29 May 2009

Friday 29 May 2009

Ref: #065/09

The Manager, Companies ASX Limited Company Announcements Office Electronic Lodgement System

Dear Sir

Drillsearch Energy Limited – off-market takeover bid by Beach Petroleum Limited – replacement bidder's statement

In accordance with section 647(3)(b) of the Corporations Act and ASIC class order CO 00/344, please find enclosed:

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supplementary bidder's statement dated 29 May 2009, setting out changes to the original bidder's statement dated 15 May 2009 ( Supplementary Bidder's Statement );

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clean copy of the replacement bidder's statement dated 29 May 2009, incorporating the changes described in the Supplementary Bidder's Statement; and

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marked up copy of the replacement bidder's statement, dated 29 May 2009, incorporating the changes described in the Supplementary Bidder's Statement.

A copy of each of the above documents has been lodged with ASIC and sent to Drillsearch Energy Limited.

Yours faithfully

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Cathy Oster Company Secretary

Enc. As above

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

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Supplementary Bidder's Statement 29 May 2009

in respect of the offer by

Beach Petroleum Limited

ACN 007 617 969

for the ordinary shares in

Drillsearch Energy Limited

ACN 006 474 844

This document is a supplementary bidder's statement (Supplementary Bidder's Statement) under section 643 of the Corporations Act (Cth) to the Bidder's Statement dated 15 May 2009 (Bidder's Statement) issued by Beach Petroleum Limited ACN 007 617 969 (Beach) and lodged with the Australian Securities and Investments Commission (ASIC) on 15 May 2009 in relation to the offer by Beach for the ordinary shares in Drillsearch Energy Limited (Drillsearch).

This Supplementary Bidder's Statement supplements, and is to be read together with, the Bidder's Statement. This Supplementary Bidder's Statement is dated 29 May 2009. A copy of this Supplementary Bidder's Statement was lodged with ASIC on 29 May 2009. Neither ASIC nor any of its officers takes any responsibility for the contents of this Supplementary Bidder's Statement.

Unless the context requires otherwise, defined terms in the Bidder's Statement have the same meaning in this Supplementary Bidder's Statement. This Supplementary Bidder's Statement prevails to the extent of any inconsistency with the Bidder's Statement.

To accept the offer you should follow the instructions in "How do I accept the Offer?" in the Frequently Asked Questions.

It is, however, important that you read this Supplementary Bidder's Statement and the Bidder's Statement.

1. Changes to Bidder's Statement

The Bidder's Statement is changed as set out below:

1.1 in the "Important Information" section, first paragraph, first line, insert "replacement" before "Bidder's";
1.2 in the "Important Information" section, third paragraph, amend as follows:
(a) insert "replacement" before "Bidder's"; and
(b) delete "15 May" and insert "29 May";
1.3 in the "Important Information" section, fourth paragraph, amend as follows:
(a) first line, insert "replacement" before "Bidder's";
(b) first line, delete "15 May" and insert "29 May"; and
(c) insert "This replacement Bidder's Statement replaces the Bidder's Statement lodged with ASIC on 15 May 2009. References in this document to 'the date of this Bidder's Statement' should be read as references to 15 May 2009.", before the sentence commencing "Neither ASIC nor any of its officers…";
1.4 in the "Important Information" section, the table under the heading "Key dates", insert after the row commencing "15 May 2009" the following row:
"29 May 2009 Replacement Bidder's Statement lodged with Drillsearch, ASIC and the ASX"
1.5 on the page numbered 4 of the Bidder's Statement, in the "Chairman's letter" section, sixth paragraph, amend as follows:
(a) second line, delete "receiving acceptances for" and insert "obtaining a relevant interest in";
(b) fifth line, insert "and on the exercise of options existing at the Announcement Date" after "(ATP 299P)";
1.6 on the page numbered 8 of the Bidder's Statement, in the "Features of the Offer" section, first bullet point under the heading "Conditions", amend as follows:
(a) insert "obtaining a relevant interest in at least" before "90%";
(b) delete "minimum acceptance of the Offer" and insert "of Drillsearch Shares";
1.7 on the page numbered 8 of the Bidder's Statement, in the "Features of the Offer" section, third bullet point under the heading "Conditions", insert "and on the exercise of options existing at the Announcement Date" after "(ATP 299P)";
1.8 on the page numbered 8 of the Bidder's Statement, in the "Features of the Offer" section, delete in its entirety the seventh bullet point after the heading "Conditions" commencing "the All Ordinaries Index…";

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1.9 on the page numbered 10 of the Bidder's Statement, in the "Frequently Asked Questions" section, first bullet point under the heading "What Conditions attach to the Offer?", amend as follows:
(a) insert "obtaining a relevant interest in at least" before "90%";
(b) delete "minimum acceptance of the Offer" and insert "of Drillsearch Shares";
1.10 on the page numbered 10 of the Bidder's Statement, in the "Frequently Asked Questions" section, third bullet point under the heading "What Conditions attach to the Offer?", insert "and on the exercise of options existing at the Announcement Date" after "(ATP 299P)";
1.11 on the page numbered 11 of the Bidder's Statement, in the "Frequently Asked Questions" section, delete in its entirety the ninth bullet point commencing "the All Ordinaries Index…";
1.12 on the page numbered 11 of the Bidder's Statement, in the "Frequently Asked Questions" section, first paragraph under the heading "What are Beach's intentions?", amend as follows:
(a) second line, delete "acquires" and insert "obtains a relevant interest in at least";
(b) second line, delete "or more" and insert "of Drillsearch Shares";
1.13 on the page numbered 14 of the Bidder's Statement, in the "Detailed Reasons Why You Should Accept" section, under the heading "5. Solid management with a tract record of success", insert at the end of the fourth paragraph "Although Drillsearch announced on 18 May 2009 that Mr Brad Lingo is expected to be the Managing Director, his appointment as Managing Director does not take effect until 15 June 2009.";
1.14 on the page numbered 17 of the Bidder's Statement, in the "Profile of Beach" section, under the heading "1.2 Principal activities of Beach" and sub-heading "Cooper/Eromanga Basin", insert after the fifth paragraph the following:

"Beach is associated with Drillsearch in three joint ventures in the South Australian western Cooper/Eromanga Basin, namely PEL's 91, 106 and 107.

PEL 91 (Drillsearch 60%, Beach 40%) lies on the western flank of the Cooper Basin about 100 km northwest of Moomba. it is immediately adjacent to PEL 92 in which Beach holds a 75% equity (Drillsearch holds no equity in PEL 92). Beach is the operator of both the PEL 91 and PEL 92 joint ventures.

PELs 91 and 92 were both granted in 2001. Since that time Beach has drilled 12 exploration wells in PEL 92, resulting in the discovery of six oil fields containing more than eight million barrels of Proved and Probable oil reserves.

Exploration in PEL 91 has proceeded more slowly. Beach has drilled four wells in PEL 91, three of which were plugged and abandoned, although sub-commercial oil was encountered in one of these wells. The fourth well, Udacha-1, was a gas discovery in the Patchawarra Formation with mean recoverable gas reserves of approximately 4.9 BCF (Udacha-1 was drilled under a farmin arrangement with several other parties which reduced Drillsearch's equity in the Udacha field to 32.5% and Beach's equity to 15%).

Seismic activity in PEL 91 has identified more than 40 potential drilling targets in that tenement. Beach's assessment is that seven of these features represent potentially

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economically viable drilling prospects. The best two prospects, currently denoted 91-12 and 91-48, are programmed for drilling in September/October 2009. This program will address total unrisked mean potential recoverable reserves of 3.5mmb of oil (2.1mmb net to Drillsearch, 1.4mmb net to Beach). The prospects are assessed by Beach to have an average probability of success of 35%, indicating an expected (ie risked) outcome of the drilling program of 1.2mmb (07.mmb net to Drillsearch, 0.5mmb net to Beach).

Success from either well drilled this year will likely lead to the drilling of some or all of the remaining five prospects, which are assessed by Beach to contain a further unrisked mean potential of 3.8mmb of recoverable oil and 0.8mmb of potential reserves (0.5mmb net to Drillsearch, 0.3mmb net to Beach) on a risked basis.

Conversely, should both of the wells to be drilled this year fail, it is likely that there will be no further drilling by Beach in PEL 91 in the foreseeable future.

Beach considers that the remaining prospectivity of PEL 91 is almost entirely associated with the Jurassic, Eromanga Basin Sequence, and that the Permian sequence in PEL 91 has very low prospectivity.

Beach is earning a 50% interest in a portion of PEL 106. (Drillsearch holds the remaining 50%). Beach has drilled four wells in this block, resulting in the discovery of three gas fields, Middleton, Brownlow and Canunda, which together with the Udacha discovery in PEL 91 are assessed by Beach to contain total mean recoverable sales gas reserves of approximately 19.5 BCF. (9.2 BCF net to Drillsearch, 8.5 BCF net to Beach)

Completion and production testing of Brownlow-1 and Canunda-1 is scheduled for June 2009, in order to confirm reserves and commerciality. This work will complete Beach's farmin program in the block*.

Beach considers the remaining prospectivity in the farmin block to be limited, with only one prospect, with mean potential reserves of 6.5 BCF, currently identified. However an upside in the existing discoveries is also recognised as evidenced in the probabilistic reserve distribution, as assessed by Beach, presented below:

	Gross Recoverable Sales Gas (BCF)	Gross Recoverable Sales Gas (BCF)	Gross Recoverable Sales Gas (BCF)
	P90**	P50***	P10****	Mean
Middleton	1.7	4.0	9.6	5.0
Brownlow	1.2	3.8	12.6	5.9
Canunda	1.5	3.2	6.6	3.7
Udacha (PEL 91)	1.9	4.1	8.8	4.9

Note: Brownlow & Canunda reserves are subject to confirmation by production testing, scheduled to commence in June 2009.

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*In order to earn its 50% interest in the PEL 106 Farmin Block, Beach was, under the amendment to the PEL 106 Farmin Agreement (dated 8 September 08), to drill and complete two wells (i.e. Brownlow-1 and Canunda-1) by 31 Dec 08, or such later date as Drillsearch agreed. These wells were drilled in 2008, but not completed. Completion, as approved by Drillsearch will take place in June 2009, which will complete Beach's farmin program.

P90 – there is a 90% confidence that this reserve level will be met or exceeded. P50 – there is 50% confidence that this reserve level will be met or exceeded. ***P10 – there is a 10% confidence that this reserve level will be met or exceeded.

Beach's view is that the discoveries in PEL 106 are most likely to be developed utilising the Cooper Basin Joint Venture facilities, with gas processing undertaken at Moomba. However it is possible that further increases to the reserve base could allow a standalone processing plant to be economically viable, resulting in a project largely independent of Santos Limited's operated infrastructure. Beach expects that development of these fields is likely to commence in 2010.

PEL 107 (Drillsearch 40%, Beach 40% and Magellan Petroleum Limited 20%) lies on the south-western flank of the Cooper Basin about 40km west of Moomba. It is immediately south of PEL 160. Beach is the operator of the PEL 107 joint venture.

PEL 107 was granted in 2003. Since that time the joint venture has drilled eight exploration wells and acquired approximately 390km[2] of 2D seismic and 125km[2] of 3D seismic in this PEL resulting in only one discovery (Kiana-1). Due to the poor drilling success rate and lack of sizeable, low risk prospects, Beach considers the remaining prospectivity in the PEL to be low.

