hand for assistance? You should have received material at the time you registered with the Boardroom staff prior to the meeting. The people entitled to vote on this poll are all shareholders, representatives, and attorneys of shareholders and proxy holders who hold blue admission cards.
On the reverse of your blue admission card is your voting paper. I'll now go through the procedure for filling in the voting papers. Proxy holders have attached to their admission card a summary of proxy votes, which details the voting instructions for each item of business. By completing the voting paper, when instructed to vote in a particular manner, you are deemed to have voted in accordance with those instructions. In respect of any open votes a proxy holder may be entitled to cast, you need to mark a box beside the motion to indicate how you wish to cast your open votes. Proxy holders should refer to the summary of proxy votes form attached to your voting paper for further information. Shareholders also need to mark a box beside the motion to indicate how you wish to cast your votes.
Please ensure you print your name where indicated and sign the voting paper. When you've finished filling in your voting paper, please leave the auditorium and lodge your voting paper in a ballot box being held by our share registry staff from Boardroom at the exits to ensure your votes are counted. There are refreshments waiting outside. If you require any assistance, please raise your hand. Would you please indicate by raising your hand if you require more time to complete and lodge your voting paper? If everybody has now completed their voting, I'll now formally close the poll. The final poll results will be collated and released to the ASX and posted on Beach's website when they are available later this afternoon. On behalf of the board, thank you for participating in today's AGM. With that, ladies and gentlemen, I declare the meeting is now closed. Thank you.