BEACH ENERGY LIMITED

==> picture [127 x 86] intentionally omitted <==

For Immediate Release – 3 April 2012 Ref. #033/12

ASX Ltd Companies Announcement Office Electronic Lodgement System

==> picture [127 x 247] intentionally omitted <==

Dear Sir,

BEACH ENERGY LIMITED (ASX: BPT, "BEACH") – SECTION 708A CLEANSING NOTICE FOR CONVERTIBLE NOTES

As foreshadowed in its announcements on 27 March 2012 and 29 March 2012, Beach expects to issue today A$150,000,000 3.95% due 2017 convertible notes ("Convertible Notes") to institutional investors, primarily in the Asian and European markets.

Beach gives the attached offering circular to ASX as a notice under section 708A(12C)(e) of the Corporations Act 2001 (Cth) ("Corporations Act") as notionally inserted by ASIC Class Order [CO 10/322].

The full terms of the Convertible Notes are set out in the offering circular.

Beach notifies ASX that:

the Convertible Notes will be issued without disclosure to investors under Part 6D.2 of the Corporations Act;
this notice is being given under section 708A(12C)(e) of the Corporations Act as inserted by ASIC Class Order [CO 10/322]; and
Beach has complied with section 708A(12D) of the Corporations Act as inserted by ASIC Class Order [CO 10/322].

Yours sincerely

==> picture [114 x 46] intentionally omitted <==

Cathy Oster

General Counsel / Joint Company Secretary

Page 1

IMPORTANT NOTICE

NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES

IMPORTANT: You must read the following before continuing. The following applies to the Offering Circular following this page (the “ Offering Circular ”), and you are therefore advised to read this carefully before reading, accessing or making any other use of the Offering Circular. In accessing the Offering Circular, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from us as a result of such access.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ SECURITIES ACT ”) OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES. THE SECURITIES ARE BEING OFFERED AND SOLD SOLELY OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S UNDER THE SECURITIES ACT.

THIS OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER, AND IN PARTICULAR, MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY PERSON IN THE UNITED STATES. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.

Confirmation of your Representation: This Offering Circular is being sent at your request and by accepting the e-mail and accessing this Offering Circular, you shall be deemed to have represented to us that the electronic mail address that you gave us and to which this e-mail has been delivered is not located in the United States and that you consent to delivery of such Offering Circular by electronic transmission.

You are reminded that this Offering Circular has been delivered to you on the basis that you are a person into whose possession this Offering Circular may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver, circulate, forward or distribute this Offering Circular to any other person.

The materials relating to the offering of securities to which this Offering Circular relates do not constitute, and may not be used in connection with, an offer or solicitation by or on behalf of any of the Issuer (as defined in this Offering Circular), Citigroup Global Markets Australia Pty Limited, Goldman Sachs Australia Capital Markets Limited or Macquarie Capital (Australia) Limited (each a “ Joint Lead Manager ”, and together, the “ Joint Lead Managers ”) in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licenced broker or dealer and the underwriters or any affiliate of the underwriters is a licenced broker or dealer in that jurisdiction, the offering shall be deemed to be made by the underwriters or such affiliate on behalf of the Issuer in such jurisdiction.

This Offering Circular has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently none of the Issuer, either of the Joint Lead Managers, any person who controls a Joint Lead Manager, any director, officer, employee or agent of each of the Joint Lead Managers, or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the Offering Circular distributed to you in electronic format and the hard copy version available to you on request from the Joint Lead Managers.

You are responsible for protecting against viruses and other destructive items. Your use of this e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature.

==> picture [114 x 78] intentionally omitted <==

Beach Energy Limited (ABN 20 007 617 969)

A$150,000,000

3.95% Senior Unsecured Convertible Notes Due 2017

Convertible into Ordinary Shares of Beach Energy Limited

The A$150,000,000 3.95% Senior Unsecured Convertible Notes due 2017 (the “ Notes ”) will be issued by Beach Energy Limited (the “ Company ” or the “ Issuer ”).

The Notes bear interest from (and including) 3April 2012 at the rate of 3.95% per annum calculated by reference to the principal amount thereof and payable semi-annually in arrear on 3 April and 3 October in each year commencing with the first interest payment date falling on 3 October 2012.

Each Note will, at the option of the holder, be convertible (unless previously redeemed, converted or purchased and cancelled) on or after 14 May 2012 up to and including 5.00 pm (London time) on 24 March 2017 into fully paid ordinary shares of the Issuer (the “ Ordinary Shares ”) at an initial Conversion Price (as defined in the Terms and Conditions of the Notes) of A$2.00 per Ordinary Share. The Conversion Price is subject to adjustment in the circumstances described under “Terms and Conditions of the Notes – Conversion of Notes”. The closing price of the Ordinary Shares on ASX Limited (ABN 98 008 624 691) also known as Australian Securities Exchange (the “ ASX ”) on 26 March 2012 (being the latest practicable date prior to the announcement of the proposed issue of the Notes) was A$1.575 per Ordinary Share.

The Conversion Right (as defined in the Terms and Conditions of the Notes) of a converting Noteholder may be settled in Ordinary Shares or in cash, at the option of the Issuer. The Issuer may make an election to satisfy the exercise of a Conversion Right by making payment to the relevant Noteholder of the Cash Alternative Amount (as defined in the Terms and Conditions of the Notes).

Unless previously redeemed, converted or purchased and cancelled, the Notes will be redeemed on 3 April 2017 at their principal amount together with accrued but unpaid interest to the date of redemption. At any time on or after 3 April 2015, the Issuer may redeem all but not some of the Notes at a redemption price equal to their principal amount together with accrued but unpaid interest to the date of redemption, if the Volume Weighted Average Price (as defined in the Terms and Conditions of the Notes) for any 20 consecutive Dealing Days (as defined in the Terms and Conditions of the Notes), the last of which occurs not more than five Dealing Days prior to the date upon which notice of such redemption is published, is at least 130% of the Conversion Price. The Issuer may redeem all but not some only of the Notes at a redemption price equal to their principal amount together with accrued but unpaid interest to the date of redemption, if at any time at least 90% in principal amount of the Notes originally issued (including any further issued Notes issued pursuant to Condition 18 and consolidated and forming a single series with the Notes) has already been converted, redeemed or purchased and cancelled. The Notes may also be redeemed at the option of the holders at a redemption price equal to their principal amount together with accrued but unpaid interest to the date of redemption, upon the occurrence of a Change of Control or a Delisting (each as defined in the Terms and Conditions of the Notes). All but not some only of the Notes may be redeemed at any time at a redemption price equal to their principal amount together with accrued but unpaid interest to the date of redemption, in the event of certain changes relating to Australian taxation, subject to the non-redemption option of each Noteholder as described herein. See “Terms and Conditions of the Notes – Redemption and Purchase”.

Approval in-principle has been received for the listing of the Notes on the Singapore Exchange Securities Trading Limited (the

“ SGX-ST ”). The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions expressed or reports contained in this Offering Circular. Admission of the Notes to the Official List of the SGX-ST is not to be taken as an indication of the merits of the Issuer, the Notes or the Ordinary Shares. The Ordinary Shares are listed on the ASX and application will be sought from the ASX for the listing of any new Ordinary Shares which may be issued on exercise of the conversion rights attached to the Notes.

Investing in the Notes and the Ordinary Shares involves certain risks. See “Risk Factors” beginning on page 12 for a discussion of certain factors to be considered in connection with an investment in the Notes.

The Notes and the Ordinary Shares to be issued upon conversion of the Notes have not been, and will not be, registered under the U.S. Securities Act of 1933 (the “Securities Act”) or the securities laws of any state or other jurisdiction of the United States and they may not be offered or sold within the United States. The Notes are being offered and sold solely outside the United States pursuant to Regulation S under the Securities Act. For a description of these and certain further restrictions on offers and sales of the Notes and the Ordinary Shares to be issued upon conversion of the Notes and the distribution of this Offering Circular, see “Subscription and Sale”.

The Notes will be represented by beneficial interests in a permanent global certificate (the “ Global Certificate ”) in registered form, without interest coupons attached, which will be registered in the name of a nominee of, and shall be deposited on or about 3 April 2012 (the “ Closing Date ”), with a common depositary for, Euroclear Bank S.A./N.V. (“ Euroclear ”) and Clearstream Banking, société anonyme (“ Clearstream, Luxembourg ”).

Beneficial interests in the Global Certificate will be shown on, and transfers thereof will be effected only through, records maintained by Euroclear and Clearstream, Luxembourg. Except as described herein, certificates for Notes will not be issued in exchange for interests in the Global Certificate.

Joint Bookrunners and Joint Lead Managers

Citigroup

Goldman Sachs

Macquarie

Financial Adviser to the Issuer

Miro Advisors

The date of this Offering Circular is 3 April 2012

IMPORTANT NOTICE

GENERAL

About this document

This document (the “ Offering Circular ”) is issued by Beach Energy Limited (ABN 20 007 617 969). Any offering of the Issuer’s A$150,000,000 3.95% Senior Unsecured Convertible Notes due 2017 (the “ Notes ”) in Australia is made under this Offering Circular.

This Offering Circular is being given to the ASX in accordance with the requirements of Australian Securities and Investments Commission (“ ASIC ”) Class Order [CO 10/322] ( On-sale for convertible notes issued to wholesale investors ) made under section 741(1) of the Corporations Act 2001 (Cth) (“ Corporations Act ”) and which provides relief so that the Ordinary Shares may be on-sold to retail investors if an Offering Circular containing disclosure required by section 708A(12D) of the Corporations Act (as inserted by Class Order [CO 10/322] ( On-sale for convertible notes issued to wholesale investors )) is released in connection with the issue of the Notes to institutional investors. Any offering of Notes within Australia is open only to selected investors who are sophisticated or professional investors as respectively referred to in sections 708(8) and 708(11) of the Corporations Act.

Neither this Offering Circular nor any other disclosure document in relation to the Notes or Ordinary Shares has been lodged with ASIC and is not, and does not purport to be, a prospectus or document containing disclosure to investors for the purposes of Part 6D.2 or Part 7.9 of the Corporations Act. This document is not intended to be used in connection with any offer for which such disclosure is required and does not contain all the information that would be required if this document was a prospectus under Part 6D.2 or Part 7.9 of the Corporations Act. This Offering Circular is not to be provided to any “retail client” as defined in section 761G of the Corporations Act. The Issuer is not licenced to provide financial product advice in respect of the Notes or the Ordinary Shares. Cooling-off rights do not apply to the acquisition of the Notes or Ordinary Shares.

A person may not make or invite an offer of the Notes for issue or sale in Australia (including an offer or invitation which is received by a person in Australia) or distribute or publish this Offering Circular or any other offering material or advertisement relating to the Notes in Australia unless the minimum aggregate consideration payable by each offeree is at least A$500,000 calculated in accordance with both section 708(9) of the Corporations Act and regulation 7.1.18 of the Corporations Regulations 2001 (Cth) or the offer or invitation otherwise does not require disclosure to investors in accordance with Part 6D.2 of the Corporations Act, and such action complies with all applicable laws, regulations and directives.

None of ASIC or ASX or their respective officers takes any responsibility for the contents of this Offering Circular or the merits of the investment to which this Offering Circular relates. The fact that ASX has quoted the Ordinary Shares and may quote the Ordinary Shares into which the Notes are convertible is not to be taken in any way as an indication of the merits of the Ordinary Shares, the Notes or the Issuer.

The Issuer has confirmed to Citigroup Global Markets Australia Pty Limited, Goldman Sachs Australia Capital Markets Limited and Macquarie Capital (Australia) Limited (each a “ Joint Lead Manager ”, and together, the “ Joint Lead Managers ”) that this Offering Circular contains or incorporates by reference all information regarding the Issuer, the Issuer and its subsidiaries as a whole (the Issuer and its subsidiaries collectively, the “ Group ”), the Notes and the Ordinary Shares which is (in the context of the issue of the Notes) material; such information is true and accurate in all material respects and is not

misleading in any material respect; any opinions, predictions or intentions expressed in this Offering Circular on the part of the Issuer and the Group are honestly held or made and are not misleading in any material respect; this Offering Circular does not omit to state any material fact necessary to make such information, opinions, predictions or intentions (in such context) not misleading in any material respect; and all proper enquiries have been made to ascertain and to verify the foregoing. The Issuer accepts responsibility for the information contained in this Offering Circular. This Offering Circular should be read in its entirety. It contains general information only and does not take into account your specific objectives, financial situation or needs. In the case of any doubt, investors should seek the advice of a financial or other professional adviser.

None of the Issuer, any member of the Group, or their respective associates or directors guarantees the success of the offering of the Notes (the “ Offering ”), or any particular rate of capital or income return. Investment-type products are subject to investment risk, including possible loss of income and capital invested.

The Issuer is not providing investors with any legal, business or tax advice in this Offering Circular. Investors should consult their own advisers to assist them in making their investment decision and to advise themselves whether they are legally permitted to purchase the Notes. Investors must comply with all laws that apply to them in any place in which they buy, offer or sell any Notes or possess this Offering Circular. Investors must also obtain any consents or approvals that they need in order to purchase the Notes. None of the Issuer, the Joint Lead Managers, Citicorp International Limited (the “ Trustee ”) or the Agents (as defined in the Terms and Conditions of the Notes) are responsible for investors’ compliance with any such legal requirements. The Issuer has not authorised the making or provision of any representation or information regarding the Issuer or the Notes other than as contained in this Offering Circular or as approved for such purpose by the Issuer. Any such representation or information should not be relied upon as having been authorised by the Issuer, the Joint Lead Managers, the Trustee or the Agents.

Neither the delivery of this Offering Circular nor the offering, sale or delivery of any Note shall in any circumstance create any implication that there has been no adverse change, or any event reasonably likely to involve any adverse change, in the condition (financial or otherwise) of the Issuer or the Group since the date of this Offering Circular.

In this Offering Circular, unless otherwise specified, references to “A$” and “Australian Dollars” are to Australian Dollars and references to “S$” are to Singapore dollars.

Any offer, invitation to offer or agreement made in connection with the purchase or acquisition of the Notes or pursuant to this Offering Circular shall (without liability or responsibility on the part of the Issuer, any Joint Lead Manager (or any of its affiliates, officers, directors and representatives), the Trustee or the Agents) lapse and cease to have any effect if (for any reason whatsoever) the Notes are not issued by the Issuer to the Joint Lead Managers.

No representations or recommendations

No person has been authorised to give any information or to make any representation other than those contained in this Offering Circular in connection with the offering of the Notes and, if given or made, such information or representations must not be relied upon as having been authorised by the Issuer, any Joint Lead Manager (or any of such Joint Lead Manager’s affiliates, officers, directors and representatives), the Trustee or the Agents. Neither the delivery of this Offering Circular nor any sale made hereunder shall, under any circumstances, constitute an offer of, or an invitation by, or on behalf of, the Issuer, any Joint Lead Manager, the Trustee or the Agents to subscribe for, or purchase, any of the Notes. This Offering Circular does not constitute an offer, and may not be used for the purpose of an

offer, to anyone in any jurisdiction or in any circumstances in which such an offer is not authorised or is unlawful.

None of the Joint Lead Managers, the Trustee or the Agents or any of their respective affiliates, officers, directors and representatives has separately verified the information contained in or incorporated in this Offering Circular. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by any Joint Lead Manager, the Trustee or any Agent or any of their respective affiliates, officers, directors and representatives as to the accuracy or completeness of the information (including the financial information) contained or incorporated in this Offering Circular or any other information (including the financial information) provided by the Issuer or in connection with the Notes or their distribution. Nothing contained or incorporated in this Offering Circular is, or shall be relied upon as, a promise or representation by any Joint Lead Manager, the Trustee or any Agent or any of their respective affiliates, officers, directors and representatives.

This Offering Circular is not intended to provide the basis of any credit or other evaluation and nor should it be considered as a recommendation by the Issuer, the Joint Lead Managers, the Trustee or the Agents that any recipient of this Offering Circular should purchase the Notes. Each potential purchaser of Notes should determine for itself the relevance of the information contained in this Offering Circular and its purchase of Notes should be based upon such investigations as it deems necessary.

Advisers named in this Offering Circular have acted pursuant to the terms of their respective engagements, have not authorised or caused the issue of, and take no responsibility for, this Offering Circular and do not make, and should not be taken to have verified, any statement or information in this Offering Circular unless expressly stated otherwise.

Restrictions in certain jurisdictions

This Offering Circular does not constitute an offer or invitation in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation.

Any purchase or acquisition of the Notes is in all respects conditional on the satisfaction of certain conditions set out in the Subscription Agreement (as defined herein) and the issue of the Notes by the Issuer to the Joint Lead Managers pursuant to the Subscription Agreement.

The distribution of this Offering Circular and the offering, sale and delivery of Notes and the Ordinary Shares to be issued on conversion of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circular comes are required to inform themselves about and to observe any such restrictions. For a description of certain restrictions on offers, sales and deliveries of Notes and on distribution of this Offering Circular and other offering material relating to the Notes, see “Subscription and Sale”.

The Notes and the Ordinary Shares to be issued upon conversion of the Notes have not been, and will not be, registered under the Securities Act and may not be offered or sold within the United States. The Notes are being offered and sold solely outside the United States pursuant to Regulation S under the Securities Act.

Any offering of Notes in Australia is made under this Offering Circular and is open only to select investors who are sophisticated or professional investors as respectively defined within sections 708(8) or 708(11) of the Corporations Act.

Prospective purchasers of the Notes must comply with all laws that apply to them in any place in which they buy, offer or sell any Notes or possess this Offering Circular. Each prospective investor must also obtain any consents or approvals that they need in order to purchase any Notes. The Issuer, the Joint

iii

Lead Managers, the Trustee or the Agents are not responsible for the compliance with relevant legal requirements by the prospective purchasers.

Listing of the Notes on the SGX-ST

Approval in-principle has been received for the listing of the Notes on the SGX-ST. The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions expressed or reports contained in this Offering Circular. Admission of the Notes to the Official List of the SGX-ST is not to be taken as an indication of the merits of the Issuer, the Group, the Notes or the Ordinary Shares.

Listing of Ordinary Shares

The Ordinary Shares of the Issuer are quoted on the stock market operated by the ASX. Upon conversion of the Notes, application will be made for quotation of the Ordinary Shares issuable upon conversion of the Notes on the ASX.

Global Certificate

The Notes will be in registered form. The Notes will be represented on issue by a Global Certificate. The Global Certificate will be deposited on or around the Closing Date with a common depositary, and registered in the name of a common nominee, for Euroclear and Clearstream, Luxembourg. The Global Certificate will be exchangeable, in whole or in part, for individual definitive Notes in registered form serially numbered in denominations of A$200,000 and integral multiples of A$100,000 in excess thereof.

Stabilisation

IN CONNECTION WITH THE ISSUE OF THE NOTES, ONE OR MORE OF THE JOINT LEAD MANAGERS, AS THE STABILISING MANAGER(S) (THE “ STABILISING MANAGER(S) ”) (OR PERSONS ACTING ON BEHALF OF THE STABILISING MANAGER(S)) MAY OUTSIDE AUSTRALIA (AND ON A MARKET OPERATED OUTSIDE AUSTRALIA), AND OTHERWISE SUBJECT TO ALL APPLICABLE LAWS, EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISING MANAGER(S) (OR PERSONS ACTING ON BEHALF OF THE STABILISING MANAGER(S)) WILL UNDERTAKE STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE FINAL TERMS OF THE OFFER OF THE NOTES IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE NOTES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE NOTES. ANY STABILISATION ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED BY THE RELEVANT STABILISING MANAGER(S) (OR PERSON(S) ACTING ON BEHALF OF ANY STABILISING MANAGER(S)) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.

Further information on the Group

The Issuer is a “disclosing entity” for the purposes of the Corporations Act and is subject to regular reporting and disclosure obligations under the Corporations Act and the Listing Rules of ASX (the “ ASX Listing Rules ”). Copies of documents regarding the Issuer lodged with ASIC or ASX, respectively, may be obtained from, or inspected at, any ASIC office or the ASX, respectively.

In addition, a copy of the following documents may be obtained, as described below:

the audited consolidated annual reports of the Group for the financial years ended 30 June 2010 and 2011;

the reviewed half-year financial reports of the Group for the half years ended 31 December 2010 and 31 December 2011;
any other document used to notify ASX of information relating to the Group under the continuous disclosure provisions of the ASX Listing Rules and the Corporations Act after the lodgement with ASIC after the annual report of the Group for the financial year ended 30 June 2011 and before lodgement of this Offering Circular with ASX.

These documents may be obtained from the Issuer, free of charge, by contacting the Company Secretary at the head office of the Issuer at 25 Conyngham St, Glenside, SA, 5065, Australia. These documents, and all other regular reporting and disclosure documents of the Issuer, are also available electronically on the website of ASX, at www.asx.com.au and the Issuer at www.beachenergy.com.au .

Risk Factors

Prospective purchasers of Notes should carefully consider the risks and uncertainties described in this Offering Circular before making a decision to invest in the Notes. An investment in the Notes should be considered speculative due to various factors, including the nature of the Group’s business. See “Cautionary Statement Regarding Forward-Looking Statements” (below) and “Risk Factors” outlined below.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This document may contain forward-looking statements concerning anticipated developments in the Group’s operations in future periods, planned exploration activities, the adequacy of the Group’s financial resources and other events or conditions that may occur in the future. Forward-looking statements are frequently, but not always, identified by words such as “expects”, “anticipates”, “believes”, “intends”, “estimates”, “potential”, “targeted”, “plans”, “possible” and similar expressions, or statements that events, conditions or results “will”, “may”, “could” or “should” occur or be achieved. Information concerning the interpretation of drill results and hydrocarbon resource estimates also may be deemed to be forward-looking statements, as such information constitutes a prediction of what hydrocarbons might be found to be present if and when a project is actually developed.

Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Group or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, those referred to in this document under the heading “Risk Factors”. The Group’s forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, and the Group does not assume any obligation to update forwardlooking statements if circumstances or management’s beliefs, expectations or opinions should change. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

Page INCORPORATION BY REFERENCE .............................................................................................................. 1 SUMMARY ....................................................................................................................................................... 2 SUMMARY FINANCIAL INFORMATION ..................................................................................................... 4 MARKET PRICE INFORMATION .................................................................................................................. 7 KEY OFFER FEATURES .................................................................................................................................. 8 RISK FACTORS ...............................................................................................................................................12 ABOUT THE COMPANY ................................................................................................................................22 DIRECTORS AND MANAGEMENT ..............................................................................................................34 RIGHTS AND LIABILITIES OF ORDINARY SHARES ...............................................................................39 USE OF PROCEEDS ........................................................................................................................................41 CAPITALISATION AND INDEBTEDNESS ...................................................................................................42 TERMS AND CONDITIONS OF THE NOTES ..............................................................................................45 GLOBAL CERTIFICATE PROVISIONS .........................................................................................................87 TAX IMPLICATIONS ......................................................................................................................................90 SUBSCRIPTION AND SALE ..........................................................................................................................95 ADDITIONAL INFORMATION ....................................................................................................................100 GENERAL INFORMATION ..........................................................................................................................102

INCORPORATION BY REFERENCE

The following documents filed with ASIC and the ASX, respectively, are deemed to be incorporated by reference into, and to form part of, this Offering Circular:

(a) the audited annual consolidated financial statements of the Group as at and for the financial years ended 30 June 2010 and 2011, including the directors’ remuneration report and the auditors’ report in respect of such financial statements; and
(b) the reviewed half year consolidated financial statements of the group for the half years ended 31 December 2010 and 31 December 2011.

Each document incorporated herein by reference is current only as at the date of such document, and the incorporation by reference of such documents shall not create any implication that there has been no change in the affairs of the Issuer and the Group, as the case may be, since the date thereof or that the information contained therein is current as at any time subsequent to its date. Any statement contained therein shall be deemed to be modified or superseded for the purposes of this Offering Circular to the extent that a subsequent statement contained in another incorporated document herein modifies or supersedes that statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Offering Circular. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes.

The making of a modifying or superseding statement is not to be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made.

Copies of the documents incorporated herein by reference may be obtained on request without charge from the Company Secretary at 25 Conyngham St, Glenside, SA, 5065, Australia, telephone +61 8 8338 2833. These documents are also available electronically through the internet from the ASX or the Issuer as set out in the “Important Information” section.

Prospective investors are advised to obtain and read the documents incorporated by reference herein before making their investment decision in relation to the Notes.

A14546062

SUMMARY

This summary highlights information contained elsewhere in this Offering Circular. This summary is qualified by, and must be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this Offering Circular. Prospective investors in the Notes should read this entire Offering Circular carefully, including the audited annual consolidated financial statements for the years ended 30 June 2010 and 30 June 2011 respectively, and related notes thereof, together with the reviewed half year financial reports for the half years ended 31 December 2010 and 31 December 2011 respectively, which are incorporated by reference into and deemed to be included in this Offering Circular. Copies of those financial statements can be obtained from the 2010 and 2011 financial reports of the Group from ASX at www.asx.com.au, or the Issuer at www.beachenergy.com.au.

Company Overview

Beach Energy Limited is an Adelaide based oil and gas exploration and production company established in the early 1960’s. The Company is listed on the ASX, is a constituent of the S&P/ASX 100 index and has a market capitalisation of approximately A$1.75 billion as at 26 March 2012. For the year ended 30 June 2011 the Company’s sales revenue was A$496 million, its gross profit was A$77 million, its underlying net profit after tax was A$41 million and its reported net loss after tax was A$97 million. As at 31 December 2011, the Group had consolidated assets of A$1,652 million and liabilities of A$331 million.

The Company’s primary activities are in the Cooper and Eromanga Basins held through operated and non-operated joint ventures, including the Santos Limited (“ Santos ”) operated South Australia Cooper Basin Joint Venture and South West Queensland Joint Venture. In recent years the Company has also been assessing prospects for unconventional resources in the basin; unconventional exploration activities in 2011 resulted in two discoveries which indicated potential for a substantial natural gas resource.

The Company holds over 300 exploration and production tenements in Australia, Egypt, New Zealand, Papua New Guinea, Tanzania and the United States of America. As at 30 June 2011, the Company’s oil and gas Proved and Probable (2P) Reserves totalled 77.4 million barrels of oil equivalent (“ MMboe ”) (73% gas / gas liquids, 27% oil) and Most-likely (2C) Contingent Resources of 582 MMboe.

For more details about the Company, please see the sections entitled “Summary Financial Information” and “About the Company”.

Summary of Offer of Convertible Notes

The offer is for A$150,000,000 3.95% Senior Unsecured Convertible Notes (“ Notes ”) due 2017 issued by the Issuer. The issue price of the Notes is 100% and interest shall be paid semi-annually in arrear. The Notes constitute direct, unsubordinated, unconditional and unsecured obligations of the Issuer. The Issuer is subject to a negative pledge in respect of future secured indebtedness.

The initial conversion price of the Notes is A$2.00, subject to certain adjustments, including adjustments if the Company pays dividends. The holder of each Note has the right to convert such Note into Ordinary Shares of the Issuer at any time during the conversion period, commencing on or after 14 May 2012 and up to and including the close of business on 24 March 2017, into fully paid Ordinary Shares of the Issuer, unless previously redeemed, converted, purchased or cancelled.

Noteholders have the right to redeem the Notes at the Issue Price together with any accrued interest on the third anniversary of issue or following a Delisting or Change of Control event. The Issuer has the right to redeem all of the Notes on or after the third anniversary of issue if the Issuer’s share price

exceeds 130% of the Conversion Price for a certain period of time or if 10% or less of the principal amount of Notes remain outstanding.

Please refer to the section entitled “Terms and Condition of the Notes” for full details.

Entitlement Offer

In conjunction with the offering of the Notes, the Company announced on 27 March 2012 that it is conducting a fully underwritten accelerated non-renounceable entitlement offer to raise approximately A$195 million (before costs) (the “ Entitlement Offer ”). The Entitlement Offer will be made on the basis of one new Ordinary Share for every eight existing Ordinary Shares held at the record date, at an issue price of A$1.40 per new Ordinary Share.

Use of Proceeds

The net proceeds from the issue of the Notes will be used, together with the proceeds of the Entitlement Offer, existing operating cash flow and other capital resources, to fund the Company’s future capital expenditure initiatives over the next two to three years and for general working capital purposes.

The key elements of the Company’s capital expenditure programme include:

Cooper Basin conventional – ongoing exploration, appraisal and development of the Company’s key cash producing assets;
Cooper Basin unconventional – continued appraisal of a gas resource in the Nappamerri Trough;
Egypt – ongoing appraisal and development of oil discoveries and further exploration; and
Tanzania – exploration for oil reservoirs along the proven East Africa Rift.

For more details about how the proceeds will be used, please see “Use of Proceeds” section.

Key Risks in Relation to Issuer and the Notes

The Issuer faces general risks relating to investments such as economic developments, market conditions, security environments, exchange rate and political risks. Changes and volatility in these factors may affect the Group’s operations and financial position. The Group also faces the risks associated with the oil and gas exploration industry such as exploration, development and production risks, exposures to oil and gas prices and access to infrastructure. In particular, the Group is engaging in the exploration and development of unconventional resources in the Cooper Basin in Australia and exploration activities in other overseas jurisdictions, where the operating conditions can be challenging and the costs are high.

The Notes are unsecured obligations that are subordinated to the Group’s existing and future secured debts. The trading price of the Notes are directly affected by the price of the Ordinary Shares, therefore the factors that affect the price of the Ordinary Shares will also affect the price of the Notes. Noteholders have only limited anti-dilution protections because only specified events will lead to an adjustment in the Conversion Price. A liquid market in the Notes may not be developed. The Group also faces risks in relation to the introduction of new legislation or policy such as the introduction of carbon tax legislation, an extension to the petroleum resources rent tax in Australia and the potential for wild river proclamations in areas where the Company operates.

For more details about the risks, please see the section entitled “Risk Factors”.

SUMMARY FINANCIAL INFORMATION

The financial information below has been derived from, and should be read in conjunction with, the audited annual consolidated financial statements of the Group for the years ending 30 June 2010 and 30 June 2011 respectively, and the reviewed half year consolidated financial statements for the half years ended 31 December 2010 and 31 December 2011 respectively, which are incorporated by reference into and deemed to be included in this Offering Circular. Copies of those financial statements can be obtained from the 2011 financial report and 2012 half year financial report of the Group from ASX at www.asx.com.au or the Issuer’s website at www.beachenergy.com.au.

Income Statement

Income Statement
Sales revenue ................................................ Cost of sales .................................................	Six months ended 31 December (reviewed) 2011 2010 A$’000 A$’000 294,258 265,224 (203,591) (228,218)			Year ended 30 June (audited) 2011 2010 A$’000 A$’000 496,446 487,468 (419,100) (414,652)
		2011 A$’000 294,258 (203,591)		2011 A$’000 496,446 (419,100)
Gross profit .................................................		90,667	37,006	77,346	72,816
Other revenue ............................................... Other income ................................................ Other expenses .............................................		363 10,912 (17,737)	273 16,088 (149,064)	1,777 26,043 (228,998)	1,701 58,714 (98,633)
Operating profit/(loss) before financing costs.............................................................. 84,205			(95,697)	(123,832)	34,598
Interest income ............................................. Finance expenses ..........................................		2,888 (6,259)	5,508 (3,232)	8,954 (6,390)	5,868 (6,056)
Profit/(loss) before income tax expense .....		80,834	(93,421)	(121,268)	34,410
Income tax benefit/(expense) .......................		(24,772)	32,771	23,818	(1,292)
Impairment of PRRT asset		-	(26,909)	-	-
Net profit/(loss) after tax ............................		56,062	(87,559)	(97,450)	33,118
Net profit/(loss) attributable to Owners of Beach Energy Limited ................ Non-controlling interests .............................. Basic earnings/(loss) per share (cents per share) ............................................................ Diluted earnings/(loss) per share (cents per share) ............................................................		56,332 (270) 56,062 5.07¢ 5.02¢	(87,136) (423) (87,559) (7.99¢) (7.99¢)	(96,791) (659) (97,450) (8.87¢) (8.87¢)	33,442 (324) 33,118 3.09¢ 3.09¢

Consolidated Statement of Financial Position

As at 31 December (reviewed)	As at 31 December (reviewed)	As at 30 June (audited)
2011	2010	2010
		A$’000 169,940 116,055 90,927 8,945 2,580 7,127
		395,574
		7,254 367,204 573,892 269,161 63,893 - 30
		1,281,434
		1,677,008
		93,874 2,392 5,623 4,395
		106,284
		698 2,747 119,049

Provisions .............................................................. Total non-current liabilities ...................................	As at 31 December (reviewed)	As at 31 December (reviewed)	As at 30 June (audited)
	2011	2010	2010
	A$’000 74,123 189,480		A$’000 76,674 199,168
Total liabilities ......................................................	331,250		305,452
Net assets ..............................................................	1,321,124		1,371,556
Equity Issued capital ......................................................... Reserves ................................................................ Retained earnings .................................................. Equity attributable to equity holders of Beach Energy Limited ...................................................... Non-controlling interests ....................................... Total equity ............................................................	1,006,295 13,347 296,064 1,315,706		992,581 11,065 366,735 1,370,381
	5,418		1,175
	1,321,124		1,371,556

MARKET PRICE INFORMATION

Price of Ordinary Shares

The Issuer’s Ordinary Shares have been listed on the ASX since 30 June 1972. The following table sets out the high and low closing prices, in Australian Dollars, of Ordinary Shares on the ASX for the calendar year periods indicated.