The Kiana oilfield is located on the eastern part of PEL 107 and as at 30 June 2007 had a net 2P oil remaining reserves of 34,500 barrels.";

1.15 on the page numbered 19 of the Bidder's Statement, in the "Profile of Beach" section, under the heading "1.2 Principal activities of Beach" and sub-heading "Surat Basin", second paragraph, amend as follows:
(a) delete "is scheduled for completion" and insert "completed";
(b) delete "in" after amended "completed" and insert "on"; and
(c) insert "20" before "May 2009";
1.16 on the page numbered 35 of the Bidder's Statement, in the "Profile of Drillsearch and other information about Drillsearch's Shares" section, under the heading "Cooper Basin gas and condensate development interests", delete in its entirety the two paragraphs and insert the following:

"Drillsearch holds interests in a number of undeveloped gas resources in PEL's 91 and 106 in the western Cooper Basin.

Particulars of the Middleton, Udacha, Brownlow and Canunda discoveries in which Beach holds an interest are set out in section 1.2 of this Bidder's Statement.";

1.17 on the page numbered 35 of the Bidder's Statement, in the "Profile of Drillsearch and other information about Drillsearch's Shares" section, under the heading "2.3 Directors of Drillsearch", insert as a new paragraph under "(e) Dato Ben Kai Choo, Director." the following:

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"On 18 May 2009 Drillsearch announced the appointment of Brad Lingo as a nonexecutive director effective 19 May 2009 and as Managing Director effective 15 June 2009."

1.18 on the page numbered 37 of the Bidder's Statement, in the "Beach's intentions in relation to Drillsearch" section, amend the paragraph 3.3 heading as follows:
(a) delete "upon" and insert "on";
(b) delete "acquisition of" and insert "obtaining"; and
(c) delete "the" before "Drillsearch Shares";
1.19 on the page numbered 37 of the Bidder's Statement, in the "Beach's intentions in relation to Drillsearch" section, under the amended heading "3.3 Intentions on obtaining 90% or more of Drillsearch Shares", amend the first paragraph as follows:
(a) first line, delete "acquires" and insert "is entitled to a relevant interest of at least";
(b) first line, delete "or more" after "90%"; and
(c) first line, delete "the" before "Drillsearch Shares";
1.20 on the page numbered 38 of the Bidder's Statement, in the "Beach's intentions in relation to Drillsearch" section, amend the paragraph 3.4 heading as follows:
(a) delete "up" in the "upon";
(b) delete "acquisition" and insert "obtaining"; and
(c) delete "the" before "Drillsearch Shares";
1.21 on the page numbered 38 of the Bidder's Statement, in the "Beach's intentions in relation to Drillsearch" section, under the amended heading "3.4 Intentions on obtaining of less than 90% of Drillsearch Shares", amend the first paragraph as follows:
(a) second line, insert "Shares" before "but";
(b) fourth line, delete "90% condition" and insert "obtaining a relevant interest in at least 90% of Drillsearch Shares condition;
1.22 on the page numbered 39 of the Bidder's Statement, in the "Beach's intentions in relation to Drillsearch" section, subparagraph "(d) Limitations in giving effect to intentions", first line, delete "3.3" and insert "3.4";
1.23 on the page numbered 43 of the Bidder's Statement, in the "Overview of the combined Beach/Drillsearch" section, under the heading "Notes to the Pro-forma balance sheet" and sub-heading "Other Pro-forma assumptions", first bullet point, amend as follows:
(a) first line, delete "has not been" before "completed"; and
(b) first line, delete "at the date of this Offer as it is subject to outstanding conditions precedent" and insert "on 20 May 2009";

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1.24 on the page numbered 43 of the Bidder's Statement, in the "Overview of the combined Beach/Drillsearch" section, under the heading "Notes to the Pro-forma balance sheet" and sub-heading "Other Pro-forma assumptions", second bullet point, amend as follows:
(a) fourth line, delete "is" and insert "was originally"; and
(b) insert "however ASIC granted an exemption from section 650C(2) of the Corporations Act to permit Drillsearch to extend the offer period to 9 June 2009" after "26 May 2009";
1.25 on the page numbered 51 of the Bidder's Statement, in the "Investment risks" section, under the heading "5.3 Risks relating to the offer", subparagraph "(d) Consequences of Drillsearch not becoming a wholly owned subsidiary", first line, delete "is accepted in respect of" and insert "results in Beach being entitled to a relevant interest";
1.26 on the page numbered 51 of the Bidder's Statement, in the "Investment risks" section, under the heading "5.3 Risks relating to the offer", second paragraph under the subparagraph "(d) Consequences of Drillsearch not becoming a wholly owned subsidiary", amend as follows:
(a) second line, delete "90% minimum acceptance";
(b) third line, insert "that it obtain a relevant interest in 90% of Drillsearch Shares" after "condition"; and
(c) third line, delete "does not" before "receive";
(d) third line, amend "receive" to "receives";
(e) third line, delete "in respect of at least 90%" and insert "to attain a relevant interest in at least 50%";
1.27 on the page numbered 52 of the Bidder's Statement, in "Tax considerations" section, under heading "6.1 Introduction", second paragraph, amend as follows:
(a) fourth line, insert "capital gains tax" before "CGT"; and
(b) fourth line, insert "(" before "CGT" and ")" after "CGT"; and
(c) fourth line, make "CGT" bold;
1.28 on the page numbered 62 of the Bidder's Statement, in "Approval of Bidder's Statement" section, delete "15 May 2009" and insert "29 May 2009";
1.29 on the page numbered 72 of the Bidder's Statement, in "Annexure A – The Offer", under the heading "9. Conditions", delete in its entirety sub-paragraph "(g) Index out" and its corresponding paragraph;
1.30 on the page numbered 72 of the Bidder's Statement, in "Annexure A – The Offer", under the heading "9. Conditions", point (4) in the sub-paragraph "(h) No Prescribed Occurrences", insert "and on the exercise of options existing at the Announcement Date" after "ATP 299P";
1.31 on the page numbered 73 of the Bidder's Statement, in "Annexure A – The Offer", in paragraph (a) under the heading "10. Nature and benefit of conditions", first line, insert "(h)" after "section 9";

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1.32 on the page numbered 73 of the Bidder's Statement, in "Annexure A – The Offer", first line, subparagraph 11(a)(1), insert "(h)" after "section 9";
1.33 on the page numbered 73 of the Bidder's Statement, in "Annexure A – The Offer", under the heading "11. Waiver of conditions", second line of sub-paragraph (b), amend "business days" to "Business Days";
1.34 on the page numbered 80 of the Bidder's Statement, in "Annexure C – Beach's ASX announcements since the 2008 annual report", after the last announcement:

"15/05/2009 DLS: Appointment of Advisors for Beach Petroleum Takeover Bid"

insert the following:

"15/05/2009 TDO: Drillsearch failure 15/05/2009 Bidders Statement and Offer by BPT for DLS 15/05/2009 Beach Bidders Statement offers balance sheet strength 19/05/2009 May Investors Presentation 20/05/2009 AOE: Completion of Tipton West Acquisition from BPT 20/05/2009 Beach completes sale of its 40% stake in Tipton West 20/05/2009 Weekly Drilling Report 21/05/2009 Appendix 3B 22/05/2009 ADE: PEL 218 Farmin 22/05/2009 PEL 218 Farmin 25/05/2009 COE: Tumby-1 27/05/2009 Takeover offer for Drillsearch Energy Ltd 27/05/2009 TDO: Drillsearch Fractures Reinforce High Risk 27/05/2009 Weekly Drilling Report" 27/05/2009 ROC: Sale of 10% Interest in BMG Project to Pertamina 29/05/2009 Becoming a substantial holder

1.35 on the page numbered 82 of the Bidder's Statement, in "Annexure D – Drillsearch's announcements since the 2008 annual report", after the last announcement:

"15/05/2009 TDO – notice of failure of Takeover Bid"

insert the following:

"15/05/2009 Bidders Statement and Offer by BPT for DLS 15/05/2009 BPT: Beach Bidders Statement offers balance sheet strength 18/05/2009 Notice of Status of Conditions for TDO 18/05/2009 Chairmans Undirected Proxies 18/05/2009 Appointment of Managing Director 20/05/2009 Appendix 3B - Amended 21/05/2009 Appendix 3X – Brad Lingo 25/05/2009 Sale of Surat Basin Permits to Primary Petroleum Pty Limited 25/05/2009 Notice of Change of Interest of Substantial Holder for TDO 25/05/2009 Takeovers Panel 3D Oil Limited Panel Receives Application 26/05/2009 Notice of Change of Interest of Substantial Holder for TDO 26/05/2009 Postponement of EGM and update on board renewal process 26/05/2009 Extension of Offer Period 26/05/2009 Takeover bid for shares in 3D Oil 27/05/2009 BPT: Takeover offer for Drillsearch Energy Ltd

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27/05/2009 Notice of Change of Interest of Substantial Holder for TDO 27/05/2009 TDO: Drillsearch Fractures Reinforce High Risk" 27/05/2009 Takeovers panel 3D Oil Limited Panel Application Withdrawn

2. Authorisations

This Supplementary Bidder's Statement has been approved by a resolution passed by the directors of Beach.

Dated 29 May 2009

Signed on behalf of Beach Petroleum Limited

…………………………………………………… Bob Kennedy Chairman

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Bidder's Statement

Offer

Beach Petroleum Limited

ABN 20 007 617 969

to acquire all your shares in

Drillsearch Energy Limited

ABN 73 006 474 844

The consideration offered is one Beach Share for every 27 of your Drillsearch Shares The Offer is dated [#] and will close at 5.00pm Adelaide time on [#], unless extended

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Adelaide Equity Partners Limited AFSL License No: 313143

Piper Alderman

Corporate Adviser

Legal Adviser

THIS IS AN IMPORTANT DOCUMENT AND REQUIRES YOUR IMMEDIATE ATTENTION

IF YOU ARE IN DOUBT ABOUT THE OFFER, YOU SHOULD CONSULT YOUR FINANCIAL LEGAL OR OTHER PROFESSIONAL ADVISERS WITHOUT DELAY

Important information

This replacement Bidder’s Statement is given by Beach Petroleum Limited ABN 20 007 617 969 to Drillsearch Energy Limited ABN 73 006 474 844 under Part 6.5 of the Corporations Act.

You should read this Bidder’s Statement in its entirety.

This replacement Bidder’s Statement is dated 29 May 2009 and includes in Annexure A an offer dated [# ]2009.

A copy of this replacement Bidder’s Statement was lodged with ASIC on 29 May 2009. This replacement Bidder's Statement replaces the Bidder's Statement lodged with ASIC on 15 May 2009. References in this document to 'the date of this Bidder's Statement' should be read as references to 15 May 2009. Neither ASIC nor any of its officers takes any responsibility for the contents of this Bidder’s Statement.

Key Dates

Date and Time	Event
5 May 2009	Date of announcement of Offer
15 May 2009	Bidder’s Statement lodged with Drillsearch, ASIC
	and ASX
29 May 2009	Replacement Bidder's Statement lodged with
	Drillsearch, ASIC and ASX
[# ]2009	Date of Offer
5:00pm Adelaide time [#]2009	Closing Date of Offer (unless extended)

These dates may vary as permitted under the Corporations Act. Any changes to the above timetable will be notified on Beach’s website www.beachpetroleum.com.au and announced to ASX.

Forward looking statements

Some statements in this Bidder's Statement are in the nature of forward looking statements, including statements of current intention (which include those in section 3 of this Bidder's Statement), statements of opinion and predictions as to possible future events.

Such statements are only predictions and are subject to inherent risks and uncertainties. Actual events or results may differ materially from the events or results expressed as implied in any forward looking statement. You are cautioned not to place undue reliance on any forward looking statement. The forward looking statements in this Bidder's Statement reflect views held only as at the date of this Bidder's Statement.

Notice to Foreign Shareholders

The distribution of this Bidder's Statement may, in some countries, be restricted by law or regulation. Persons who come into possession of this Bidder's Statement should inform themselves of and observe those restrictions.

