BEACH ENERGY LIMITED — M&A Activity 2009

Jun 24, 2009

==> picture [166 x 105] intentionally omitted <==

25 June 2009

Ref: #076/09

The Manager, Companies ASX Limited Companies Announcement Office Electronic Lodgement System

Dear Sir,

ANNOUNCEMENT TO ASX

TAKEOVER OFFER FOR DRILLSEARCH ENERGY LIMITED

Beach Petroleum Limited advises that the letter attached to this release has been sent to Drillsearch Energy Limited shareholders.

Yours faithfully,

==> picture [59 x 54] intentionally omitted <==

Reg Nelson Managing Director, FAusIMM

25 Conyngham Street, Glenside South Australia 5065 GPO Box 175 Adelaide 5001 Telephone (618) 8338 2833 Facsimile (618) 8338 2336 Beach Petroleum Ltd ABN 20 007 617 969 www.beachpetroleum.com.au

==> picture [166 x 104] intentionally omitted <==

25 Conyngham Street Glenside South Australia 5065 GPO Box 175 Adelaide 5001 Telephone (618) 8338 2833 Facsimile (618) 8338 2336 Beach Petroleum Ltd ABN 20 007 617 969 www.beachpetroleum.com.au

24 June 2009

Dear fellow Drillsearch Shareholder,

By now you should have received an offer from Beach Petroleum Limited ( Beach ) for your shares in Drillsearch Energy Limited ( Drillsearch ). Beach, a substantial shareholder of Drillsearch, is offering you one Beach share for every twenty-seven Drillsearch shares that you hold.

The Offer is now open and I urge you to ACCEPT.

The Offer is due to expire on 16 July . The Offer is fully-priced and Beach does not intend to increase the Offer. Beach believes that it is highly unlikely that an alternate offer will emerge. If the Beach Offer does not proceed, it is likely that the Drillsearch share price will fall .

Highlights of the Beach Offer

The reasons to accept the Offer are detailed in this document. In summary, the Offer:

==> picture [11 x 15] intentionally omitted <==

==> picture [11 x 14] intentionally omitted <==

==> picture [11 x 15] intentionally omitted <==

• Is at a significant premium to the Drillsearch share price before the Offer was announced on 5 May 2009;

• Gives you shares in a much larger and better capitalised ASX/S&P200 company that is financially strong and has recognised upside growth potential ; and

• Will allow you to participate in the development of the Drillsearch assets without the likelihood of having to contribute more cash or suffer equity dilution in Drillsearch.

How to accept the Beach Offer

To ACCEPT the Offer, you can either:

• (1) Contact your stockbroker and instruct it to accept on your behalf; or

• (2) Complete the form that was recently mailed to you which looks like this:

==> picture [116 x 159] intentionally omitted <==

If you have misplaced your form or didn’t receive one, please contact Computershare Investor Services on (08) 8236 2300 .

To download a copy of the Bidder’s Statement, please visit: www.beachpetroleum.com.au .

If you have any other questions regarding the Beach Offer, please call the information line on 1800 171 413 (or + 61 8 8232 8648 ).

==> picture [112 x 159] intentionally omitted <==

Overview of reasons why you should accept

The Beach Offer represents an outstanding opportunity for Drillsearch shareholders. Beach is one of Australia’s leading energy companies and has the financial strength , experience and technical expertise to develop the Drillsearch assets. Drillsearch does not have the resources to develop its assets.

By accepting shares under the Beach Offer, you will continue to participate in Drillsearch’s upside, but as a shareholder in a company better equipped financially and technically to develop the assets. Below is a summary of the reasons why you should ACCEPT the Beach Offer.

1. Attractive offer price

As at Friday 19 June 2009, the Beach Offer represents value of approximately 3.05 cents per Drillsearch share, based on Beach's closing price of $0.825. On the day before the Offer was announced, Drillsearch shares closed at 2.5 cents. Beach’s offer therefore represents a 22% premium to the last-traded Drillsearch share price before the Offer was announced.