Period 2012 First Quarter 2011 Fourth Quarter ........................... Third Quarter ............................. Second Quarter .......................... First Quarter .............................. 2010 Fourth Quarter ........................... Third Quarter ............................. Second Quarter .......................... First Quarter .............................. 2009 Fourth Quarter ........................... Third Quarter ............................. Second Quarter .......................... First Quarter ..............................	High (A$) 1.76 1.45 1.25 1.10 0.98 0.87 0.72 0.83 1.01 0.92 0.87 0.91 0.96	Low (A$) 1.24 1.04 0.90 0.85 0.79 0.61 0.61 0.69 0.67 0.73 0.75 0.74 0.69	Total trading volume of Ordinary Shares (000s)
			508,301 343,187 471,426 280,796 268,834 333,012 350,615 329,325 373,714 367,647 409,209 482,727 408,939

Source: Capital IQ

KEY OFFER FEATURES

Summary of offer

The following is a summary of the principal features of the Notes and the Offering. Terms defined under “Terms and Conditions of the Notes” (the “Conditions”) or elsewhere in this Offering Circular shall have the same respective meanings in this summary.

The following summary is qualified in its entirety by the more detailed information appearing in the “Terms and Conditions of the Notes” section in this Offering Circular. If there is any inconsistency between this summary and more detailed information in the “Terms and Conditions of the Notes” section, then the “Terms and Conditions of the Notes” shall prevail.

Issuer Beach Energy Limited (ABN 20 007 617 969). The Notes A$150,000,000 3.95% Senior Unsecured Convertible Notes due 2017.

The Offering The Notes are being offered and sold by the Joint Lead Managers solely outside the United States pursuant to Regulation S under the Securities Act. Issue Price 100% of the principal amount. Denomination A$200,000 and integral multiples of A$100,000 in excess thereof. Closing Date 3 April 2012. Interest Rate The Notes bear interest from and including the Closing Date at

The Notes bear interest from and including the Closing Date at the rate of 3.95% per annum calculated by reference to the principal amount thereof and payable semi-annually in equal instalments in arrear on 3 April and 3 October in each year, with the first payment of interest to be made on 3 October 2012.

The Notes will constitute direct, unconditional, unsubordinated, senior and (subject to Condition 2) unsecured obligations of the Issuer, as provided in the Conditions, ranking pari passu and rateably, without any preference among themselves. The payment obligations of the Issuer under the Notes rank equally with all its other existing and future unsecured and unsubordinated obligations, save for such obligations that may be preferred by provisions of law that are mandatory and of general application.

Status

Unless previously redeemed or purchased and cancelled, Noteholders will have the right to convert Notes into Ordinary Shares at the then applicable Conversion Price. The Conversion Right attaching to any Note may be exercised, at the option of the holder thereof, at any time on or after 14 May 2012 on the tenth day prior to the Maturity Date or, if such Note shall have been called for redemption by the Issuer before the Maturity Date, then up to the close of business (at the place aforesaid) on a date no later than the tenth day prior to the date fixed for redemption thereof. If such final date for exercise of the

Conversion Right

Conversion Rights is not a business day at the place aforesaid, then the period for exercise of the Conversion Rights by the Noteholders shall end on the immediately preceding business day at the place aforesaid.

Conversion Price

Cash Settlement

The initial Conversion Price shall be A$2.00. The Conversion Price will be subject to adjustment in certain circumstances described in Condition 6(b).

The Conversion Right of a converting Noteholder may be settled in Ordinary Shares or in cash, at the option of the Issuer. The Issuer may make an election to satisfy the exercise of a Conversion Right by making payment to the relevant Noteholder of the Cash Alternative Amount.

“Cash Alternative Amount” means the product of (a) the number of Ordinary Shares deliverable upon exercise of the Conversion Right in respect of which the Issuer has exercised a Cash Alternative Election and (b) the arithmetic average of the daily Volume Weighted Average Price of the Ordinary Shares for the 20 consecutive Dealing Days commencing on the relevant Cash Election Date (if not a Dealing Day, the next Dealing Day).

Final Maturity

Redemption at the Option of the Issuer

Redemption at the Option of Noteholders

Unless previously purchased and cancelled, redeemed or converted, the Notes will be redeemed in cash on 3 April 2017 at their principal amount together with accrued but unpaid interest to, but excluding, such date.

The Issuer may redeem all but not some only of the Notes on any date on or after 3 April 2015 at their principal amount, together with accrued interest up to but excluding the redemption date, if (i) for 20 consecutive Dealing Days (as defined in the Terms and Conditions of the Notes) the Volume Weighted Average Price (as defined in the Terms and Conditions of the Notes) for any 20 consecutive Dealing Days, where the last Dealing Day of such 20-Day Dealing Period falls within five Dealing Days prior to the date notice of redemption is given, was at least 130% of the Conversion Price; or (ii) Conversion Rights (as defined in the Terms and Conditions of the Notes) shall have been exercised and/or purchases and cancellations and/or redemptions effected in respect of 90% or more in principal amount of the Notes. See Condition 7(b) of the Conditions.

On the Put Option Date and at any time following the occurrence of a Delisting or a Change of Control (as defined in the Terms and Conditions of the Notes), the holder of any Note will have the right, at such holder’s option, to require the Issuer to redeem all or some only of that holder’s Notes on the Relevant Event Redemption Date (as defined in the Terms and Conditions of the Notes) at their principal amount, together with accrued interest up to but excluding the redemption date. See Conditions 7(e) and 7(f) of the Conditions.

Withholding Taxes

Tax Redemption

All payments in respect of the Notes will be made free from any restriction or condition and be made without deduction or withholding for or on account of any present or future taxes, duties, assessments or governmental charges of whatsoever nature imposed or levied by or on behalf of the Commonwealth of Australia or any political subdivision or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law. In that event the Issuer shall (except in certain circumstances as set out in the Terms and Conditions of the Notes) pay such additional amounts as will result in the receipt by the Noteholders of such amounts as would have been received by them if no such withholding or deduction had been required. See Condition 9 of the Conditions.

The Notes may be redeemed at the option of the Issuer in whole, but not in part, at their principal amount together with interest accrued to, but excluding the date fixed for redemption, (i) in the event that as a result of any change in, or amendment of, the tax laws or regulations of the Commonwealth of Australia or any political subdivision thereof or any authority thereof or therein having power to tax or any change in the application or official interpretation of such laws or regulations, if the change becomes effective after the issue date of the Notes, the Issuer has or will become obliged to pay additional amounts; and (ii) the Issuer is still obliged to pay such additional amounts after taking reasonable measures available to it.

If the Issuer gives a tax redemption notice, each Noteholder will have the right to elect that his Note(s) shall not be redeemed and that the provisions of Condition 9 shall not apply in respect of any payment of interest to be made on such Note(s) which falls due after the relevant Tax Redemption Date (as defined in the Conditions). See Condition 7(c) of the Conditions.

Negative Pledge

Cross Default

Other Events of Default

Trust Deed

The Notes will contain a negative pledge provision given by the Issuer and its Subsidiaries in respect of Relevant Indebtedness (other than a Permitted Security Interest) (each as defined in the Terms and Conditions of the Notes). See Condition 2 of the Conditions.

The Notes will contain a cross default provision, subject to a threshold of A$20,000,000 (or its equivalent in other currencies). See Condition 10(c) of the Conditions.

For a description of certain events that will permit acceleration of the Notes, see Condition 10 of the Conditions. Upon acceleration for any such event, the Notes will become immediately due and repayable at their principal amount, together with accrued but unpaid interest.

The Notes will be constituted by a trust deed dated 3 April 2012 between the Issuer and the Trustee.

Trustee

Governing Law

Principal Paying, Transfer and Conversion Agent

Registrar

Form of the Notes and Delivery

Selling Restrictions

Listing

Citicorp International Limited.

The Notes and the Trust Deed will be governed by, and construed in accordance with, English law.

Citibank, N.A., London Branch.

Citigroup Global Markets Deutschland AG.

The Notes will be in registered form without coupons attached and will be represented by a Global Certificate registered in the name of a nominee of, and deposited with a common depositary for, Euroclear and Clearstream, Luxembourg on or about the Closing Date.

There are restrictions on offers and sales of the Notes, inter alia , in the United States, the United Kingdom, Hong Kong, Australia, the European Economic Area, Switzerland, Japan and Singapore. See “Subscription and Sale”.

Approval in-principle has been received for the listing of the Notes on the SGX-ST. The Notes will be traded on the SGX-ST in a minimum board lot size of A$200,000 for so long as any of the Notes are listed on the SGX-ST. The Issuer has not applied to have the Notes admitted to dealing on the ASX.

Upon conversion of the Notes, application will be made for quotation of the Ordinary Shares issuable upon conversion of the Notes on the ASX.

The Issuer has agreed to certain restrictions on its ability and the ability of its subsidiaries to issue or dispose of Ordinary Shares or related securities during the period commencing on the date of the Subscription Agreement (as defined in this Offering Circular) and ending 90 days after the Closing Date (both days inclusive). See “Subscription and Sale”.

Lock up

ISIN XS0766381528 Common Code 076638152

Common Code

The net proceeds of the issue of the Notes are expected to amount to approximately A$145,500,000, subject to adjustment for certain expenses in connection with the Offering. The net proceeds will be used for the purposes as set out in “Use of Proceeds”.

Use of Proceeds

RISK FACTORS

There are numerous widespread risks associated with investing in any form of business and with investing in notes and the share market generally. There are also a range of specific risks associated with the Group’s business and its involvement in the exploration and petroleum development and production industry and an investment in the Notes or the Ordinary Shares of the Issuer should be considered speculative. Many of these risk factors are largely beyond the control of the Issuer and its Directors because of the nature and location of the existing and proposed business activities of the Issuer.

Investors should carefully consider the risks described below before making a decision to invest in the Notes. The risks described below do not necessarily comprise all those faced by the Issuer and are not intended to be presented in any assumed order of priority.

The investment referred to in this Offering Circular may not be suitable for all of its recipients. Investors are advised to examine the contents of this Offering Circular and to consult their professional advisers before making a decision to subscribe for Notes.

GENERAL INVESTMENT RISKS

Global economic developments and market conditions

The Company’s operational results may be adversely impacted by factors including significant changes in general economic conditions such as interest rates, inflation, deflation and general market levels. A number of factors affect the performance of stock markets, which could affect the price at which the Company’s securities trade on the ASX. Among other things, movements on international and domestic stock markets, interest rates, inflation and inflationary expectations, deflation and deflationary expectations and overall economic conditions, as well as government taxation and other policy changes may affect the demand for, and price of, the Company’s shares. Volatility in the Australian or international financial markets may influence the trading price of the Company’s shares on the ASX.

The economic situation in global markets has in various ways been adversely affected by weakening economic conditions and recent turmoil in the global financial markets. Some countries have experienced declining GDP, reduced industrial production, increasing rates of unemployment and decreasing asset values. A continued downturn in economic conditions may result in lower demand for the Company’s products and, in turn, impact negatively on its financial position.

Furthermore, recent volatility in the credit markets and the potential impact on the liquidity of major financial institutions may have an adverse effect on the Company’s cost of funding.

Global security environment and political risks

An outbreak and / or a material escalation of hostilities including a declaration of war in major countries of the world may affect the global economic and commercial environment and in turn directly or indirectly affect the Company’s future revenues, operating costs and share price.

The Company’s non-Australian assets are more likely to be impacted by geo-political risks. The Company may be hindered in its business activities or prevented from proceeding with projects as a result of, amongst other things, such hazards as the expropriation of property, insurrection, acts of terrorism, nationalisation, renegotiation or termination of existing contracts, licences or other agreements, changes in laws or fiscal policies, currency exchange restrictions and other political risks. Such risks are difficult to predict with certainty, but any combination of one or other could have a material adverse impact on the Company’s business or financial position.

RISKS RELATING TO THE INDUSTRY

Exploration and development

Oil and gas exploration and development involves a certain degree of risk. In the normal course of business, the Company depends on the following factors: successful exploration; establishment of commercial oil and gas reserves; finding commercial solutions to exploitation of reserves; ability to design and construct efficient producing, gathering and processing facilities; efficient transportation and marketing of hydrocarbons; and sound management of operations.

In particular, oil and gas exploration is a speculative endeavour and the nature of the business carries a degree of risk associated with failure to find hydrocarbons in commercial quantities or at all. Exploration and development operations can be hampered by force majeure circumstances and cost overruns for unforeseen events, including, unexpected variations in location, reserves estimates, quality of oil and gas, and facility malfunction.

Exploration and development projects may be delayed or unsuccessful for many reasons, including cost overruns, lack of qualified and available personnel and contractors, lack of drill rigs, equipment shortages, power shortages and mechanical difficulties.

Certain projects may also require the use of new and advanced technologies, which can be expensive to develop, purchase and implement, and may not function as expected.

The Company is engaged in exploration and development of unconventional resources in the Cooper Basin in Australia. The area is a well-established oil and gas production region with existing infrastructure; however the Company will be amongst the first to produce from unconventional reservoirs. Development challenges associated with unconventional resource projects in Australia include the ability to:

correctly determine the size of resource and scale of development;
access existing facilities (through other joint ventures) or build new ones;
access rigs which can drill to the depth required;
secure off-take customers;
obtain experienced and qualified personnel including those with relevant well and unconventional reservoir management experience;
gain access to appropriate technology; and
gain the required landholder and regulatory approvals.

The Company also conducts exploration activities in other areas, including Egypt, Tanzania, New Zealand and Papua New Guinea, where operating conditions can be challenging and costs may be high. The cost of drilling, completing and operating wells is often uncertain. These activities as a result, may incur cost overruns or may be required to curtail, delay or cancel drilling operations because of a variety of factors, including unexpected drilling conditions, dry holes, pressure or irregularities in geological formations, equipment failures or accidents, adverse weather conditions, compliance with governmental requirements, including those relating to environmental protection, and shortages or delays in the availability of drilling rigs and the delivery of equipment.

Production risks

Any oil and gas projects may be exposed to production decrease or stoppage, which may be the result of facility shut-downs, mechanical or technical failure and other unforeseeable events. A significant failure to maintain production could result in the Company lowering production forecasts, loss of revenue and additional operational costs to bring production online. There may be occasions where loss of production may incur significant capital expenditure, resulting in the requirement for the Company to seek additional funding, through equity or debt issuance.

Exposure to oil and gas prices

A severe decline in the price of oil and gas may have a material adverse effect on the Company’s financial performance. Historically, international crude oil prices have been very volatile. Although the Company has a management policy for hedging oil price and currency risks, a sustained period of low or declining crude oil prices could adversely affect the Company’s operations, financial position and ability to finance developments.

The factors which impact volatility are beyond the control of the Company. Lower price expectations may reduce future margins or the economic viability of projects planned or in development (thereby reducing the size of recoverable reserves). The risk factors which may impact the Company include:

global and regional supply and demand and expectations regarding future supply and demand for crude products;
the status of the Australian domestic gas market supply and demand and international LNG demand;
the associated impacts of major development projects within the region (e.g. current Australian LNG projects);
the cost of exploring for, developing, producing, processing and marketing crude oil, natural gas and associated products;
the ability and willingness of the Organisation of Petroleum Exporting Countries (OPEC) and other producing nations to influence global production levels and prices;
the international political environment and any potential hostilities and acts of terrorism in resource-producing regions;
prices and availability of alternative and competing fuels;
global and regional economic conditions;
unexpected failure in infrastructure;
prices and availability of new technology; and
weather and climate conditions and natural disasters.

It is impossible to predict future crude oil and natural gas price movements with certainty. However, the Company engages in limited hedging transactions to manage cash flows. A decline in crude oil, natural gas or associated product prices for protracted periods could have a material adverse effect on the Company’s business, financial condition, operational results, prospects and ability to finance planned capital expenditures.

Ability to access and develop infrastructure

The Company will require the ability to access infrastructure to economically exploit any reserves discovered. Specifically, the ability to access or build gas pipeline infrastructure at the Cooper Basin would drive the commerciality and value of existing unconventional resources. In addition, the Company may undertake exploration in other locations where access to infrastructure to exploit discovered reserves may not currently exist and, as a result, may be challenging to develop and require significant capital investment which may impact the economic viability of the discovered reserves.

Primary risks include future capacity availability, tariff charges, regulation changes and the ability to obtain approvals for pipeline expansions / constructions from governments (across a number of different sovereign states).

The ability to develop, manage and transport products successfully relies on accessible and efficient supply chains and logistics. The Company operates in a number of geographic locations which increase the complexity of the Company’s supply chain and logistics requirements. Failure to manage said requirements could result in project delays and additional capital expenditure outlays.

Material change to reserves and resources

Underground oil and gas reserve and resource estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates which are valid at a certain point in time may alter significantly or become uncertain when new oil and gas reservoir information become available through additional drilling or reservoir engineering over the life of the field. As reserve and resource estimates change, development and production plans may be altered in a way that may adversely affect the Company’s operations and / or financial results.

The Company’s reported reserves are hydrocarbons which can be economically recovered, hence certain assumptions are made, including those relating to future oil and gas prices, rates of production, future net revenues, royalty and tax payments, cost of recovery and the timing of development based on existing economic and operating conditions. In addition, estimates necessarily depend upon a number of variable factors and assumptions, including the following:

historical production from the area;
interpretation of geological and geophysical data; and
the assumed effects of regulations by governmental agencies.

Therefore, if these assumptions change, or are no longer relevant, the estimates may need to be revised.

Ongoing results from continued drilling, testing and production may cause upward or downward revisions in reported reserves and resources. Additionally, oil and gas reserves and resources assume that the Company continues to be entitled to production licences over the fields and that the fields would be produced until the economic limit of production is reached. If any production licences for fields are not renewed or cancelled, estimated oil and gas reserves and resources may materially decrease.

Negotiation with third parties

Various aspects of the Company’s future performance and profitability may depend on the outcome of future negotiations with third parties. In addition to sales negotiations, these include the outcome of negotiations on land access arrangements, terms of access to third-party facilities, native title issues and discussions with government regulatory bodies in relation to:

licence renewals and work obligations; and

security for rehabilitation of areas of operation within the Company’s tenements.

If the outcomes of these negotiations are not favourable to the Company, the Company’s financial performance may be adversely impacted.

Integration of acquisitions

There are a number of inherent risks associated with acquisitions, including the ability to realise synergies, manage integration and restructuring costs. The Company may be liable for all businesses and properties acquired, which may carry unforeseen costs and litigation issues.

Health, safety and environmental impact constraints

The business of exploration, development, production and transportation of hydrocarbons involves a variety of risks which may impact the health and safety of personnel, the community and the environment. It is conceivable that an incident could occur which might negatively impact on the Company’s business and reputation.

Oil and natural gas production and transportation can be impacted by natural disasters, operational error or other occurrences which can result in hydrocarbon leaks or spills, loss of containment of hazardous materials, fires, equipment failure and loss of well control. Potential failure to manage these risks could result in injury or loss of life, damage or destruction of wells and production facilities pipelines and other property and damage to the environment.

Losses and liabilities arising from such events could significantly reduce revenues or increase costs and have a material adverse effect on the operations and/or financial conditions of the Company.

Ongoing production and development of any of the Company’s properties, in any country, will be dependent upon meeting environmental laws and regulatory guidelines. From time to time, laws and regulations are subject to amendment or change, which may require the Company to undertake changes to its operational procedures. The results of non-compliance, or alleged non-compliance, may result in sanctions that include administrative, civil and criminal fines and penalties, the loss of licences or permits or corrective action orders.

The Company holds operations in a number of locations around the world and the safety and security of its operations are closely monitored by management. However, there is a risk that the Company’s operations could lead to injuries or loss of life for its workforce and the public and could result in regulatory action, legal liability and damage to the Company’s reputation. Security threats require continuous oversight and control. A breach of security, such as an act of terrorism, against facilities and offices, pipelines, transportation or computer systems could severely disrupt operations and could cause harm to people.

Land access and Native Title

Immediate and continuing access to tenements cannot in any case be guaranteed. The Company is required to obtain the consent of owners and occupiers of land within its licence areas. Compensation may be required to be paid to the owners and occupiers of land in order to carry out exploration activities.

The Company operates in a number of areas, within Australia, that are or may become subject to claims or applications for native title determinations. Although, the Company has experience in dealing with a number of native title claims in Australia in relation to some of its existing Cooper Basin licences, native title claims have the potential to introduce delays in the granting of petroleum and other licences and, consequently, may have an effect on the timing and cost of exploration, development and production.

Native or indigenous title and land rights may also apply or be implemented in other jurisdictions in which the Company operates outside of Australia.

Sufficient insurance coverage

The Company maintains insurance, either through its corporate entity or through a joint venture, for certain activities within ranges of coverage that it believes to be consistent with industry practice. The occurrence of an event that is uninsurable, not covered or partially covered by insurance could have a material adverse effect on the Company’s business and financial position.

Ability to influence joint venture and manage future work programmes and budgets

The Company and its subsidiaries participate in joint ventures for certain exploration, development and production activities. Under certain joint venture operating agreements, the Company or a subsidiary may not control the approval of work programmes and budgets and a joint venture partner may vote to participate in certain activities without the approval of the Company. As a result, the Company may experience a dilution of its interest or may not gain the benefit of the activity, except at a significant cost penalty later in time. Participating in a joint venture, as a non-operator, may cause difficulty in setting forecast budgets.

Work programme delays may arise due to joint venture partners not reaching agreement on exploration, development and production activities. Neither the Company nor its subsidiaries have any assurance of the financial viability of other joint venture partners and may incur unforeseen costs and losses in the event of default of joint venture participants.

Security of tenure

All petroleum licences held by the Company are subject to the granting and approval of relevant government bodies. Government regulatory authorities generally require the holder of the licences to undertake certain proposed exploration commitments and the failure to meet these obligations could result in loss of exploration rights. Any renewal or extension of licence terms is subject to agreement by the government; potential failure to approve may result in a financial loss for the Company.

Changes in government policy and laws

Changes in government policy (such as in relation to taxation) or statutory changes may affect the Company’s business operations and its financial position. A change in government regime may result in changes to fiscal, monetary, property rights and other issues which may result in a material adverse impact on the Company’s business and its operations.

The possible extent of changes to legislation, regulations, guidelines or amendments to existing legislation (including taxation changes) that may affect the Company’s business activities cannot be predicted with any certainty. The effects of any such actions may result in increased costs, whether in the nature of capital or operating expenses, through delays or the prevention of certain activities. Recent examples of the introduction of new legislation or policy include the introduction of carbon tax legislation, an extension to the petroleum resources rent tax in Australia and the potential for wild river proclamations in areas where the Company operates. The impact of those items is yet to be quantified by the Company.

Companies in the oil and gas industry may be subject to pay direct and indirect taxes, royalties and other imposts in addition to normal company taxes. The Company currently operates (or is contemplating operating) in Australia, New Zealand, Papua New Guinea, Egypt, United States of America and Tanzania. Accordingly its profitability may be affected by changes in government taxation and royalty policies or in the interpretation or application of such policies in each of these jurisdictions.

Changes in the interpretation or application of existing taxation laws by the courts or taxation authorities in Australia, or changes to the laws themselves may affect the taxation treatment of the Company’s securities or the holding or disposal of those securities.

Ability to access credit and financial market risks

The oil and gas business involves significant capital expenditure, including in exploration and development, production, processing and transportation. The Company relies on cash flows from operating activities or on external sources, including bank borrowings and offerings of debt or equity securities in the Australian and international capital markets to finance capital expenditures.

If cash flows decrease or the Company is unable to raise the necessary financing, this may result in reduction in planned capital expenditures. Any such reduction could have a material adverse effect on the Company’s ability to expand its business and/or maintain operations at current levels, which in turn could have a material adverse effect on the Company’s business, financial condition and operations.

Hedging risks

The Company is exposed to fluctuations in currency rates, interest rates and oil and gas prices.

The Company uses derivative financial instruments such as foreign exchange contracts, commodity contracts and interest rate swaps to hedge certain risk exposures. The Company is exposed to commodity price fluctuations through the sale of petroleum productions and other oil-linked contracts. The Company’s policy is to hedge up to 80% of forecast oil production by way of Australian Dollar denominated oil floor contracts for up to 18 months. In the financial year ending 30 June 2011, the Company hedged U.S.$48 million or A$54.3 million through instruments with ceilings and collars in place. The Company does not have a policy to hedge interest rates, which means it may be adversely affected by fluctuations in the interest rates.

The Company has three oil hedging instruments for financial years 2012 and 2013, each with a floor price of A$50/bbl, A$55/bbl and A$60/bbl Brent. A total of 1.905 million barrels are hedged over the 2 financial years.

Shortage and retention of qualified personnel

There is a growing global shortage of workers in the oil and gas industry and the shortage is particularly apparent in Australia, where there are a significant number of large oil and gas projects undergoing development. A shortage in the supply of experienced technical and operational staff could impact the ability of the Company to achieve its operational objectives and also result in an increase in salaries which would increase operational costs.

The Company’s key resources are its people, many of whom hold significant knowledge and qualifications. Operations could be adversely affected if the Company were to lose certain key people which it was unable to replace with equally qualified personnel. The Company has had a stable senior management group for many years and has implemented incentive plans to assist in the recruitment and retention of talented people needed to achieve successful business outcomes.

Climatic impacts

Any adverse or extreme climatic conditions could affect the Company’s operations through delaying exploration, development and production activities, causing additional expenditure and impacting production levels. For example, the Company encountered flooding at its Cooper Basin operations in 2010 which impacted production volumes and delayed the exploration programme.

RISKS RELATING TO THE NOTES

Lack of a public market for the Notes

The Notes are a new issue of securities for which there is currently no established trading market when issued, and one may never develop. Approval in-principle has been received for the listing of the Notes on the SGX-ST. However, there can be no assurance that the Company will be able to maintain such a listing or that, if listed; a trading market will develop for the Notes on the SGX-ST. If a market does develop, it may not be liquid. Therefore, investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. Illiquidity may have an adverse effect on the market value of Notes.

If an active trading market were to develop, the Notes could trade at a price that may be lower than the initial offering price of the Notes. Whether or not the Notes will trade at lower prices depends on many factors, including:

prevailing interest rates and the market for similar securities;
general economic, market and political conditions; and
the Company’s financial condition, financial performance and future prospects as well as the market price and volatility of the Shares;.
the publication of earnings estimates or other research reports and speculation in the press or investment community in relation to the Company; and
changes in the industry and competition affecting the Company

The Notes are unsecured obligations

The Notes constitute direct, unconditional, unsubordinated, senior and (subject to “Terms and Conditions of the Notes – Negative Pledge”) unsecured obligations of the Company ranking pari passu and rateably, without any preference among themselves. The payment obligations of the Company under the Notes rank equally with all its other existing and future unsecured and unsubordinated obligations, save for such obligations that may be preferred by provisions of law that are mandatory and of general application. The repayment of the Notes may be compromised if:

the Group enters into bankruptcy, liquidation, rehabilitation or other winding-up proceedings;
there is a default in payment under the Group’s future secured indebtedness or other unsecured indebtedness; or
there is an acceleration of any of the Group’s indebtedness.

As at 31 December 2011, the Group had no outstanding secured debt . If any of the above events occurs, the Group’s assets may not be sufficient to pay amounts due on the Notes.

Noteholders will bear the risk of fluctuation in the price of the Shares

The trading price of the Ordinary Shares will directly affect the trading price of the Notes. It is impossible to predict whether the price of the Ordinary Shares will rise or fall.

There are various risks associated with investing in any form of business and with investing in the stock market generally. The value or trading price of the Ordinary Shares and the value of the Ordinary Shares issued upon conversion of the Notes will depend upon the general stock market and economic conditions as well as other factors including, but not limited to, the Company’s credit quality, operating results, economic and financial prospects and other factors. In addition, the price of the Ordinary Shares is also

subject to varied and often unpredictable influences on the market for equities, including, but not limited to:

general economic conditions, including the performance of the Australian Dollar, the US Dollar and commodities on world markets;
inflation rates, foreign exchange rates and interest rates;
changes to government policy, legislation or regulation;
industrial disputes; and
general operational and business risks.

There is no guarantee of profitability, dividends, return of capital, or the price at which the Ordinary Shares will trade on the ASX after conversion of the Notes. The past performance of the Ordinary Shares is not necessarily an indication as to future performance as the trading price of shares can fluctuate.

Noteholders have limited anti-dilution protection

The Conversion Price will be adjusted in the event that there is a Share subdivision or consolidation or reclassification, rights offering and equity issuances at less than 95% of the then Current Market Price (as defined in the Terms and Conditions of the Notes), bonus issue, stock dividends, Capital Distributions (as defined in the Terms and Conditions of the Notes) (including dividends) and other analogous dilutive events, but only in the circumstances and only to the extent provided in “Terms and Conditions of the Notes – Conversion”. There is no requirement that there should be an adjustment for every corporate or other event that may affect the value of the Ordinary Shares. Such events, should they occur, may adversely affect the value of the Ordinary Shares and, therefore, where no adjustment is required to be made, adversely affect the value of the Notes.

There is an absence of covenant protection for the Notes

Other than as described herein, the Trust Deed will not limit the Company’s ability to incur additional debt or liabilities (including secured indebtedness). The Trust Deed will not contain any provision specifically intended to protect holders of the Notes in the event of a future leveraged transaction by the Company (other than secured capital markets transactions in the circumstances described in the Terms and Conditions of the Notes).

The Company may in future incur further indebtedness and other liabilities. The Company has provided, and may in the future provide, guarantees and/or indemnities in respect of such liabilities.

The Company may be unable to redeem or repay the Notes when due

In the event the Ordinary Shares cease to be listed on ASX, holders of the Notes may require the Company to redeem all of such Noteholder’s Notes. The Company may also be required to redeem all the Notes upon the occurrence of a Change of Control. Following acceleration of the Notes upon an Event of Default, the Company would be required to pay all amounts then due in accordance with the Conditions. Unless previously redeemed, converted or purchased and cancelled, the Company will be required to redeem the Notes on 3 April 2017. The Company may not be able to redeem all or any of such Notes or pay all or any amounts due under the Notes if the Company does not have sufficient cash flows to do so. The Company cannot assure the Noteholders that, if required, it would have sufficient cash or other financial resources or would be able to arrange financing to redeem the Notes in cash.

Before conversion, Noteholders will not be entitled to any shareholder rights, but will be subject to all changes affecting the Ordinary Shares

Unless and until the Noteholders acquire the Ordinary Shares upon conversion of the Notes, they will have no rights with respect to the Ordinary Shares, including any voting rights or rights to receive any regular dividends or other distributions with respect to the Ordinary Shares. Upon conversion of the Notes, these holders will be entitled to exercise the rights of holders of the Ordinary Shares only as to actions for which the applicable record date occurs after the date of conversion.

The Trustee may request Noteholders to provide an indemnity and/or security and/or prefunding to its satisfaction

In certain circumstances (including giving of notice to the Company pursuant to Condition 10 and Condition 13 of the Terms and Conditions of the Notes), the Trustee may (at its sole discretion) request Noteholders to provide an indemnity and/or security and/or prefunding to its satisfaction before it takes actions on behalf of Noteholders. The Trustee shall not be obliged to take any such actions if not indemnified and/or secured and/or prefunded to its satisfaction. Negotiating and agreeing to an indemnity and/or security and/or prefunding can be a lengthy process and may impact on when such actions can be taken. The Trustee may not be able to take actions, notwithstanding the provision of an indemnity or security or prefunding to it, in breach of the terms of the Trust Deed and in circumstances where there is uncertainty or dispute as to the applicable laws or regulations and, to the extent permitted by the Trust Deed and the Terms and Conditions of the Notes and applicable laws and regulations, it will be for the Noteholders to take such actions directly.