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Investment decision

This Bidder’s Statement does not take into account your individual investment objectives, financial situation or particular needs. You may wish to seek independent financial and taxation advice before deciding to accept the Offer.

Defined terms

A number of defined terms as set out in section 8 are used in this Bidder’s Statement along with certain rules of interpretation which apply to this Bidder’s Statement.

Information on Drillsearch

The information concerning Drillsearch in this Bidder's Statement has been prepared using publicly available information and has not been independently verified. Neither Beach nor its advisers, subject to the Corporations Act, make any representation or warranty or assume any responsibility for or as to the accuracy or completeness of the information.

Privacy

Beach has collected your information from the register of Drillsearch shareholders for the purposes of making the Offer and, if accepted, administering your holding of Drillsearch Shares. The Corporations Act requires the names and addresses of Drillsearch shareholders to be held in a public register. Your information may be disclosed on a confidential basis to Beach's related bodies corporate and external service providers and may be required to be disclosed to regulators, such as ASIC.

Internet

Both Beach and Drillsearch maintain internet sites. Beach's internet site is www.beachpetroleum.com.au. Drillsearch's internet site is www.drillsearch.com.au. Information contained in or otherwise accessible through these internet sites is not part of this Bidder's Statement. All references in this Bidder's Statement to these internet sites are inactive textual references to these sites and are for your information only.

Enquiries

If you have any questions in relation to the Offer or how to accept, please contact your legal, financial or other professional advisers or telephone the Beach Offer Information Line on:

if you are calling within Australia 1800 171413; or
if you are calling outside Australia +61 8 8232 8648.

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Overview of Reasons Why You Should Accept

Beach’s Offer gives you the opportunity to exchange your Drillsearch Shares at a significant premium to their current value, for shares in what Beach believes to be a larger, more secure company with high quality assets and experienced and stable management.

1. Attractive offer price

Beach’s Offer represents a 50% premium to Drillsearch Shares' three month average price.

2. Step up to a larger company

Beach is an S&P/ASX 200 listed company and is a significant Australian oil and gas producer.

3. Recognised growth potential

Analysts from a number of larger investment banks believe that Beach’s Share price has the potential to increase.

4. Greater financial strength

Compared with Drillsearch, Beach has a substantially stronger balance sheet and has proven it can generate consistently strong cashflows.

5. Solid management with a track record of success

Beach has a stable Board with a record of continuity and a sound track record of developing and growing oil and gas assets.

6. Exposure to diverse asset portfolio

Beach has a diversified exploration and production portfolio across a range of geographical regions offering greater opportunity for discoveries.

7. Consolidation of ownership

Beach and Drillsearch hold a number of Cooper Basin assets in common. Combining management of these assets should yield greater efficiencies.

8. Improved share liquidity

Beach traded approximately 5 times as many shares as Drillsearch in the 12 months prior to the Announcement, based on the relative number of issued shares.

9. A history of regularly paying dividends

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

The above should be read in conjunction with detailed reasons why you should accept the Offer on page 12 of this Bidder's Statement.

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Chairman’s letter

[Beach Petroleum Limited Letterhead]

Dear Drillsearch shareholder

Scrip Offer for your Drillsearch Shares

On 5 May 2009 Beach announced an Offer to acquire all of your Drillsearch Shares.

The Offer is one Beach Share for every 27 of your Drillsearch Shares.

Beach has entered into pre bid agreements with a number of Drillsearch's larger shareholders and, as a result, together with its existing shareholding, now holds a relevant interest of 13.2% of Drillsearch.

I believe that the Offer by Beach is a compelling proposition for Drillsearch shareholders as it enables you to realise an implied value of $0.03 for each Drillsearch Share (based on Beach's closing price of $0.815 on the day before Announcement Date) representing:

a 21% premium to Drillsearch's closing price of $0.025 per share on the day before the Announcement Date;
a 46% premium to Drillsearch Shares' one month volume weighted average price of $0.0207 to the Announcement Date; and
a 50% premium to Drillsearch Shares' three month volume weighted average price of $0.0201 to the Announcement Date.

Your acceptance of the Offer will, subject to the takeover of Drillsearch being effected, entitle you to be a shareholder in one of Australia's premier energy companies which is included in the S&P/ASX 200 Index.

The Offer is subject to a number of conditions which are set out in Annexure A of the Bidder’s Statement, including Beach obtaining a relevant interest in at least 90% of Drillsearch Shares and Drillsearch not issuing any shares to any person including shareholders of 3D Oil Limited other than 60 million shares to CPC Energy Limited in relation to Drillsearch's acquisition of an interest in the "Tintaburra Block" (ATP 299P) and on the exercise of options existing at the Announcement Date. I note that in relation to CPC Energy Limited those shares have now been issued and further that CPC Energy Limited has entered into a pre bid agreement with Beach in respect of its Drillsearch Shares.

I ask that you read this Bidder's Statement carefully and give full consideration to Beach's Offer to acquire your shares.

I encourage you to accept the Offer as soon as possible. To accept the Offer, you should follow the instructions on the enclosed Acceptance Form.

The Offer is scheduled to close at 5:00pm Adelaide time [#]2009.

If you have any questions in relation to the Offer please contact the Beach Offer Information Line on 1800 171413 from within Australia or +61 8 8232 8648 from outside Australia.

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I look forward to your joining me as a shareholder in what I consider to be one of Australia's leading energy companies.

Yours sincerely

Bob Kennedy Chairman

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Important information	Important information	Important information	1
Chairman’s letter			4
Features of the Offer			8
1.	Profile of Beach		16
	1.1	Overview of Beach	16
	1.2	Principal activities of Beach	16
	1.3	Beach’s goals and strategies	21
	1.4	Financial information	22
	1.5	Information about Beach’s issued securities	24
	1.6	Disclosing entity information	30
	1.7	Directors of Beach	31
	1.8	Directors’ interests in Beach	33
	1.9	Interest in Drillsearch Shares	34
	1.10	Summary of pre-bid acceptance agreements	34
	1.11	Directors' interest in Drillsearch Shares	35
2.	Profile of Drillsearch and other information about Drillsearch’s Shares		36
	2.1	Overview	36
	2.2	Principal activities of Drillsearch	36
	2.3	Directors of Drillsearch	37
	2.4	Drillsearch securities on issue	38
	2.5	Drillsearch's share price	38
	2.6	Dividends	38
3.	Beach’s intentions in relation to Drillsearch		39
	3.1	Introduction	39
	3.2	Review	39
	3.3	Intentions on obtaining 90% or more of Drillsearch Shares	39
	3.4	Intentions on obtaining of less than 90% of Drillsearch Shares	40
	3.5	Intentions generally	41
4.	Overview of the combined Beach/Drillsearch		42
	4.1	Combined Group Disclaimer	42
	4.2	Pro-forma balance sheet	42
	4.3	Profile of the Merged Group	46
5.	Investment risks		47
	5.1	Introduction	47
	5.2	Risks associated with owning Beach Shares	47
	5.3	Risks relating to the Offer	52
6.	Tax considerations		54
	6.1	Introduction	54
	6.2	Australian residents holding Drillsearch Shares on capital account	54
	6.3	Australian resident – shares held on revenue account	56
	6.4	Non-resident shareholders	56
	6.5	Other Taxation Implications	57
7.	Other material information		58
	7.1	Drillsearch options	58
	7.2	Disclosure of interests of certain persons	58
	7.3	Disclosure of fees and benefits received by certain persons	58

page 6

	7.4 Consents	59
	7.5 Broker commission	59
	7.6 Other benefits	59
	7.7 No escalation agreements	59
	7.8 Expiry date	59
	7.9 Other material information	60
8.	Definitions and interpretation	61
	8.1 Definitions	61
	8.2 Interpretation	63
9.	Approval of Bidder’s Statement	64
Annexure A – The Offer		65
Annexure B - Beach’s ASX announcement of takeover bid		77
Annexure C – Beach’s ASX announcements since the 2008 annual report		80
Annexure D – Drillsearch’s announcements since the 2008 annual report		83
Corporate directory		86

page 7

Features of the Offer

This summary provides an overview of the Offer and should be read together with the detailed information set out in the rest of this Bidder’s Statement.

Features of the Offer:

Offer

Beach is offering to acquire all of your Drillsearch shares. You are offered one Beach Share for every 27 Drillsearch Shares you hold rounded up.

Closing Date

The Offer is scheduled to close at 5:00pm Adelaide time on [#] 2009 unless extended in accordance with the Corporations Act.

Payment Terms

If you accept the Offer and the contract resulting from your acceptance becomes unconditional, Beach will issue Beach Shares to you on or before the earlier of:

one month after you accept this Offer or, if the Offer is subject to a defeating condition when you accept it, within one month of the contract resulting from your acceptance becoming unconditional (whichever is the later); and
21 days after the Offer closes.

If you are a Foreign Shareholder, the Beach Shares to which you would have otherwise been entitled will be sold on your behalf and the proceeds of sale sent to you – see Annexure A.

Brokerage You will not pay brokerage or stamp duty if you accept. Any such costs will be paid by Beach.

Conditions

The Offer is subject to a number of conditions. In summary, these conditions are:

obtaining a relevant interest in at least 90% of Drillsearch Shares;
no orders being made by, or applications to, a public authority which restrain or prohibit, or otherwise materially adversely impact on the Offer or the completion of any transaction contemplated by the Offer;
Drillsearch not issuing additional shares to any party, including to shareholders of 3D Oil Limited who accepted Drillsearch’s takeover offer for 3D Oil Limited other than 60 million Drillsearch Shares to CPC Energy Limited in relation to the acquisition by Drillsearch of an equity interest in Tintaburra Block (ATP 299P) and on the exercise of options existing at the Announcement Date;
no change, event or condition occurring, being announced or becoming known to Beach which has had, or is reasonably likely to have, a material adverse effect on Drillsearch;
no material acquisitions or disposals of assets by Drillsearch;
no declaration or payment of dividends or distribution of capital by Drillsearch;
no Prescribed Occurrence occurring.

page 8

Frequently Asked Questions

Below are the answers to some key questions that you may have about the Offer which should be read in conjunction with the detailed information contained in this Bidder’s Statement and in the Annexures to this Bidder’s Statement. You should read this Bidder’s Statement in full before deciding whether or not to accept the Offer.

If you have further questions please call the Offer Information Helpline on 1800 171413 (toll-free) from within Australia or on +61 8 8232 8648 from outside Australia.

Who is making the Offer?

Beach Petroleum Limited has made the Offer. Beach is an Australian listed company (ASX code: BPT) and is one of the top ten oil and gas exploration and production companies in Australia.

Why has the Offer been made?

The Offer has been made because Beach considers that Drillsearch’s assets can be more effectively and efficiently managed by Beach's management team for the benefit of Beach and Drillsearch shareholders.

What will I receive if I accept the Offer?

If you accept the Offer you will receive one Beach Share for every 27 Drillsearch Shares you hold (rounded up).

How do I accept the Offer?

To accept the Offer for all of your Drillsearch shares:

for CHESS Holdings of Drillsearch Shares you should either:
- instruct your stockbroker or other Controlling Participant to accept on your behalf; or
- complete the accompanying Acceptance Form and send the completed Acceptance Form directly to your broker or other Controlling Participant before the end of the Offer Period; or
complete, sign and return the Acceptance Form and lodge it by returning it to the address indicated on the form before last day of the Offer Period. For Issuer Sponsored Holdings of Drillsearch Shares you should complete, sign and return the accompanying Acceptance Form in accordance with the instructions on the form;
if you are a broker or a ASTC participant, to accept the Offer you must initiate acceptance in accordance with the requirements of the ASTC Settlement Rules before the end of the Offer Period;
for detailed instructions on how to accept this Offer see section 4 of The Offer in Annexure A to this Bidder's Statement.

When does the Offer close?