The 3.05 cent offer also represents a 47% premium to the Drillsearch one month volume weighted average price ( VWAP ) of 2.07 cents leading up to the announcement of the offer on 5 May 2009, as illustrated below:

==> picture [317 x 174] intentionally omitted <==

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

47% PREMIUM to 3-MONTH VWAP
----- End of picture text -----

2. Recognised growth potential

By accepting the Offer, you will become a shareholder in Beach, an ASX/S&P 200 company and an Australian energy business of substance . Due to its size and growth prospects, Beach enjoys strong coverage from a number of Australia’s respected oil and gas research analysts. The general opinion of these analysts is that Beach’s share price has the potential to increase. Many of these reports can be found on Beach’s website (www.beachpetroleum.com.au).

Beach holds interests in more than 300 exploration and production tenements in Australia, Egypt, New Zealand, Papua New Guinea and Spain and continues to seek additional domestic and international opportunities. Beach’s reserve base at 30 June 2008 stood at 145 mmboe.[1] A

1 The company’s reserves have since reduced following the settlement of the Tipton West sale described in section 1.2 of the Bidder’s Statement

2

contingent gas resource totalling 278 mmboe (net to Beach) is also identified in Beach’s Cooper and Gippsland Basin tenements.

3. Share performance

The Beach Offer is fully-priced and builds in a significant control premium . Given that the Offer is for shares in Beach, Drillsearch shareholders will also enjoy any further efficiencies that the combined group is able to achieve.

The Beach share price has consistently and significantly outperformed Drillsearch’s share price over a number of years.

From 16 June 2004 to 16 June 2009, Beach generated a ‘total shareholder return’ ( TSR ) (TSR measures the total return to shareholders – i.e. both share price change and dividends paid), of approximately 250%, whereas Drillsearch generated a TSR of approximately -25%, as illustrated by the graph below.

Beach has paid two dividends per year since 2002. Drillsearch has not paid dividends.

==> picture [457 x 236] intentionally omitted <==

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

Total Shareholder Returns
Beach vs Drillsearch
(five years to 16 June 09)
800%
700% BPT : + 250% increase
600% over 5 years
500%
400%
300%
200% DLS
100%
BPT
0%
-100%
DLS: - 25% decline
over 5 years
% Movement
16-Jun-04 16-Jun-05 16-Jun-06 16-Jun-07 16-Jun-08 16-Jun-09
----- End of picture text -----

4. Greater financial strength

Beach is approximately fifteen times the size of Drillsearch 2 and is extremely well capitalised with over $270 million cash in the bank as at 19 June 2009. Beach has strong and growing cash flows (see adjacent graph) and is well positioned to take the Drillsearch assets forward with its depth of technical expertise.

Drillsearch, on the other hand, does not have the

==> picture [208 x 127] intentionally omitted <==

2 By market capitalisation as at 18 June 2009

3

financial or technical resources required to develop the assets. To raise the money required to develop its assets, Drillsearch shareholders may be required to contribute more cash or face equity dilution .

5. Efficiencies from operational consolidation

The arguments for consolidating Beach and Drillsearch’s assets are compelling. Beach and Drillsearch are already joint venture partners in 5 of Drillsearch’s 11 tenement interests and the combined entity would have an increased operational presence in the Cooper Basin region with opportunities for cost savings and efficiencies. Drillsearch shareholders would share in these efficiencies through their shareholding in the combined group.

6. No alternate offer likely to emerge.

It is unlikely that an alternate offer will emerge, particularly given that Beach has a 5.1% direct shareholding and pre-bid agreements of 8.1% representing in total a relevant interest of 13.2% in Drillsearch.

7. Drillsearch shares may fall in absence of Beach Offer

The announcement of the Beach Offer on 5 May 2009 caused the Drillsearch share price to increase dramatically (by about 25% in a single day’s trade). Since then, the Drillsearch share price has tracked at or around the implied value of the Beach Offer, irrespective of any announcements made by Drillsearch. Therefore, the Drillsearch share price now has a substantial takeover premium built into it, meaning that if the Beach takeover does not proceed, it is likely that the share price will fall to its pre-bid levels.

8. Accept the Beach Offer

I urge you to ACCEPT the very attractive takeover Offer from Beach.

The Offer is at a significant premium to pre-bid trading levels, gives you shares in an ASX/S&P200 company that has recognised growth potential and a way of ensuring assets will be developed as part of a strong portfolio without the need for Drillsearch shareholders to contribute additional cash to fund operations.

Yours sincerely,

==> picture [79 x 51] intentionally omitted <==

Bob Kennedy

Chairman

4