Modifications and waivers

The conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit majorities to bind all Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority.

Change of Law

The Company must comply with various legal requirements including requirements imposed by securities laws and company laws in Australia. Should any of those laws change over time, the legal requirements to which the Company may be subject could differ materially from current requirements.

Legal investment considerations may restrict certain investments

The investment activities of certain investors are subject to investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (1) the Notes are legal investments for it, (2) the Notes can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of the Notes. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of the Notes under any applicable risk based capital or similar rules.

The risks described above do not necessarily comprise all those faced by the Group and are not intended to be presented in any assumed order of priority.

The investment referred to in this Offering Circular may not be suitable for all of its recipients. Investors are accordingly advised to consult an investment adviser before making a decision to subscribe for Notes.

ABOUT THE COMPANY

Beach Energy Limited is an Adelaide based oil and gas exploration and production company listed on the Australian Securities Exchange (ASX: BPT). The Company is a constituent of the S&P/ASX 100 Index and has a market capitalisation of approximately A$1.75 billion as at 26 March 2012 (U.S.$1.85 billion).

The Company holds over 300 exploration and production tenements in Australia, Egypt, New Zealand, Papua New Guinea, Tanzania and the United States of America.

Strategy Overview

The Company has extensive conventional oil and gas exploration and production acreage across the Cooper Basin.

In recent years, the Company has been assessing prospects for unconventional resources in the Cooper Basin. The Company’s unconventional exploration activities in 2011 consisted of two successful vertical wells, Holdfast-1 and Encounter-1, from which the Company booked a contingent resource of 2 trillion cubic feet (" Tcf ") (equal to approximately 330 million barrels of oil equivalent). These unconventional wells were targeting shale zones within the large Nappamerri Trough, one of the major structural components of the Cooper Basin. Following these developments, the Company believes the targeted shale gas zones are only part of a much larger gas opportunity which includes mixed lithologies within a basin centred gas play. The Company is focused on commercialising this opportunity through further development work.

The Company’s international investment strategy is based on early entry into countries or basins that management believe will offer attractive technical and commercial opportunities to add shareholder value. In particular, the Company made an early investment in Tanzania via the award of the Lake Tanganyika South block in 2010. In Egypt, the Company has commenced production from the North Shadwan concession in the Gulf of Suez and has had four discoveries from its first four exploration wells drilled in the Abu Sennan Concession.

Reserves and Resources

As at 30 June 2011, the Company’s oil and gas Proved and Probable (2P) Reserves totalled 77.4 MMboe (73% gas / gas liquids, 27% oil) and Most-likely (2C) Contingent Resources of 582 MMboe.

2P Reserves as at 30 June 2011

Area Cooper & Eromanga Basins ........................ USA ............................................................. Egypt ........................................................... Total ............................................................	2P Reserves
	Oil (MMbbl) Gas Liquids (MMboe) Gas (PJ) Total (MMboe) 17.0 9.5 275 73.8 0.3 - - 0.3 3.3 - - 3.3 20.6 9.5 275 77.4

2C Contingent Resources as at 30 June 2011

		2C Contingent Resources	2C Contingent Resources
Oil (MMbbl) 5.6 - 9.4 15.0	Gas Liquids (MMboe) 19.6 3.8 3.3 26.6	Gas (PJ) 377 2,642 127 3,145	Total (MMboe)
			90

			458

			34

			582

The reserve and resource information set out above is based on information compiled by Neil Gibbins in accordance with ASX listing rule 5.11. Mr. Gibbins has more than 20 years’ relevant experience within the petroleum industry and consents to the disclosure of the information in the form and the context in which it appears.

Production

In FY11, the Company produced 6.6 MMboe, of which 6.5 MMboe was produced from the CooperEromanga Basins. Production comprised oil and gas liquids of 7,636 boepd (42% of total) and gas production of 10,394 boepd.

1H12, FY11 and FY 10 Net Production

		Net	Production
Cooper & Eromanga Basins Gippsland Basin USA Cooper & Eromanga Basins Cooper & Eromanga Basins Cooper & Eromanga Basins	1H12 1.2 n/a 0.01 1.2 11.2 21.3 0.2 3.5	FY11 2.0 0.1 0.03 2.1 22.0 42.2 0.3 6.6	FY10 2.3 0.3 n/a
			2.6 23.1 45.8 0.3
			7.3

The fall in production in FY11, compared to the previous year, was primarily due to the abnormal impact of a one in forty year flood event in the Cooper Basin, the unavailability of the Tantanna to Moomba oil pipeline in the latter part of the reporting period, the suspension of the offshore Basker, Manta and Gummy liquids production operation, and the effects of natural field decline.

Asset Overview

The Company’s key assets comprise:

Cooper Basin (Conventional Oil and Gas);

Cooper Basin (Unconventional Gas);
Egypt (North Shadwan, Abu Sennan and the Mesaha Concessions);
Tanzania (Lake Tanganyika South Concession); and
A 56% shareholding in ASX-listed Somerton Energy Limited (“ Somerton ”).

==> picture [420 x 256] intentionally omitted <==

----- Start of picture text -----

Tanzania
(Lake Tanganyika South
Concession)
Mesaha (Egypt)
Bonaparte Basin,
North Shadwan (Egypt)
Otway Basin (Aus)
New Zealand Abu Sennan (Egypt) Henderson (USA)
Cooper / Eromanga Basin (Aus)
Includes: Conventional O&G and Unconventional Gas
Exploration / Concept Development Production
----- End of picture text -----

Australia

Cooper Basin – Conventional Oil and Gas

The Company’s main operations in the Cooper Basin comprise:

Operated: 20 oil fields with six gas discoveries, of which two are already producing; and
Non-operated:
20.21% interest in the SACB JV, a 23.20% interest in the SWQJV and a 38.5% interest in the Naccowlah Block JV operated by Santos; and
40% interest in PEL 104, PEL 111 and PRL 15, operated by Senex Energy Limited (“ Senex ”).

Cooper Basin – Conventional Oil and Gas

Asset Description Operated Cooper Basin Western Operated licences (PEL 91[1] and PEL 92[2] ) lie along the Western Flank of the Cooper Basin. These permits are primarily prospective for oil

1 The Company 40% and operator, Drillsearch 60%

2 The Company 75% and operator, Cooper Energy 25%

Asset Flank Oil ..........................................

Description

discoveries in the Eromanga Basin section, although Cooper Basin oil and gas / condensate prospectivity is also recognised in some areas.

In FY12, the Company drilled eight oil exploration wells, of which five were discoveries. It is anticipated that the oil exploration programme will recommence in May 2012. The Company is constructing two new pipelines to increase oil production volumes from the Western Flank to Moomba at an expected net cost of A$23 million.

Non-operated Cooper Basin Western Flank Oil ............................ Operated Cooper Basin Western Flank Wet Gas .................................. SACB JV/ SWQ JV .........................

The Company has a 40% interest in PRL 15, PEL 104 and PEL 111. Senex holds the remaining 60% interest and is operator of the JV. The JV is undertaking an 11 well drilling programme, comprising five appraisal/development wells (already drilled) and six exploration wells (two drilled to date) targeting the highly prospective Birkhead channel play on the Western Flank of the Cooper Basin.

Production commenced from the Middleton and Brownlow fields in PEL 106B at an initial rate of 25 million standard cubic feet per day (“MMscfd”) of gas and gas liquids. This was the first Company operated gas production sold into the Moomba facility, operated by the SACB JV.

A defining factor in the Company’s historic growth was the acquisition of Delhi Petroleum in 2006. The Delhi acquisition provided the Company with an interest in the SACB JV and SWQ JV operated by Santos, including participation in an exploration and development programme primarily targeting conventional oil and gas. The SACB JV is currently in the process of infill development drilling of conventional gas targets, which added 12 MMboe of reserves from resources in FY11 and is expected to add up to 20 MMboe of reserves to resources in FY12.

Cooper Basin Permit Locations

==> picture [275 x 231] intentionally omitted <==

Cooper Basin – Unconventional Gas

The Company is the leader in the exploration of unconventional resources in Australia, primarily through its 100% interests in the Permian section of PEL 218 (South Australia). This tenement is located within the Nappamerri Trough in the Cooper Basin.

The Company estimates it has over 300 Tcf of gas in place in PEL 218 alone.

PEL 218 (100%, Operated), South Australia

The Company booked an initial gross contingent resource of 2 Tcf after drilling the first two unconventional wells, Holdfast-1 and Encounter-1, with drilling commencing on the third well, Moonta1, on 23 January 2012. Moonta-1 is the first of at least five vertical wells in 2012 that will be drilled to delineate the resource potential of the shale and basin centred gas volumes within the Nappamerri Trough.

The Company also plans to drill two horizontal pilot production wells which will be near the two existing exploration wells (Holdfast-1 and Encounter-1). The unconventional drilling programme in 2012 is designed to test the potential in what is now considered a thick, continuous, multi-lithology gas accumulation across the permit.

PEL 218 Nappamerri Trough, South Australia

==> picture [296 x 209] intentionally omitted <==

ATP 855P (60%, Operated)[3] , Queensland

Under the terms of a Farm-in Agreement, the Company is to fund the first horizontal shale and basin centred gas well, with a A$1.75 million contribution from Icon Energy Limited, which is planned for the second half of 2012. The JV is currently undertaking a 423km 2D seismic survey. It is expected that an exploration and appraisal programme, similar to that currently underway in PEL 218, will be undertaken in this permit to address the multi-lithology gas potential of the Nappamerri Trough extension into southwest Queensland.

Egypt (North Shadwan, Abu Sennan and Mesaha Concessions)

The Company has an established and growing portfolio of production, near-term development and exploration opportunities in Egypt.

Egypt Concessions

Egypt Concessions
Concession North Shadwan ...............................	Description
	In 2008, the Company acquired a 20% interest in the North Shadwan Concession in the Gulf of Suez.

The Gulf of Suez has been a prolific area for oil production, yielding approximately 10 billion barrels of oil to date.

The North Shadwan Concession JV consists of BP as operator (50%), TriOcean (30%) and the Company (20%), with first oil produced from the NS 377 field in March 2012. A development well on the NS 385 field is planned in 2Q 2012, with a third oil field, NS 394 (Burtocal), expected to be developed in 2014.

Abu Sennan and the Mesaha The Abu Sennan JV consists of Kuwait Energy as operator (50%). Concessions Dover Investments (28%) and the Company (22%). Four discoveries have been made in the first four exploration wells of a six well programme, which commenced in 2011. The potential reserves and

3 The Company (60%) and Icon Energy (40%)

Concession

Description

commerciality of these discoveries will be assessed after the completion of testing.

The Mesaha JV consists of Melrose as operator (40%), Hellenic Petroleum (30%), Kuwait Energy (15%) and the Company (15%). It is the largest concession area in Egypt at 42,750km² and is considered to have the potential to contain 100 MMbbl+ oil fields. The JV plans to drill the first exploration well in the second half of 2012.

Egypt Concessions

==> picture [228 x 253] intentionally omitted <==

Tanzania – Lake Tanganyika South Concession (100%, Operated)

On 24 July 2010, the Company signed the Lake Tanganyika South Production Sharing Agreement with the Government of the United Republic of Tanzania.

The Company regards the East African Rift region in Tanzania as underexplored and highly prospective, with a number of natural oil seeps on the lake indicating a working petroleum system is present in the sedimentary section of the rift beneath the lake. This is similar to Lake Albert to the north, where there has been oil exploration success. Tullow Oil Plc (“Tullow”) has reported discovering over 1.1 billion barrels of oil in the Lake Albert region, Uganda. Lake Albert is located along the East African Rift, as is Lake Tanganyika, which the Company believes to be analogous from a geological perspective. Tullow is concluding a farmout to Total SA and CNOOC of two thirds of its equity in the Ugandan rift acreage for US$2.9 billion. Total SA was recently offered the Lake Tanganyika North block, via a gazettal in a competitive bid process, by the Tanzanian Government. This block is immediately north of the Company’s Lake Tanganyika South Block.

Lake Tanganyika South Concession

==> picture [306 x 419] intentionally omitted <==

Somerton Energy Limited (56% shareholding)

The Company has an interest of 56.22% in ASX-listed Somerton, a petroleum exploration company focused on the onshore Otway and Gippsland Basins.

Somerton’s Otway Basin exploration strategy is focused on unconventional plays associated with the Casterton Formation which is prospective for shale oil and gas. A high level assessment of the shale gas potential of the formation within Somerton’s licences concluded that there is an area of more than 1,800 km[2] which is prospective for shale gas, with the potential for gas in place in the range of 14-48 Tcf.

Somerton Energy Permit Locations in Otway / Gippsland Basins

==> picture [423 x 213] intentionally omitted <==

Note: PEP 150 - Grant contingent upon entering into right to negotiate agreement with native title holders. PEP 171: Grant contingent upon entering into right to negotiate agreement with Native Title holders/claimants by 30 June 2013.

Other Assets

Other Assets
Area Arrowie Basin – Paralana Geothermal, Australia .................... Bonaparte Basin, Australia ............. Browse Basin, Australia ................. Carnarvon Basin, Australia ............	Description
	 3 permits – GEL 156 (21%), GEL 254 (21%) and GEL 336 (21%)  Acquired interest in permits from Petratherm in January 2007  Paralana geothermal energy project was awarded a A$62.8 million Renewable Energy Demonstration Programme grant by the Federal Government in FY11  2 offshore permits – NTC/P 10 and EP(A) 135 (earning up to 55%)  2 onshore permits – EP 126 and EP(A) 138 (earning up to 90%)  Highly prospective and underexplored  2 permits – WA-281P (7.3%) and WA-411P (9.7%)  Emerging major gas province with several large nearby fields (Prelude and Ichthys) to supply gas to LNG developments  Ongoing studies towards assessing and appraising Burnside-1ST1 discovery in WA-281P  2 permits – WA-208P (10%) and WA-41-R (16.7%)  One of Australia’s most productive oil and gas provinces with several new LNG projects proposed / under development, with two wells to be drilled in WA-208P in 2012/2013  WA-208P shown to be highly prospective based on drilling in 2005 and 2007

Other Assets

Area
Arrowie Basin – Paralana
Geothermal, Australia ....................
Bonaparte Basin, Australia .............
Browse Basin, Australia .................
Carnarvon Basin, Australia ............

Description


3 permits – GEL 156 (21%), GEL 254 (21%) and GEL 336 (21%)

Acquired interest in permits from Petratherm in January 2007

Paralana geothermal energy project was awarded a A$62.8 million
Renewable Energy Demonstration Programme grant by the Federal
Government in FY11

2 offshore permits – NTC/P 10 and EP(A) 135 (earning up to 55%)

2 onshore permits – EP 126 and EP(A) 138 (earning up to 90%)

Highly prospective and underexplored

2 permits – WA-281P (7.3%) and WA-411P (9.7%)

Emerging major gas province with several large nearby fields
(Prelude and Ichthys) to supply gas to LNG developments

Ongoing studies towards assessing and appraising Burnside-1ST1
discovery in WA-281P

2 permits – WA-208P (10%) and WA-41-R (16.7%)

One of Australia’s most productive oil and gas provinces with
several new LNG projects proposed / under development, with two
wells to be drilled in WA-208P in 2012/2013

WA-208P shown to be highly prospective based on drilling in 2005
and 2007

Area	Description	Description
Cooper Basin, Australia .................		A 50% operated share of PEL 105, in the North West section of the
		Cooper Basin
Gippsland, Australia .......................		1 permit - PRL-2 (earning up to 45%)
		Wombat-4 and Boundary Creek-2 wells expected to be fracture
		stimulated in first half of 2012.
Maryborough Basin ........................		25% non-operated equity stake in three permits in Queensland’s
		Maryborough Basin, two of which are under application
Otway Basin, Australia ...................		PRL 13 (100%), PRL 2 (100%), PPL 6 (10%), PPL 9 (10%), PPL 62
		(100%), PPL 168(100%), PPL 202 (100%), PRL 1 (Victoria,
		Buttress North - 10%), PRL-1 (SA, Wynn – 100%), PEP 168 (50%),
		PEL 186 (66.7%), PEL 255 (100%), PEL 494 (100%), PEL 496
		(100%), and PEL 495 (Farming in to 35%)
		Long history of participation in exploration and development in the
		basin since the 1960s
		Exploration, development and production assets all located in the
		South Australian section of the onshore Otway Basin
		The Katnook gas/condensate plant and production licences
		Exploration acreage held to the West and South of Katnook
		Prospective for conventional gas and oil as well as unconventional
		gas and liquids
Surat Basin, Australia		Two separate acreage positions are held in the Surat Basin: a 100%
		owned block in the South Surat (ATP 904P) which is adjacent to
		existing oil production facilities and a 20% non-operated stake in the
		West Surat (ATP 849P), which is near the Surat Basin’s coal seam
		gas producing areas
New Zealand ..................................		1 permit - PEP38259 (35%) in the Canterbury Basin
		Entered New Zealand in 2005
		Focused on drilling the Barque gas/condensate Prospect
Papua New Guinea .........................		A retention licence held, PRL 1 (6.4%), over the Pandora Gas Field
		which is 160 km offshore PNG
		Pandora is a carbonate reef reservoir that was discovered in 1988
		Current studies are directed at evaluating market and
		commercialisation opportunities
Williston Basin, North Dakota,		23% interest in lease area section 25, part of the South Antelope oil
USA................................................		prospect in Bakken Shale, North Dakota, acquired from Sundance in
		2010
		18.4% interest in a second Bakken shale oil well acquired from
		Sundance in August 2010
West Florence, USA .......................		A non-operated interest in a lease in Colorado called West Florence

Corporate Structure

The following outlines the corporate structure of which the Company is the holding company, the percentage of shares held and the jurisdiction of each subsidiary within the Group

Name of Subsidiary	Place of Incorporation	Percentage of shares held %
Beach Petroleum (NZ) Pty Ltd	South Australia	100
Beach Oil and Gas Pty Ltd	New South Wales	100
Beach Production Services Pty Ltd	South Australia	100
Beach Petroleum Pty Ltd	Victoria	100
Beach Petroleum (Cooper Basin) Pty Ltd	Victoria	100
Beach Petroleum (Egypt) Pty Ltd	Victoria	100
Beach Petroleum (Exploration) Pty Ltd	Victoria	100
Beach Petroleum Spain S.L.	Spain	100
Beach Petroleum (Tanzania) Pty Ltd	Victoria	100
Beach Petroleum (Tanzania) Limited	Tanzania	100
Beach (USA) Inc	USA	100
Australian Petroleum Investments Pty Ltd	Victoria	100
Delhi Holdings Pty Ltd	Victoria	100
Delhi Petroleum Pty Ltd	South Australia	100
Impress Energy Pty Ltd	Western Australia	100
Impress (Cooper Basin) Pty Ltd	Victoria	100
Springfield Oil and Gas Pty Ltd	Western Australia	100
Mazeley Ltd	Liberia	100
Mawson Petroleum Pty Ltd	Queensland	100
Claremont Petroleum (USA) Pty Ltd	Victoria	100
Tagday Pty Ltd	New South Wales	100
Claremont Petroleum (PNG) Ltd	Papua New Guinea	100
Midland Exploration Pty Ltd	South Australia	100
Petrogulf Resources Ltd	New South Wales	95
Shale Gas Australia Pty Ltd	Victoria	100
Somerton Energy Limited	Victoria	56
Essential Petroleum Exploration Pty	Victoria	100

Name of Subsidiary	Place of Incorporation	Percentage of shares held %
Ltd
Adelaide Energy Limited	Victoria	99.994
Australian Unconventional Gas Pty Ltd	Victoria	100
Well Traced Pty Ltd	New South Wales	100
Deka Resources Pty Ltd	Queensland	100

4 Note that the former Adelaide Energy managing director holds options and he has exercised 10,000 options which resulted in the issue of 10,000 shares. The Company intends to acquire the remaining options and those shares.

DIRECTORS AND MANAGEMENT

The directors of the Company are:

Name Robert Michael Kennedy Reginald George Nelson Glenn Stuart Davis John Charles Butler Franco Giacomo Moretti Neville Foster Alley Belinda Charlotte Robinson	Position
	Independent Non-Executive Chairman Managing Director Independent Non-Executive Deputy Chairman Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director

Robert Michael Kennedy - ASAIT, Grad Dip (Systems Analysis), FCA, ACIS, Life Member AIM, FAICD

INDEPENDENT NON-EXECUTIVE CHAIRMAN

Mr Kennedy is a chartered accountant and a consultant to Kennedy & Co, Chartered Accountants, a firm he founded. He joined the Company in December 1991 as a Non-Executive Director and has been the Chairman of the Company since 1995. He is also a Director of ASX listed companies Ramelius Resources Limited (since 1995), Flinders Mines Limited (since 2001), Maximus Resources Limited (since 2004), ERO Mining Limited (since 2006), Monax Mining Ltd (since 2004), Marmota Energy Limited (2007) and Somerton (since 2010). His special responsibilities include chairmanship of the Corporate Development and Remuneration and Nomination Committees and membership of the Audit Committee. Mr Kennedy brings to the Board his expertise in finance and management consultancy and extensive experience as Chairman and Non-Executive Director of a range of listed public companies including those in the resources sector. Mr Kennedy leads the development of strategies for the development and future growth of the Company.

Reginald George Nelson - BSc, Hon Life Member Society of Exploration Geophysicists, FAusIMM, FAICD

MANAGING DIRECTOR

Mr Nelson joined in May 1992 as an Executive Director, he was appointed Chief Executive Officer in October 1995 and then Managing Director in May 2002. He has had a career spanning over four decades as an exploration geophysicist in the minerals and petroleum industries. He was Chairman of the peak industry organisation, the Australian Petroleum Production and Exploration Association (APPEA), from 2004 to 2006 and remains a member of its Council. He is also a Director of ASX listed companies, Ramelius Resources Limited (since 1995), Monax Mining Ltd (since 2004) and Marmota Energy Limited (since 2006). His special responsibilities include membership of the Corporate Development Committee, and served as a member of the Remuneration and Nomination Committee until May 2009.

Mr Nelson’s contribution to the Board is his technical expertise and knowledge of the petroleum industry and broad experience in corporate matters. Mr Nelson’s broad experience and knowledge of industry issues and future energy directions is directed towards broadening and strengthening the future growth of the Company.

Glenn Stuart Davis - LLB, BEc

INDEPENDENT NON-EXECUTIVE DEPUTY CHAIRMAN

Mr Davis is a solicitor and partner of DMAW Lawyers, a firm he founded. He joined the Company in July 2007 as an Independent Non-Executive Director, and then as Independent Non-Executive Deputy Chairman in June 2009. Mr Davis is a Director of ASX listed companies Monax Mining Limited (since 2004) and Marmota Energy Limited (since 2006). His special responsibilities include chairmanship of the Corporate Governance Committee and membership of the Audit Committee and Remuneration and Nomination Committee. Mr Davis brings to the Board his expertise in the execution of large legal and commercial transactions and his expertise and experience in corporate activity regulated by the Corporations Act and ASX.

John Charles Butler - FCPA, FAICD, FIFS

INDEPENDENT NON-EXECUTIVE DIRECTOR

Mr Butler joined in June 1999 as an Independent Non-Executive Director, having been previously the Alternate Director to Mr Nelson from 1994-1998. He brings to the Board financial and business experience from employment in senior management positions in the financial services industry from 1974 to 1992. He has been a business consultant and company director since 1992. He is the Chairman of Lifeplan Australia Friendly Society Group and a Director of Australian Unity Limited. His special responsibilities include chairmanship of the Audit Committee and membership of the Corporate Governance Committee.

Franco Giacomo Moretti - BE (Hons), FIEAust, CPEng, MAICD

INDEPENDENT NON-EXECUTIVE DIRECTOR

Mr Moretti joined the Company as an Independent Non-Executive Director in March 2005. He is an engineer with over 40 years experience in engineering, procurement and project management of major projects. He has also been a consultant to government and private enterprise in the delivery of major infrastructure projects in Australia and overseas. Mr Moretti brings to the Board extensive experience in the delivery and management of major projects. Mr Moretti was formally Chief Executive Officer of Asia Pacific Transport Pty Ltd, responsible for building, owning, financing and operating the Alice Springs to Darwin railway project. He was previously with Kellogg Brown & Root as Director, Infrastructure Investment and Kinhill, where he was a Board Director. His special responsibilities with the Company include membership of the Corporate Governance and Corporate Development Committees.

Neville Foster Alley - PhD, PSM

INDEPENDENT NON-EXECUTIVE DIRECTOR

Dr Alley joined in February 2007 as an alternate director to Mr Franco Moretti and then appointed an Independent Non-Executive Director in July 2007. He is an internationally renowned earth science researcher and has wide experience in geological research in Australia and overseas. In 2004 he was awarded the Verco Medal for his contribution and leadership in the earth sciences and the Public Service Medal (PSM) in 2005 for outstanding contribution to geology and the minerals industry. He is an Executive Director of ASX listed company Marmota Energy Limited (since 2007) and a Visiting

Research Fellow of the School of Earth and Environmental Sciences at the University of Adelaide (since 2004). He was a Non-Executive Director of ASX listed companies InterMet Resources Limited and Monax Mining Limited until retiring from those Boards those Boards in 2009 and 2011 respectively. His special responsibilities include membership of the Remuneration and Nomination Committee since May 2009. Dr Alley’s contribution to the Board is his technical and commercial knowledge of the resources industry.

Belinda Charlotte Robinson – BA, MEnvLaw, GAICD

INDEPENDENT NON-EXECUTIVE DIRECTOR

Ms Robinson was appointed to the Board of the Company as an Independent Non-Executive Director in May 2011. She is currently the Chief Executive of Universities Australia. Prior to this appointment in 2011, she was the Chief Executive of the APPEA, a role she held since July 2005. During her time at APPEA, Ms Robinson delivered the policy, regulatory and fiscal framework that increased the profile of Australia’s oil and gas industry. She successfully steered national petroleum regulation reform, influenced a number of public policy outcomes and more than doubled APPEA’s membership during her tenure. Having held a number of senior executive positions within the federal Government, including almost a decade with the Department of the Prime Minister and Cabinet, Ms Robinson brings to the the Company’s Board extensive knowledge and experience in public policy, government processes, change management and corporate governance. She is a member of the Australian Institute of Company Directors (“ AICD ”), has completed the Company Director Diploma and is currently participating in the AICD’s ASX 200 Chairman’s Mentoring Programme.

Management Profiles

The executive officers of the Company (other than the Managing Director) are:

Name Neil Gibbins Kathryn Presser Steve Masters Rod Rayner Gordon Moseby Cathy Oster	Position
	Chief Operating Officer Chief Financial Officer and Joint Company Secretary Chief Commercial Officer Group Executive - Strategic Business and External Affairs General Manager - Business Review and Planning General Counsel and Joint Company Secretary

Neil Gibbins - BSc (Hons)

CHIEF OPERATING OFFICER

Mr Gibbins joined the company in 1997, initially in the role of Chief Geophysicist. Appointed as Exploration Manager in 2005, he is a geophysicist with over 25 years of experience in the petroleum industry, over a wide variety of regions in Australia and internationally. Prior to joining the Company, he was employed by Esso Australia and Santos, initially as a geophysicist and later in supervisory roles. He is a member of the Petroleum Exploration Society of Australia and the Australian Society of Exploration Geophysicists.

Kathryn Presser - BA (Accounting), Grad Dip CSP, FAICD, CPA, ACIS, AFAIM

CHIEF FINANCIAL OFFICER AND JOINT COMPANY SECRETARY

Ms Presser joined the Company in January 1997 and was appointed to the role of Company Secretary in January 1998. Appointed as the Chief Financial Officer in June 2005, Ms Presser has over 25 years experience in senior accounting and company secretarial roles and is a qualified chartered secretary. She is currently on the Committee of the South Australian Branch of Chartered Secretaries Australia, is a member of the Petroleum Society of Australia and Director of Mawson Petroleum Pty Ltd.

Steve Masters - BApp Sc (Applied Geology), BSc (Hons) - Petroleum Geology & Geophysics, Grad Dip App Finance and Investment, F Finsia, M AusIMM CHIEF COMMERCIAL OFFICER

Mr Masters graduated from the Royal Melbourne Institute of Technology with a Bachelor of Applied Science (Applied Geology) in 1992 and completed a Bachelor of Science (Hons) in Petroleum Geology and Geophysics at the University of Adelaide in 1993. In 2001, he completed a Graduate Diploma in Applied Finance and Investment with the Securities Institute of Australia (now Finsia). Mr Masters joined the Company in early 2007 after approximately ten years with Woodside Energy Limited, where he held a variety of commercial roles associated with LNG, domestic gas, offshore oil projects and mergers and acquisitions. He has broad experience in the negotiation of oil and gas agreements, domestic and international acquisitions, divestments, and corporate strategy.

Rod Rayner BSc (Geology, 1st Class Hons)

GROUP EXECUTIVE – STRATEGIC BUSINESS AND EXTERNAL AFFAIRS

Mr Rayner has more than 25 years of experience in the oil and gas industry. He has a First Class Honours degree in Geology from the University of Queensland and in 2011 joined the Company after consulting to the Company for seven years. He has held senior executive roles with Santos and AGL and up to 2004, was the General Manager of Santos’ Queensland & Northern Territory business unit, responsible for that company’s oil and gas business in the Cooper, Surat/Bowen and Amadeus Basins and Timor Sea. Mr Rayner has substantial experience in the development of both onshore and offshore oil and gas assets, as well as instigating and implementing the necessary commercial frameworks that govern the marketing, joint venture and regulatory relationships. He served as director of the Queensland Mining Council and subsequently the Queensland Resources Council and, for a period, chaired the Exploration Committee of that body.

Gordon Moseby - BE (Petroleum, 1st Class Hons)

GENERAL MANAGER - BUSINESS REVIEW AND PLANNING

Mr Moseby graduated from the University of New South Wales in 1992 with a Bachelor of Petroleum Engineering and joined Santos, where he gained extensive experience in the planning and implementing of oil & gas developments in the Cooper & Eromanga Basins. Mr Moseby also worked for Chevron Niugini and Oil Search Limited, and joined the Company in early 2002 to oversee the operation and development of the oil and gas assets of the Company. In 2009 he was promoted to General Manager – Business Review & Planning, a role more broadly focused on the company’s Corporate Planning and Business Development. He is a member of the Society of Petroleum Engineers (SPE), the Petroleum Exploration Society of Australia (PESA) and the AICD.

Cathy Oster - BA (Jurisprudence), LLM (Corporate & Commercial), FCIS

GENERAL COUNSEL AND JOINT COMPANY SECRETARY

Ms Oster was appointed joint Company Secretary in July 2005 and has more than 20 years experience as a lawyer, advising on corporate and commercial transactions. Ms Oster is a qualified chartered secretary, a member of the Law Society of South Australia, AMPLA and the Australian Corporate Lawyers Association, as well as serving on the board of a not for profit aged care provider.

RIGHTS AND LIABILITIES OF ORDINARY SHARES

The following is a summary (though not necessarily an exhaustive or definitive statement) of the rights attaching to fully paid Ordinary Shares as set out in the Issuer’s constitution (the “ Constitution ”). The rights attaching to Ordinary Shares are in certain circumstances regulated by the Corporations Act, the ASX Listing Rules, the ASX Settlement Operating Rules and general law.

Full details of the rights attaching to the Ordinary Shares are set out in the Constitution, a copy of which can be inspected at the Issuer’s registered office at 25 Conyngham St, Glenside, SA, 5065, Australia during normal business hours.