The Offer is scheduled to close at 5:00pm Adelaide time on [#] 2009 unless extended in accordance with the Corporations Act.

page 9

When will I receive the offered Beach Shares?

If you accept the Offer and the contract resulting from your acceptance becomes unconditional, Beach will issue Beach Shares to you on or before the earlier of:

one month after you accept this Offer or, if the Offer is subject to a defeating condition when you accept it, within one month of the contract resulting from your acceptance becoming unconditional (whichever is the later); and
21 days after the Offer closes.

If you are a Foreign Shareholder, the Beach Shares to which you would have otherwise been entitled will be sold on your behalf and the proceeds of sale sent to you – see Annexure A.

Will I pay brokerage or stamp duty if I accept?

What conditions attach to the Offer?

You will not pay brokerage or stamp duty if you accept. Any such costs will be paid by Beach.

The Offer is subject to a number of conditions. In summary, these conditions are:

obtaining a relevant interest in at least 90% of Drillsearch Shares;
regulatory approvals are obtained;
Drillsearch not issuing additional shares to any party, including to shareholders of 3D Oil Limited who accepted Drillsearch’s takeover offer for 3D Oil Limited other than 60 million Drillsearch Shares to CPC Energy Limited in relation to the acquisition by Drillsearch of an equity interest in Tintaburra Block (ATP299P) and on the exercise of options existing at the Announcement Date;
no orders being made by, or applications to, a public authority which restrain or prohibit, or otherwise materially adversely impact on the Offer or the completion of any transaction contemplated by the Offer;
no change, event or condition occurring, being announced or becoming known to Beach which has had, or is reasonably likely to have, a material adverse effect on Drillsearch;
no material acquisitions or disposals of assets by Drillsearch;
no change of control of Drillsearch or the change of rights in respect to material assets of Drillsearch;
no declaration or payment of dividends or distribution of capital by Drillsearch;

page 10

no Prescribed Occurrence occurring.

What are Beach’s intentions?

Beach is seeking to acquire all of the share capital of Drillsearch. If it obtains a relevant interest in at least 90% of Drillsearch Shares it intends to compulsorily acquire the balance.

Subject to the successful completion of the Offer and Beach acquiring 100% of Drillsearch, Beach intends to:

undertake a full review of the operations of the combined Beach/Drillsearch;
remove Drillsearch from the official list of ASX; and
seek to maximise the performance of the business operations under the management of Beach.

What are the risks associated with owning Beach Shares?

What are the tax implications of accepting the Offer?

Section 5 of this Bidder’s Statement provides information regarding the risks associated with owning Beach Shares.

The tax implications for most Drillsearch shareholders of accepting the Offer are summarised in general terms in section 6 of this Bidder’s Statement.

You should, however, obtain your own tax advice regarding the tax implications of accepting the Offer.

What happens if I do not accept the Offer?

Can I withdraw my acceptance?

Can Beach extend the Offer period?

Can I sell my Drillsearch shares on market?

If you do not accept this Offer you will remain a Drillsearch shareholder. If, however, Beach acquires 90% of Drillsearch Shares it will act to compulsorily acquire your Drillsearch Shares as allowed for under the compulsory acquisition provisions of the Corporations Act. In that case, you will receive your Beach Shares no later than shareholders who accept the Offer.

You cannot withdraw your acceptance unless a withdrawal right arises under the Corporations Act. Such a withdrawal right will arise if, after you have accepted the Offer, Beach varies the Offer in a way that postpones, for more than one month, the time when it has to meet its obligations under the Offer.

Yes, the Offer Period can be extended at Beach’s election. Drillsearch shareholders will be sent written notice of any extension, and the extension will be announced to the ASX.

Yes, but you may incur brokerage costs and GST if you do. If you have already accepted the Offer, you will be unable to settle any subsequent sale of your Drillsearch Shares, subject to you being entitled to withdraw your acceptance - see “Can I withdraw my acceptance?” above.

page 11

Detailed Reasons Why You Should Accept

1. Attractive offer price

Beach believes that the Offer is a compelling proposition for Drillsearch shareholders as it enables them to realise an implied value of $0.03 for each Drillsearch Share (based on Beach's closing price of $0.815 on the day before the Announcement Date), representing:

a 21% premium to Drillsearch Shares' closing price of $0.025 per share on the day before the Announcement Date;
a 46% premium to Drillsearch Shares' one month volume weighted average price of $0.0207 to the Announcement Date; and
a 50% premium to Drillsearch Shares' three month volume weighted average price of $0.0201 to the Announcement Date.

2. Step up to a larger company

The Offer by Beach gives you exposure to an Australian S&P/ASX200 listed energy company of substance. As an indication of the relative size of the two companies, based on the closing price the day before the Announcement Date, Beach’s market capitalisation was $845 million compared with Drillsearch’s market capitalisation of $42 million.

Benefits of a larger company include:

Beach being a member of the S&P/ASX 200 index and having a number of institutional shareholders. This gives Beach potentially significantly greater access to capital at a time of considerable financial and economic volatility and uncertainty on global markets;
being one of the top ten oil and gas producing companies in Australia, Beach is regularly presented with quality energy investment opportunities.

3. Recognised growth potential

Beach's inclusion in the ASX/S&P 200 index and its size has led to its being reported on regularly by analysts from a number of the larger investment banks. The general opinion of these analysts is that Beach’s Share price has the potential to increase.

4. Greater financial strength

Beach has delivered strong growth in operating cash flows over the last five years which has underpinned its ability to fund the exploration and development program within its portfolio of oil and gas assets as well as enabling it to pay consistent dividends from profits on an expanding capital base.

Beach will be able to develop Drillsearch’s assets utilising its strong cashflow at a time when Beach believes it will be difficult for companies with a smaller market capitalisation to raise funds. Beach has a substantially stronger balance sheet than Drillsearch.

page 12

5. Solid management with a track record of success

Beach has stability and continuity. The chairman, Mr Robert Kennedy, joined Beach in December 1991 as a non-executive director and has been the chairman since 1995.

The directors of Drillsearch have collectively called an extraordinary general meeting, the purpose of which is to remove all directors from the board.

You would entrust the Drillsearch assets to a very reputable management team with a sound track record of developing and growing oil and gas assets. The team is led by the Managing Director, Mr Reg Nelson who joined Beach in May 1992 as an executive director and has been Managing Director since 2002. Mr Hector Gordon, Chief Operating Officer, has been with Beach since 1996 and Ms Kathryn Presser, Chief Financial Officer, has been with the company since 1997.

Drillsearch has yet to replace its former Managing Director, Mr David Williams who left his role on 30 March 2009, after tendering his resignation in December 2008. Although Drillsearch announced on 18 May 2009 that Mr Brad Lingo is expected to be the Managing Director, his appointment as Managing Director does not take effect until 15 June 2009.

6. Exposure to diverse asset portfolio

You would receive the benefits of Beach’s diversified exploration and production portfolio across a range of geographical regions.

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 as indicated in the table below, (this will be reduced by approximately 76 mmboe on settlement of the Tipton West sale described in section 1.2 of this Bidder's Statement). A contingent gas resource totaling 278 mmboe (net to Beach) is also indentified in Beach's Cooper and Gippsland Basin tenements.

Beach's production is derived from the Cooper/Eromanga and Gippsland Basins, with first oil production from its Egyptian tenements expected to commence during FY10.

During FY10 Beach expects to participate in the drilling of approximately 60 wells, of which approximately 50 will be located in the Cooper/Eromanga Basin region.

Area	2P Reserves 1 July 2008	Net Prodn FY 2008
	(mmboe)	(mmboe)
Cooper Basin	63	8.1
Gippsland Basin	5.9	0.8
Surat Basin	761	0.4
TOTAL	145	9.3

1 Beach's Surat Basin reserves will reduce to zero on settlement of the Tipton West sale described in section 1.2 of this Bidders Statement.

page 13

7. Consolidation of ownership

The consolidation of ownership interests held in common by Beach and Drillsearch in the Cooper Basin (as illustrated in the map below) would, in Beach's view, deliver greater efficiencies.

==> picture [329 x 329] intentionally omitted <==

Beach is an experienced operator of Cooper Basin assets.

8. Improved share liquidity

You will benefit from significantly greater share trading liquidity. For the 12 months to 4 May 2009, Beach had a turnover of approximately 167% of the shares on issue, whereas Drillsearch had a turnover of only 33%.

	Beach	Drillsearch
Issued shares (at 4 May
2009)	1,036,284,644	1,668,431,597
Total Volume 12 Months
to 4 May 2009	1,726,675,047	561,010,919
As a % of Issued shares	167%	33%
Average Daily Volume	6,906,700	2,208,704
As a % of Issued shares	0.67%	0.13%
Average Daily Turnover
(A$)	6,985,761	96,205

page 14

9. A history of regularly paying dividends

Beach has regularly paid a dividend as illustrated in the following table:

Years	Period	Dividend per
		Share(cents)
2009	Interim	0.75
2008	Final	1.0
2008	Interim	0.75
2007	Final	1.00
2007	Interim	0.75
2006	Final	1.0
2006	Interim	0.5
2005	Final	0.5
2005	Interim	1.0
2004	Final	0.5
2004	Interim	0.5
2003	Final	0.5
2003	Special	0.5
2003	Interim	0.5
2002	Final	0.5

Risks of not accepting

Drillsearch Shares may revert to the price at which they were trading before the Offer was announced (or possibly even lower).

If you do not accept Beach’s Offer for Drillsearch, and no superior offer is made, there are factors that you should consider, including;

the risk that Beach’s relevant interest in Drillsearch of 13.2% is large enough to form a blocking stake which would prevent another bidder from attaining 100% of Drillsearch without Beach’s support, thereby reducing the chance of a counter bid emerging. This risk could increase should Beach successfully acquire an additional interest through this Offer;
the fact that Drillsearch made losses from ordinary activities of $5.5 million in the six months to December 2008, while Beach made a profit from ordinary activities of $127.5 million over the same period;
the potential for your investment in Drillsearch to continue to be exposed to the inherently higher risks of a smaller company operating in the capital intensive oil and gas industry, including greater vulnerability to:
funding and capital investment risk;
operating and technical risk;
exploration and development risk; and
environmental and community risks.

page 15

1. Profile of Beach

1.1 Overview of Beach

Beach is a long established oil and gas exploration and production company, based in Adelaide, South Australia and listed on ASX.

Beach was established in the early 1960s by the late Dr. Reginald C. Sprigg, a highly regarded Australian oilman, geologist, explorer and conservationist. After working with Santos Limited in the Cooper Basin in central Australia, now Australia's largest onshore petroleum producing region, Dr. Sprigg identified an opportunity to establish an independent oil and gas exploration company to build a portfolio of assets in the region.

Beach’s assets grew steadily through the 1960s, 70s and early 80s, by which time it held a broad range of promising exploration and production tenements, extensive cash reserves, plus a long term revenue base from its recent oil and gas discoveries. Following a restructure in the 1990s, Beach began rebuilding its asset base in the Cooper Basin and beyond.

Beach significantly bolstered its position in the Australian oil and gas market in 2006 with its acquisition of Delhi Petroleum Pty Limited group for more than $500 million.

Beach now 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 also aims to diversify its energy mix, most notably through its participation in geothermal energy exploration.

1.2 Principal activities of Beach

Cooper/Eromanga Basin

Beach's exploration and production focus is primarily in the Cooper/Eromanga Basin in central Australia, where it holds interests in more than 280 tenements. The Cooper and the overlying Eromanga Basin host Australia's largest onshore oil and gas development. Average production during the March 2009 quarter from Beach's Cooper/Eromanga tenements was approximately 7,900 barrels of oil per day, net to Beach.

Beach's operated licences lie primarily along the flanks of the Cooper Basin where Eromanga Basin sandstone reservoirs are well positioned to receive oil charge from deeper Cooper Basin source rocks. These permits are primarily prospective for oil discoveries in the Eromanga Basin section, although Cooper Basin oil and gas / condensate prospectivity is also recognised in some areas. Beach currently operates 15 oil fields in the Cooper/Eromanga Basin with 5 gas discoveries awaiting development.

Recent exploration efforts by Beach in its tenements located on the western flank of the Cooper Basin in South Australia have proven to be particularly rewarding, with seven oil fields now in production. Since Beach began exploring on the western flank of the Cooper Basin in 2002, approximately 6.3 million barrels of oil reserves (net to Beach) have been discovered and developed, at an average finding and development cost of less than A$11 per barrel. Beach has continued its exploration efforts in this area, carrying out large 3D seismic surveys, with a strong portfolio of prospects and leads developed for further assessment over the next few years.

page 16

A defining factor in Beach's recent growth was the acquisition in 2006 of Delhi Petroleum Pty Limited group and its extensive oil and gas assets in the Cooper/Eromanga Basins, complementing Beach's prior holdings in the area. The Delhi acquisition provided Beach with an approximate 21% interest in the Cooper Basin tenements operated by Santos Limited.

During the quarter ending 31 March 2009, Beach produced 6.6 PJ of natural gas and 0.7 million barrels of oil from its Cooper/Eromanga tenements. Beach also participated in the drilling of 15 wells in this region during this period. At 1 July 2008, Beach's Cooper/Eromanga 2P reserves stood at 238 PJ of gas and 15 million barrels of oil. In addition to these reserves in March 2009 Beach confirmed contingent gas resources of 262 million barrels of oil equivalent (net to Beach) as assessed by the joint venture operator and supported by an independent review.

Beach is associated with Drillsearch in three joint ventures in the South Australian western Cooper/Eromanga Basin, namely PEL's 91, 106 and 107.

Seismic activity in PEL 91 has identified more than 40 potential drilling targets in that tenement. Beach's assessment is that seven of these features represent potentially economically viable drilling prospects. The best two prospects, currently denoted 91-12 and 91-48, are programmed for drilling in September/October 2009. This program will address total unrisked mean potential recoverable reserves of 3.5mmb of oil (2.1mmb net to Drillsearch, 1.4mmb net to Beach). The prospects are assessed by Beach to have an average probability of success of 35%, indicating an expected (ie risked) outcome of the drilling program of 1.2mmb (07.mmb net to Drillsearch, 0.5mmb net to Beach).

Conversely, should both of the wells to be drilled this year fail, it is likely that there will be no further drilling by Beach in PEL 91 in the foreseeable future.

page 17

Completion and production testing of Brownlow-1 and Canunda-1 is scheduled for June 2009, in order to confirm reserves and commerciality. This work will complete Beach's farmin program in the block*.

	Gross Recoverable Sales Gas (BCF)	Gross Recoverable Sales Gas (BCF)	Gross Recoverable Sales Gas (BCF)
	P90**	P50***	P10****	Mean
Middleton	1.7	4.0	9.6	5.0
Brownlow	1.2	3.8	12.6	5.9
Canunda	1.5	3.2	6.6	3.7
Udacha (PEL 91)	1.9	4.1	8.8	4.9

Note: Brownlow & Canunda reserves are subject to confirmation by production testing, scheduled to commence in June 2009.

page 18

The Kiana oilfield is located on the eastern part of PEL 107 and as at 30 June 2007 had a net 2P oil remaining reserves of 34,500 barrels.

The map below shows the location of Beach's interests in the Cooper/Eromanga Basin.

==> picture [453 x 350] intentionally omitted <==

Gippsland Basin

Beach holds 30% equity in the Basker, Manta and Gummy oil and gas fields in offshore Victoria (known as the BMG Project). Its location is illustrated in the map below. This project presently involves oil production from four wells in the Basker field and one well in the Manta field, all of which are connected, via subsea connections, to the Crystal Ocean FPSO. Separation of gas associated with the oil production is undertaken on the Crystal Ocean with excess gas reinjected into the Basker field and oil transferred to a leased shuttle tanker (Basker Spirit).

Production during the March 2009 quarter averaged 2,408 barrels of oil per day, net to Beach.

page 19

==> picture [378 x 235] intentionally omitted <==

Surat Basin

On 3 April 2009, Beach announced the sale of its 40% joint venture interest in the producing Tipton West Coal Seam Gas Field and associated tenements in the Surat Basin, 20 km south of Dalby, to Arrow Energy Limited under a tiered payment structure. The sale price will consist of a mix of cash, shares and contingent payments as summarised below:

$260 million cash - payable on completion;
$70 million of Arrow Energy Limited's shares as listed on the ASX - issued on completion;
up to $40 million cash for the booking of additional gross 3P gas reserves;
$15 million cash upon gas owned by Arrow Energy Limited supplying any liquefied natural gas (LNG) project no later than 31 December 2016; and
$15 million cash upon any LNG project producing an annualised equivalent of 1 million tonnes per annum of LNG using gas supplied from Arrow Energy Limited tenements no later than 31 December 2017.

The transaction completed on 20 May 2009. Selling its interests in the Tipton West assets will yield Beach a profit of approximately $276 million (before tax) in this financial year.

The sale of the asset for up to $400 million represents a very significant return of over 11 times Beach's original investment.

Egypt

In 2008, Beach acquired a 20% interest in each of the North Shadwan and South East July Concessions, in the Gulf of Suez, Egypt.

The North Shadwan Concession is operated by BP Exploration (Delta) Limited and contains three existing undeveloped oil discoveries and several attractive exploration prospects.

page 20

Government approval has been granted to develop two of these fields (NS-377 and NS-385) which were discovered during the mid 1980's and are offshore but close to the eastern shore of the Gulf. First production from these fields is planned for late in 2009. The NS-377 and NS-385 fields are estimated to contain recoverable oil reserves of 2.2 million barrels (net to Beach). Two wells will be drilled in this area of the concession during the second half of 2009.

The third discovery, Burtocal, was made in late 2007. Drilling of one well and a probable sidetrack is planned to commence in the third quarter of 2009. The Burtocal complex has the potential to contain mean recoverable oil reserves (as assessed by Beach) of approximately 4 million barrels (net to Beach).

==> picture [336 x 339] intentionally omitted <==

Other Exploration

Beach holds other exploration interests offshore Australia, New Zealand and Spain and expects to finalise acquisition of exploration tenements in Albania and Tanzania during FY10.

1.3 Beach’s goals and strategies

Beach’s approach of increasing reserves and production through exploration and acquisition has driven its growth to be among the top Australian listed petroleum producers.

Beach will continue to seek to drive growth in its existing business by:

maximising economic return from its producing assets;

page 21

expanding through exploration within its existing portfolio; and
diversifying into new regions.
Beach’s achievements can be measured in terms of:
market capitalisation;
recognition and awards;
integrity in corporate governance;
petroleum production and reserves;
exploration success;
profitability and earnings;
total shareholder return relative to its peers;
responsibility as a corporate citizen; and
ability to retain and attract good people.

These performance indicators will continue to be framed by Beach’s core values of teamwork, integrity and performance.

1.4 Financial information

(a) Basis of presentation of historical financial information

The historical financial information below relates to Beach on a stand alone basis and accordingly does not reflect any impact of the Offer for Drillsearch. It is a summary only and the quarterly reports and full financial accounts (including notes to the accounts) for Beach covering the financial periods described below can be found in Beach's quarterly, half-yearly and annual reports for the relevant periods, copies of which are available at Beach’s website (www.beachpetroleum.com.au) or the ASX website (www.asx.com.au).

(b) Current financial year

Beach's financial performance for the half year ended 31 December 2008 included record half year total revenue of $480 million, operating cash flow of $68 million and a net profit after tax of $128 million. As at 31 December 2008, Beach's net asset position stood at $1.2 billion with a cash balance of $139 million and a gearing ratio of 14.2% (on a debt to debt plus equity basis). Beach declared an interim dividend of 0.75 cents per share based on the half year financial results which was paid on 20 April 2009.

For the March 2009 quarter, Beach achieved sales revenue of $129 million giving a total for the nine months to March 2009 of $463 million, 16% higher than the corresponding period in the previous year. Capital expenditure during the quarter was $116 million and debt was reduced by a further $17 million to $180 million. The cash balance at the March quarter end was $30 million.

page 22

==> picture [355 x 198] intentionally omitted <==

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

Gross Revenue
800
700
600
500
$ million 400
300
200
100
0
FY04 FY05 FY06 FY07 FY08
----- End of picture text -----

Over the last five years, Beach's revenue has consistently grown, most notably in the 2006/07 financial year with the acquisition of the Delhi Petroleum Pty Limited group and its interests in extensive oil and gas assets in the Cooper/Eromanga Basin.

==> picture [355 x 199] intentionally omitted <==

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

Net Profit After Tax
120
100
80
60
$ million
40
20
0
FY04 FY05 FY06 FY07 FY08
----- End of picture text -----

Beach's core business has been steadily growing as can be seen by the general trend of increasing net profit after tax over the period FY04-FY08. The reduction in net profit after tax in FY08 was primarily attributable to the close out of part of the company's oil hedging contracts, as well as unrealised hedging losses on those oil contracts remaining.

page 23

==> picture [355 x 198] intentionally omitted <==

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

Operating Cash Flow
250
200
150
$ million
100
50
0
FY04 FY05 FY06 FY07 FY08
----- End of picture text -----

(d) Future performance

The historical financial performance of Beach outlined above should not be taken as an indication or guarantee of how Beach may perform in the future. You should consider the investment risks for Beach as outlined in section 5. Given the nature of uncertainties associated with oil and gas exploration and production and global energy markets, Beach believes that it does not have a reasonable basis for the presentation of forecast financial information in this Bidder’s Statement.

1.5 Information about Beach’s issued securities

a) Beach’s issued securities

As at the date of this Bidder’s Statement the issued securities of Beach consist of:

1,036,284,644 Beach Shares;
102,555,626 listed options over unissued Beach Shares; and
17,874,697 unlisted options over unissued Beach Shares.

Details of issues of Beach Shares since 30 June 2008 are as follows:

Issue	Date	Price	Number Issued	Amount Raised
		(A$)		(A$)
Employee	18/07/08	1.220	4,411,430	5,381,945
Share Issue
Share	30/07/08	1.430	1,215,894	1,738,728
Purchase
Plan

page 24

Employee	15/09/08	0.934	309,500	289,073
Share Issue
Option	03/10/08	2.00	39	78
Conversion
DRP	24/10/08	0.903	3,309,811	2,988,759
Employee	07/11/08	0.823	50,000	41,150
Share Issue
Employee	22/12/08	0.834	36,850	30,733
Share Issue
Option	16/01/09	2.00	3	6
Conversion
Employee	20/03/09	0.77	36,850	28,375
Share Issue
DRP	20/04/09	0.866	2,360,297	2,044,017

b) Substantial shareholders

As at the date of this Bidder’s Statement the following entity had notified Beach of substantial shareholdings in Beach:

Substantial Shareholder	Number of Shares	Voting Power
Mathews Capital Partners	107,697,297	12.09%

c) Recent trading in Beach Shares

The latest recorded sale price for Beach Shares on ASX before the date on which this Bidder’s Statement was lodged with ASIC was $0.785 on 14 May 2009.

The latest sale price for Beach Shares on ASX before the Announcement Date was $0.815 on 4 May 2009.