Voting	Subject to the Constitution and to any rights/restrictions attached to any shares, at meetings of Issuer’s shareholders:  each shareholder is entitled to receive notice of, and, if they are entitled to vote at the meeting, attend and vote at, general meetings of the Issuer;  on a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a shareholder has one vote; and  on a poll, every person present who is a shareholder or proxy, attorney or representative of a shareholder has one vote for each Ordinary Share that person holds or represents (as the case may be).
General meetings and notices	Each shareholder is entitled to receive notice of, and, if they are entitled to vote at the meeting, attend and vote at, general meetings of the Issuer
Dividends	The Issuer’s Directors may pay interim and final dividends in accordance with the Corporations Act and Listing Rules. The payment of a dividend does not require confirmation by a general meeting of the Issuer
Issue of further shares	Subject to the Constitution, the Listing Rules and the Corporations Act, the Issuer’s Directors have the right to issue shares (including preference shares) or to grant options to such persons at such times and on such terms and conditions and having attached to them such rights or such restrictions, as the Issuer’s Directors think fit.
Transfer of the Issuer’s Ordinary Shares	Subject to the Constitution and the Corporations Act, the Issuer’s Ordinary Shares are freely transferable. The Issuer’s Directors may decline to register a transfer of the Issuer’s Ordinary Shares if the registration of the transfer may breach a law of Australia or an employee share plan, where the transfer is not in registrable form or if the Listing Rules or terms of issue of the share permit or require registration of the transfer to be declined.
Winding up	If the Issuer is wound up, the liquidator may (with the sanction of a special resolution) divide among the Issuer’s shareholders the whole or any part of the property of the Issuer and may determine how the division is to be carried out as between the shareholders or difference classes of shareholders.
Alteration of capital	The Issuer may reduce or otherwise alter its capital including buying back its shares in any manner authorised or permitted by the Corporations Act and

	Listing Rules
Variation of rights	If at any time the share capital of the Issuer is divided into different classes of shares, the rights attached to any class may (unless otherwise provided by the terms of issue of the shares of that class), whether or not the Issuer is being wound up, be varied or abrogated in any way with the consent in writing of the holders of at least 75% of the issued shares of that class, or with the sanction of a special resolution of the holders of the shares in that class.
Proportional takeover approval	If a proportional takeover bid for the Issuer shares is made, the Issuer’s Directors must ensure that a resolution to approve the bid is voted on prior to the 14thday before the last day of the bid period. Any person, excluding the bidder or any associate of the bidder, who held bid class securities as at the end of the day on which the first offer under the bid was made is entitled to vote on the resolution. The resolution will be passed if more than 50% of the votes are cast in favour of the resolution. If no such resolution is considered as at the end of the day prior to the 14thday before the last day of the bid period, a resolution approving the bid is taken to have been passed. The proportional takeover provisions in the Constitution will expire on the day three years following the date of adoption, but may be renewed by a resolution of the Issuer’s shareholders. The proportional takeover provisions in the Constitution were last adopted by the Issuer’s shareholders at the annual general meeting held on 26 November 2009.
Amendment to the Constitution	The Constitution can only be amended by special resolution passed by at least 75% of the Issuer’s shareholders present and voting at a general meeting of the Issuer.

USE OF PROCEEDS

The estimated net proceeds from the issue of the Notes will be, after deduction of commissions, professional fees and other administrative expenses, approximately A$145,500,000. The net proceeds from the issue of the Notes will be used, together with the proceeds of the Entitlement Offer, existing operating cash flow and other capital resources, to fund the Company’s future capital expenditure initiatives over the next two to three years and for general working capital purposes.

The key elements of the Company’s capital expenditure programme include:

Cooper Basin conventional – ongoing exploration, appraisal and development of the Company’s key cash producing assets;
Cooper Basin unconventional – continued appraisal of a gas resource in the Nappamerri Trough;
Egypt – ongoing appraisal and development of oil discoveries and further exploration; and
Tanzania – exploration for oil reservoirs along the proven East Africa Rift.

CAPITALISATION AND INDEBTEDNESS

Capitalisation and Indebtedness of the Group

The following table sets forth the Reviewed Statement of Financial Position adjusted for events subsequent to 31 December 2011 as indicated below. These adjustments give effect to the Entitlement Offer and Notes (but without giving effect to the application of the proceeds thereof). As at 31 December 2011, the Group had no short-term or long-term debt. This table should be read in conjunction with the consolidated audited financial statements and related notes incorporated by reference in this Offering Circular.

Reviewed 31-Dec-11 A$(000’s) 58,565 154,733 1,439,076	Adjustments (1) A$(000’s) (4,834) - -	Adjusted 31-Dec-11 A$(000’s) 53,731 154,733 1,439,076	Pro-forma transactions (2) A$(000’s) 335,161 - -	Pro-forma 31-Dec-11
				A$(000’s) 388,892 154,733 1,439,076
1,652,374	(4,834)	1,647,540	335,161	1,982,701
-	-	-	-	-
141,770 - - 189,480	- - - -	141,770 - - 189,480	- - 145,500(*) -	141,770 - 145,500 189,480
331,250	-	331,250	145,500	476,750
1,321,124	(4,834)	1,316,290	189,661	1,505,951
				1,199,473 13,347 287,713 5,418
1,321,124 (4,834) 1,316,290 189,661				1,505,951

Note:

(*) For the purposes of the above table, the Notes have been treated as a 100% liability.

The following adjustments and assumptions have been made in the preparation of the pro-forma balance sheet above:

The pro-forma information has not been audited and has been prepared using Australian equivalents to International Financial Reporting Standards and reflects the accounting policies of the Issuer.
The pro-forma adjustments reflect transactions announced by the Issuer since 31 December 2011. They exclude the impact of the general trading of the Issuer including capital expenditure which has occurred since 31 December 2011.

The pro-forma Statement of Financial Position reflects provisional accounting adjustments. Actual results may change between the date of this offering circular and the completion of the proposed transactions.

(1)

Adjustments

Payment of an interim dividend by the Issuer in March 2012 of 0.75 cents per share equating to A$8.351 million of which A$4.834 million was paid in cash with the remaining A$3.517 million satisfied by the issue of 2,463,617 new Ordinary Shares at A$1.43 per share under the terms of the Issuer’s dividend reinvestment plan.

(2) Pro-forma Transactions

The issue of Convertible Notes with a combined face value of A$150 million, less estimated costs of the offer of A$4.50 million.
The one for eight Entitlement Offer at A$1.40 per Ordinary Share (A$195 million) less estimated costs of the offer of A$5.63 million.

Issued capital

Issued capital
Description	No. of Shares
Number of ordinary shares on issue as at 31 December 2011	1,112,199,119
Issue of shares to employees on 28 February 2012 under the Issuer’s employee	1,297,932
share investment plan
Issue of shares to shareholders on 23 March 2012 under the terms of the Issuer’s	2,463,617
dividend reinvestment plan.
Issue of shares under proposed Entitlement Offer(1)	139,495,084
Number of ordinary shares on issue giving effect to the issue of shares under the	1,255,455,752
Entitlement Offer
Possible issue of shares under proposed convertible notes(2)	75,000,000
Number of ordinary shares on issue giving effect to the issue of shares under the	1,330,455,752
Entitlement Offer & possible issue of shares under proposed convertible note

(1) Ordinary Shares issued under the Entitlement Offer are approximate only. The final number of shares issued will be impacted by rounding.

(2) Ordinary Shares issued under the convertible note issue are approximate only. The final number of shares issued may be impacted by any adjustments to the conversion price under the terms of the convertible note issue.

Share options on issue

The following unlisted options have been issued to a Director and employees of the Issuer which are outstanding as at the date of the Offering Circular. They represent 0.77% of the Ordinary Shares outstanding as at the date of this Offering Circular on a fully diluted basis prior to issue of the Notes and shares under the Entitlement Offer. The exercise price and expiry dates of the options are as follows.

Options Number of shares subject Exercise price Exercisable by

	to option
2006 Employee Long Term Options	6,418,280	A$1.406	1 December 2013
2007 Employee Long Term Options	2,258,977	A$1.422	27 February 2015

Share rights

The following unlisted share rights have been issued to a Director and employees of the Issuer which are outstanding as at the date of the Offering Circular. They represent 0.74% of the Ordinary Shares outstanding at the date this Offering Circular on a fully diluted basis prior to issue of the Notes and shares under the Entitlement Offer.

Share rights	Number of shares subject to rights	Exercisable after	Expire on
2010 Executive Rights	5,453,895	1 December 2013	30 November 2015
2011 Executive Rights	2,566,470	1 December 2014	30 November 2016
2011 Employee Rights	416,894	-	19 November 2013

The vesting of executive share rights is subject to meeting a performance condition on the relative total shareholder return (TSR), three years after their issue date. Further details on the performance conditions are detailed in the latest annual report of the Issuer. The vesting of employee rights is subject to employee retention criteria.

Effects of the Notes on the Issuer

The Ordinary Shares to be issued upon conversion of the Notes will be issued fully paid and will rank from the date of issue equally for dividend and other rights with existing Ordinary Shares. Upon conversion of the Notes, the Issuer will apply to the ASX for quotation of the Ordinary Shares issued on conversion of the Notes.

In the event of a full conversion of the Notes issued, based on the initial Conversion Price of the Notes and the number of Ordinary Shares on issue at the date this Offering Circular, following conversion of the Notes into Ordinary Shares:

The Issuer would issue 75,000,000 new Ordinary Shares; and
The Ordinary Shares issued as a result of conversion would constitute 5.6% of the Ordinary Shares on issue of 1,330,455,752 including the total Ordinary Shares outstanding at the date this Offering Circular plus those issued under the conversion of Notes and the Entitlement Offer.

TERMS AND CONDITIONS OF THE NOTES

The following, subject to completion and amendment, and save for the paragraphs in italics, is the text of the Terms and Conditions of the Notes.

The issue of the A$150,000,000 3.95% Convertible Notes due 2017 (the “ Notes ”, which expression shall, unless otherwise indicated, include any further Notes issued pursuant to Condition 18 and consolidated and forming a single series with the Notes) was (save in respect of any such further Notes) authorised by a resolution of the board of directors of Beach Energy Limited (ABN 20 007 617 969) (the “ Issuer ”) passed on 26 March 2012. The Notes are constituted by a trust deed dated 3 April 2012 (the “ Trust Deed ”) between the Issuer and Citicorp International Limited (the “ Trustee ”, which expression shall include all persons for the time being appointed as the trustee or trustees under the Trust Deed) as trustee for the holders (as defined below) of the Notes. The statements set out in these Terms and Conditions (the “ Conditions ”) are summaries of, and are subject to, the detailed provisions of the Trust Deed, which includes the form of the Notes. The Noteholders (as defined below) are entitled to the benefit of, and are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and to have notice of those provisions applicable to them which are contained in the Paying, Transfer and Conversion Agency Agreement dated 3 April 2012 (the “ Agency Agreement ”) relating to the Notes between the Issuer, the Trustee and Citibank, N.A., London Branch (the “ Principal Paying, Transfer and Conversion Agent ”, which expression shall include any successor as principal paying, transfer and conversion agent under the Agency Agreement), the paying agents, transfer agents and conversion agents for the time being (such persons, together with the Principal Paying, Transfer and Conversion Agent, being referred to below as the “ Paying Agents ”, “ Transfer Agents ” and “ Conversion Agents ”, which expression shall include their successors as Paying Agents, Transfer Agents and Conversion Agents under the Agency Agreement) and Citigroup Global Markets Deutschland AG in its capacity as registrar (the “ Registrar ”, which expression shall include any successor as registrar under the Agency Agreement). Copies of the Trust Deed and the Agency Agreement are available for inspection at the office of the Trustee at 56th Floor, One Island East, 18 Westlands Road, Island East, Hong Kong and at the specified offices of the Paying, Transfer and Conversion Agent and the Registrar.

Capitalised terms used but not defined in these Conditions shall have the meanings attributed to them in the Trust Deed unless the context otherwise requires or unless otherwise stated.

1 Form, Denomination, Title and Status

(a) Form and Denomination

The Notes are in registered form, serially numbered, in principal amounts of A$200,000 and integral multiples of A$100,000 in excess thereof (“ authorised denominations ”). A note certificate (each a “ Certificate ”) will be issued to each Noteholder in respect of its registered holding of Notes.

Upon issue, the Notes will be represented by the Global Certificate deposited with a common depositary for, and representing Notes registered in the name of a nominee of, Euroclear and Clearstream, Luxembourg. The Conditions are modified by certain provisions contained in the Global Certificate. Except in the limited circumstances described in the Global Certificate, owners of interests in Notes represented by the Global Certificate will not be entitled to receive definitive Certificates in respect of their individual holdings of Notes. The Notes are not issuable in bearer form. See “The Global Certificate”.

(b) Title

Title to the Notes will pass by transfer and registration in the Register as described in Condition 4. The holder (as defined below) of any Note will (except as otherwise required by law or as ordered by a

court of competent jurisdiction) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest in it or its theft or loss (or that of the related certificate, as appropriate) or anything written on it or on the certificate representing it (other than a duly executed transfer thereof)) and no person will be liable for so treating the holder.

(c) Status

The Notes constitute direct, unconditional, unsubordinated, senior and (subject to Condition 2) unsecured obligations of the Issuer ranking pari passu and rateably, without any preference among themselves. The payment obligations of the Issuer under the Notes rank equally with all its other existing and future unsecured and unsubordinated obligations, save for such obligations that may be preferred by provisions of law that are mandatory and of general application.

2 Negative Pledge

So long as any of the Notes remain outstanding (as defined in the Trust Deed), the Issuer will not create or permit to subsist, and will ensure that none of its Subsidiaries will create or permit to subsist, any mortgage, charge, lien, pledge or other form of encumbrance or security interest (including any security interest arising under sections 12(1) or 12(2) of the Personal Property Securities Act 2009 of Australia) (each a “ Security Interest ”) upon the whole or any part of its present or future property or assets (including any uncalled capital) to secure any Relevant Indebtedness or to secure any guarantee of or indemnity in respect of any Relevant Indebtedness (other than a Permitted Security Interest) unless in any such case, before or at the same time as the creation of the Security Interest, any and all action necessary shall have been taken to ensure that:

(i) all amounts payable by the Issuer under the Notes and the Trust Deed are secured equally and rateably with the Relevant Indebtedness or guarantee or indemnity, as the case may be; or
(ii) such other Security Interest or guarantee or indemnity or other arrangement (whether or not including the giving of a Security Interest) is provided in respect of all amounts payable by the Issuer under the Notes and the Trust Deed either (i) as the Trustee shall in its absolute discretion deem not materially less beneficial to the interests of the Noteholders or (ii) as shall be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders.

3 Definitions

In these Conditions, unless otherwise provided:

“ Additional Cash Alternative Amount ” has the meaning provided in Condition 6(m).

“ Additional Ordinary Shares ” has the meaning provided in Condition 6(c).

“ Alternative Stock Exchange ” means at any time, in the case of the Ordinary Shares, if they are not at that time listed and traded on the Australian Securities Exchange, the principal stock exchange or securities market on which the Ordinary Shares are then listed or quoted or dealt in.

“ Associate ” has the meaning it has in section 128F(a) of the Income Tax Assessment Act 1936 of the Commonwealth of Australia.

“ Auditors ” means the auditors for the time being of the Issuer or, if they are unable or unwilling to carry out any action requested of them under the Trust Deed or the Notes, such other firm of accountants as may be nominated by the Issuer and approved in writing by the Trustee for the purpose or, failing such nomination, as selected by the Trustee.

“ Australian Dollars ”, “ Australian cents ” and “ A$ ” means the lawful currency of the Commonwealth of Australia.

“ ASX ” or “ Australian Securities Exchange ” means ASX Limited (ABN 98 008 624 691) or the market operated by it, as the context requires.

“ Noteholder ” and “ holder ” mean the person in whose name a Note is registered in the Register (as defined in Condition 4(a)).

“ business day ” means, in relation to any place, a day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets are open for business in that place.

“ Cash Alternative Amount ” means the product of (a) the number of Ordinary Shares deliverable upon exercise of the Conversion Right at the discretion of the Issuer in respect of the Notes to which the Conversion Notice applies, and in respect of which the Issuer has exercised a Cash Alternative Election and (b) the arithmetic average of the daily Volume Weighted Average Price of the Ordinary Shares for the Cash Alternative Calculation Period.

“ Cash Alternative Election ” has the meaning provided in Condition 6(m).

“ Cash Alternative Calculation Period ” means the period of 20 consecutive Dealing Days commencing on the relevant Cash Election Date (or the next Dealing Day if such date is not a Dealing Day).

“ Cash Dividend ” has the meaning provided in Condition 6(b)(iii)(B).

“ Cash Election Date ” has the meaning provided in Condition 6(m).

“ Change of Control ” has the meaning provided in Condition 6(b)(x).

“ Change of Control Notice ” has the meaning provided in Condition 6(g).

“ Change of Control Period ” has the meaning provided in Condition 6(b)(x).

“ Closing Date ” means 3 April 2012.

“ Conversion Date ” has the meaning provided in Condition 6(h).

“ Conversion Notice ” has the meaning provided in Condition 6(h).

“ Conversion Period ” has the meaning provided in Condition 6(a).

“ Conversion Price ” has the meaning provided in Condition 6(a).

“ Conversion Right ” has the meaning provided in Condition 6(a).

“ Corporations Act ” means the Corporations Act 2001 of Australia.

“ Current Market Price ” means, in respect of an Ordinary Share at a particular date, the arithmetic average of the Volume Weighted Average Price of an Ordinary Share for each day during the five consecutive Dealing Days ending on the Dealing Day immediately preceding such date; provided that if at any time during the said five Dealing Day period the Volume Weighted Average Price shall have been based on a price ex-Dividend (or ex- any other entitlement) and during some other part of that period the Volume Weighted Average Price shall have been based on a price cum-Dividend (or cum- any other entitlement), then:

(a) if the Ordinary Shares to be issued or transferred and delivered do not rank for the Dividend (or entitlement) in question, the Volume Weighted Average Price on the dates on which the Ordinary Shares shall have been based on a price cum-Dividend (or cum- any other entitlement) shall for the purpose of this definition be deemed to be the amount thereof reduced by an amount equal to the Fair Market Value of any such Dividend or entitlement per Ordinary Share as at the date of first public announcement of such Dividend (or entitlement), in any such case, determined on a gross basis and

disregarding any withholding or deduction required to be made on account of tax, and disregarding any associated tax credit; or

(b) if the Ordinary Shares to be issued or transferred and delivered do rank for the Dividend (or entitlement) in question, the Volume Weighted Average Price on the dates on which the Ordinary Shares shall have been based on a price ex-Dividend (or ex- any other entitlement) shall for the purpose of this definition be deemed to be the amount thereof increased by an amount equal to the Fair Market Value of any such Dividend or entitlement per Ordinary Share as at the date of first public announcement of such Dividend (or entitlement), in any such case, determined on a gross basis and disregarding any withholding or deduction required to be made on account of tax, and disregarding any associated tax credit,

and provided further that:

(A) if on each of the said five Dealing Days the Volume Weighted Average Price shall have been based on a price cum-Dividend (or cum- any other entitlement) in respect of a Dividend (or other entitlement) which has been declared or announced but the Ordinary Shares to be issued or transferred and delivered do not rank for that Dividend (or other entitlement) the Volume Weighted Average Price on each of such dates shall for the purposes of this definition be deemed to be the amount thereof reduced by an amount equal to the Fair Market Value of any such Dividend or other entitlement per Ordinary Share as at the date of the first public announcement of such Dividend or entitlement, in any such case, determined on a gross basis and disregarding any withholding or deduction required to be made on account of tax, and disregarding any associated tax credit; and
(B) if the Volume Weighted Average Price of an Ordinary Share is not available on one or more of the said five Dealing Days (disregarding for this purpose the proviso to the definition of Volume Weighted Average Price), then the average of such Volume Weighted Average Prices which are available in that five-Dealing-Day period shall be used (subject to a minimum of two such prices) and if only one, or no, such Volume Weighted Average Price is available in the relevant period, the Current Market Price shall be determined in good faith by a Financial Adviser.

“ Dealing Day ” means a day on which the Relevant Stock Exchange or relevant stock exchange or securities market is open for business and on which Ordinary Shares, Securities, Spin-Off Securities options, warrants or other rights (as the case may be) may be dealt in (other than a day on which the Relevant Stock Exchange or relevant stock exchange or securities market is scheduled to or does close prior to its regular weekday closing time).

A “ Delisting ” occurs when the Ordinary Shares (a) cease to be listed or admitted to trading on the Australian Securities Exchange or any Alternative Stock Exchange (as relevant) or (b) are suspended for trading for a period of 20 consecutive Dealing Days.

“ Dividend ” means any dividend or distribution to Shareholders whether of cash, assets or other property, and however described and whether payable out of share premium account, profits, retained earnings or any other capital or revenue reserve or account, and including a distribution or payment to Shareholders upon or in connection with a reduction in capital (and for these purposes a distribution of assets includes without limitation an issue of Ordinary Shares, or other Securities credited as fully or partly paid up by way of capitalisation of profits or reserves) provided that:

(a) where: (1) a Dividend in cash is announced which is to be, or may at the election of a Shareholder or Shareholders be, satisfied by the issue or delivery of Ordinary Shares or other property or assets, or where a capitalisation of profits or reserves is announced which is to be, or may at the election of a Shareholder or Shareholders be, satisfied by the payment of cash, then for the purposes of this

definition the Dividend or capitalisation in question shall be treated as a Cash Dividend of (i) the Fair Market Value of such cash amount (in the case of an issue of Ordinary Shares pursuant to the DRP, provided that the discount per Ordinary Share as determined and announced by the Issuer at which Ordinary Shares may be issued pursuant to the DRP in respect of such Dividend is equal to or less than 5 per cent.) or, if greater, (ii) (a) the Current Market Price of such Ordinary Shares or, as the case may be, the Fair Market Value of such other property or assets in any case (as at the date of the first public announcement of such Dividend or capitalisation (as the case may be) or if later, the date on which the number of Ordinary Shares (or amount of such other property or assets, as the case may be) which may be issued or transferred and delivered is determined) or (b) in the case of a DRP where the discount per Ordinary Share as determined and announced by the Issuer exceeds 5 per cent., the Fair Market Value of such cash amount (which shall be an Extraordinary Dividend and adjusted for pursuant to Condition 6(b)(iii)(B)) and the difference between the Current Market Price (as at the settlement date of the DRP) of an Ordinary Share and the price per Share of the DRP (which shall be a Capital Distribution and adjusted for pursuant to Condition 6(b)(iii)(A) on the date of settlement of the DRP) or (2) there shall be any issue of Ordinary Shares by way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve) where such issue is or is expressed to be in lieu of a Dividend (whether or not a Cash Dividend equivalent or amount is announced or would otherwise be payable to Shareholders, whether at their election or otherwise), the Dividend in question shall be treated as a Cash Dividend of an amount equal to the Current Market Price of such Ordinary Shares as at the date of first public announcement of such capitalisation or, if later, the date on which the number of Ordinary Shares to be issued or transferred and delivered is determined;

(b)
any issue of Ordinary Shares falling within Condition 6(b)(ii) shall be disregarded;
(c) a purchase or redemption or buy back of share capital of the Issuer by the Issuer or any Subsidiary of the Issuer shall not constitute a Dividend unless, in the case of a purchase or redemption or buy back of Ordinary Shares by or on behalf of the Issuer or its Subsidiaries, the weighted average price per Ordinary Share (before expenses) on any one day (a “ Specified Share Day ”) in respect of such purchases or redemptions or buy backs (translated, if not in the Relevant Currency, into the Relevant Currency at the Prevailing Rate on such day) exceeds the average of the closing prices of the Ordinary Shares on the Relevant Stock Exchange (as published by or derived from the Relevant Stock Exchange) on the five Dealing Days immediately preceding the Specified Share Day or, where an announcement (excluding, for the avoidance of doubt for these purposes, any general authority for such purchases, redemptions or buy backs approved by a general meeting of Shareholders or any notice convening such a meeting of Shareholders) has been made of the intention to purchase, redeem or buy back Ordinary Shares at some future date at a specified price or where a tender offer is made, on the five Dealing Days immediately preceding the date of such announcement or the date of first public announcement of such tender offer (and regardless whether or not a price per Ordinary Share, a minimum price per Ordinary Share or a price range or a formula for the determination thereof is or is not announced at such time), as the case may be, in which case such purchase, redemption or buy back shall be deemed to constitute a Dividend in the Relevant Currency to the extent that the aggregate price paid (before expenses) in respect of such Ordinary Shares purchased, redeemed or bought back by the Issuer or, as the case may be, any of its Subsidiaries (translated where appropriate into the Relevant Currency as provided above) exceeds the product of (i) the average closing price of the Ordinary Shares determined as aforesaid and (ii) the number of Ordinary Shares so purchased, redeemed or bought back;
(d) if the Issuer or any of its Subsidiaries shall purchase, redeem or buy back any depositary or other receipts or certificates representing Ordinary Shares, the provisions of paragraph (c) of the proviso to

this definition shall be applied in respect thereof in such manner and with such modifications (if any) as shall be determined in good faith by a Financial Adviser;

(e) where a dividend or distribution is paid or made to Shareholders pursuant to any plan implemented by the Issuer for the purpose of enabling Shareholders to elect, or which may require Shareholders, to receive dividends or distributions in respect of the Ordinary Shares held by them from a person other than, or in addition to the Issuer, such dividend or distribution shall for the purposes of these Conditions be treated as a dividend or distribution made or paid to Shareholders by the Issuer, and the foregoing provisions of this definition and the provisions of these Conditions shall be construed accordingly; and
(f) a dividend or distribution that is a Spin-Off shall be deemed to be a Dividend paid or made by the Issuer,

and any such determination shall be made on a gross basis and disregarding any withholding or deduction required to be made on account of tax, and disregarding any associated tax credit.

“ DRP ” means the Dividend Reinvestment Plan of the Issuer in effect on 3 April 2012 or any amendment or successor plan thereto.

“ equity share capital ” means, in relation to any entity, its issued share capital excluding any part of that capital which, neither as regards dividends nor as regards capital, carries any right to participate beyond a specified amount in a distribution.

“ Exempt Newco Scheme ” means a Newco Scheme where immediately after completion of the relevant Scheme of Arrangement the ordinary shares or units or equivalent of Newco (or depositary or other receipts or certificates representing ordinary shares or units or equivalent of Newco) are (1) admitted to trading on the Relevant Stock Exchange or (2) admitted to listing on such other regulated, regularly operating, recognised stock exchange or securities market as the Issuer or Newco may determine.

“ Fair Market Value ” means, with respect to any property on any date, the fair market value of that property as determined in good faith by a Financial Adviser provided, that (i) the Fair Market Value of a Cash Dividend shall be the amount of such Cash Dividend; (ii) the Fair Market Value of any other cash amount shall be the amount of such cash; (iii) where Spin-Off Securities, Securities, options, warrants or other rights are publicly traded in a market of adequate liquidity (as determined by a Financial Adviser), the fair market value (a) of such Spin-Off Securities or Securities shall equal the arithmetic mean of the daily Volume Weighted Average Prices of such Spin-Off Securities or Securities and (b) of such options, warrants or other rights shall equal the arithmetic mean of the daily closing prices of such options, warrants or other rights, in the case of both (a) and (b) during the period of five Dealing Days on the relevant market commencing on such date (or, if later, the first such Dealing Day such Spin-Off Securities, Securities, options, warrants or other rights are publicly traded); (iv) where Spin-Off Securities, Securities, options, warrants or other rights are not publicly traded (as aforesaid), the Fair Market Value of such Spin-Off Securities, Securities, options, warrants or other rights shall be determined in good faith by a Financial Adviser, on the basis of a commonly accepted market valuation method and taking account of such factors as it considers appropriate, including the market price per Ordinary Share, the dividend yield of an Ordinary Share, the volatility of such market price, prevailing interest rates and the terms of such Spin-Off Securities, Securities, options, warrants or other rights, including as to the expiry date and exercise price (if any) thereof; (v) in the case of (i) above translated into the Relevant Currency (if declared or paid or payable in a currency other than the Relevant Currency) at the rate of exchange used to determine the amount payable to Shareholders who were paid or are to be paid or are entitled to be paid the Cash Dividend in the Relevant Currency; and in any other case, translated into the Relevant Currency (if expressed in a currency other than the Relevant Currency) at the Prevailing Rate on that

date and (vi) in the case of (i) and (ii) above disregarding any withholding or deduction required to be made on account of tax and any associated tax credit.

“ Final Maturity Date ” means 3 April 2017.

“ Financial Adviser ” means an independent investment bank of international repute appointed by the Issuer and notified in writing to the Trustee or, if the Trustee gives notice to the Issuer to appoint a Financial Adviser and the Issuer fails to make such appointment and such failure continues for a period of 30 days from the date notice is given by the Trustee, appointed by the Trustee following notification to the Issuer provided that the Trustee has no obligation to make such appointment unless it has been indemnified and/or pre-funded and/or provided with security to its satisfaction in respect of the costs, fees and expenses of such independent investment adviser.

“ indebtedness for borrowed money ” means any present or future indebtedness (whether being principal, interest or other amounts) for or in respect of (i) money borrowed or raised (ii) liabilities under or in respect of any acceptance or acceptance credit or (iii) any notes, bonds, debentures, debenture stock, loan stock, certificates of deposit, commercial paper or other securities offered, issued or distributed whether by way of public offer, private placing, acquisition consideration or otherwise and whether issued for cash or in whole or in part for a consideration other than cash.

“ Interest Payment Date ” has the meaning provided in Condition 5(a).

“ Newco Scheme ” means a scheme of arrangement or analogous proceeding (a “ Scheme of Arrangement ”) which effects the interposition of a limited liability company (“ Newco ”) between the Shareholders of the Issuer immediately prior to the Scheme of Arrangement (the “ Existing Shareholders ”) and the Issuer; provided that (i) only ordinary shares or units or equivalent of Newco or depositary or other receipts or certificates representing ordinary shares or units or equivalent are issued to Existing Shareholders; (ii) immediately after completion of the Scheme of Arrangement the only holders of ordinary shares, units or equivalent of Newco or, as the case may be, the only holders of depositary or other receipts or certificates representing ordinary shares or units or equivalent of Newco are Existing Shareholders holding in the same proportions as immediately prior to completion of the Scheme of Arrangement; (iii) immediately after completion of the Scheme of Arrangement, Newco is (or one or more wholly-owned Subsidiaries of Newco are) the only shareholder of the Issuer; (iv) all Subsidiaries of the Issuer immediately prior to the Scheme of Arrangement (other than Newco, if Newco is then a Subsidiary of the Issuer) are Subsidiaries of the Issuer (or of Newco) immediately after completion of the Scheme of Arrangement; and (v) immediately after completion of the Scheme of Arrangement the Issuer (or Newco) holds, directly or indirectly, the same percentage of the ordinary share capital and equity share capital of those Subsidiaries as was held by the Issuer immediately prior to the Scheme of Arrangement.

“ Non-Cash Dividend ” has the meaning provided in Condition 6(b)(iii).

“ Offshore Associate ” means an Associate:

(a) which is a non-resident of Australia and does not acquire, or would not acquire, the Notes (or an interest in the Notes) in carrying on a business in Australia at or through a permanent establishment of the Associate in Australia; or
(b) which is a resident of Australia and which acquires, or would acquire, the Notes (or an interest in the Notes) in carrying on a business in a country outside Australia at or through a permanent establishment of the Associate in the country,

and which, in either case, is not acquiring the Notes (or an interest in the Notes) or receiving payment in the capacity of a clearing house, custodian, funds manager or responsible entity of a registered managed investment scheme.

“ Optional Redemption Date ” has the meaning provided in Condition 7(b).

“ Optional Redemption Notice ” has the meaning provided in Condition 7(b).

“ Ordinary Shares ” means fully paid ordinary shares in the capital of the Issuer.

“ Permitted Security Interest ” means a Security Interest in respect of property or assets of the Issuer or a Subsidiary of the Issuer, which (i) existed at the Closing Date and was not created in contemplation of the issue of Notes; or (ii) Security Interest existed before the relevant entity became a Subsidiary of the Issuer and was not created in contemplation of such entity becoming a Subsidiary of the Issuer and provided that the principal amount of such Relevant Indebtedness is not increased.

a “ person ” includes any individual, company, corporation, firm, partnership, joint venture, undertaking, association, organisation, trust, state or agency of a state (in each case whether or not being a separate legal entity).

“ Prevailing Rate ” means, in respect of any currency on any day, the spot rate of exchange between the relevant currencies prevailing as at or about 12 noon (Sydney time) on that date as appearing on or derived from the Relevant Page or if such a rate cannot be determined at such time, the rate prevailing as at or about 12 noon (Sydney time) on the immediately preceding day on which such rate can be so determined.