The highest and lowest sale price for Beach Shares on ASX during the four months before the Bidder’s Statement was lodged with ASIC were:

• highest - $0.97 on 6 January 2009 • lowest - $0.695 on 6 February 2009.

d) Dividends

The following unfranked dividends have been paid by Beach in the 2005 to 2009 financial years:

Years	Period	Dividend per Share
		(cents)
2009	Interim	0.75
2008	Final	1.0
2008	Interim	0.75

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2007	Final	1.00
2007	Interim	0.75
2006	Final	1.0
2006	Interim	0.5
2005	Final	0.5
2005	Interim	1.0
2004	Final	0.5
2004	Interim	0.5
2003	Final	0.5
2003	Special	0.5
2003	Interim	0.5
2002	Final	0.5

e) Rights and liabilities attaching to Beach Shares

The Beach Shares received as consideration under the Offer will rank equally with existing Beach Shares.

The rights and restrictions attaching to Beach Shares are set out principally in Beach’s constitution and the Corporations Act.

A summary of the rights follows.

Dividend entitlement

Dividends are declared by the Directors at their discretion and subject to any special rights (at present there are none), are payable on all Beach Shares in proportion to the amount of capital for the time being paid up or credited as paid up on those shares.

The Beach Shares received as consideration under the Offer will participate in all dividends declared after their allotment and rank equally with existing Beach Shares.

Voting rights

At a general meeting every shareholder present in person by proxy, attorney or representative, has one vote on a show of hands and every shareholder present in person or by proxy, attorney or representative has one vote for each Beach Share on a poll.

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Transfer of shares

Generally, Beach Shares are freely transferable. Where the Listing Rules or the law requires Beach to do so, the Directors must decline to register a transfer.

Future increases in capital

The allotment or issue of Beach Shares is under the control of the Directors who may, subject to the Corporations Act and the Listing Rules, allot or otherwise deal with them on such conditions as they see fit.

Variation of rights

The rights and privileges attaching to Beach Shares can be altered by special resolution of the shareholders. A special resolution is a resolution passed by a majority of not less than 75% of those present and voting.

Rights on winding up

In the event of a winding up of Beach:

any surplus will be divided among the shareholders in the proportion that the amount paid up on the Beach Shares bears to the total amount paid up on all Beach Shares on issue;
surplus assets in kind may, with the sanction of a special resolution, be divided among shareholders in such proportion as the liquidator may determine.

f) Dividend reinvestment plan

Beach has established a dividend reinvestment plan (DRP). The DRP is intended to provide shareholders with a choice of reinvesting dividends in additional shares rather than receiving those dividends in cash.

A copy of the DRP is available on request to the company secretary.

Some of the key features of the DRP are listed below:

1) Eligibility

all Beach shareholders who have registered addresses or places of residences in Australia or New Zealand;

2) Participation

participation in the DRP is optional. Beach shareholders who are eligible to participate in the DRP may elect to reinvest dividends on some or all of their shares by subscribing for additional fully paid Beach Shares except where, under the constitution or otherwise by law, the Directors are entitled to retain all or part of that dividend. A shareholder may terminate his, her or its participation in the DRP or increase or decrease the percentage of shares that are to participate in the DRP at any time by giving written notice to Beach using the prescribed form;

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3) Price

the issue price of Beach Shares under the DRP will be at a discount determined by the Directors, to the weighted average market price of Beach Shares sold in the ordinary course of trading on ASX in the five trading days immediately following the Beach record date in relation to the dividend to be paid. If no Beach Shares are sold in that period, the Directors will determine a fair market value of Beach Shares;

4) Shares issued under the DRP

the number of Beach Shares to be issued to each participant in the DRP will be determined as the nearest whole number of shares, rounded up, which would be acquired at the issue price for the amount of the dividend;

5) Modification and termination by the Directors

the DRP may be varied, suspended or terminated at any time by the Directors;

6) Costs

no brokerage, commission or other transaction costs and no stamp duty or other duties are payable by participants on Beach Shares issued under the DRP.

g) Executive long term incentive plan (LTI)

Beach has an executive long term incentive plan approved at the shareholders’ general meeting on 23 November 2006.

The plan is open to senior executives (including directors employed in an executive capacity) employed by Beach or its subsidiaries who are determined by the Directors to be eligible to participate in the plan.

Participants in the plan are offered options or rights to subscribe for Beach Shares which become exercisable at the end of an exercise date only if stated exercise conditions have been met.

Participants are granted options for no consideration. The Directors have a discretion to determine the amount (if any) the participant must pay for a share in the event that an option becomes exercisable.

The date that an option might become exercisable is subject to the plan rules and any vesting performance condition (VPC). The VPC means one or more conditions which must be satisfied or waived or circumstances which must exist before an option becomes vested in its holder.

An option that has not been exercised will lapse and have no further rights on the first to occur of:

the expiry date for the option;
any VPC is not satisfied or waived;

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the participant has given notice that he or she wishes the option to lapse;
the Directors determine in their discretion that the option will be forfeited because the participant has been dismissed for acting fraudulently or dishonestly or has committed a breach of his or her obligations to Beach; or
the participant ceases to be employed by Beach.

Until such time as options vest they cannot be transferred, encumbered or otherwise dealt with. Options are not quoted on ASX.

Currently under the LTI there are;

8,091,552 options on issue to acquire Beach Shares at an exercise price of $1.406 per share;
4,439,958 options on issue to acquire Beach Shares at an exercise price of $1.422 per share;
5,343,187 rights on issue to acquire Beach Shares for nil consideration but subject to achievement of performance criteria.

h) Employee Incentive Plan (EIP)

Currently Beach has 14,185,635 Beach Shares on issue under the EIP.

A summary of the rules of the EIP is set out below. Copies of the EIP rules are available on request to the company secretary.

The rules of the EIP in respect of share issues are summarised as follows:

the EIP is open to permanent employees of Beach or a controlled entity of Beach which will include a director holding salaried employment in Beach or a controlled entity of Beach (Eligible Persons);
under the EIP, the Directors at their discretion may offer Beach Shares to Eligible Persons. Any offer to a Director must be first approved by shareholders;
the shares issued under the EIP have the same rights as other Beach Shares subject to restrictions on transfer, which apply where a loan made by Beach remains unpaid;
the subscription price for shares shall be the market value of Beach Shares on the day of offer;
Beach at the time of making an offer to purchase shares may also provide an interest free loan to assist with the purchase of those shares. Unless otherwise specified in the offer document, the terms of the loan will be:
interest free and for a term of 10 years;
if a disqualifying event (as defined in the EIP Rules) occurs, Beach may sell the shares and after costs apply the sale proceeds to repay

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the outstanding amounts of the loan. If there is a shortfall between the loan amount still owing and the sale price, the employee will not be required to make good the shortfall. If there is a surplus after the sale of the shares the employee is only entitled to the surplus if the Qualifying Period described below has expired; and

− if at the expiry of a loan term a participant does not repay the loan, Beach may sell the shares and after costs, repay the loan. Any surplus will be repaid to the participant. No shortfall between the sale price and the loan amount will be recoverable from the participant;

− while an offer to take up shares under the EIP will be at market value the incentive for employees to accept the offer is the granting of an interest free loan to fund all or part of the purchase price;

− in certain circumstances the Directors may specify in an offer to an Eligible Person that shares may not be transferred by the Eligible Person for a certain period of time. Where Beach issues shares under the EIP and there is a loan granted to purchase those shares, Beach retains a lien over the shares until such time as the loan is repaid in full;

by accepting an offer of shares in accordance with the EIP, a participant agrees to be bound by the rules or other conditions contained in the offer document;
the EIP rules must comply with the Listing Rules and the Corporations Act requirements.

1.6 Disclosing entity information

Beach is a “disclosing entity” for the purposes of the Corporations Act and as such is subject to periodic reporting and continuous disclosure obligations. Specifically, as a listed company, Beach is subject to Listing Rules which require continuous disclosure of any information which Beach has concerning itself that a reasonable person would expect to have a material effect on the price or value of Beach Shares.

Copies of announcements made by Beach on ASX are available from ASX and are also available on Beach’s website (www.beachpetroleum.com.au). In addition, Beach is required to lodge various documents with ASIC copies of which may be obtained from, or inspected at, ASIC offices.

During the Offer Period, Beach will provide free of charge the following documents to any person upon request:

Beach’s constitution;
Beach’s annual report for the year ended 30 June 2008 (being the annual report most recently lodged with ASX before this Bidder’s Statement was lodged with ASIC);
Beach’s half yearly report for the six month period to 31 December 2008;

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any continuous disclosure notice given to ASX by Beach after the lodgement with ASIC of Beach’s 2008 annual report and before lodgement of this Bidder’s Statement with ASIC. A list of such notices is provided in Annexure C; and
any continuous disclosure notice given to ASX by Drillsearch after the lodgement with ASIC of Drillsearch's 2008 annual report and before lodgement of this Bidder’s Statement with ASIC. A list of such notices is provided in Annexure D.

Copies of any of these documents can be requested by contacting the Beach Offer Information Line on 1800 171413 (callers within Australia) or +61 8 8232 8648 (callers outside Australia). Alternatively the information (excluding Beach’s constitution) can be downloaded from the Beach website www.beachpetroleum.com.au.

The text of the announcement given to ASX by Beach in relation to this Offer is attached in Annexure B.

1.7 Directors of Beach

Details of Directors of Beach are set out below:

Robert Michael Kennedy

Non-Executive Chairman

Mr Kennedy is a chartered accountant and a consultant to Kennedy & Co, Chartered Accountants, a firm he founded. He joined Beach in December 1991 as a non-executive Director and has been the Chairman of Beach 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), Eromanga Uranium Limited (since 2006), Monax Mining Ltd (since 2004) and Marmota Energy Limited (2007). His special responsibilities include chairmanship of the Corporate Development and Remuneration & 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 in the resources sector.

Reginald George Nelson

Managing Director

Mr Nelson joined Beach in May 1992 as an executive Director, was appointed Chief Executive Officer in October 1995 and then Managing Director in May 2002. He has had a career spanning nearly 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 director of its governing body. 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. Mr Nelson contributes to the board his technical expertise and knowledge of the petroleum industry and broad experience in corporate matters.

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John Charles Butler

Non-Executive Director

Mr Butler joined Beach in June 1999 as a non-executive Director, having previously been the alternate director to Mr R G 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 chairman of Lifeplan Australia Friendly Society Group. Former appointments include the chairmanship of Friendly Society Medical Association Limited and directorship of former ASX listed company, Great Artesian Oil and Gas Limited (appointed and resigned in 2006). His special responsibilities include chairmanship of the Audit Committee and membership of the Corporate Governance Committee.

Franco Giacomo Moretti

Non-Executive Director

Mr Moretti joined Beach, as a Director in March 2005. He is an engineer with over 40 years experience in engineering, procurement and project management of major projects as a consultant to government and private enterprise in the delivery of major infrastructure projects in Australia and overseas. Mr Moretti was formerly bid director and Chief Executive Officer of Asia Pacific Transport Pty Ltd, responsible for building, owning, financing and operating the $1.35 billion 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. He was an alternate director of former ASX listed company Great Artesian Oil and Gas Limited for Mr Frost from June to August 2006. His special responsibilities with Beach include membership of the Corporate Governance and Corporate Development Committees. Mr Moretti brings to the board extensive experience in the delivery and management of major projects.

Hector Mackenzie Gordon

Executive Director/Chief Operating Officer

Mr Gordon was appointed as an executive Director in June 2005. He is a geologist with over 30 years of experience in the petroleum industry. His previous employers include Delhi Petroleum Pty Ltd, Esso Australia Pty Ltd, AGL Petroleum and Santos Limited. He is a member of the American Association of Petroleum Geologists and the Society of Petroleum Engineers. His contribution to the board includes his extensive knowledge of the petroleum industry and of the business and operations of Beach. He is also a member of the Corporate Development Committee.

Glenn Stuart Davis

Non-Executive Director

Mr Davis is a solicitor and partner of DMAW Lawyers, a firm he founded. He joined Beach in July 2007 as a non-executive Director. Mr Davis is a director of ASX listed companies Monax Mining Ltd (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 & 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 Ltd.

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Neville Foster Alley

Non-Executive Director

Dr Alley joined Beach in February 2007 as an alternate Director to Mr Franco Moretti and was then appointed a Director in July 2007. He is an internationally known 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 a non executive director of ASX listed company Monax Mining Limited (since 2004), and South East Energy Limited (since 2007), an executive director of ASX listed company Marmota Energy Limited (since 2007) and a Visiting Research Fellow, School of Earth and Environmental Sciences, The University of Adelaide (since 2004).. He was also a non executive director of ASX listed company InterMet Resources Limited from 2005 until retiring from the board in August 2008. He is a member of the Remuneration & Nomination Committee.

Dr Alley’s contribution to the board is his technical and commercial knowledge of the resources industry.

1.8 Directors’ interests in Beach

The relevant interest of each Director in Beach marketable securities as at the date of this Bidder’s Statement is as follows:

Director	Beach Shares	Options	Options
R M Kennedy	1,257,881	125,789	(listed)
R G Nelson	2,301,903	230,192	(listed)
		7,267,220	(LTI)
		2,500,000	(LTI rights)
J C Butler	128,490	12,850	(listed)
F G Moretti	174,161	17,417	(listed)
H M Gordon	764,434	76,445	(listed)
		2,348,272	(LTI)
		780,000	(LTI rights)
G S Davis	---	---
N F Alley	---	---

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1.9 Interest in Drillsearch Shares

As at the date of this Bidder’s Statement, Beach has a direct interest in 88,349,250 Drillsearch Shares representing 5.1% of the issued capital of Drillsearch in addition to the relevant interest arising from the pre-bid acceptance agreements outlined in section 1.10.

The Drillsearch Shares in which Beach has a direct relevant interest were acquired by Beach as a result of Drillsearch's all scrip merger with Great Artesian Oil and Gas Limited in 2008. Beach acquired its original interests in Great Artesian Oil and Gas Limited by on and off market purchases in 2006.

Beach's voting power in Drillsearch is 13.2% because of its direct relevant interest and conditional relevant interest in Drillsearch Shares totalling 13.2% of the issued shares of Drillsearch.

1.10 Summary of pre-bid acceptance agreements

Beach is a party to pre-bid acceptance agreements with 14 Drillsearch Shareholders (Vendors) under which Beach has acquired a relevant interest in 8.1% of the voting power in Drillsearch. Details of the parties to those agreements, and the agreement terms, are set out in notices of substantial holder released by Beach to ASX on 5 May and 8 May 2009.

Under the pre-bid acceptance agreements, the Vendors agree to accept the Offer. The prebid acceptance agreements will terminate if (among other things):

before acceptance of this Offer by the Vendor, another bidder:
1) makes offers under a takeover bid for the whole of Drillsearch;
2) makes an offer at a price per Drillsearch Share higher than the then offer price;
3) makes an offer which is or has become free from defeating conditions other than a Prescribed Occurrence or FIRB approval;

and Beach does not, within five Business Days of the later of the date those offers were made and the date those offers became free from defeating conditions other than a Prescribed Occurrence or FIRB approval;

4) vary this Offer in accordance with section 650D of the Corporations Act to increase the offer price to equal to or greater than those offers; and
5) waive any remaining defeating conditions;
before acceptance of the Offer by the Vendor, Drillsearch announces a scheme of arrangement under which a third party will become the controlling shareholder of Drillsearch and the shareholders will dispose of all of the Drillsearch Shares to the third party at a price per Drillsearch Share higher than the then current offer price and Beach does not, on or before the 23 Business Days before the scheme meeting:
vary this Offer in accordance with section 650D of the Corporations Act to increase the offer price to equal to or grater than the scheme price; and
waive any remaining defeating conditions; or

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after the Vendor accepts the Offer, Beach validly withdraws this Offer or this Offer otherwise expires or lapses in accordance with its terms and conditions.

If the pre-bid acceptance agreements are terminated, the Vendors will not be compelled to accept the Offer on the terms of the agreements, but would remain free to do so in accordance with the Offer terms.

1.11 Directors' interest in Drillsearch Shares

No Director or other associate of Beach has a relevant interest in Drillsearch Shares.

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2. Profile of Drillsearch and other information about Drillsearch’s Shares

2.1 Overview

Drillsearch is an ASX listed oil and gas exploration and production company with a market capitalisation of approximately $50 million as at the date of this Bidder's Statement. Drillsearch has onshore oil producing assets in Australia and Canada and development and exploration assets in Australia, Papua New Guinea and Canada. The assets all lie in proven hydrocarbon provinces and most are close to existing infrastructure.

Drillsearch was listed on ASX on 2 July 1987. Drillsearch's head office is located in Sydney, New South Wales. In August 2008 Drillsearch completed a merger with Great Artesian Oil and Gas Limited which added to its exploration and development activities as well as adding an additional interest in one production licence in the Cooper Basin.

In Australia, Drillsearch holds oil production interests in the Tintaburra Block (11%) and Naccowlah Block (2%) in the Cooper/Eromanga Basin in Queensland. Drillsearch also shares in oil and gas production from its approximate 79.5% interest in the Toronto listed Circumpacific Energy Corporation which holds a portfolio of production and development interests in Western Canada in Alberta and Saskatchewan. Production for the six months to 31 December 2008, net to Drillsearch group from all its interests (including its interests in Canada) was 97,415 barrels of oil equivalent.

Drillsearch has interests in ten gas and condensate discoveries in the Cooper Basin, South Australia. Six of these discoveries have been flow tested with the remaining four cased and suspended awaiting flow-testing and possible completion for gas production. Drillsearch's exploration interests in the Cooper and Eromanga basins are at various stages of activity ranging from preferred tenderer status (8 permits) to acquiring seismic, prospect definition and drilling.

Other interests include exploration permits in the Gippsland Basin in offshore Victoria and Tasmania and the Carnarvon Basin in offshore Western Australia. Drillsearch also has an interest in one offshore permit in Papua New Guinea in the offshore Papuan Basin.

2.2 Principal activities of Drillsearch

Australian production interests

Drillsearch's Australian oil production is primarily derived from the Cooper/Eromanga Basin in south-west Queensland.

The Tintaburra Block, ATP 299P and its associated production licences are located in the Cooper/Eromanga Basin of south-west Queensland. Drillsearch currently holds an 11% working interest in the Tintaburra Block. Drillsearch's net 2P oil reserves in the Tintaburra Block were 1.3 million barrels of oil as at year end 2007.

The Naccowlah Block, ATP259P and its associated production licences, are located in the Cooper/Eromanga Basin of south-west Queensland. Drillsearch has a 2% interest in the Naccowlah Block and associated production licences. Drillsearch's net 2P oil reserves in the Naccowlah Block at year end 2007 were 0.3 million barrels of oil.

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The Kiana oil field is located 30km to the west of the Moomba production facilities in the south-west Cooper Basin of South Australia. Drillsearch has a 30% interest in the production licence and had net 2P oil remaining reserves at 30 June 2008 of 34,500 barrels.

Canadian production interests

Through Drillsearch's approximately 79.5% interest in the Toronto listed Circumpacific Energy Corporation, Drillsearch also has Canadian onshore oil and gas production. Circumpacific holds a portfolio of production interests in Alberta and Saskatchewan. The Drillsearch gross 2P oil reserves in Canada as at 30 June 2008 were 0.3 million barrels of oil. Production for the 12 months to 30 June 2008 net to Drillsearch was 58,516 barrels of oil equivalent. Production for the six months to 31 December 2008 was 32,335 barrels of oil equivalent.

Cooper Basin gas and condensate development interests

Drillsearch holds interests in a number of undeveloped gas resources in PEL's 91 and 106 in the western Cooper Basin.

Particulars of the Middleton, Udacha, Brownlow and Canunda discoveries in which Beach holds an interest are set out in section 1.2 of this Bidder's Statement.

Reserves

Drillsearch's developed recoverable 2P reserves were 2.0 million barrels of oil as at 31 December 2007 for Australia and 30 June 2008 for Canada. This includes the Tintaburra, Naccowlah, Kiana and Canadian fields currently in production.

Undeveloped recoverable 2P reserves calculated for the Middleton and Udacha gas and condensate fields were 0.7 million barrels of oil equivalent as at 30 June 2008. The total combined developed and undeveloped proved and probable reserves were 2.6 million barrels of oil equivalent at 30 June 2008.

Exploration interests

Drillsearch has an interest in exploration permits across a number of sedimentary basins including the onshore Cooper, Eromanga and Western Canada basins and offshore Gippsland, Carnarvon and Papuan basins.

2.3 Directors of Drillsearch

As at the date of this Bidder's Statement, the directors of Drillsearch are:

a) Peter Simpson, Chairman.
b) Russell Langusch, Director.
c) Jim McKerlie, Director.
d) Peter Wicks, Director.
e) Dato Ben Kai Choo, Director.

On 18 May 2009 Drillsearch announced the appointment of Brad Lingo as a non-executive director effective 19 May 2009 and as Managing Director effective 15 June 2009.

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2.4 Drillsearch securities on issue

According to filings with ASX, at the date of this Bidder's Statement, the issued securities of Drillsearch consist of:

1,728,431,597 fully paid ordinary shares;
57,500,000 options over unissued Drillsearch Shares.

2.5 Drillsearch's share price

The latest recorded sale price of Drillsearch Shares on ASX before the date on which this Bidder's Statement was lodged with ASIC was $0.028 on 14 May 2009.

The latest sale price of Drillsearch shares before the Announcement Date was $0.025.

2.6 Dividends

Since listing on ASX on 2 July 1987, Drillsearch has not paid a dividend.

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3. Beach’s intentions in relation to Drillsearch

3.1 Introduction

This section sets out Beach's intentions, on the basis of the facts and information concerning Drillsearch which are known to it and the existing circumstances affecting the business of Drillsearch in relation to the following:

the continuation of the business of Drillsearch;
any major changes to be made to the business of Drillsearch, including any redeployment of the fixed assets of Drillsearch; and
the future employment of the present employees of Drillsearch.

3.2 Review

Beach and its advisers have reviewed information that has been publicly released about Drillsearch, its current activities and its plans for the future. Despite this, Beach does not currently have knowledge of all material information, facts and circumstances that are necessary to assess the operational, commercial, taxation and financial implications of its current intentions. Consequently, final decisions have not been made.

During the Offer Period and following the close of the Offer, Beach will, to the extent that information is available to it, conduct a review of the operations, assets, structure and employees of Drillsearch in the light of that information. Final decisions will only be reached after that review and in light of all material facts and circumstances. As such, statements set out in this section are statements of current intention only which may change as new information becomes available or circumstances change. The statements in this section 3 should be read in this context.

3.3 Intentions on obtaining 90% or more of Drillsearch Shares

This section 3.3 sets out Beach's current intentions if it is entitled to a relevant interest of at least 90% of Drillsearch Shares.

a) Compulsory acquisition

If Beach becomes entitled to compulsorily acquire Drillsearch Shares under Part 6A.1 Division 1 of the Corporations Act, it intends to exercise these rights.

b) Directors

Beach will replace all members of the Drillsearch board and of any company in respect of which Drillsearch has nominee directors with its own nominees. Replacement board members have not been identified by Beach and their identity will depend on the circumstances at the relevant time. However it is expected that the replacement board members will be members of the Beach board (details of whom are set out in section 1).

c) ASX Listing

At the conclusion of the compulsory acquisition process, Beach intends to arrange for Drillsearch to be removed from the official list of ASX (subject to any required approvals on

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the part of ASX), thereby eliminating the corporate administration costs associated with maintaining Drillsearch as a listed company.

d) Operations and assets

Beach has not had access to all the information relevant to making a final decision regarding what changes, if any, will be made to Drillsearch's operations.