“ Record Date ” has the meaning provided in Condition 8(c).

“ Reference Date ” has the meaning provided in Condition 6(a)(i).

“ Relevant Currency ” means Australian Dollars or, if at the relevant time or for the purposes of the relevant calculation or determination, the Australian Securities Exchange is not the Relevant Stock Exchange, the currency in which the Ordinary Shares are quoted or traded on the Relevant Stock Exchange.

“ Relevant Date ” means, in respect of any Note, whichever is the later of (i) the date on which payment in respect of it first becomes due and (ii) if any amount of the money payable is improperly withheld or refused the date on which payment in full of the amount outstanding is made or (if earlier) the date on which notice is duly given by the Issuer to the Noteholders in accordance with Condition 17 that, upon further presentation of the Note, where required pursuant to these Conditions, being made, such payment will be made, provided that such payment is in fact made as provided in these Conditions.

a “ Relevant Event ” occurs when:

(i) there is a Delisting; or
(ii) there is a Change of Control.

“ Relevant Indebtedness ” means any present or future indebtedness (whether being principal, premium, interest or other amounts) in the form of or evidenced by notes, bonds, debentures, debenture stock, loan stock or other securities, whether issued for cash or in whole or in part for a consideration other than cash, and which (in any case) are or are capable of being quoted, listed or ordinarily dealt in or traded on any recognised listing authority, stock exchange, securities quotation system or over-the-counter or other securities market.

“ Relevant Page ” means the relevant page on Bloomberg or, if there is no such page, on Reuters or such other information service provider that displays the relevant information.

“ Relevant Stock Exchange ” means the Australian Securities Exchange or the Alternative Stock Exchange if any.

“ Retroactive Adjustment ” has the meaning provided in Condition 6(c).

“ Securities ” means any securities including, without limitation, Ordinary Shares, or options, warrants or other rights to subscribe for or purchase or acquire Ordinary Shares.

“ Shareholders ” means the holders of Ordinary Shares.

“ Specified Date ” has the meaning provided in Conditions 6(b)(iv), 6(b)(vi), 6(b)(vii) and 6(b)(viii).

“ Spin-Off ” means:

(a) a distribution of Spin-Off Securities by the Issuer to Shareholders as a class; or
(b) any issue, transfer or delivery of any property or assets (including cash or shares or securities of or in or issued or allotted by any entity) by any entity (other than the Issuer) to Shareholders as a class or, in the case of or in connection with a Newco Scheme, Existing Shareholders as a class (but excluding the issue and allotment of ordinary shares by Newco to Existing Shareholders as a class), pursuant in each case to any arrangements with the Issuer or any of its Subsidiaries.

“ Spin-Off Securities ” means equity share capital of an entity other than the Issuer or options, warrants or other rights to subscribe for or purchase equity share capital of an entity other than the Issuer.

“ Subsidiary ” means any entity which is a subsidiary of the Issuer within the meaning of Part 1.2 Division 6 of the Corporations Act or is a subsidiary of or otherwise controlled by the Issuer within the meaning of any approved accounting standard applicable to the Issuer.

“ Tax Redemption Date ” has the meaning provided in Condition 7(c).

“ Tax Redemption Notice ” has the meaning provided in Condition 7(c).

“ Volume Weighted Average Price ” means, in respect of an Ordinary Share, Security or, as the case may be, a Spin-Off Security on any Dealing Day, the volume-weighted average price of an Ordinary Share, Security or, as the case may be, a Spin-Off Security published by or derived (in the case of an Ordinary Share) from Bloomberg page VAP or (in the case of a Security (other than an Ordinary Share) or Spin-Off Security) from (in the case of Ordinary Shares) the Relevant Stock Exchange or (in the case of other Securities or Spin-Off Securities) the principal stock exchange or securities market on which such Securities or Spin-Off Securities are then listed or quoted or dealt in, if any or, in any such case, such other source as shall be determined to be appropriate by a Financial Adviser on such Dealing Day, provided that if on any such Dealing Day where such price is not available or cannot otherwise be determined as provided above, the Volume Weighted Average Price of an Ordinary Share, Security or a Spin-Off Security, as the case may be, in respect of such Dealing Day shall be the Volume Weighted Average Price, determined as provided above, on the immediately preceding Dealing Day on which the same can be so determined.

“ Voting Rights ” means the right generally to vote at a general meeting of Shareholders (irrespective of whether or not, at the time, stock of any other class or classes shall have, or might have, voting power by reason of the occurrence of any contingency).

References to any act or statute or any provision of any act or statute shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made thereunder or under such modification or re-enactment.

References to any issue or offer or grant to Shareholders or Existing Shareholders “as a class” or “by way of rights” shall be taken to be references to an issue or offer or grant to all or substantially all Shareholders or Existing Shareholders, as the case may be, other than Shareholders or Existing Shareholders, as the case may be, to whom, by reason of the laws of any territory or requirements of any recognised regulatory body or any other stock exchange or securities market in any territory or in connection with fractional entitlements, it is determined not to make such issue or offer or grant.

In making any calculation or determination of Current Market Price or Volume Weighted Average Price, such adjustments (if any) shall be made as a Financial Adviser considers appropriate to reflect any consolidation or sub-division of the Ordinary Shares or any issue of Ordinary Shares by way of capitalisation of profits or reserves, or any like or similar event.

For the purposes of Conditions 6(a), 6(b), 6(c), 6(h) and 6(i) and Condition 11 only, (a) references to the “issue” of Ordinary Shares or Ordinary Shares being “issued” shall include the transfer and/or delivery of Ordinary Shares, whether newly issued and allotted or previously existing or held by or on behalf of the Issuer or any of its Subsidiaries, and (b) Ordinary Shares held by or on behalf of the Issuer or any of its respective Subsidiaries (and which, in the case of Condition 6(b)(iv) and 6(b)(vi), do not rank for the relevant right or other entitlement) shall not be considered as or treated as “in issue” or “issued” or entitled to receive the relevant Dividend, right or other entitlement.

4 Registration and Transfer of Notes

(a) Registration

The Issuer will cause a register (the “ Register ”) to be kept at the specified office of the Registrar outside the United Kingdom on which will be entered the names and addresses of the holders of the Notes and the particulars of the Notes held by them and of all transfers, redemptions and conversions of Notes.

(b) Transfer

Notes may, subject to the terms of the Agency Agreement and to Conditions 4(c) and 4(d), be transferred in whole or in part in an authorised denomination by lodging the relevant Note (with the form of application for transfer in respect thereof duly executed and duly stamped where applicable) at the specified office of the Registrar or any Transfer Agent.

No transfer of a Note will be valid unless and until entered on the Register. A Note may be registered only in the name of, and transferred only to, a named person (or persons, not exceeding four in number).

The Registrar will within seven business days, in the place of the specified office of the Registrar, of any duly made application for the transfer of a Note register the relevant transfer and deliver a new Note to the transferee (and, in the case of a transfer of part only of a Note, deliver a Note for the untransferred balance to the transferor) at the specified office of the Registrar or (at the risk and, if mailed at the request of the transferee or, as the case may be, the transferor otherwise than by ordinary mail, at the expense of the transferee or, as the case may be, the transferor) mail the Note by uninsured mail to such address as the transferee or, as the case may be, the transferor may request.

Transfers of interests in the Notes evidenced by the Global Certificate will be effected in accordance with the rules of the relevant clearing systems.

(c) Formalities Free of Charge

Such transfer will be effected without charge subject to (i) the person making such application for transfer paying or procuring the payment of any taxes, duties and other governmental charges in connection therewith, (ii) the Registrar being satisfied with the documents of title and/or identity of the person making the application and (iii) such reasonable regulations as the Issuer may from time to time agree with the Registrar and the Trustee.

(d) Closed Periods

Neither the Issuer nor the Registrar will be required to register the transfer of any Note (or part thereof) (i) during the period of 15 days ending on and including the day immediately prior to the Final Maturity Date or any earlier date fixed for redemption of the Notes pursuant to Condition 7(b) or Condition 7(c), (ii) in respect of which a Conversion Notice has been delivered in accordance with Condition 6(h), (iii) in respect of which a holder shall have exercised its option to require the Issuer to redeem pursuant to Condition 7(e) or Condition 7(f), or (iv) during the period of 15 days ending on (and including) any Record Date (as defined in Condition 8(c)) in respect of any payment of interest on the Notes.

(e) Regulations

All transfers of Notes and entries on the Register will be made subject to the detailed regulations concerning transfer of Notes scheduled to the Agency Agreement. The regulations may be changed by the Issuer, with the prior written agreement of the Trustee and the Registrar. A copy of the current regulations will be mailed by the Registrar to any Noteholder upon request.

(f) Restrictions on transfer

Notes may only be transferred if the offer or invitation giving rise to the transfer:

(i) does not constitute an offer or invitation for which disclosure is required to be made to investors under Part 6D.2 of the Corporations Act;
(ii) is not made to a person who is a “retail client” within the meaning of Section 761G of the Corporations Act; and
(iii) complies with any applicable law or directive of the jurisdiction where transfer takes place.

5 Interest

(a) Interest Rate

The Notes bear interest from and including the Closing Date at the rate of 3.95 per cent. per annum (the “ Interest Rate ”) calculated by reference to the principal amount thereof and payable semiannually in equal instalments in arrear on 3 April and 3 October in each year (each an “ Interest Payment Date ”) commencing on the Interest Payment Date falling on 3 October 2012.

If interest is required to be calculated for a period other than an Interest Period (as defined below) it will be calculated on the basis of a 360 day year consisting of 12 months of 30 days each, and in the case of an incomplete month, the number of days elapsed.

“ Interest Period ” means the period beginning on (and including) the Closing Date and ending on (but excluding) the first Interest Payment Date and each successive period beginning on (and including) an Interest Payment Date and ending on (but excluding) the next succeeding Interest Payment Date.

(b) Accrual of Interest

Each Note will cease to bear interest (i) where the Conversion Right shall have been exercised by a Noteholder, from the Interest Payment Date immediately preceding the relevant Conversion Date or, if none, the Closing Date (subject in any such case as provided in Condition 6(j)) or (ii) where such Note is redeemed or repaid pursuant to Condition 7 or Condition 10, from the due date for redemption or repayment thereof unless, upon due presentation thereof, payment of principal is improperly withheld or refused, in which event interest will continue to accrue from the due date for redemption or repayment at the rate specified in Condition 8(f) (both before and after judgment) until whichever is the earlier of (a) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant holder, and (b) the day seven days after the Trustee or the Principal Paying, Transfer and Conversion Agent has notified Noteholders of receipt of all sums due in respect of all the Notes up to that seventh day (except to the extent that there is failure in the subsequent payment to the relevant holders under these Conditions).

6 Conversion of Notes

(a) Conversion

(i) Conversion Period and Conversion Price: Subject to Condition 6(m), each Note shall entitle the holder to convert such Note into new Ordinary Shares, credited as fully paid, subject to and as provided in these Conditions (a “ Conversion Right ”).

The number of Ordinary Shares to be issued or transferred and delivered on exercise of a Conversion Right shall (subject as aforesaid) be determined by dividing the principal amount of the Notes to be converted by the conversion price (the “ Conversion Price ”) in effect on the relevant Conversion Date.

The initial Conversion Price is A$2.00 per Ordinary Share but will be subject to adjustment in the manner provided in Condition 6(b) and Condition 6(m).

A Noteholder may exercise the Conversion Right in respect of a Note by delivering the certificate evidencing such Note together with a duly completed Conversion Notice to the specified office of any Conversion Agent in accordance with Condition 6(h) whereupon the Issuer shall (subject as provided in these Conditions) procure the delivery, to or as directed by the relevant Noteholder of Ordinary Shares credited as paid up in full as provided in this Condition 6.

Subject to, and as provided in these Conditions, the Conversion Right in respect of a Note may be exercised, at the option of the holder thereof, at any time subject to any applicable fiscal or other laws or regulations and as hereinafter provided, at any time on or after 14 May 2012, provided that the relevant Conversion Date shall not fall later than on the date falling ten days prior to the Final Maturity Date (both days inclusive) or, if such Note is to be redeemed pursuant to Condition 7(b) or Condition 7(c) prior to the Final Maturity Date, not later than the tenth day before the date fixed for redemption thereof pursuant to Condition 7(b) or Condition 7(c), unless there shall be default in making payment in respect of such Note on such date fixed for redemption, in which event the Conversion Right may be exercised up to the date on which the full amount of such payment becomes available for payment and notice of such availability has been duly given in accordance with Condition 17 or, if earlier, the date falling ten days prior to the Final Maturity Date (the “ Conversion Period ”) provided that, in each case, if such final date for the exercise of Conversion Rights is not a business day at the place aforesaid, then the

period for exercise of Conversion Rights by Noteholders shall end on the immediately preceding business day at the place aforesaid.

Conversion Rights in respect of a Note may not be exercised following the giving of a notice by the holder thereof pursuant to Condition 7(e) or Condition 7(f).

Conversion Rights may not be exercised following the giving of notice by the Trustee pursuant to Condition 10.

Save where a notice of redemption is given by the Issuer in the circumstances provided in Condition 6(j), Conversion Rights may not be exercised by a Noteholder in circumstances where the relevant Conversion Date would fall during the period commencing on the Record Date in respect of any payment of interest on the Notes and ending on the relevant Interest Payment Date (both days inclusive).

Conversion Rights may only be exercised in respect of an authorised denomination. Where Conversion Rights are exercised in respect of part only of a Note, the old Note shall be cancelled and a new Certificate evidencing such Note and appropriate entries made in the Register for the balance thereof shall be issued in lieu thereof without charge but upon payment by the holder of any taxes, duties and other governmental charges payable in connection therewith and the Registrar will within seven business days, in the place of the specified office of the Registrar, following the relevant Conversion Date deliver the Certificate evidencing such new Note to the Noteholder at the specified office of the Registrar or (at the risk and, if mailed at the request of the Noteholder otherwise than by ordinary mail, at the expense of the Noteholder) mail the Certificate evidencing such new Note by uninsured mail to such address as the Noteholder may request.

The Issuer will procure that Ordinary Shares to be issued or transferred and delivered on conversion will be issued or transferred and delivered to the holder of the Notes completing the relevant Conversion Notice or his nominee. Such Ordinary Shares will be deemed to be issued or transferred and delivered as of the relevant Conversion Date. Any Additional Ordinary Shares to be issued or transferred and delivered pursuant to Condition 6(c) will be deemed to be issued or transferred and delivered as of the date the relevant Retroactive Adjustment takes effect or as at the date of issue or transfer and delivery of Ordinary Shares if the adjustment results from the issue or transfer and delivery of Ordinary Shares (each such date, the “ Reference Date ”).

(ii) Fractions: Fractions of Ordinary Shares will not be delivered on conversion or pursuant to Condition 6(c) and no cash payment or other adjustment will be made in lieu thereof. However, if the Conversion Right in respect of more than one Note is exercised at any one time such that Ordinary Shares to be delivered on conversion or pursuant to Condition 6(c) are to be registered in the same name, the number of such Ordinary Shares to be delivered in respect thereof shall be calculated on the basis of the aggregate principal amount of such Notes being so converted and rounded down to the nearest whole number of Ordinary Shares.

(b) Adjustment of Conversion Price

Upon the happening of any of the events described below, the Conversion Price shall be adjusted as follows:

(i) If and whenever there shall be a consolidation, reclassification or subdivision in relation to the Ordinary Shares, the Conversion Price shall be adjusted by multiplying the Conversion Price in

force immediately prior to such consolidation, reclassification or subdivision by the following fraction:

A

where:

A is the aggregate number of Ordinary Shares in issue immediately before such consolidation, reclassification or subdivision, as the case may be; and
B is the aggregate number of Ordinary Shares in issue immediately after, and as a result of, such consolidation, reclassification or subdivision, as the case may be.

Such adjustment shall become effective on the date the consolidation, reclassification or subdivision, as the case may be, takes effect.

(ii) If and whenever the Issuer shall issue any Ordinary Shares credited as fully paid to the Shareholders by way of capitalisation of profits or reserves (including any share premium account or capital redemption reserve) other than (1) where any such Ordinary Shares are or are to be issued instead of the whole or part of a Dividend in cash which the Shareholders would or could otherwise have elected to receive, (2) where the Shareholders may elect to receive a Dividend in cash in lieu of such Ordinary Shares or (3) where any such Ordinary Shares are or are expressed to be issued in lieu of a Dividend (whether or not a Cash Dividend equivalent or amount is announced or would otherwise be payable to Shareholders, whether at their election or otherwise), the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to such issue by the following fraction:

A

==> picture [8 x 8] intentionally omitted <==

where:

A is the aggregate number of Ordinary Shares in issue immediately before such issue; and
B is the aggregate number of Ordinary Shares in issue immediately after such issue.

Such adjustment shall become effective on the date of issue of such Ordinary Shares.

(iii)

(A) If and whenever the Issuer shall pay or make any Capital Distribution to the Shareholders, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to the Effective Date by the following fraction:

A  B A

where:

A is the Current Market Price of one Ordinary Share on the Effective Date; and
B is the portion of the Fair Market Value of the aggregate Capital Distribution attributable to one Ordinary Share, with such portion being determined by dividing the Fair Market Value of the aggregate Capital Distribution by the

number of Ordinary Shares entitled to receive the relevant Capital Distribution (or, in the case of a purchase, redemption or buy back of Ordinary Shares or any depositary or other receipts or certificates representing Ordinary Shares by or on behalf of the Issuer or any Subsidiary of the Issuer, by the number of Ordinary Shares in issue immediately following such purchase, redemption or buy back, and treating as not being in issue any Ordinary Shares, or any Ordinary Shares represented by depositary or other receipts or certificates, purchased, redeemed or bought back).

Such adjustment shall become effective on the Effective Date or, if later, the first date upon which the Fair Market Value of the relevant Capital Distribution is capable of being determined as provided herein.

“ Effective Date ” means, in respect of this Condition 6(b)(iii)(A), the first date on which the Ordinary Shares are traded ex-the relevant Dividend on the Relevant Stock Exchange or, in the case of a purchase, redemption or buy back of Ordinary Shares or any depositary or other receipts or certificates representing Ordinary Shares, the date on which such purchase, redemption or buy back is made or in the case of a Spin-Off, the first date on which the Ordinary Shares are traded ex- the relevant Spin-Off on the Relevant Stock Exchange.

“ Capital Distribution ” means any Non-Cash Dividend.

“ Non-Cash Dividend ” means any Dividend which is not a Cash Dividend, and shall include a Spin-Off.

(B) If and whenever the Issuer shall pay or make any Extraordinary Dividend to Shareholders, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to the Effective Date (defined below) by the following fraction:

==> picture [26 x 26] intentionally omitted <==

where:

A is the Current Market Price of one Ordinary Share on the Effective Date; and

B is the portion of the Fair Market Value of the aggregate Extraordinary Dividend attributable to one Ordinary Share, with such portion being determined by dividing the Fair Market Value of the aggregate Extraordinary Dividend by the number of Ordinary Shares entitled to receive the relevant Dividend.

Such adjustment shall become effective on the Effective Date or, if later, the first date upon which the Fair Market Value of the relevant Extraordinary Dividend is capable of being determined as provided herein.

“ Cash Dividend ” means (i) any Dividend which is to be paid or made in cash (in whatever currency), but other than falling within paragraph (b) of the definition of “ Spin-Off ” and (ii) any Dividend determined to be a Cash Dividend pursuant to paragraph (a) of the definition of “ Dividend ”, and for the avoidance of doubt, a Dividend falling within paragraph (c) or (d) of the definition of “ Dividend ” shall be treated as being a Non-Cash Dividend.

“ Effective Date ” means, in respect of this Condition 6(b)(iii)(B), the first date on which the Ordinary Shares are traded ex-the relevant Dividend on the Relevant Stock Exchange.

“ Extraordinary Dividend ” means any Cash Dividend (the “ Relevant Dividend ”) paid or made in respect of a fiscal year of the Issuer (the “ Relevant Fiscal Year ”).

For the purposes of the above, Fair Market Value shall (subject as provided in paragraph (a) of the definition of “Dividend” and in the definition of “Fair Market Value”) be determined as at the Effective Date.

(iv) If and whenever the Issuer or any Subsidiary of the Issuer or (at the direction or request or pursuant to any arrangements with the Issuer or any Subsidiary of the Issuer) any other company, person or entity shall issue to Shareholders as a class by way of rights, or issue or grant to Shareholders as a class by way of rights, any options, warrants or other rights to subscribe for or purchase or otherwise acquire Ordinary Shares or any Securities which by their terms of issue carry (directly or indirectly) rights of conversion into, or exchange or subscription for, or the right to otherwise acquire any Shares (or shall grant any such rights in respect of existing Securities so issued), in each case at a price per Ordinary Share which is less than 95 per cent. of the Current Market Price per Ordinary Share on the date of the first public announcement of the terms of the issue or grant of such Shares, options, warrants or other rights (and notwithstanding that the relevant issue may be or be expressed to be subject to Shareholder or other approvals or consents or other contingency or event occurring or not occurring), the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to such issue or grant by the following fraction:

==> picture [28 x 25] intentionally omitted <==

where:

A is the number of Ordinary Shares in issue at close of business on the Dealing Day immediately before such announcement;
B is the number of Ordinary Shares which the aggregate consideration (if any) receivable for the Ordinary Shares issued by way of rights or for the Securities issued by way of rights, or for the options or warrants or other rights issued by way of rights and for the total number of Ordinary Shares deliverable on the exercise thereof, would purchase at such Current Market Price per Ordinary Share on the date of such first announcement; and
C is the number of Ordinary Shares issued or, as the case may be, the maximum number of Ordinary Shares which may be issued upon exercise of such options, warrants or rights calculated as at the date of issue of such options, warrants or rights or upon conversion or exchange or exercise of rights of subscription or purchase (or other rights of acquisition) in respect thereof at the initial conversion, exchange, subscription, purchase or acquisition price or rate;

provided that if at the first date on which the Ordinary Shares are traded ex-rights, ex-options or ex-warrants on the Relevant Stock Exchange (as used in this Condition 6(b)(iv), the “ Specified Date ”) such number of Ordinary Shares is to be determined by reference to the application of a formula or other variable feature or the occurrence of any event at some subsequent time, then for the purposes of this Condition 6(b)(iv), “C” shall be determined by the application of such formula or variable feature or as if the relevant event occurs or had occurred as at the Specified

Date and as if such conversion, exchange, subscription, purchase or acquisition had taken place on the Specified Date.

Such adjustment shall become effective on the first date on which the Ordinary Shares are traded ex-rights, ex-warrants or ex-options on the Relevant Stock Exchange.

For the avoidance of doubt, the non-renounceable entitlement offer of up to approximately 140,000,000 Ordinary Shares as set out in the announcement dated 27 March 2012 will not result in any adjustment to the Conversion Price pursuant to this Condition 6(b).

(v) If and whenever the Issuer or any Subsidiary of the Issuer or (at the direction or request or pursuant to any arrangements with the Issuer or any Subsidiary of the Issuer) any other company, person or entity shall issue any Securities (other than Ordinary Shares or options, warrants or other rights to subscribe for, purchase or otherwise acquire any Ordinary Shares or Securities which by their terms carry (directly or indirectly) rights of conversion into, or exchange or subscription for, or rights to otherwise acquire, Ordinary Shares) to all or substantially all Shareholders as a class by way of rights or grant to all or substantially all Shareholders as a class by way of rights, any options, warrants or other rights to subscribe for, purchase or otherwise acquire any Securities (other than Ordinary Shares or options, warrants or other rights to subscribe for, purchase or otherwise acquire Ordinary Shares or Securities which by their terms carry (directly or indirectly) rights of conversion into, or exchange or subscription for, or rights to otherwise acquire, Ordinary Shares), the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately before such issue or grant by the following fraction:

==> picture [25 x 25] intentionally omitted <==

where:

A is the Current Market Price of one Ordinary Share on the first date on which the terms of such issue or grant are publicly announced (or if that is not a Dealing Day, the immediately preceding Dealing Day); and
B is the Fair Market Value on the date of such announcement (or, if that is not a Dealing Day, the immediately preceding Dealing Day) of the portion of the rights attributable to one Ordinary Share.

Such adjustment shall become effective on the first date on which the Ordinary Shares are traded ex-rights, ex-options or ex-warrants on the Relevant Stock Exchange.

(vi) If and whenever the Issuer shall issue (otherwise than as mentioned in Condition 6(b)(iv) above and save in relation to an issue of Ordinary Shares pursuant to the DRP where the Conversion Price has been adjusted for pursuant to Condition 6(b)(iii)) any Ordinary Shares (other than Ordinary Shares issued on conversion of the Notes or on the exercise of any rights of conversion into, or exchange or subscription for or purchase of or rights to otherwise acquire, Ordinary Shares) or if and whenever the Issuer or any Subsidiary of the Issuer or (at the direction or request or pursuant to any arrangements with the Issuer or any Subsidiary of the Issuer) any other company, person or entity shall issue or grant (otherwise than as mentioned in Condition 6(b)(iv) above) any options, warrants or other rights to subscribe for or purchase or otherwise acquire any Ordinary Shares (other than the Notes, which term shall for this purpose include any further Notes issued pursuant to Condition 18), in each case at a price per Ordinary

Share which is less than 95 per cent. of the Current Market Price per Ordinary Share on the date of the first public announcement of the terms of such issue or grant, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to such issue or grant by the following fraction:

==> picture [28 x 25] intentionally omitted <==

where:

A is the number of Ordinary Shares in issue immediately before the issue of such Ordinary Shares or the grant of such options, warrants or rights;
B is the number of Ordinary Shares which the aggregate consideration (if any) receivable for the issue of such additional Shares or, as the case may be, for the Ordinary Shares to be issued or made available upon the exercise of any such options, warrants or rights, would purchase at such Current Market Price per Ordinary Share on the date of such first public announcement; and
C is the number of Ordinary Shares to be issued pursuant to such issue of such Ordinary Shares or, as the case may be, the maximum number of Ordinary Shares which may be issued upon exercise of such options, warrants or rights calculated as at the date of issue of such options, warrants or rights, provided that if at the time of issue of such Ordinary Shares or date of issue or grant of such options, warrants or rights (as used in this Condition 6(b)(vi), the “ Specified Date ”) such number of Ordinary Shares is to be determined by reference to the application of a formula or other variable feature or the occurrence of any event at some subsequent time, then for the purposes of this Condition 6(b)(vi), “C” shall be determined by the application of such formula or variable feature or as if the relevant event occurs or had occurred as at the Specified Date and as if such conversion, exchange, subscription, purchase or acquisition had taken place on the Specified Date.

Such adjustment shall become effective on the date of issue of such Ordinary Shares or, as the case may be, the issue or grant of such options, warrants or rights.

(vii) If and whenever the Issuer or any Subsidiary of the Issuer or (at the direction or request of or pursuant to any arrangements with the Issuer or any Subsidiary of the Issuer) any other company, person or entity (otherwise than as mentioned in Conditions 6(b)(iv), 6(b)(v) or 6(b)(vi) above and save in relation to an issue of Ordinary Shares pursuant to the DRP where the Conversion Price has been adjusted for pursuant to Condition 6(b)(iii)) shall issue any Securities (other than the Notes which term shall for this purpose exclude any further Notes issued pursuant to Condition 18), which by their terms of issue carry (directly or indirectly) rights of conversion into, or exchange or subscription for, purchase of or rights to otherwise acquire Ordinary Shares (or shall grant any such rights in respect of existing Securities so issued) or Securities which by their terms might be redesignated as Ordinary Shares and the consideration per Ordinary Share receivable upon conversion, exchange, subscription, purchase, acquisition or redesignation is less than 95 per cent. of the Current Market Price per Ordinary Share on the date of the first public announcement of the terms of issue of such Securities (or the terms of such grant), the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to such issue or grant by the following fraction:

A  B A  C

where:

A is the number of Ordinary Shares in issue immediately before such issue or grant (but where the relevant Securities carry rights of conversion into or rights of exchange or subscription for Ordinary Shares which have been issued by the Issuer (or at the direction or request or pursuant to any arrangements with the Issuer or any Subsidiary of the Issuer) for the purposes of or in connection with such issue, less the number of such Ordinary Shares so issued, purchased or acquired);
B is the number of Ordinary Shares which the aggregate consideration (if any) receivable for the Ordinary Shares to be issued or otherwise made available upon conversion or exchange or upon exercise of the right of subscription, purchase or acquisition attached to such Securities or upon the exercise of any such options, warrants or rights or, as the case may be, for the Ordinary Shares to be issued or to arise from any such redesignation would purchase at such Current Market Price per Ordinary Share on the date of such first public announcement; and
C is the maximum number of Ordinary Shares to be issued or otherwise made available upon conversion or exchange of such Securities or upon the exercise of such right of subscription, purchase or acquisition attached thereto at the initial conversion, exchange, subscription, purchase or acquisition price or rate or, as the case may be, the maximum number of Ordinary Shares which may be issued or arise from any such redesignation, provided that if at the time of issue of the relevant Securities or date of grant of such rights (as used in this Condition 6(b)(vii), the “ Specified Date ”) such number of Ordinary Shares is to be determined by reference to the application of a formula or other variable feature or the occurrence of any event at some subsequent time (which may be when such Securities are converted or exchanged or rights of subscription, purchase or acquisition are exercised or, as the case may be, such Securities are redesignated or at such other time as may be provided) then for the purposes of this Condition 6(b)(vii), “C” shall be determined by the application of such formula or variable feature or as if the relevant event occurs or had occurred as at the Specified Date and as if such conversion, exchange, subscription, purchase or acquisition or, as the case may be, redesignation had taken place on the Specified Date.

Such adjustment shall become effective on the date of issue of such Securities or, as the case may be, the grant of such rights.

(viii) If and whenever there shall be any modification of the rights of conversion, exchange, subscription, purchase or acquisition attaching to any such Securities (other than the Notes which shall for this purpose include and any further Notes issued pursuant to Condition 18) as are mentioned in Condition 6(b)(vii) above (other than in accordance with the terms (including terms as to adjustment) applicable to such Securities upon issue) so that following such modification the consideration per Ordinary Share receivable has been reduced and is less than 95 per cent. of the Current Market Price per Ordinary Share on the date of the first public announcement of the proposals for such modification, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to such modification by the following fraction:

A  B A  C

where:

A is the number of Ordinary Shares in issue on the Dealing Day immediately before such modification (but where the relevant Securities carry rights of conversion into or rights of exchange or subscription for, or purchase or acquisition of, Ordinary Shares which have been issued, purchased or acquired by the Issuer or any Subsidiary of the Issuer (or at the direction or request or pursuant to any arrangements with the Issuer or any Subsidiary of the Issuer) for the purposes of or in connection with such Securities, less the number of such Ordinary Shares so issued, purchased or acquired);
B is the number of Ordinary Shares which the aggregate consideration (if any) receivable for the Ordinary Shares to be issued or otherwise made available upon conversion or exchange or upon exercise of the right of subscription, purchase or acquisition attached to the Securities so modified would purchase at such Current Market Price per Ordinary Share on the date of such first public announcement or, if lower, the existing conversion, exchange, subscription, purchase or acquisition price of such Securities; and
C is the maximum number of Ordinary Shares which may be issued or otherwise made available upon conversion or exchange of such Securities or upon the exercise of such rights of subscription, purchase or acquisition attached thereto at the modified conversion, exchange, subscription, purchase or acquisition price or rate but giving credit in such manner as a Financial Adviser shall consider appropriate for any previous adjustment under this Condition 6(b)(viii) or under Condition 6(b)(vii) above, provided that if at the time of such modification (as used in this Condition 6(b)(viii), the “ Specified Date ”) such number of Ordinary Shares is to be determined by reference to the application of a formula or other variable feature or the occurrence of any event at some subsequent time (which may be when such Securities are converted or exchanged or rights of subscription, purchase or acquisition are exercised or at such other time as may be provided) then for the purposes of this Condition 6(b)(viii), “C” shall be determined by the application of such formula or variable feature or as if the relevant event occurs or had occurred as at the Specified Date and as if such conversion, exchange, subscription, purchase or acquisition had taken place on the Specified Date.

Such adjustment shall become effective on the date of modification of the rights of conversion, exchange, subscription, purchase or acquisition attaching to such Securities.

(ix) Subject to Condition 6(e), if and whenever the Issuer or any Subsidiary of the Issuer or (at the direction or request of or pursuant to any arrangements with the Issuer or any Subsidiary of the Issuer) any other company, person or entity shall offer any Securities of the Issuer of the Subsidiary in connection with which Shareholders as a class are entitled to participate in arrangements whereby such Securities may be acquired by them (except where the Conversion Price falls to be adjusted under Conditions 6(b)(ii), 6(b)(iii), 6(b)(iv), 6(b)(v), 6(b)(vi) or 6(b)(vii) above or 6(b)(x) below (or would fall to be so adjusted if the relevant issue or grant was at less than 95 per cent. of the Current Market Price per Ordinary Share on the relevant Dealing Day)) the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately before the making of such offer by the following fraction:

A - B

where:

A is the Current Market Price of one Ordinary Share on the date on which the terms of such offer are first publicly announced; and
B is the Fair Market Value on the date of such announcement (or, if that is not a Dealing Day, the immediately preceding Dealing Day) of the portion of the relevant offer attributable to one Ordinary Share.

Such adjustment shall become effective on the first date on which the Ordinary Shares are traded ex-rights on the Relevant Stock Exchange.

(x) If:
(i) an offer is made to all (or as nearly as may be practicable to all) Shareholders (or all (or as nearly as may be practicable to all) Shareholders other than the offeror and/or any associate (as defined in sections 11 and 12 of the Corporations Act) of the offeror) to acquire the whole or any part of the issued ordinary share capital of the Issuer (an “ Offer ”) and such offer having become or been declared unconditional in all respects, and the offeror has acquired at any time during the relevant offer period a relevant interest in more than 50 per cent. of the Shares in issue; or
(ii) any person proposes a scheme of arrangement with regard to such acquisition (other than an Exempt Newco Scheme) (a “ Scheme ”), where such scheme of arrangement (A) is approved by the Shareholders and all other classes of members or creditors whose approval is required for the scheme of arrangement to take effect and (B) when implemented will result in a person acquiring a relevant interest in more than 50 per cent. of the Shares that will be in issue after the scheme of arrangement is implemented; or

an event occurs which has equivalent effect as (i) or (ii) above (a “ Change of Control ”), then upon any exercise of Conversion Rights where the Conversion Date falls during the period (the “ Change of Control Period ”) commencing on the occurrence of the Change of Control and ending 30 calendar days following the Change of Control or, if later, 30 calendar days following the date on which a Change of Control Notice as required by Condition 6(g) is given, the Conversion Price (the “ Change of Control Conversion Price ”) shall be as determined pursuant to the following formula:

COCCP = OCP/(1+ (CP x c/t))

where:

COCCP = means the Change of Control Conversion Price

OCP = means the Conversion Price in effect on the relevant Conversion Date, disregarding the application of this Condition 6(b)(x)
CP =
means 28.2% (expressed as a fraction)
c = means the number of days from and including the date the Change of Control occurs to but excluding the Final Maturity Date

t = means the number of days from and including the Closing Date to but excluding the Final Maturity Date
(xi) If the Issuer (after consultation with the Trustee) or the Trustee determines that an adjustment should be made to the Conversion Price as a result of one or more circumstances not referred to above in this Condition 6(b), the Issuer shall, at its own expense and acting reasonably, request a Financial Adviser to determine as soon as practicable what adjustment (if any) to the Conversion Price is fair and reasonable to take account thereof and the date on which such adjustment should take effect and upon such determination such adjustment (if any) shall be made and shall take effect in accordance with such determination, provided that an adjustment shall only be made pursuant to this Condition 6(b)(xi) if such Financial Adviser is so requested to make such a determination not more than 21 days after the date on which the relevant circumstance arises and if the adjustment would result in a reduction to the Conversion Price.

Notwithstanding the foregoing provisions, where:

(a) the events or circumstances giving rise to any adjustment pursuant to this Condition 6(b) have already resulted or will result in an adjustment to the Conversion Price or where the events or circumstances giving rise to any adjustment arise by virtue of any other events or circumstances which have already given or will give rise to an adjustment to the Conversion Price or where more than one event which gives rise to an adjustment to the Conversion Price occurs within such a short period of time that, in the opinion of the Issuer, a modification to the operation of the adjustment provisions is required to give the intended result, such modification shall be made to the operation of the adjustment provisions as may be advised by a Financial Adviser to be in its opinion appropriate to give the intended result; and
(b) such modification shall be made to the operation of these Conditions as may be advised by a Financial Adviser to be in its opinion appropriate (i) to ensure that an adjustment to the Conversion Price or the economic effect thereof shall not be taken into account more than once and (ii) to ensure that the economic effect of a Dividend is not taken into account more than once.

The Issuer has undertaken that it will not take any corporate or other action which is equivalent to Conditions 6(b)(i) to 6(b)(x) (both inclusive) that would cause the Conversion Price of the Notes to be adjusted in a manner that contravenes the Corporations Act or the Listing Rules of the ASX.

For the purpose of any calculation of the consideration receivable or price pursuant to Conditions 6(b)(iv), 6(b)(vi), 6(b)(vii) and 6(b)(viii), the following provisions shall apply:

(a) the aggregate consideration receivable or price for Ordinary Shares issued for cash shall be the amount of such cash;
(b) (x) the aggregate consideration receivable or price for Ordinary Shares to be issued or otherwise made available upon the conversion or exchange of any Securities shall be deemed to be the consideration or price received or receivable for any such Securities and (y) the aggregate consideration receivable or price for Ordinary Shares to be issued or otherwise made available upon the exercise of rights of subscription attached to any Securities or upon the exercise of any options, warrants or rights shall be deemed to be that part (which may be the whole) of the consideration or price received or receivable for such Securities or, as the case may be, for such options, warrants or rights which are attributed by the Issuer to such rights of subscription or, as the case may be, such options, warrants or rights or, if no part of such consideration or price is so attributed, the Fair Market Value of such rights of subscription or, as the case may be, such

options, warrants or rights as at the relevant date of the first public announcement as referred to in Conditions 6(b)(vi), 6(b)(vii) or 6(b)(viii), as the case may be, plus in the case of each of (x) and (y) above, the additional minimum consideration receivable or price (if any) upon the conversion or exchange of such Securities, or upon the exercise of such rights of subscription attached thereto or, as the case may be, upon exercise of such options, warrants or rights and (z) the consideration receivable or price per Ordinary Share upon the conversion or exchange of, or upon the exercise of such rights of subscription attached to, such Securities or, as the case may be, upon the exercise of such options, warrants or rights shall be the aggregate consideration or price referred to in (x) or (y) above (as the case may be) divided by the number of Ordinary Shares to be issued upon such conversion or exchange or exercise at the initial conversion, exchange or subscription price or rate;

(c) if the consideration or price determined pursuant to (a) or (b) above (or any component thereof) shall be expressed in a currency other than the Relevant Currency it shall be converted into the Relevant Currency at the Prevailing Rate on the relevant Specified Date (in the case of (a) above or the relevant date of the first public announcement (in the case of (b) above);
(d) in determining consideration or price pursuant to the above, no deduction shall be made for any commissions or fees (howsoever described) or any expenses paid or incurred for any underwriting, placing or management of the issue of the relevant Ordinary Shares or Securities or options, warrants or rights, or otherwise in connection therewith; and
(e) the consideration or price shall be determined as provided above on the basis of the consideration or price received, receivable, paid or payable, regardless of whether all or part thereof is received, receivable, paid or payable by or to the Issuer or another entity.

(c) Retroactive Adjustments

Subject as provided in Condition 6(m), if the Conversion Date in relation to the conversion of any Note shall be after the record date in respect of any consolidation, reclassification or sub-division as is mentioned in Condition 6(b)(i), or after the record date or other due date for the establishment of entitlement for any such issue, distribution, grant or offer (as the case may be) as is mentioned in Conditions 6(b)(ii), 6(b)(iii), 6(b)(iv), 6(b)(v) or 6(b)(ix), or after the date of the first public announcement of the terms of any such issue or grant as is mentioned in Conditions 6(b)(vi) and 6(b)(vii) or of the terms of any such issue or grant as is mentioned in Condition 6(b)(viii), but before the relevant adjustment to the Conversion Price becomes effective under Condition 6(b) (such adjustment, a “ Retroactive Adjustment ”), then the Issuer shall (conditional upon the relevant adjustment becoming effective) procure that there shall be issued or transferred and delivered to the converting Noteholder, in accordance with the instructions contained in the Conversion Notice, such additional number of Ordinary Shares (if any) (the “ Additional Ordinary Shares ”) as, together with the Ordinary Shares issued or to be transferred and delivered on conversion of the relevant Note (together with any fraction of an Ordinary Share not so issued), is equal to the number of Ordinary Shares which would have been required to be issued or delivered on conversion of such Note as if the relevant adjustment to the Conversion Price had in fact been made and become effective immediately prior to the relevant Conversion Date.

(d) Decision of a Financial Adviser

If any doubt shall arise as to whether an adjustment falls to be made to the Conversion Price or as to the appropriate adjustment to the Conversion Price or as to the occurrence of a Change of Control, the Issuer shall consult a Financial Adviser and the written opinion of such Financial Adviser in respect of

such adjustment to the Conversion Price shall be conclusive and binding on all parties, save in the case of manifest or proven error.

(e) Employees Incentive Schemes

No adjustment will be made to the Conversion Price where Ordinary Shares or other Securities (including rights, warrants and options) are issued, transferred, offered or granted pursuant to any Employee Share Scheme.

“ Employee Share Scheme ” means any scheme approved by the Issuer and in compliance with the requirements of the listing rules of ASX (or if applicable, the Alternative Stock Exchange) pursuant to which Ordinary Shares or other securities (including rights or options) are or may be issued, transferred, offered, exercised, allotted, purchased, appropriated, modified or granted to, or for the benefit of, employees or former employees (including directors holding or formerly holding executive office or the personal service company of any such person) of the Issuer, its Subsidiaries and/or affiliated companies, or spouses or persons related to such employees or former employees or eligible participants of such scheme or to a trustee or trustees to be held for the benefit of any such person and includes the plans of the Issuer titled “Employee Incentive Plan”, “Long Term Incentive” and “Beach Executive Incentive Plan” in effect on 3 April 2012 or any amendment or successor plan thereto.

(f) Rounding Down and Notice of Adjustment to the Conversion Price

On any adjustment to the Conversion Price, the resultant Conversion Price, if not an integral multiple of A$0.001, shall be rounded down to the nearest whole multiple of A$0.01. No adjustment shall be made to the Conversion Price where such adjustment (rounded down if applicable) would be less than 1% of the Conversion Price then in effect. Any adjustment not required to be made, and/or any amount by which the Conversion Price has been rounded down, shall be carried forward and taken into account in any subsequent adjustment, and such subsequent adjustment shall be made on the basis that the adjustment not required to be made had been made at the relevant time and/or, as the case may be, that the relevant rounding down had not been made.

Notice of any adjustments to the Conversion Price shall be given by the Issuer to Noteholders in accordance with Condition 17 and to the Trustee and the Principal Paying, Transfer and Conversion Agent promptly after the determination thereof.

The Issuer undertakes that it shall not take any action, and shall procure that no action is taken, that would otherwise result in the inability to issue Ordinary Shares on conversion as fully paid.

No adjustment involving an increase in the Conversion Price will be made, except in the case of a consolidation of the Shares as referred to in Condition 6(b)(i) above. The Issuer and the Issuer may at any time and for a specified period only, following notice being given to the Trustee and to Noteholders in accordance with Condition 17, reduce the Conversion Price.

(g) Change of Control

Within 15 calendar days following the occurrence of a Change of Control, the Issuer shall give notice thereof to the Trustee and to the Noteholders in accordance with Condition 17 (a “ Change of Control Notice ”). Such notice shall contain a statement informing Noteholders of their entitlement to exercise their Conversion Rights as provided in these Conditions and their entitlement to require the Issuer to redeem their Notes as provided in Condition 7(f).

The Change of Control Notice shall also specify:

(i) all information material to Noteholders concerning the Change of Control;

(ii) the Conversion Price immediately prior to the occurrence of the Change of Control and the Change of Control Conversion Price (on the basis of such Conversion Price) applicable pursuant to Condition 6(b)(x) during the Change of Control Period;
(iii) the closing price of the Ordinary Shares as derived from the Relevant Stock Exchange as at the latest practicable date prior to the publication of such notice;
(iv) the Change of Control Put Date and the last day of the Change of Control Period;
(v) details of the right of the Issuer to redeem any Notes which shall not previously have been converted or redeemed pursuant to Condition 7(f); and
(vi) such other information relating to the Change of Control as the Trustee may reasonably require.

The Trustee shall not be required to take any steps to ascertain whether a Change of Control or any event which could lead to a Change of Control has occurred or may occur and will not be responsible to Noteholders or any other person for any loss arising from any failure by it to do so.

(h) Procedure for exercise of Conversion Rights

The Conversion Right may be exercised by a Noteholder during the Conversion Period by delivering the relevant Note to the specified office of any Conversion Agent, during its usual business hours, accompanied by a duly completed and signed notice of conversion (a “ Conversion Notice ”) in the form (for the time being current) obtainable from any Conversion Agent. Conversion Rights shall be exercised subject in each case to any applicable fiscal or other laws or regulations applicable in the jurisdiction in which the specified office of the Conversion Agent to whom the relevant Conversion Notice is delivered is located. If such delivery is made after the end of normal business hours or on a day which is not a business day in the place of the specified office of the relevant Conversion Agent, such delivery shall be deemed for all purposes of these Conditions to have been made on the next following such business day.

Any determination as to whether any Conversion Notice has been duly completed and properly delivered shall be made by the relevant Conversion Agent and shall, save in the case of manifest or proven error, be conclusive and binding on the Issuer, the Trustee, the Conversion Agents and the relevant Noteholder.

A Conversion Notice, once delivered, shall be irrevocable.

The conversion date in respect of a Note (the “ Conversion Date ”) shall be the next Sydney business day following the date of the delivery of the Notes and the Conversion Notice.

A Noteholder exercising a Conversion Right:

(i) shall, subject to Condition 6(h)(ii) below, be responsible for paying directly to the relevant authorities any taxes and capital, stamp, issue and registration and transfer taxes and duties arising on conversion and such Noteholder shall be responsible for paying all, if any, taxes arising by reference to any disposal or deemed disposal of a Note or interest therein in connection with such conversion; but
(ii) shall not be responsible for any taxes or capital, stamp, issue and registration and transfer taxes and duties payable in Australia (or any province, state or territory thereof) in respect of the allotment and issue of any Ordinary Shares on such conversion or in respect of the delivery of any Ordinary Shares on such conversion (including any Additional Ordinary Shares), which shall be paid by the Issuer. If the Issuer shall fail to pay any taxes and capital, stamp, issue and registration and transfer taxes and duties payable for which it is responsible as provided above, the relevant holder shall be entitled to tender and pay the same and the Issuer as a separate and independent stipulation, covenants to reimburse and indemnify each Noteholder in respect of any payment thereof and any penalties payable in respect thereof.

For the avoidance of doubt, none of the Agents nor the Trustee shall be responsible for determining whether such taxes or capital, stamp, issue and registration and transfer taxes and duties are payable or the amount thereof and it shall not be responsible or liable for any failure by the Issuer or any Noteholder to pay such taxes or capital, stamp, issue and registration and transfer taxes and duties.

Ordinary Shares to be issued on exercise of Conversion Rights will be issued, at the option of the Noteholder exercising its Conversion Right as specified in the Conversion Notice, either:

(a) in uncertificated form through the securities trading system known as the Clearing House Electronic Sub-register System operated by ASX Settlement Pty Ltd (“ CHESS ”) (or any successor licensed clearance and settlement facility applicable to the Ordinary Shares), or
(b) in uncertificated form through the Issuer’s share registry provider,

and in the case of (a) the Ordinary Shares will be credited to the CHESS account specified in the Conversion Notice, or in the case of (b) the Ordinary Shares will be credited to an account with the share registry provider in the name of the Noteholder, in each case by a date which is generally expected to be not later than four Sydney business days (in the case of Ordinary Shares to be issued through CHESS) after the relevant Conversion Date.

Statements of holdings for Ordinary Shares issued on exercise of Conversion Rights through CHESS will be dispatched by the Issuer by mail free of charge as soon as practicable but in any event within 10 Sydney business days after the relevant Conversion Date.

On conversion, the Issuer will redeem the Notes held at that time by the Noteholder concerned and in respect of which a Conversion Right is to be exercised (“ Relevant Notes ”) for an amount equal to their aggregate outstanding principal amount. In relation to each Noteholder concerned, the Issuer will apply the whole of the said amount in respect of the redemption of the Relevant Notes for the subscription on behalf of that Holder, for the number of Ordinary Shares calculated in accordance with these Conditions.

On the Conversion Date, the Issuer must issue, or otherwise deliver (or procure the issue or delivery as the case may be), to each Noteholder (or to such other person as the Holder may direct the Issuer in writing at least 5 business days prior to the Conversion Date provided that such person is a person to whom a transfer of the Notes could be made in compliance with Condition 4) the number of Ordinary Shares for its Notes calculated in accordance with these Conditions. Provided the Issuer is admitted to

the official list of the ASX, on the date of issue of Ordinary Shares issued on conversion of a Note, the Issuer will apply for quotation of such Ordinary Shares on the ASX.

The lodgement of an application for quotation of the Ordinary Shares with ASX by the Issuer will constitute a representation and warranty by the Issuer to the person to whom the Ordinary Shares in question are issued on Conversion (“ Recipient ”) that:

(i) the Ordinary Shares issued on conversion are issued solely for the purpose of satisfying the Issuer’s contractual obligations under the terms of the Notes and not for the purpose of the person to whom those Ordinary Shares are issued, selling or transferring the Ordinary Shares or granting, issuing or transferring an interest in, or options over, them;
(ii) subject to the ASX granting quotation of the Ordinary Shares issued on conversion of Notes, they will be freely tradable in the ordinary course on the ASX; and
(iii) an offer of the Ordinary Shares issued on conversion for sale within 12 months after their issue will not require disclosure under section 707(3) of the Corporations Act.

Without limiting its obligations under this Condition 6(h), the Issuer must use its best endeavours, and furnish all such quotation applications, documents, information and undertakings as may be reasonably necessary in order, to procure the ASX quotation referred to in this Condition 6 on the Conversion Date.

(i) Ordinary Shares

(i) Ordinary Shares issued or transferred and delivered upon conversion of the Notes will be fully paid and will in all respects rank pari passu with the fully paid Ordinary Shares in issue on the relevant Conversion Date or, in the case of Additional Ordinary Shares, on the relevant Reference Date, except in any such case for any right excluded by mandatory provisions of applicable law and except that such Ordinary Shares or, as the case may be, Additional Ordinary Shares will not rank for (or, as the case may be, the relevant holder shall not be entitled to receive) any rights, distributions or payments the record date or other due date for the establishment of entitlement for which falls prior to the relevant Conversion Date or, as the case may be, the relevant Reference Date.
(ii) Save as provided in Condition 6(j), no payment or adjustment shall be made on conversion for any interest which otherwise would have accrued on the relevant Notes since the last Interest Payment Date preceding the Conversion Date relating to such Notes (or, if such Conversion Date falls before the first Interest Payment Date, since the Closing Date).

(j) Interest on Conversion

If any notice requiring the redemption of any Notes is given pursuant to Conditions 7(b) or 7(c) on or after the fifteenth calendar day prior to a record date in respect of any Dividend or distribution payable in respect of the Ordinary Shares which has occurred since the last Interest Payment Date (or in the case of the first Interest Period, since the Closing Date) and where such notice specifies a date for redemption falling on or prior to the date which is 14 days after the Interest Payment Date next following such record date, interest shall accrue at the applicable Interest Rate on Notes in respect of which Conversion Rights shall have been exercised and in respect of which the Conversion Date falls after such record date and on or prior to the Interest Payment Date next following such record date in respect of such Dividend or distribution, in each case from and including the preceding Interest Payment Date (or, if such Conversion Date falls before the first Interest Payment Date, from the Closing Date) to but excluding such Conversion Date. The Issuer shall pay any such interest by not

later than 14 days after the relevant Conversion Date by transfer to, an Australian Dollar account with a bank in Sydney in accordance with instructions given by the relevant Noteholder in the relevant Conversion Notice.

(k) Purchase or Redemption of Ordinary Shares

The Issuer or any Subsidiary may exercise such rights as it may from time to time enjoy as permitted under applicable law to purchase or redeem or buy back its own shares (including Ordinary Shares) or any depositary or other receipts or certificates representing the same without the consent of the Noteholders.

(l) No duty to Monitor

Neither the Trustee nor the Agents shall be under any duty to monitor whether any event or circumstance has happened or exists which may require an adjustment to be made to the Conversion Price and will not be responsible or liable to the Noteholders or any other person for any loss arising from any failure by it to do so.

Neither the Trustee nor the Agents shall be under any duty to determine, calculate or verify the Conversion Price and/or any adjustments to it and will not be responsible or liable to the Noteholders or any other person for any loss arising from any failure by it to do so.

(m) Cash Settlement

(i) Cash Alternative Election : Upon exercise of Conversion Rights by a Noteholder, the Issuer may make an election (a “ Cash Alternative Election ”) by giving notice (a “ Cash Alternative Election Notice ”) to the relevant Noteholder by not later than the date (the “ Cash Election Date ”) falling three Sydney business days following the relevant Conversion Date to the address (or, if a fax number or email address is provided in the relevant Conversion Notice, that fax number or email address) specified for that purpose in the relevant Conversion Notice (with a copy to the Trustee and the Principal Paying, Transfer and Conversion Agent) to satisfy the exercise of the Conversion Right in respect of the relevant Notes by making payment, or procuring that payment is made, to the relevant Noteholder of the Cash Alternative Amount, together with any other amount payable by the Issuer to such Noteholder pursuant to these Conditions in respect of or relating to the relevant exercise of Conversion Rights, including any interest payable pursuant to Condition 6(j).

A Cash Alternative Election shall be irrevocable.

(ii) Cash Alternative Amount : The Issuer will pay the relevant Cash Alternative Amount, together with any other amount as aforesaid, by not later than 5 Sydney business days following the last day of the Cash Alternative Calculation Period by transfer to an Australian Dollar account with a bank in Sydney in accordance with instructions contained in the relevant Conversion Notice.
(iii) Additional Cash Alternative Amount : If there is a Retroactive Adjustment to the Conversion Price following the exercise of Conversion Rights by a Noteholder, in circumstances where a Cash Alternative Election is made in respect of such exercise, the Issuer shall pay to the relevant Noteholder an additional amount (the “ Additional Cash Alternative Amount ”) equal to the Current Market Price of such number of Ordinary Shares equal to that by which the number of Ordinary Shares by reference to which the Cash Alternative Amount shall have been determined would have been increased if the relevant adjustment to the Conversion Price had been made and become effective immediately prior to the relevant Conversion Date.

The Issuer will pay the Additional Cash Alternative Amount not later than five Sydney business days following the relevant Reference Date by transfer to an Australian Dollar account with a bank in Sydney in accordance with instructions contained in the relevant Conversion Notice.

7 Redemption and Purchase

(a) Final Redemption

Unless previously purchased and cancelled, redeemed or converted as herein provided, the Notes will be redeemed at their principal amount on the Final Maturity Date. The Notes may only be redeemed at the option of the Issuer prior to the Final Maturity Date in accordance with Conditions 7(b) or 7(c).

(b) Redemption at the Option of the Issuer

On giving not less than 30 nor more than 60 days’ notice (an “ Optional Redemption Notice ”) to the Trustee and to the Noteholders, the Trustee and the Principal Paying, Transfer and Conversion Agent (which notice shall be irrevocable) in accordance with Condition 17:

(i) the Issuer may redeem all but not some only of the Notes on any date (an “ Optional Redemption Date ”) on or after 3 April 2015 and specified in the Optional Redemption Notice at their principal amount together with accrued but unpaid interest to but excluding such date, if the Volume Weighted Average Price for any 20 consecutive Dealing Days, where the last day of such 20-Dealing Day period falls within five Dealing Days prior to the date upon which notice of such redemption is given, was at least 130% of the Conversion Price; or
(ii) the Issuer may redeem all but not some only of the Notes on an Optional Redemption Date specified in the Optional Redemption Notice at their principal amount, together with accrued but unpaid interest to but excluding such date if, at any time prior to the date the relevant Optional Redemption Notice is given, Conversion Rights shall have been exercised and/or purchases (and corresponding cancellations) and/or redemptions effected in respect of 90% or more in principal amount of the Notes originally issued (which shall for this purpose include any further Notes issued pursuant to Condition 18 and consolidated and forming a single series with the Notes).

(c) Redemption for Taxation Reasons

At any time the Issuer may, having given not less than 30 nor more than 60 days’ notice (a “ Tax Redemption Notice ”) to the Noteholders, the Trustee and the Principal Paying, Transfer and Conversion Agent (which notice shall be irrevocable) redeem (subject to the second following paragraph) all but not some only, of the Notes on the date (“ Tax Redemption Date ”) specified in the Tax Redemption Notice at their principal amount, together with accrued but unpaid interest to such date, if (i) the Issuer certifies to the Trustee immediately prior to the giving of such notice that the Issuer has or will become obliged to pay additional amounts in respect of payments on the Notes pursuant to Condition 9 as a result of any change in, or amendment to, the laws or regulations of the Commonwealth of Australia or any political subdivision or any authority thereof or therein having power to tax, or any change in the general application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after 3 April 2012, and (ii) the Issuer would still be obliged to pay such additional amounts after taking reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts were a payment in respect of the Notes then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Trustee (a) a certificate signed by two directors of the Issuer stating that the

Issuer would still be obliged to pay such additional amounts after taking reasonable measures available to it and (b) an opinion of independent legal or tax advisers of recognised international standing to the effect that such change or amendment has occurred and that the Issuer has or will be obliged to pay such additional amounts as a result thereof (irrespective of whether such amendment or change is then effective) and the Trustee shall accept without any liability for so doing such certificate and opinion as sufficient evidence of the matters set out in (i) and (ii) above which shall be conclusive and binding on the Noteholders.

On the Tax Redemption Date, the Issuer shall (subject to the next following paragraph) redeem the Notes at their principal amount, together with accrued interest to such date.

If the Issuer gives a Tax Redemption Notice, each Noteholder will have the right to elect that his Note(s) shall not be redeemed and that the provisions of Condition 9 shall not apply in respect of any payment of interest to be made on such Note(s) which falls due after the relevant Tax Redemption Date whereupon no additional amounts shall be payable in respect thereof pursuant to Condition 9 and payment of all amounts of interest on the Notes shall be made subject to the deduction or withholding of the taxation required to be withheld or deducted by the Commonwealth of Australia or any political subdivision or any authority thereof or therein having power to tax. To exercise such right, the holder of the relevant Note must complete, sign and deposit at the specified office of the Principal Paying, Transfer and Conversion Agent or any other Paying Agent or Conversion Agent a duly completed and signed notice of election, in the form for the time being current, obtainable from the specified office of the Principal Paying, Transfer and Conversion Agent or any other Paying Agent or Conversion Agent together with the relevant Certificate evidencing such Notes on or before the day falling 10 days prior to the Tax Redemption Date.

(d) Optional and Tax Redemption Notices

Any Optional Redemption Notice or Tax Redemption Notice shall be irrevocable. Any such notice shall specify (i) the Optional Redemption Date or, as the case may be, the Tax Redemption Date, (ii) the Conversion Price, the aggregate principal amount of the Notes outstanding and the closing price of the Ordinary Shares as derived from the Relevant Stock Exchange, in each case as at the latest practicable date prior to the publication of the Optional Redemption Notice or, as the case may be, the Tax Redemption Notice and (iii) the last day on which Conversion Rights may be exercised by Noteholders.

(e) Redemption at the Option of Noteholders

The Issuer will, at the option of the holder of any Note redeem all or some only of such holder’s Notes on 3 April 2015 (the “ Put Option Date ”) at their principal amount, together with interest accrued to the Put Option Date. To exercise such option, the holder must deposit at the specified office of the Principal Paying, Transfer and Conversion Agent or any other Paying Agent a duly completed and signed put notice in the form for the time being current, obtainable from the specified office of the Principal Paying, Transfer and Conversion Agent or any other Paying Agent, together with the Certificate evidencing the Notes to be redeemed not more than 60 days and not less than 30 days prior to the Put Option Date. A put notice, once delivered, shall be irrevocable and may not be withdrawn without the Issuer’s consent and the Issuer shall redeem the Notes the subject of a put notice on the Put Option Date.

(f) Redemption for a Relevant Event

Following the occurrence of a Relevant Event, the holder of each Note will have the right at such holder’s option, to require the Issuer to redeem all or some only of that holder’s Notes on the Relevant

Event Redemption Date (as defined below) at their Principal Amount, together with accrued interest to but excluding the Event Redemption Date. To exercise such right, the holder of the relevant Note must complete, sign and deposit at the specified office of any Paying Agent a duly completed and signed notice of redemption, in the form for the time being current, obtainable from the specified office of any Paying Agent (the “ Relevant Event Redemption Notice ”) together with the Certificate evidencing the Notes to be redeemed by not later than 60 days following a Relevant Event, or, if later, 60 days following the date upon which notice thereof is given to Noteholders by the Issuer in accordance with Condition 17. The “ Relevant Event Redemption Date ” shall be the 14th day after the expiry of such period of 60 days as referred to above.

A Relevant Event Redemption Notice, once delivered, shall be irrevocable and the Issuer shall redeem the Notes the subject of Relevant Event Redemption Notices delivered as aforesaid on the Relevant Event Redemption Date.

The Issuer shall give notice to the Noteholders in accordance with Condition 17 and the Trustee and the Agents by not later than 14 days following the first day on which it becomes aware of the occurrence of a Relevant Event, which notice shall specify the procedure for exercise by holders of their rights to require redemption of the Notes pursuant to this Condition 7 and shall give brief details of the Relevant Event.

The Trustee shall not be required to take any steps to ascertain whether a Relevant Event or any event which could lead to the occurrence of a Relevant Event has occurred and shall not be liable to any person for any loss arising from any failure to do so.

(g) Purchase

Subject to the requirements (if any) of any stock exchange on which the Notes may be admitted to listing and trading at the relevant time and subject to compliance with applicable laws and regulations, the Issuer or any Subsidiary of the Issuer may at any time purchase some or all of the Notes in the open market, by private contract or otherwise at any price.

(h) Cancellation

All Notes which are redeemed or in respect of which Conversion Rights are exercised will be cancelled and may not be reissued or resold. Notes purchased by the Issuer or any of its Subsidiaries shall be surrendered to the Principal Paying, Transfer and Conversion Agent for cancellation and may not be reissued or re-sold.

(i) Multiple Notices

If more than one notice of redemption is given pursuant to this Condition 7, the first of such notices to be given shall prevail, save that a notice of redemption given by a Noteholder pursuant to Condition 7(f) shall prevail over any other notice of redemption given pursuant to this Condition 7, whether given before, after or at the same time as any notice of redemption under Condition 7(f).

8 Payments

(a) Principal

Payment of principal in respect of the Notes and accrued interest payable on a redemption of the Notes other than on an Interest Payment Date will be made to the persons shown in the Register at the close of business on the Record Date and subject to the surrender of the Certificate evidencing such Notes at the specified office of the Registrar or of any Paying Agent.

(b) Interest and other Amounts

(i) Payments of interest due on an Interest Payment Date, which shall be for value on such Interest Payment Date, (or, if such Interest Payment Date is not a business day (as defined below in Condition 8(g)), for value on the first following day which is a business day) will be made to the persons shown in the Register at close of business on the Record Date.
(ii) Payments of all amounts other than as provided in Conditions 8(a) and (b)(i) will be made as provided in these Conditions.

(c) Record Date

“ Record Date ” means the seventh business day, in the place of the specified office of the Registrar, before the due date for the relevant payment.

(d) Payments

Each payment in respect of the Notes pursuant to Conditions 8(a) and 8(b)(i) will be made by transfer to an Australian Dollar account with a bank in Sydney as notified to the Registrar by the relevant Noteholder by no later than the relevant Record Date.

The Issuer will not be required to make any such payment in respect of the Notes until six business days after the Noteholder has provided the necessary account details for payment in accordance with this Condition 8(d).

(e) Payments subject to fiscal laws

All payments in respect of the Notes are subject in all cases to any applicable fiscal or other laws and regulations but without prejudice to Condition 9. No commissions or expenses shall be charged to the Noteholders in respect of such payments.

(f) Default Interest and Delay In Payment

If the Issuer fails to pay any sum in respect of the Notes when the same becomes due and payable under these Conditions (including as provided in Condition 5(b)), interest shall accrue on the overdue sum at the rate of 6.95 per cent. per annum from the due date. Such default interest shall accrue on the basis of the actual number of days elapsed and a 360-day year.

Noteholders will not be entitled to any interest or other payment for any delay after the due date in receiving the amount due (i) as a result of the due date not being a business day, (ii) if the Noteholder is late in surrendering the relevant Note or (iii) if the Noteholder does not provide the necessary account details for payment in accordance with these Conditions.

(g) Business Days

In this Condition 8, “ business day ” means a day (other than a Saturday or Sunday) on which banks and foreign exchange markets are open for business, in Sydney and (where such surrender is required by these Conditions) in the place of the specified office of the Registrar or relevant Paying Agent, to whom the relevant Certificate evidencing such Note is presented or surrendered.

(h) Paying Agents, Transfer Agents and Conversion Agents, etc.

The initial Principal Paying, Transfer and Conversion Agent and the initial Registrar and their initial specified offices are listed below. The Issuer reserves the right under the Agency Agreement at any time, with the prior written approval of the Trustee, to vary or terminate the appointment of the Registrar or any other Agent and to appoint another Registrar or any additional or other Agents or

another Registrar, provided that it will (i) maintain a Principal Paying, Transfer and Conversion Agent and a Registrar, (ii) maintain Paying Agents, Transfer Agents and Conversion Agents having specified offices in at least one major European city including a Paying Agent, a Transfer Agent and a Conversion Agent having a specified office in London, (iii) a Paying Agent, a Transfer Agent and a Conversion Agent with a specified office in a European Union member state that will not be obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any other European Union Directive implementing the conclusions of the ECOFIN council meeting of 26-27 November 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive, (iv) so long as the Notes are listed on the Singapore Exchange Securities Trading Limited and the rules of that exchange so require, a Paying Agent having a specified office in Singapore and (v) maintain a Registrar with a specified office outside the United Kingdom. Notice of any change in the Registrar or any other Agents or their specified offices will promptly be given by the Issuer to the Noteholders in accordance with Condition 17, and to the Trustee and the other Agents.

(i) Fractions

When making payments to Noteholders, if the relevant payment is not of an amount which is a whole multiple of the smallest unit of the relevant currency in which such payment is to be made, such payment will be rounded down to the nearest unit.

9 Taxation

All payments made by on or behalf of the Issuer in respect of the Notes will be made free from any restriction or condition and be made without deduction or withholding for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of the Commonwealth of Australia or any political subdivision or any authority thereof or therein having power to tax, unless deduction or withholding of such taxes, duties, assessments or governmental charges is required to be made by law.

In the event that any such withholding or deduction is required to be made, the Issuer will pay such additional amounts as will result in the receipt by the Noteholders of the amounts which would otherwise have been receivable had no such withholding or deduction been required, except that no such additional amount shall be payable in respect of interest on any Note:

(a) to a holder (or to a third party on behalf of a holder) who is subject to such taxes, duties, assessments or governmental charges in respect of such Note by reason of his having some connection with the Commonwealth of Australia (and where the withholding or deduction is required on account of the Noteholder failing to provide their tax file number or Australian business number to the Issuer) otherwise than merely by holding the Note or by the receipt of amounts in respect of the Note; or
(b) in the case of payment of principal, in respect of which the Certificate representing such Note is presented or surrendered more than 30 days after the relevant date except to the extent that the holder would have been entitled to such Additional Tax Amount on presenting or surrendering the relevant Certificate for payment on the last day of such period of 30 days; or
(c) where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive; or

(d) to, or to a third party on behalf of, a holder who is liable for such taxes, duties, assessments or governmental charges by reason of the holder being an Offshore Associate.

References in these Conditions and the Trust Deed to principal and interest shall be deemed also to refer to any additional amounts which may be payable under this Condition 9 or any undertaking or covenant given in addition thereto or in substitution therefor pursuant to the Trust Deed.

This Condition 9 shall not apply in respect of payments on any Notes which are the subject of an election by the relevant Noteholder pursuant to Condition 7(c).

10 Events of Default

The Trustee at its discretion may, and if so requested in writing by the holders of at least twenty five per cent. in principal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution of the Noteholders shall (subject in each case to being indemnified and/or pre-funded and/or secured to its satisfaction), give notice to the Issuer that the Notes are, and they shall accordingly thereby immediately become, due and repayable at their principal amount together with accrued interest if any of the following events (each an “ Event of Default ”) shall have occurred:

(a) default is made in:
(i) the payment on the due date of (i) any principal payable in respect of the Notes or (ii) any interest payable in respect of the Notes; or
(ii) the delivery of Ordinary Shares to satisfy a Conversion Right pursuant to Condition 6; or
(b) the Issuer does not perform or comply with any one or more of its other obligations under the Notes or the Trust Deed and (unless the default is incapable of remedy) is not remedied within 15 days after the Issuer shall have received from the Trustee written notice of such default requiring it to be remedied; or
(c) (i) any other present or future indebtedness for borrowed money of the Issuer or any Subsidiary of the Issuer becomes (or becomes capable of being declared) due and payable prior to its stated maturity by reason of an event of default (however described); or
(ii) any such indebtedness is not paid when due or, as the case may be, within any applicable grace period; or
(iii) the Issuer or any Subsidiary of the Issuer fails to pay when due or, as the case may be, within any applicable grace period any amount payable by it under any present or future guarantee for, or indemnity in respect of, any indebtedness for borrowed money; or
(iv) any mortgage, charge, pledge, lien or other encumbrance, present or future, created or assumed by the Issuer or any Subsidiary of the Issuer for any indebtedness for borrowed money (or any guarantee of, or indemnity in respect of, indebtedness for borrowed money) that has become payable becomes enforceable and steps are taken to enforce it (including the taking of possession or the appointment of a receiver, administrative receiver, administrator manager, judicial manager, controller or other similar person),

and the aggregate amount of the indebtedness, guarantees and indemnities in respect of which one or more of the events mentioned above in this Condition 10(c) have occurred equals or exceeds A$20,000,000 (or its equivalent in other currencies); or

(d) a distress, attachment, execution, seizure before judgment or other legal process is levied or enforced on or against all or any material part of the property, assets or revenues of the Issuer or any Subsidiary of the Issuer which is not discharged, removed, stayed or paid within 30 days; or
(e) the Issuer or any Subsidiary of the Issuer (i) is (or is deemed by law or a court to be) or states that it is insolvent or unable to pay its debts when they fall due, (ii) stops, suspends or threatens to stop or suspend payment of its debts generally, or (iii) makes or enters into a general assignment or an arrangement or composition or compromise with or for the benefit of its creditors (other than in connection with a reconstruction, amalgamation, reorganisation, merger or consolidation permitted under Condition 10(f)); or
(f) an administrator (as defined in the Corporations Act) or liquidator or a like or similar officer is appointed in respect of the Issuer or any Subsidiary of the Issuer or a court order is made or a resolution passed for the winding-up or dissolution of the Issuer or any Subsidiary of the Issuer (which is not stayed, withdrawn or dismissed within 45 days), or the Issuer or any Subsidiary of the Issuer ceases or threatens to cease to carry on business, except in any such case for the purpose of and followed by a reconstruction, amalgamation, reorganisation, merger or consolidation (i) on terms approved by the Trustee or by an Extraordinary Resolution of the Noteholders, or (ii) in the case of a Subsidiary of the Issuer, where that Subsidiary is solvent or its undertaking and assets are transferred to or otherwise vested in the Issuer or another Subsidiary of the Issuer; or
(g) a final judgment or judgments of a court or courts of competent jurisdiction for the payment of money aggregating in excess of A$20,000,000 (or its equivalent in the relevant currency of payment) are rendered against the Issuer or any Subsidiary of the Issuer and which judgments are not bonded, discharged or stayed pending appeal within 30 days after the Latest Date, or are not discharged within 30 days after the later of the expiration of such stay and the Latest Date; or
(h) any action, condition or thing (including the obtaining or effecting of any necessary consent, approval, authorisation, exemption, filing, licence, order, recording or registration) at any time required to be taken, fulfilled or done in order (i) to enable the Issuer lawfully to enter into, exercise its rights and perform and comply with its obligations under the Notes and the Trust Deed, (ii) to ensure that those obligations are legally binding and enforceable and (iii) to make the Notes and the Trust Deed admissible in evidence in the courts of Australia or England is not taken, fulfilled or done and not remedied within 30 days; or
(i) it is or will become unlawful for the Issuer to perform or comply with any one or more of its obligations under any of the Notes or the Trust Deed; or
(j) any event occurs which under the laws of any relevant jurisdiction has an analogous or substantially similar effect to any of the events referred to in Condition 10(d) to Condition 10(f) (both inclusive).

“ Latest Date ” means the latest of (i) the entry of such judgment; (ii) if such judgment specifies a date by which it must be satisfied, the date so specified; and (iii) the time allowed or specified under applicable law for such judgment to be bonded, discharged or stayed pending appeal.

11 Undertakings

Whilst any Conversion Right remains exercisable, the Issuer will, save with the approval of an Extraordinary Resolution or with the prior written approval of the Trustee where, in the opinion of the Trustee, it is not materially prejudicial to the interests of the Noteholders to give such approval:

(a) other than in connection with a Newco Scheme, not issue or pay up any Securities, in either case by way of capitalisation of profits or reserves, other than:

(i) by the issue of fully paid Ordinary Shares or other securities to Shareholders and other holders of shares in the capital of the Issuer which by their terms entitle the holders thereof to receive Ordinary Shares or other shares of Securities on a capitalisation of profits or reserves; or
(ii) by the issue of Ordinary Shares paid up in full (in accordance with applicable law) and issued wholly, ignoring fractional entitlements, in lieu of the whole or part of a cash dividend; or
(iii) by the issue of fully paid equity share capital (other than Ordinary Shares) to the holders of equity share capital of the same class and other holders of shares in the capital of the Issuer which by their terms entitle the holders thereof to receive equity share capital (other than Ordinary Shares); or
(iv) by the issue of Securities or any equity share capital pursuant to any Employee Share Scheme,

unless, in any such case, the same constitutes a Dividend or otherwise gives rise (or would, but for the provisions of any exclusion from Conditions 6(b)(i) to 6(b)(x) (both inclusive) or Condition 6(f) relating to the carry forward of adjustments, give rise) to an adjustment to the Conversion Price; or

(b) not modify the rights attaching to the Ordinary Shares with respect to voting, dividends or liquidation nor issue any other class of equity share capital carrying any rights which are more favourable than the rights attaching to the Ordinary Shares but so that nothing in this Condition 11(b) shall prevent:
(i) any consolidation, reclassification or subdivision of the Ordinary Shares; or
(ii) any modification of such rights which is not, in the opinion of a Financial Adviser, materially prejudicial to the interests of the holders of the Notes; or
(iii) any issue of equity share capital where the issue of such equity share capital results, or would, but for the provisions of Condition 6(f) relating to roundings or the carry forward of adjustments or, where comprising Ordinary Shares, the fact that the consideration per Ordinary Share receivable therefor is at least the Current Market Price per Ordinary Share, otherwise result, in an adjustment to the Conversion Price; or
(iv) any issue of equity share capital or modification of rights attaching to the Ordinary Shares, where prior thereto the Issuer shall have instructed a Financial Adviser to determine what (if any) adjustments should be made to the Conversion Price as being fair and reasonable to take account thereof and such Financial Adviser shall have determined either that no adjustment is required or that an adjustment resulting in an decrease in the Conversion Price is required and, if so, the new Conversion Price as a result thereof and the basis upon which such adjustment is to be made and, in any such case, the date on which the adjustment shall take effect (and so that the adjustment shall be made and shall take effect accordingly);
(c) procure that no Securities (whether issued by the Issuer or any Subsidiary of the Issuer or procured by the Issuer or any Subsidiary of the Issuer to be issued or issued by any other person pursuant to any arrangement with the Issuer or any Subsidiary of the Issuer) issued without rights to convert into, or exchange or subscribe for, Ordinary Shares shall subsequently be granted such rights exercisable at a consideration per Ordinary Share which is less than 95 per cent. of the Current Market Price per Ordinary Share at the close of business on the last Dealing Day preceding the date of the first public announcement of the proposed inclusion of such rights unless the same gives rise (or would, but for the provisions of Condition 6(f) relating to roundings and minimum adjustments or the carry forward of adjustments, give rise) to an adjustment to the Conversion Price and that at no time shall there be in issue Ordinary Shares of differing nominal values, save where such Ordinary Shares have the same economic rights;

(d) not make any issue, grant or distribution take or omit to take any other action if the effect thereof would be that, on the exercise of Conversion Rights, Ordinary Shares could not, under any applicable law then in effect, be legally issued as fully paid;
(e) not reduce its issued share capital or any uncalled liability in respect thereof, or any non-distributable reserves, except:
(i) pursuant to the terms of issue of the relevant share capital; or
(ii) by means of a purchase or redemption of share capital of the Issuer to the extent permitted by applicable law; or
(iii) pursuant to a Newco Scheme; or
(iv) by way of transfer to reserves as permitted under applicable law; or
(v) where the reduction is permitted by applicable law and the Trustee is advised by a Financial Adviser, acting as an expert, that the interests of the Noteholders will not be materially prejudiced by such reduction; or
(vi) where the reduction is permitted by applicable law and results in (or would, but for the provisions of Condition 6(f) relating to roundings or the carry forward of adjustments, result in) an adjustment to the Conversion Price or is otherwise taken into account for the purposes of determining whether such an adjustment should be made,

provided that, without prejudice to the other provisions of these Conditions, the Issuer may exercise such rights as it may from time to time be entitled pursuant to applicable law to purchase its Ordinary Shares and any depositary or other receipts or certificates representing Ordinary Shares without the consent of Noteholders;

(f) if any offer is made to all (or as nearly as may be practicable all) Shareholders (or all (or as nearly as may be practicable all) Shareholders other than the offeror and/or any associate (as defined in sections 11 and 12 of the Corporations Act)) to acquire the whole or any part of the issued Ordinary Shares, or if any person proposes a scheme with regard to such acquisition (other than a Newco Scheme), give notice of such offer or scheme to the Noteholders, the Trustee and the Principal Paying, Transfer and Conversion Agent at the same time as any notice thereof is sent to the Shareholders (or as soon as practicable thereafter) that details concerning such offer or scheme may be obtained from the specified offices of the Principal Paying, Transfer and Conversion Agent and, where such an offer or scheme has been recommended by the board of directors of the Issuer, or where such an offer has become or been declared unconditional in all respects or such scheme has become effective, use all reasonable endeavours to procure that a like offer or scheme is extended to the holders of any Ordinary Shares issued during the period of the offer or scheme arising out of the exercise of the Conversion Rights by the Noteholders;
(g) in the event of a Newco Scheme take (or shall procure that there is taken) all necessary action to ensure that (to the satisfaction of the Trustee) immediately after completion of the Scheme of Arrangement, Newco is substituted under the Notes and the Trust Deed as principal obligor in place of the Issuer (with the Issuer providing a guarantee) subject to and as provided in the Trust Deed and (i) such amendments are made to these Conditions and the Trust Deed as are necessary in the opinion of the Trustee to ensure that the Notes may be converted into or exchanged for ordinary shares or units or the equivalent in Newco mutatis mutandis in accordance with and subject to these Conditions and the Trust Deed and (ii) the ordinary shares or units or the equivalent of Newco are:
(A) admitted to listing on the Relevant Stock Exchange; or

(B) admitted to listing on another regulated, regularly operating, recognised stock exchange or securities market;
(h) use its best endeavours to ensure that the Ordinary Shares issued upon exercise of Conversion Rights will, as soon as is practicable, be admitted to listing and to trading on the Australian Securities Exchange and will be listed, quoted or dealt in, as soon as is practicable, on any other stock exchange or securities market on which the Ordinary Shares may then be listed or quoted or dealt in;
(i) not change the jurisdiction in which it is domiciled or resident or to whose taxing authority it is subject generally unless it would not thereafter be required pursuant to then current laws and regulations to withhold or deduct for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of such jurisdiction or any political subdivision thereof or therein having power to tax in respect of any payment on or in respect of the Notes;
(j) for so long as any Note remains outstanding and subject to the occurrence of a Change of Control, use its reasonable endeavours to ensure that its issued and outstanding Ordinary Shares shall be admitted to listing and to trading on the Australian Securities Exchange; and
(k) comply with each of the requirements of ASIC Class Order [CO 10/322] including those with ongoing operation after the Issue Date for so long as they are relevant.

The Issuer has undertaken in the Trust Deed to deliver to the Trustee annually a certificate of the Issuer, as to there not having occurred an Event of Default or Potential Event of Default since the date of the last such certificate or if such event has occurred as to the details of such event. The Trustee will be entitled to rely on such certificate and shall not be obliged to independently monitor compliance by the Issuer with the undertakings set forth in this Condition 11, nor be liable to any person for not so doing.

12 Prescription

Claims against the Issuer for payment in respect of the Notes shall be prescribed and become void unless made within 10 years (in the case of principal) or five years (in the case of interest) from the appropriate Relevant Date in respect of such payment.

Claims in respect of any other amounts payable in respect of the Notes shall be prescribed and become void unless made within 10 years following the due date for payment thereof.

13 Replacement of Notes

If any Certificate evidencing a Note is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the specified office of the Registrar or any Transfer Agent subject to all applicable laws and stock exchange requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence and indemnity as the Issuer may require. Mutilated or defaced Certificates must be surrendered before replacements will be issued.

14 Meetings of Noteholders, Modification and Waiver, Substitution

(a) Meetings of Noteholders

The Trust Deed contains provisions for convening meetings of Noteholders to consider matters affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of any of these Conditions or any provisions of the Trust Deed. Such a meeting may be convened by the Issuer or the Trustee and shall be convened by the Issuer if requested in writing by Noteholders holding not less than ten per cent. in principal amount of the Notes for the time being outstanding. The

quorum for any meeting convened to consider an Extraordinary Resolution will be one or more persons holding or representing more than fifty per cent., in principal amount of the Notes for the time being outstanding, or at any adjourned meeting one or more persons being or representing Noteholders whatever the principal amount of the Notes so held or represented, unless the business of such meeting includes consideration of proposals, inter alia, (i) to modify the maturity of the Notes (other than deferring the earliest date on which the Notes may be redeemed pursuant to Condition 7(b)(i)) or the dates on which interest is payable in respect of the Notes, (ii) to reduce or cancel the principal amount, or interest on, the Notes or to reduce the amount payable on redemption of the Notes or modify or cancel the Conversion Rights, (iii) to increase the Conversion Price other than in accordance with these Conditions, (iv) to change the currency of any payment in respect of the Notes, (v) to change the governing law of the Notes, the Trust Deed or the Agency Agreement (other than in the case of a substitution of the Issuer (or any previous substitute or substitutes) under Condition 14(c)), or (vi) to modify the provisions concerning the quorum required at any meeting of Noteholders or the majority required to pass an Extraordinary Resolution, in which case the necessary quorum will be one or more persons holding or representing not less than seventy five per cent., or at any adjourned meeting not less than fifty per cent., in principal amount of the Notes for the time being outstanding. Any Extraordinary Resolution duly passed shall be binding on Noteholders (whether or not they were present at the meeting at which such resolution was passed). An Extraordinary Resolution is a resolution in respect of which not less than seventy five per cent. of the votes cast shall have been in favour at a meeting of Noteholders duly convened and held in accordance with the Trust Deed.

The Trust Deed provides that a resolution in writing signed by or on behalf of the holders of not less than ninety per cent. of the aggregate principal amount of Notes outstanding shall for all purposes be as valid and effective as an Extraordinary Resolution passed at a meeting of Noteholders duly convened and held. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders.

No consent or approval of Noteholders shall be required in connection with any Newco Scheme Modification.

(b) Modification and Waiver

The Trustee may agree, without the consent of the Noteholders, to (i) any modification of any of the provisions of the Trust Deed, any trust deed supplemental to the Trust Deed, the Agency Agreement, any agreement supplemental to the Agency Agreement, the Notes or these Conditions which in the Trustee’s opinion is of a formal, minor or technical nature or is made to correct a manifest error or to comply with mandatory provisions of law, and (ii) any other modification to the Trust Deed, any trust deed supplemental to the Trust Deed, the Agency Agreement, any agreement supplemental to the Agency Agreement, the Notes or these Conditions (except as mentioned in the Trust Deed), and any waiver or authorisation of any breach or proposed breach, of any of the provisions of the Trust Deed, any trust deed supplemental to the Trust Deed, the Agency Agreement, any agreement supplemental to the Agency Agreement, the Note or these Conditions which is, in the opinion of the Trustee, not materially prejudicial to the interests of the Noteholders. The Trustee may, without the consent of the Noteholders, determine any Event of Default or a Potential Event of Default should not be treated as such, provided that in the opinion of the Trustee, the interests of Noteholders will not be materially prejudiced thereby. Any such modification, authorisation, waiver or determination shall be binding on the Noteholders and, unless the Trustee otherwise requires, shall be notified by the Issuer to the Noteholders promptly in accordance with Condition 17 and to the Trustee and the Principal Paying, Transfer and Conversion Agent. The Trustee’s agreement may be subject to any condition that the Trustee requires including but not limited to obtaining, at the expense of the Issuer, an opinion of any

investment bank or legal or other expert and being indemnified and/or secured and/or pre-funded to its satisfaction.

(c) Substitution

The Trustee may, without the consent of the Noteholders, agree with the Issuer to the substitution in place of the Issuer (or any previous substitute or substitutes under this Condition 14(c)) as the principal debtor under the Notes and the Trust Deed of any Subsidiary of the Issuer subject to (i) the Notes being unconditionally and irrevocably guaranteed by the Issuer and (ii) the Notes continuing to be convertible or exchangeable into Ordinary Shares as provided in these Conditions mutatis mutandis as provided in these Conditions, with such amendments as the Trustee shall consider appropriate provided that in any such case, (x) the Trustee is satisfied that the interests of the Noteholders will not be materially prejudiced by the substitution, and (y) certain other conditions set out in the Trust Deed are complied with. In the case of such a substitution the Trustee may agree, without the consent of the Noteholders, to a change of the law governing the Notes and/or the Trust Deed provided that such change would not in the opinion of the Trustee be materially prejudicial to the interests of the Noteholders. Any such substitution shall be binding on the Noteholders and shall be notified by the Issuer promptly to the Noteholders in accordance with Condition 17 and to the Trustee and the Principal Paying, Transfer and Conversion Agent.

(d) Entitlement of the Trustee

In connection with the exercise of its functions, rights, powers and discretions (including but not limited to those referred to in this Condition 14) the Trustee shall have regard to the interests of the Noteholders as a class and, in particular but without limitation, shall not have regard to the consequences of the exercise of its functions, rights, powers or discretions for individual Noteholders resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory, and the Trustee shall not be entitled to require, nor shall any Noteholder be entitled to claim, from the Issuer or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders.

15 Enforcement

The Trustee may at any time, at its discretion and without notice, take such proceedings against the Issuer as it may think fit to enforce the provisions of the Trust Deed and the Notes, but it shall not be bound to take any such proceedings or any other action in relation to the Trust Deed or the Notes unless (i) it shall have been so directed by an Extraordinary Resolution of the Noteholders or so requested in writing by the holders of at least twenty five per cent. in principal amount of the Notes then outstanding, and (ii) it shall have been indemnified and/or pre-funded and/or secured to its satisfaction. No Noteholder shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound so to proceed, fails so to do within a reasonable period and the failure shall be continuing.

16 The Trustee

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including relieving it from taking any action or proceedings unless indemnified and/or prefunded and/or secured to its satisfaction. The Trustee is entitled to enter into business transactions with the Issuer and any entity related to the Issuer without accounting for any profit. The Trustee may rely without liability to Noteholders or any other person on a report, confirmation or certificate or any advice of any accountants (including the Auditors), financial advisers, investment bank or other expert, whether or not addressed to it and whether their liability in relation thereto is limited (by its terms or by any engagement letter relating thereto entered into by the Trustee or in any other manner) by reference to a monetary cap,

methodology or otherwise. The Trustee shall be obliged to accept and be entitled to rely on any such report, confirmation or certificate or advice where the Issuer procures delivery of the same pursuant to its obligation to do so under a condition hereof or any provision of the Trust Deed and such report, confirmation or certificate or advice shall be binding on the Issuer, the Trustee and the Noteholders in the absence of manifest error.

17 Notices

All notices regarding the Notes will be valid if published in a leading daily newspaper having circulation in (i) Asia (which is expected to be the Asian Wall Street Journal ) and (ii) Europe (which is expected to be the Financial Times ). The Issuer shall also ensure that all notices are duly published in a manner which complies with the rules and regulations of any stock exchange or other relevant authority on which the Notes are for the time being listed. Any such notice shall be deemed to have been given on the date of such publication or, if required to be published in more than one newspaper or in more than one manner, on the date of the first such publication in all the required newspapers or in each required manner. If publication as provided above is not practicable, notice will be given in such other manner, and shall be deemed to have been given on such date, as the Trustee may approve.

So long as the Notes are represented by a Global Certificate and such Global Certificate is held on behalf of a clearing system, notices to Noteholders shall be given by delivery of the relevant notice to such clearing system for communication by them to their respective accountholders instead of in accordance with Condition 17.

18 Further Issues

The Issuer may from time to time without the consent of the Noteholders create and issue further notes, bonds or debentures either having the same terms and conditions in all respects as the outstanding notes, bonds or debentures of any series (including the Notes) or in all respects except for the first payment of interest on them and the first date on which Conversion Rights may be exercised and so that such further issue shall be consolidated and form a single series with the outstanding notes, bonds or debentures of any series (including the Notes) or upon such terms as to interest, conversion, premium, redemption and otherwise as the Issuer may determine at the time of their issue. Any further notes, bonds or debentures consolidated and forming a single series with the outstanding notes, bonds or debentures of any series (including the Notes) constituted by the Trust Deed or any deed supplemental to it shall, and any other notes, bonds or debentures may, with the consent of the Trustee, be constituted by a deed supplemental to the Trust Deed. The Trust Deed contains provisions for convening a single meeting of the Noteholders and the holders of notes, bonds or debentures of other series in certain circumstances where the Trustee so decides.

19 Contracts (Rights of Third Parties) Act 1999

No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of Third Parties) Act 1999 (United Kingdom).

20 Governing Law and Jurisdiction

(a) Governing Law

The Trust Deed, the Agency Agreement and the Notes and any non-contractual obligations arising out of or in connection with them are governed by, and shall be construed in accordance with, English law.

(b) Jurisdiction

The courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with the Trust Deed or the Notes and accordingly any legal action or proceedings arising

out of or in connection with the Trust Deed or the Notes (“ Proceedings ”) may be brought in such courts. The Issuer has in the Trust Deed irrevocably submitted to the jurisdiction of such courts and has waived any objection to Proceedings in such courts whether on the ground of venue or on the ground that the Proceedings have been brought in an inconvenient forum. This submission is made for the benefit of the Trustee and each of the Noteholders and shall not limit the right of any of them to take Proceedings in any other court of competent jurisdiction nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction (whether concurrently or not).

(c) Agent for Service of Process

The Issuer has irrevocably appointed Law Debenture Corporate Services Limited of Fifth Floor, 100 Wood Street, London EC2V 7EX, as its agent in England to receive service of process in any Proceedings in England. Nothing herein or in the Trust Deed shall affect the right to serve process in any other manner permitted by law.

GLOBAL CERTIFICATE PROVISIONS

This section summarises the provisions relating to the Notes while represented by the Global Certificate.

Initial Issue of Notes

Upon the initial registration of the Notes in the name of a nominee of Euroclear and Clearstream, Luxembourg and delivery of the Global Certificate to a common depositary for Euroclear and Clearstream, Luxembourg (the “ Common Depositary ”), Euroclear or Clearstream, Luxembourg will credit each subscriber with a nominal amount of Notes equal to the nominal amount thereof for which it has subscribed and paid.

Relationship of Accountholders with Clearing Systems

Each of the persons shown in the records of Euroclear and Clearstream, Luxembourg as the holder of a Note represented by the Global Certificate must look solely to Euroclear or Clearstream, Luxembourg (as the case may be) for his share of each payment made by the Issuer to the holder of the underlying Note and in relation to all other rights arising under the Global Certificate, subject to and in accordance with the respective rules and procedures of Euroclear and Clearstream, Luxembourg. Such persons shall have no claim directly against the Issuer in respect of payments due on the Notes for so long as the Notes are represented by the Global Certificate and such obligations of the Issuer will be discharged by payment to the holder of the underlying Note, as the case may be, in respect of each amount so paid.

Exchange

The Global Certificate will be exchangeable (free of charge to the holder of the Global Certificate and the Noteholders) in whole, but not in part, for the definitive Notes described below if, but only if, the Global Certificate is held on behalf of Clearstream, Luxembourg and/or Euroclear and either such clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so. Thereupon the holder may give notice to the Trustee of its intention to exchange the Global Certificate for definitive certificates in respect of the Notes on or after the Exchange Date (as defined below) specified in the notice.

On or after the Exchange Date, the Issuer will deliver, or procure the delivery of, an equal aggregate principal amount of duly executed and authenticated definitive Notes in registered form, printed in accordance with any applicable legal and stock exchange requirements and in, or substantially in, the form set out in the Trust Deed. Such definitive Notes will be registered in the name of the accountholders at Clearstream, Luxembourg and Euroclear which previously had Notes credited to the accounts.

“ Exchange Date ” means a day falling not less than 60 days after that on which the notice requiring exchange is given and on which the banks are open for business in the city in which the specified office of the Registrar is located.

Conversion Rights

Subject to the requirements of Euroclear and Clearstream, Luxembourg, the Conversion Rights attaching to the Notes in respect of which the Global Certificate is issued may be exercised by the presentation to or to the order of the Principal Paying, Transfer and Conversion Agent or any other Conversion Agent of one or more Conversion Notices (as defined in the Terms and Conditions of the Notes) duly completed by or on behalf of a holder of a book-entry interest in such Notes. The exercise of the Conversion Right shall be notified by the Principal Paying, Transfer and Conversion Agent or such other Conversion Agent (as the case may be) to the Registrar and the holder of the Global Certificate.

Redemption at the Option of the Issuer

The options of the Issuer provided for in Condition 7(b) of the Conditions shall be exercised by the Issuer giving notice to the Noteholders, the Trustee and the Principal Paying, Transfer and Conversion Agent within the time limits set out in, and containing the information required by, that Condition.

Redemption for Taxation Reasons

The option of the Issuer provided for in Condition 7(c) of the Conditions may be exercised by the Issuer by giving notice to the Noteholders, the Trustee and the Principal Paying, Transfer and Conversion Agent within the time limits set out in Condition 7(c) of the Conditions.

Tax Election Option of the Noteholders

The option of the Noteholders provided for in Condition 7(c) of the Conditions may be exercised by the Noteholders giving notice to the Principal Paying, Transfer and Conversion Agent within the time limits relating to the deposit of Notes in Condition 7(c) and substantially in the form of the Noteholders Tax Election Notice as set out in the Agency Agreement.

Redemption at Option of the Noteholders

The Noteholders’ put option in Condition 7(e) of the Conditions may be exercised by the holder of the Global Certificate giving notice to the Principal Paying, Transfer and Conversion Agent or any other Paying Agent of the principal amount of Notes in respect of which the option is exercised and presenting the Global Certificate for endorsement or exercise within the time limits specified in such Condition and the principal amount of the Notes will be reduced in the Register accordingly.

Trustee’s Powers

In considering the interests of Noteholders the Trustee may, to the extent it considers it appropriate to do so in the circumstances, (a) have regard to such information as may have been made available to it by or on behalf of the relevant clearing system or its operator as to the identity of its accountholders (either individually or by way of category) with entitlements in respect of Notes and (b) consider such interests on the basis that such accountholders were the holders of the Notes represented by this Global Certificate.

Enforcement

For the purposes of enforcement of the provisions of the Trust Deed against the Trustee, the persons named in a certificate of the holder of the Notes represented by the Global Certificate shall be recognised as the beneficiaries of the trusts set out in the Trust Deed to the extent of the principal amount of their interest in the Notes set out in the certificate of the holder as if they were themselves the holders of Notes in such principal amounts.

Payments

Payments of principal in respect of Notes represented by the Global Certificate will be made against presentation and, if no further payment falls to be made in respect of the Notes, surrender of the Global Certificate to or to the order of the Principal Paying, Transfer and Conversion Agent or such other Paying Agent as shall have been notified to the holder of the Global Certificate for such purpose.

Each payment will be made to, or to the order of, the person whose name is entered in the Register at the close of business on the Clearing System Business Day immediately prior to the date for payment, where Clearing System Business Day means Monday to Friday inclusive except 25 December and 1 January.

Notices

So long as the Notes are represented by the Global Certificate and the Global Certificate is held on behalf of a clearing system, notice to holders of the Notes may be given by delivery of the relevant notice to that clearing system for communication by it to entitled accountholders in substitution for publication as required by the Conditions, except that the Issuer shall also ensure that all notices are duly published in a manner which complies with the rules and regulations of any stock exchange or other relevant authority on which the Notes are for the time being listed and/or admitted to trading.

Prescription

Claims against the Issuer in respect of principal and interest on the Notes while the Notes are represented by the Global Certificate will become prescribed after a period of 10 years (in the case of principal) and five years (in the case of interest) from the appropriate Relevant Date (as defined in the Terms and Conditions of the Notes).

Claims in respect of any other amounts payable in respect of the Notes shall be prescribed and become void unless made within 10 years following the due date for payment thereof.

Redemption or Purchase and Cancellation

Cancellation of any Notes to be cancelled following their purchase will be effected by endorsement by or on behalf of the Principal Paying, Transfer and Conversion Agent of the reduction in the principal amount of the Global Certificate and by an appropriate entry made in the Register maintained in respect of the Notes.

Meetings

At any meeting of Noteholders, the holder of the Global Certificate will be treated as having one vote in respect of each A$100,000 in principal amount of Notes.

The Trustee may allow to attend and speak (but not to vote) at any meeting of Noteholders any accountholder (or the representative of any such person) of a clearing system with an interest in the Notes represented by the Global Certificate on confirmation of entitlement and proof of his identity.

TAX IMPLICATIONS

AUSTRALIAN TAXATION

INTRODUCTION

Scope

The following is a general summary of the material Australian income tax and capital gains tax (“ CGT ”) consequences arising under the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997 (“ Tax Acts ”) and any relevant regulations, rulings, or judicial or administrative interpretations as at the date of this Offering Circular in relation to an investment in the Notes by a purchaser of the Notes (“ Noteholder ”).

This general summary is not intended to be nor should it be construed to be legal or tax advice to any particular investor. Prospective investors are urged to contact their tax advisers for specific advice relating to their particular circumstances, in particular in relation to local taxes in their home jurisdictions.

While the Issuer has sought legal advice on the Australian taxation implications of the Notes, it has not sought, and does not intend to seek, a ruling from the Australian Taxation Office or any other revenue authority in relation to this matter.

Payments under the Notes

It should be noted that the Notes should be properly characterised as debt interests in the Issuer for Australian tax purposes on the basis that the Issuer is under an effectively non-contingent obligation to pay the Noteholders (in the form of interest and the redemption price) an amount at least equal to the issue price for the Notes.

Accordingly, payments made under the Notes (prior to any exercise of the Conversion Right) will constitute interest or amounts in the nature of interest in the hands of the Noteholders.

NON-RESIDENT INVESTORS

Scope

The following paragraphs deal with the consequences to a Noteholder who:

is not a resident or temporary resident of Australia for tax purposes;
does not carry on business in Australia or have a permanent establishment or fixed base in Australia;
purchased the Notes pursuant to the offer detailed in this Offering Circular; and
holds the Notes (any Shares obtained from the exercise of Conversion Rights) on capital account.

This summary assumes that the issue of the Notes by the Issuer will satisfy one of the public offer tests that is described in section 128F(3) of the Tax Acts.

Australian withholding Taxation — Exemption

Payments of interest or amounts in the nature of interest to a Noteholder will be subject to a 10% interest withholding tax unless either the exemption provided by section 128F of the Tax Acts applies or an exemption is available under a double tax treaty. If the exemption in section 128F of the Tax Acts does apply to the Notes, there will be no Australian interest withholding tax on payments of interest or amounts in the nature of interest under the Notes to the Noteholders (unless another exemption is available).

The Issuer intends to issue the Notes in a manner which will satisfy the public offer test and which otherwise meets all relevant requirements of section 128F of the Tax Acts. If that is done, then based on the current legislation and administrative policy of the Australian Taxation Office, the exemption should be available.

Australian withholding Tax — Associates

The exemption in section 128F of the Tax Acts is not available where Notes are issued to an “associate”, as defined in section 128F(9) of the Tax Acts, of the Issuer, that is either an Australian resident who holds the Notes in the course of carrying on business at or through a permanent establishment outside Australia or a non-resident associate who does not hold the Notes in the course of carrying on business at or through a permanent establishment in Australia (“ Offshore Associate ”) (other than in the capacity of a dealer, manager, or underwriter in relation to the placement of the Notes or a clearing house, custodian, funds manager or responsible entity of a registered scheme), if the Issuer knew or had reasonable grounds to suspect the payee was an Offshore Associate at the time of issue (other than in the capacity of a dealer, manager, or underwriter in relation to the placement of the Notes or a clearing house, custodian, funds manager or responsible entity of a registered scheme).

The exemption in section 128F of the Tax Acts is also not available where interest under the Notes is paid to an Offshore Associate (other than in the capacity of a clearing house, paying agent, custodian, funds manager or responsible entity of a registered scheme), if the Issuer knew or had reasonable grounds to suspect the person receiving the interest is an Offshore Associate (other than in the capacity of a clearing house, paying agent, custodian, funds manager or responsible entity of a registered scheme) at the time the interest is paid.

Double Tax Treaty - withholding tax relief

If the exemption in section 128F of the Tax Acts is not available in respect of the Notes, a Noteholder may be eligible for relief from such tax under a tax treaty between Australia and the Noteholder’s country of residence.

The Australian Government has signed new or amended double tax conventions (“ New Treaties ”) with a number of countries (including the United States and the United Kingdom) (“ Specified Countries ”), which contain certain exemptions from interest withholding tax where the interest is derived by:

governments of the relevant Specified Country and certain governmental authorities and agencies in the Specified Country; or
a “financial institution” which is a resident of a Specified Country and which is unrelated to and dealing wholly independently with the Issuer. The term “financial institution” refers to either a bank or any other form of enterprise which substantially derives its profits by carrying on a business of raising and producing finance. (However, interest under a back-to-back loan or an economically equivalent arrangement will not qualify for this exemption).

Profits or Gains on Disposal or Redemption of the Notes

General

Any profit or gain made on a disposal or redemption of the Notes will be subject to Australian tax unless such profit or gain does not have an Australian source (as described under “Australian Source” below).

Australian Source

Whether a profit or gain on a disposal or redemption of the Notes has an Australian source is a question of fact that will be determined on the basis of the circumstances existing at the time of the disposal or redemption.

In general, the profit or gain should not have an Australian source provided that the Notes are:

acquired, held and dealt with outside Australia; and
held in connection with a business conducted exclusively outside Australia.

However, this is not an exhaustive list of the factors that can determine source, nor would the absence of one of these elements, of itself, mean that there is an Australian source, as it will depend on all the relevant circumstances.

Double Tax Treaty on disposal or redemption

If the profit or gain on disposal or redemption of a Note is deemed to have an Australian source, a Noteholder may be eligible for relief from Australian tax on such profit or gain under a double tax treaty between Australia and the Noteholder’s country of residence. Prospective purchasers should consult their tax advisers regarding their entitlement to benefits under a tax treaty.

Conversion of Notes into Ordinary Shares

A Noteholder will be entitled to exercise Conversion Rights and receive Ordinary Shares upon surrendering the relevant Note to the Issuer.

For income tax and CGT purposes, no taxable gain or profit should arise to the Noteholder on the conversion of the Note into Ordinary Shares even if the gain or profit has an Australian source.

CGT - TARP

Australia has special CGT rules that may impose CGT on the disposal of interest (which may include shares and rights to acquire shares) in “land rich” companies. However, the disposal of the Notes (which have a Conversion Right) or the Ordinary Shares arising from the conversion of the Notes will not be subject to CGT unless the taxable Australian real property (“ TARP ”) of the Issuer is greater than 50% of its assets. Broadly, TARP is Australian land (including a lease of land) and mining, quarrying and prospecting rights.

Even if the TARP of the Issuer is greater than 50%, CGT is only applicable to non-residents who hold 10% or more of the Ordinary Shares in the Issuer either at the time of disposal or throughout a 12 month period in the 24 months prior to disposal. Noteholders should seek their own tax advice before they dispose of any Ordinary Shares or Notes.

Dividends

Australia has an imputation system where tax paid at the company level is imputed to shareholders in determining the taxation consequences of dividends paid by the company. A dividend will be treated as “franked” where the dividend is paid out of profits of the company that have already been subject to tax. The Noteholders would be subject to Australian dividend withholding tax at a rate of 30% to the extent that the dividends paid by the Issuer on its Ordinary Shares are unfranked (the rate of withholding tax may be reduced in accordance with any double tax treaty between the Noteholder’s country of tax residency and Australia). However, the Noteholders would not be subject to Australian dividend withholding tax or other Australian income tax in relation to fully franked dividends paid on the Ordinary Shares.

Taxation of Financial Arrangements

Non-residents may need to consider the impact of the taxation of financial arrangements provisions referred to below, and any relevant double tax treaty provisions, if they have any gains (including on conversion) under those provisions that have an Australian source. It should be noted that those provisions do not override the exemption available under section 128F of the Tax Acts.

RESIDENTS

Scope

The following is a summary for a Noteholder who:

is a resident of Australia (excluding temporary residents) for income tax purposes or is a non-resident who carries on business in Australia or through a permanent establishment or fixed place in Australia and the holding of the Notes is connected with such place of business;
purchased the Notes pursuant to the offer detailed in this Offering Circular.

Interest

Interest income paid under the Notes will be included in a Noteholder’s assessable income.

Profits or Gains on Disposal or Redemption of the Notes

General

Any profit or gain made on a disposal or a redemption of the Notes will be included in a Noteholder’s assessable income.

Conversion of Notes into Ordinary Shares

A Noteholder will be entitled to exercise Conversion Rights and receive Ordinary Shares upon surrendering the relevant Note to the Issuer.

No taxable gain or profit should arise to the Noteholder on the conversion of the Note into Ordinary Shares.

Ordinary Shares

The Ordinary Shares issued to a Noteholder on an exercise of the Conversion Rights are CGT assets. The cost base of the Ordinary Shares for CGT purposes will be the cost base of the Notes at the time of conversion plus any amounts paid to convert the Notes. A subsequent disposal of Ordinary Shares by a Noteholder may give rise to ordinary income or capital gains on disposal.

Dividends

Dividends paid by the Issuer on Ordinary Shares will be included in a Noteholder’s assessable income. To the extent that those dividends are franked, a Noteholder is generally required to gross-up the dividend and will generally receive a tax offset against their tax liability.

Taxation of Financial Arrangements

Division 230 of the Tax Acts (“Division 230”) contains rules which represent a code for the taxation of receipts and payments in relation to “financial arrangements”. In this regard the Notes (including the Conversion Right) will likely constitute a financial arrangement.

However, the TOFA regime should not apply to a Note held by:

(i) individual Noteholders; or
(ii) a superannuation entity, management investment scheme or an entity substantially similar to a managed investment scheme under foreign law with assets of less than A$100 million;
(iii) certain financial entities with a turnover of less than A$20 million; and
(iv) other entities with a turnover of less than A$100 million, financial assets of less than A$100 million and assets of less than A$300 million,

unless a Noteholder makes an election for the TOFA rules to apply to all of their financial arrangements.

As the application of Division 230 is dependent on the facts and circumstances of the Noteholder, Noteholders should obtain their own advice in relation to the potential applicability of Division 230, in light of their own individual facts and circumstances.

Division 230 does not override the exemption available under section 128F of the Tax Acts.

GOODS AND SERVICES TAX (“GST”)

GST should not be payable by the Noteholders in respect of the issue or redemption of Notes by the Issuer, the transfer of the Notes or the conversion of Notes into Ordinary Shares.

STAMP DUTY

The issue or transfer of the Notes will not be subject to stamp duty in any Australian jurisdiction. As the Issuer is listed on the ASX, the conversion of the Notes into Ordinary Shares, or the transfer of the Ordinary Shares after conversion, will not be subject to stamp duty except in certain circumstances.

EU DIRECTIVE ON THE TAXATION OF SAVINGS INCOME

The EC Council Directive 2003/48/EC on the taxation of savings income (the “EU Savings Directive”) requires EU Member States to provide to the tax authorities of other EU Member States details of payments of interest and other similar income paid by a person established within its jurisdiction to (or for the benefit of) an individual or certain other persons in that other EU Member State, except that Austria and Luxembourg will instead impose a withholding system for a transitional period (subject to a procedure whereby, on meeting certain conditions, the beneficial owner of the interest or other income may request that no tax be withheld) unless during such period they elect otherwise. The European Commission has proposed certain amendments to the EU Savings Directive, which may, if implemented, amend or broaden the scope of the requirements described above.

A number of non-EU countries and territories have adopted similar measures. The European Commission has proposed certain amendments to the EU Savings Directive which may, if implemented, amend or broaden the scope of the requirements described above.

SUBSCRIPTION AND SALE

This section summarises the Subscription Agreement entered into by the Issuer and the Joint Lead Managers. It also sets out restrictions on the Offering in various jurisdictions.

SUBSCRIPTION AGREEMENT

The Joint Lead Managers have entered into a subscription agreement dated 28 March 2012 with the Issuer (the “ Subscription Agreement ”). Upon the terms and subject to the conditions contained therein, the Joint Lead Managers have agreed to subscribe or procure subscribers for the aggregate principal amount of the Notes at the issue price of 100% of their principal amount (the “ Issue Price ”).

The Issuer has agreed to pay certain commissions to the Joint Lead Managers and to reimburse and indemnify the Joint Lead Managers for certain of their expenses incurred in connection with the management of the issue of the Notes. The Joint Lead Managers are entitled in certain circumstances to be released and discharged from their obligations under the Subscription Agreement prior to the closing of the issue of the Notes.

The Issuer has undertaken that during the period commencing on the date of the Subscription Agreement and ending 90 days after the Closing Date (both days inclusive), neither it nor any person acting on its behalf will (a) issue, offer, sell, pledge, contract to sell or otherwise dispose of or grant options, issue warrants or offer rights entitling persons to subscribe or purchase any interest in any shares or securities of the same class as the Notes or the Ordinary Shares or any securities convertible into, exchangeable for or which carry rights to subscribe or purchase the Notes, the Ordinary Shares or securities of the same class as the Notes, the Ordinary Shares or other instruments representing interests in the Notes, the Ordinary Shares or other securities of the same class as them, (b) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of the ownership of the Ordinary Shares, (c) enter into any transaction with the same economic effect as, or which is designed to, or which may reasonably be expected to result in, or agree to do, any of the foregoing, whether any such transaction of the kind described in (a), (b) or (c) is to be settled by delivery of Ordinary Shares or other securities, in cash or otherwise or (d) announce or otherwise make public an intention to do any of the foregoing, in any such case without providing prior written consent of the Joint Lead Managers between the date of the subscription agreement relating to the Notes and the date which is 90 days after the issue date of the Notes (both dates inclusive) except for the Notes and the Ordinary Shares issued on conversion of the Notes.

The Joint Lead Managers and each of their respective affiliates have or may have, in the past, performed investment banking and advisory services for the Issuer and the Group, for which they have received customary fees and expenses. The Joint Lead Managers and each of their respective affiliates may, from time to time, engage in further transactions with, and perform services for, the Issuer and the Group in the ordinary course of their businesses.

The Joint Lead Managers or certain of its respective affiliates may purchase the Notes for their own account and enter into transactions, including credit derivatives, such as asset swaps, repackaging and credit default swaps relating to the Notes and/or other securities of the Issuer or its subsidiaries or associates at the same time as the offer and sale of the Notes or in secondary market transactions.

SELLING RESTRICTIONS

General

Under the terms of the Subscription Agreement neither the Issuer nor the Joint Lead Managers makes any representation that any action will be taken in any jurisdiction by the Joint Lead Managers or the Issuer that would permit a public offering of the Notes, or possession or distribution of this Offering Circular or any other offering or publicity material relating to the Notes (including roadshow materials and investor presentations), in any country or jurisdiction where action for that purpose is required. The Joint Lead Managers have agreed in the Subscription Agreement that they will comply (to the best of their knowledge and belief) in all material respects with all applicable laws and regulations relating to the subscription, offer, sale and delivery of the Note in each jurisdiction in which they acquire, offer, sell or deliver Notes or have in their possession or distribute this Offering Circular or any other such material, in all cases at their own expense.

United States

The Notes and the Ordinary Shares to be issued upon conversion of the Notes have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States and they may not be offered or sold within the United States. The Notes are being offered and sold solely outside the United States pursuant to Regulation S under the Securities Act. Each of the Joint Lead Managers have represented and warranted that it has not offered or sold, and agrees that it will not offer or sell, any Notes constituting part of its allotment except in an offshore transaction in accordance with Rule 903 and Rule 904 of Regulation S. Accordingly, neither it, nor its affiliates nor any persons acting on its or their behalf have engaged, or will engage in, any “directed selling efforts” within the meaning of Rule 902(c) of the Securities Act with respect to the Notes or the Ordinary Shares to be issued upon conversion of the Notes.

The Joint Lead Managers have further represented and warranted that they have not entered and agree that they will not enter into any contractual arrangement with any distributor (as that term is defined in Regulation S under the Securities Act) with respect to the distribution or delivery of the Notes, except with their respective affiliates or with the prior written consent of the Issuer.

United Kingdom

The Joint Lead Managers have represented, warranted and agreed that:

(i) they have only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the “ FSMA ”) received by them in connection with the issue or sale of any Notes in circumstances in which section 21(1) of the FSMA does not apply to the Issuer; and
(ii) they have complied and will comply with all applicable provisions of the FSMA with respect to anything done by them in relation to the Notes in, from or otherwise involving the United Kingdom.

Australia

The Joint Lead Managers have represented, warranted and agreed that they have not and will not offer or invite applications for the issue of any Notes or offer any Notes for issue or sale in Australia (including an offer or invitation which is received by that person in Australia) or distribute or publish and will not distribute or publish the Offering Circular or any other advertisement in relation to any Notes in Australia, unless:

(a) (i) the aggregate consideration payable by that person for such Notes (after disregarding any amount lent by the Joint Lead Managers or their associates) on acceptance of the offer by that person is at least A$500,000 (or its equivalent in another currency); or (ii) the offer or invitation otherwise does not

require disclosure to investors in accordance with Part 6D.2 or Part 7.9 of the Corporations Act, except if the only reason the offer or invitation otherwise does not require disclosure is due to section 708(1) of the Corporations Act;

(b) the offer or invitation is not made to a person who is a “retail client” within the meaning of section 761G of the Corporations Act; and
(c) such action complies with applicable laws, regulations and ASIC Regulatory Guides and Class Orders in Australia.

Hong Kong

The Joint Lead Managers have represented and agreed that:

(a) they have not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Notes other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap.571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and
(b) they have not issued or had in their possession for the purposes of issue, and will not issue or have in their possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Notes, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to so do under the securities laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

Singapore

The Joint Lead Managers have acknowledged that this Offering Circular has not been registered as a prospectus with the Monetary Authority of Singapore (the “ MAS ”). Accordingly, the Joint Lead Managers have represented, warranted and agreed that they have not offered or sold any Notes or caused such Notes to be made the subject of an invitation for subscription or purchase and will not offer or sell such Notes or cause such Notes to be made the subject of an invitation for subscription or purchase, and have not circulated or distributed, nor will they circulate or distribute, this Offering Circular or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of such Notes, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “ SFA ”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Note:

This Offering Circular has not been registered as a prospectus with the MAS. Accordingly, this Offering Circular and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of any Notes and/or Ordinary Shares may not be circulated or distributed, nor may any Notes and/or Ordinary Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the SFA, (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to

Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except:

(i) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
(ii) where no consideration is or will be given for the transfer;
(iii) where the transfer is by operation of law; or
(iv) as specified in Section 276(7) of the SFA.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “ Relevant Member State ”), each Joint Lead Manager has represented, warranted and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “ Relevant Implementation Date ”) it has not made and will not make an offer of Notes which are the subject of the offering contemplated by this Offering Circular to the public in that Relevant Member State other than:

(i) to any legal entity which is a qualified investor as defined in the Prospectus Directive;
(ii) to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive) as permitted under the Prospectus Directive; or
(iii) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Notes shall require the Issuer or either of the Joint Lead Managers to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

For the purposes of this provision, the expression “an offer of Notes to the public” in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

Japan

The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (the “ Financial Instruments and Exchange Act ”). Accordingly, each Joint Lead Manager has represented, warranted and agreed that it has not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell any Notes in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organised under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and other relevant laws, regulations and ministerial guidelines of Japan.

Switzerland

This document is not intended to constitute an offer or solicitation to purchase or invest in the Notes described herein. The Notes may not be publicly offered, sold or advertised, directly or indirectly, in, into or from Switzerland and will not be listed on the SIX Swiss Exchange or on any other exchange or regulated trading facility in Switzerland. Neither this Offering Circular nor any other offering or marketing material relating to the Offering and/or the Notes constitutes a prospectus as such term is understood pursuant to article 652a or article 1156 of the Swiss Code of Obligations or a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange or any other regulated trading facility in Switzerland or a simplified prospectus or a prospectus as such term is defined in the Swiss Collective Investment Scheme Act, and neither this Offering Circular nor any other offering or marketing material relating to the Offering and/or the Notes may be publicly distributed or otherwise made publicly available in Switzerland.

ADDITIONAL INFORMATION

ASX

ASX Listing Rules

The ASX Listing Rules prohibit the issue of equity securities (including convertible securities) if the number of those securities, when aggregated with the number of any other equity securities issued during the previous 12 months, exceeds 15% of the number of equity securities on issue at the commencement of that period of 12 months, except with prior shareholder approval, or subject to certain exceptions, including exceptions for offers to ordinary shareholders pro rata, or pursuant to a takeover or scheme of arrangement, or to finance a takeover or scheme of arrangement, or an exercise by the directors of a declared right to dispose of the shortfall remaining after a pro rata equity offering.

Investors requiring further information relating to restrictions under the ASX Listing Rules should consult their professional advisers as these matters may be applicable to the conversion of the Notes.

ASX Confirmations

The Issuer has received confirmations from ASX of the following:

the terms of the Notes are appropriate and equitable for the purposes of ASX Listing Rule 6.1; and
the conversion or redemption of the Notes in accordance with the terms will not constitute a divestment of the Notes for the purposes of ASX Listing Rule 6.12.

RESERVES AND RESOURCES INFORMATION

The reserves and resources information in relation to the Group in this Offering Circular has been compiled by Mr Neil Gibbins , a full time employee of the Issuer and is qualified in accordance with ASX Listing Rule 5.11 and has consented to the statements based on this information and to the form and context in which this information appears in this Offering Circular.

INTERESTS OF DIRECTORS

Other than as set out below or elsewhere in this Offering Circular, no director has, or has had within the two years prior to the release of this Offering Circular, any interest in:

the promotion or formation of the Issuer;
property acquired or proposed to be acquired by the Issuer in connection with its formation or promotion of the offer under this Offering Circular; or
the offer under this Offering Circular,

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any Director:

to induce him or her to become, or to qualify him or her as, a director; or
for services rendered by him or her in connection with the formation or promotion of the Issuer or the offer under this Offering Circular.

Details of the interests in the securities of the Directors of the Issuer are disclosed in the Issuer’s most recently annual report dated 30 August 2011, as updated in the Issuer’s Appendix 3Y filings lodged with the ASX since that date.

100

Details on the Directors’ remuneration are also contained in the most recently lodged annual report for the Issuer dated 30 August 2011.

The information described above can be obtained from the Issuer, ASIC or ASX respectively, as set out in the “Important Notice”.

AUTHORISATIONS AND CONSENTS

Consents

The persons stated on pages 103 to 104 of this Offering Circular (except for the Issuer, the Trustee, the Registrar, the Principal Paying, Transfer and Conversion Agent) have given and have not, before the date of this Offering Circular, withdrawn their written consent to be named in this Offering Circular in the form and context in which they are named. Each of these persons (except for the Issuer):

does not make, or purport to make, any statement in this Offering Circular, and is not aware of any statement in this Offering Circular which purports to be based on a statement made by them; and
to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Offering Circular other than a reference to its name.

This Offering Circular contains statements made by, or statements said to be based on statements made by:

Beach Energy Limited as Issuer; and
Grant Thornton as auditors to the Issuer.

Each of the persons named above has consented to the inclusion of each statement it has made in the form and context in which the statement appears in this Offering Circular, has consented to the references to those statements in the form and context in which they are included in this Offering Circular and has not withdrawn those consents as at the date of this Offering Circular.

Directors’ authorisations

This Offering Circular is issued by the Company. Each of its Directors consents to the release of this Offering Circular to ASX.

Third parties named in this Offering Circular, and not specifically referred to above as having given their consent, have not consented to the inclusion of their names in this Offering Circular, or to any statement attributed to them, or statement upon which a statement has been based. The Directors of the Company assume responsibility for the reference to those entities and statements which include those references.

101

GENERAL INFORMATION

The Issuer’s corporate head office and principal place of business is located at 25 Conyngham Street, Glenside, South Australia, Australia.
The auditors to the Issuer in Australia are Grant Thornton South Australian Partnership.
The Principal Paying, Transfer and Conversion agent for the Notes is Citibank, N.A., London Branch at its offices located at c/o Citibank, N.A., Dublin Branch, 1 North Wall Quay, Dublin 1, Ireland. The Registrar for the Notes is Citigroup Global Markets Deutschland AG at its offices located at Reuterweg 16, 60323 Frankfurt, Germany.
The issue of the Notes and the Ordinary Shares to be issued on conversion of the Notes and the terms of the Offering and the issue of the Notes were approved by resolutions of the Board of Directors of the Issuer passed on 26 March 2012.
Copies of the constitutive documents of the Issuer and copies of the Trust Deed and the Agency Agreement (upon execution) will be available for inspection, and the published financial statements of the Group will be available for collection at the specified office of the Principal Paying, Transfer and Conversion Agent during normal business hours, so long as any of the Notes is outstanding.
The Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg. The International Securities Identification Number for the Notes is XS0766381528. The Common Code for the Notes is 076638152.
The Issuer has obtained or will at the date of issue obtain all consents, approvals and authorisations in Australia and Singapore required to be obtained by it in connection with the issue and performance of the Notes.
There has been no significant change in the financial or trading position of the Issuer or the Group since 30 June 2011 and no material adverse change in the financial position or prospects of the Issuer or the Group since 30 June 2011.
Neither the Issuer nor any of its subsidiaries is involved in any litigation or arbitration proceedings or any regulatory investigations relating to claims or amounts which are material in the context of the issue of the Notes nor, so far as the Issuer is aware, is any such litigation or arbitration pending or threatened.
The audited annual consolidated financial statements of the Group for the financial years ended and as at 30 June 2010 and 2011, which are deemed to be incorporated by reference in this Offering Circular, have been audited by Grant Thornton, South Australian Partnership, auditors to the Issuer, as stated in their reports appearing therein.
Approval in-principle has been received for the listing of the Notes on the SGX-ST. So long as the Notes are listed on the SGX-ST and the rules of the SGX-ST so require, the Issuer shall appoint and maintain a paying agent in Singapore, where the Notes may be presented or surrendered for payment or redemption, in the event that the Global Certificate is exchanged for individual definitive Notes. In addition, in the event that the Global Certificate is exchanged for individual definitive Notes, an announcement of such exchange shall be made by or on behalf of the Issuer through the SGX-ST and such announcement will include all material information with respect to the delivery of the individual definitive Notes, including details of the paying agent in Singapore.

102

ISSUER

(ABN 20 007 617 969) 25 Conyngham St, Glenside, SA, 5065 Australia

JOINT LEAD MANAGERS

Citigroup Global Markets Australia Pty

Limited

Level 40 2 Par Street Sydney, NSW 2000 Australia

Goldman Sachs Australia Capital

Markets Limited

Level 42, Governor Phillip Tower 1 Farrer Place Sydney, NSW 2000 Australia

Macquarie Capital (Australia) Limited

Level 10

1 Martin Place Sydney, NSW, 2000 Australia

TRUSTEE

Citicorp International Limited

50th Floor, Citibank Tower Citibank Plaza 3 Garden Road Central Hong Kong

PRINCIPAL PAYING, TRANSFER, CONVERSION AGENT

Citibank, N.A., London Branch

c/o Citibank, N.A. Dublin Branch 1 North Wall Quay Dublin 1 Ireland

REGISTRAR

Citigroup Global Markets Deutschland AG Reuterweg 16 60323 Frankfurt Germany

FINANCIAL ADVISER TO THE ISSUER

Miro Advisors Pty Ltd

Level 1 24 Kings Park Road West Perth WA 6005 Australia

103

LEGAL ADVISERS

To the Issuer as to Australian law

Piper Alderman 167 Flinders Street Adelaide SA 5000 Australia

To the Joint Lead Managers as to Australian law Trustee as to English law King & Wood Mallesons Linklaters Level 61 10th Floor Governor Phillip Tower Alexandra House 1 Farrer Place Chater Road Sydney NSW 2000 Hong Kong Australia

To the Joint Lead Managers and the Trustee as to English law

AUDITORS TO THE GROUP

Grant Thornton South Australian Partnership 67 Greenhill Road Wayville SA 5034 Australia

104

AI assistant

BEACH ENERGY LIMITED — Capital/Financing Update 2012

64558_rns_2012-04-02_95ca805a-04a2-4cb0-8e02-d30b0e2e0f3c.pdf

BEACH ENERGY LIMITED (ASX: BPT, "BEACH") – SECTION 708A CLEANSING NOTICE FOR CONVERTIBLE NOTES

IMPORTANT NOTICE

NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES

Beach Energy Limited (ABN 20 007 617 969)

A$150,000,000

3.95% Senior Unsecured Convertible Notes Due 2017

Convertible into Ordinary Shares of Beach Energy Limited

Joint Bookrunners and Joint Lead Managers

Citigroup

Goldman Sachs

Financial Adviser to the Issuer

Miro Advisors

IMPORTANT NOTICE

GENERAL

About this document

No representations or recommendations

Restrictions in certain jurisdictions

Listing of the Notes on the SGX-ST

Listing of Ordinary Shares

Global Certificate

Stabilisation

Further information on the Group

Risk Factors

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

TABLE OF CONTENTS

INCORPORATION BY REFERENCE

SUMMARY

Company Overview

Summary of Offer of Convertible Notes

Entitlement Offer

Use of Proceeds

Key Risks in Relation to Issuer and the Notes

SUMMARY FINANCIAL INFORMATION

Income Statement

Consolidated Statement of Financial Position

MARKET PRICE INFORMATION

Price of Ordinary Shares

KEY OFFER FEATURES

Summary of offer

Conversion Right

Conversion Price

Cash Settlement

Final Maturity

Redemption at the Option of the Issuer

Withholding Taxes

Tax Redemption

Negative Pledge

Cross Default

Other Events of Default

Trust Deed

Trustee

Selling Restrictions

RISK FACTORS

GENERAL INVESTMENT RISKS

Global economic developments and market conditions

Global security environment and political risks

RISKS RELATING TO THE INDUSTRY

Exploration and development

Production risks

Exposure to oil and gas prices

Ability to access and develop infrastructure

Material change to reserves and resources

Negotiation with third parties

Integration of acquisitions

Health, safety and environmental impact constraints

Land access and Native Title

Sufficient insurance coverage

Ability to influence joint venture and manage future work programmes and budgets

Security of tenure

Changes in government policy and laws

Ability to access credit and financial market risks

Hedging risks

Shortage and retention of qualified personnel

Climatic impacts

RISKS RELATING TO THE NOTES

Lack of a public market for the Notes

The Notes are unsecured obligations

BEACH ENERGY LIMITED Capital/Financing Update 2012