At the end of the Offer Period, Beach will conduct an immediate, broad based review of Drillsearch's operations on both a strategic and financial level to determine ways to improve their performance and return to shareholders and realise any potential operational and financial synergies available to the combined group.

The extent of the review is not able to be determined at this stage, although it is likely to involve some, or all, of the following:

consolidating Drillsearch's Sydney office into the Adelaide office of Beach;
assessing Drillsearch's assets on an asset by asset basis to assess performance, prospects, commitments & profitability;
eliminating duplication of functions where it is economic to do so.

e) Employees

The status of Drillsearch's existing employees will be considered as part of the review outlined in section 3.3(d).

3.4 Intentions on obtaining of less than 90% of Drillsearch Shares

This section sets out Beach's intentions if it gains effective control of Drillsearch by acquiring 50.1% or more of Drillsearch Shares but does not become entitled to compulsorily acquire the outstanding Drillsearch Shares as set out in section 3.3 of this Bidder's Statement. This may occur if Beach decides to waive its obtaining a relevant interest in at least 90% of Drillsearch Shares condition.

a) ASX listing

Beach will review the benefits of and the suitability of Drillsearch remaining listed on ASX. Having regard to the additional corporate and compliance costs and subject to the Listing Rules, Beach intends to remove Drillsearch from the official list of ASX.

b) Directors

Subject to the Corporations Act and Drillsearch's constitution, Beach intends to replace some of the members of the Drillsearch board with nominees of Beach and to retain an appropriate number of independent directors. Beach has not made any decision about who would be nominated for appointment to the Drillsearch board in this case.

c) Operations and assets

If, following the close of the Offer, Drillsearch becomes a controlled entity but not a whollyowned subsidiary of Beach, it is the present intention of Beach to attempt to procure that the

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Drillsearch board implements the objectives and goals outlined in section 3.3 to the extent possible and appropriate, recognising the legal duties to other Drillsearch Shareholders.

d) Limitations in giving effect to intentions

The ability of Beach to implement the intentions set out in this section 3.4 will be subject to the legal obligations of Drillsearch directors to have regard to the interests of Drillsearch and all Drillsearch Shareholders, and the requirements of the Corporation Act and the Listing Rules relating to transactions between related parties and conflicts of interest. Drillsearch will only make a decision on the above mentioned courses of action following legal and financial advice in relation to those requirements.

3.5 Intentions generally

Except for the changes and intentions set out in this section 3, including the review described in sections 3.2 and 3.3, Beach intends, based on the information presently known to it:

to continue the business of Drillsearch;
not to make any material changes to the business of Drillsearch, including any redeployment of the fixed assets of Drillsearch; and
to continue the employment of Drillsearch's employees.

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4. Overview of the combined Beach/Drillsearch

4.1 Combined Group Disclaimer

The information on the combined group contained in this Bidders Statement, to the extent that it incorporates or reflects information on Drillsearch, has been prepared using publicly available information. Accordingly, information in relation to the combined group is also subject to the disclaimer contained in the important information section of this Bidder’s Statement to that extent.

4.2 Pro-forma balance sheet

Financial information is provided for illustrative purposes only. In considering the pro-forma information, holders of Drillsearch Shares must take the following matters into account:

(a) the pro-forma balance sheet has been prepared by aggregating the last audit reviewed balance sheet of Beach as at 31 December 2008 and Drillsearch as at 31 December 2008. In addition, a number of pro-forma adjustments have been made to reflect material subsequent transactions as follows:
the staged acquisition of Drillsearch and estimated transaction costs;
the execution by Beach of a Share Sale Agreement to sell its 40% interest in the Tipton West Joint Venture coal seam gas assets to Arrow Energy Ltd as announced to the ASX on 3 April 2009;
the issue of 60,000,000 ordinary shares by Drillsearch in consideration for the acquisition of a further 1% interest in the Tintaburra joint venture;
the on market sale of 47,910,488 Drillsearch shares held by Great Artesian Oil and Gas Limited (Great Artesian), a wholly owned subsidiary of Drillsearch for $1,400,109. These shares were classified as treasury stock on the merger of Drillsearch and Great Artesian in August 2008; and
the recognition of the interim dividend paid by Beach in April 2009.

Details of these adjustments are set out in the notes to the pro-forma balance sheet;

(b) the actual date of the acquisition will be later than 31 December 2008. In accordance with the requirements of AASB 3 – Business Combinations it will be necessary to assess the fair value of the net assets of Drillsearch on completion of the acquisition. Consequently the actual fair values may differ from those reflected in the pro-forma balance sheet and can only be determined on the actual date of acquisition and following a full assessment of the assets and liabilities acquired;
(c) the pro-forma balance sheet is indicative only. The Directors have drawn their conclusions based on the known facts and other publicly available information as at the date of this Bidder’s Statement. If the facts, circumstances, assumptions and other information should prove different to that described, the conclusions and outcome may change accordingly.

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Pro-forma balance sheet of Beach and Drillsearch as at 31 December 2008	Pro-forma balance sheet of Beach and Drillsearch as at 31 December 2008	Pro-forma balance sheet of Beach and Drillsearch as at 31 December 2008

	Beach Balance Sheet as at 31 Dec 2008	Drillsearch Balance Sheet as at 31 Dec 2008	Pro-forma adjustments	Combined Group Balance Sheet as at 31 Dec 2008
	$'000	$'000	$'000	$'000
Current assets
Cash and cash equivalents	139,236	10,980	253,686	403,902
Trade and other receivables	84,462	5,958	(3,285)	87,135
Inventories	88,007	3,069	-	91,076
Financial assets - held for trading	13,166	-	-	13,166
Derivative financial instruments	41,213	-	-	41,213
Other	7,130	-	-	7,130
Total current assets	373,214	20,007	250,401	643,622

Non-current assets
Other receivables	-	999	-	999
Available for sale financial assets	2,297	-	67,703	70,000
Derivative financial instruments	9,488	-	-	9,488
Plantpropertyand equipment	388,149	38,178	(19,640)	406,687
Oil andgas development assets	651,749	-	(27,919)	623,830
Exploration and evaluation expenditure	287,426	29,612	(33,343)	283,695
Deferred tax assets	52,396	526	(395)	52,527
Total non-current assets	1,391,505	69,315	(13,594)	1,447,226
Total assets	1,764,719	89,322	236,807	2,090,848

Current liabilities
Trade and otherpayables	109,161	5,351	(1,249)	113,263
Derivative financial instruments	11,840	-	-	11,840
Provisions	1,861	90	-	1,951
Taxpayable	25,871	4,520	58,700	89,091
Loans and borrowings	59,707	-	-	59,707
Total current liabilities	208,440	9,961	57,451	275,852

Non-current liabilities
Loans and borrowings	136,942	-	-	136,942
Deferred tax liabilities	136,240	154	7,201	143,595
Derivative financial instruments	12,115	-	-	12,115
Provisions	79,007	3,837	(1,318)	81,526
Total non-current liabilities	364,304	3,991	5,883	374,178
Total liabilities	572,744	13,952	63,334	650,030
Net assets	1,191,975	75,370	173,473	1,440,818

Equity
Issued capital	948,149	93,776	(42,230)	999,695
Reserves	(4,063)	1,107	11,237	8,281
Retained earnings/(accumulated losses)	247,889	(21,549)	204,466	430,806
Total equity attributable to equity holders of theparent	1,191,975	73,334	173,473	1,438,782
Minorityinterest	-	2,036	-	2,036
Total equity	1,191,975	75,370	173,473	1,440,818

The above balance sheet is to be read in conjunction with the accompanyingnotes.

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Notes to the Pro-forma balance sheet

The following pro-forma adjustments have been made in the preparation of the pro-forma balance sheet for the combined Beach Group. Note all amounts are rounded to the nearest thousand dollars and express the impact on net assets (increase/(decrease)) of the combined Beach Group.

Acquisition of Drillsearch– Net impact ($28,968)
Sale of Tipton West – Net impact $205,015
Tintaburra asset acquisition through the Issue of 60,000,000 ordinary shares by Drillsearch – Net impact $1,740
Sale of 47,910,488 Drillsearch Shares classified as treasury stock - Net impact $1,400
Beach interim dividend April 2009 – Net impact ($5,714)

The impact of these adjustments on the related balance sheet accounts are as follows:

Cash and Cash Equivalents - Tipton West proceeds - Estimated Drillsearch transaction costs - Sale of treasury stock by Drillsearch - Interim dividend (cash component) Trade and Other receivables - Tipton West sale Available for sale financial assets - Tipton West proceeds – Arrow Energy Ltd shares - Reclassification of Beach’s existing shareholding of Drillsearch to an investment in subsidiary Property, Plant and Equipment - Tipton West sale Oil and Gas development assets - Tipton West sale - Tintaburra asset acquisition via share issue Exploration assets - Tipton West sale - Fair value adjustment – Drillsearch acquisition Deferred tax assets - Tipton West sale Trade and other payables - Tipton West sale	$’000 260,000 (2,000) 1,400 (5,714)
	253,686
	(3,285)
	70,000 (2,297)
	67,703
	(19,640)
	(29,659) 1,740
	(27,919)
	(8,672) (24,671)
	(33,343)
	(395)
	(1,249)

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Tax Payable - Tipton West sale Deferred tax liabilities - Tipton West sale Provisions - Tipton West sale Issued capital - Shares issued under Beach Dividend Reinvestment Plan – April 2009 - Shares issued by Drillsearch as consideration for the Tintaburra acquisition - Proceeds from the sale of treasury stock by Drillsearch - Fair value of Beach shares issued to existing Drillsearch shareholders as part of this Offer - Consolidation adjustment to eliminate the issued capital of Drillsearch Reserves - Drillsearch acquisition – reclassification of previous decrements recognised through available for sale reserve to the income statement - Consolidation adjustment to eliminate the pre- acquisition reserves of Drillsearch Retained earnings/(accumulated losses) - Provisional Tipton West profit after tax - Drillsearch acquisition – previous decrements recognised through available for sale reserve - Interim dividend paid - Beach - Drillsearch acquisition transaction costs - Consolidation adjustment to eliminate the pre- acquisition reserves of Drillsearch	$'000 58,700
	7,201
	(1,318)
	2,040 1,740 1,400 49,506 (96,916)
	(42,230)
	12,344 (1,107)
	11,237
	205,015 (12,344) (7,754) (2,000) 21,549
	204,466

Other Pro-forma assumptions:

the Tipton West sale completed on 20 May 2009. The estimated proceeds from the sale included in this pro-forma does not include any contingent payments noted in Beach's ASX release on 3 April 2009 associated with the booking of additional gross 3P reserves ($40 million), Arrow Energy Limited supplying a liquefied natural gas project ($15 million) and any LNG project producing 1 million tonnes per annum of LNG using gas supplied by Arrow Energy Limited's tenements ($15 million);
the pro-forma balance sheet does not reflect any adjustments in relation to the Drillsearch takeover offer for 3D Oil Ltd. As at 5 May 2009 Drillsearch has received less than 1% in acceptances since announcing its takeover offer. The scheduled closing date for the offer

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was originally 26 May 2009, however ASIC granted an exemption from section 650C(2) of the Corporations Act to permit Drillsearch to extend the offer period to 9 June 2009;

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 Beach;
the pro-forma information has been prepared by aggregating Beach and Drillsearch’s reviewed balance sheet as at 31 December 2008;
the pro-forma adjustments reflect transactions announced by Beach and Drillsearch since 31 December 2008. The pro-forma also excludes the impact of the general trading of Beach and Drillsearch including capital expenditure which has occurred since 31 December 2008. These transactions are not considered to materially impact the net asset position of the pro-forma balance sheet as presented;
the pro-forma balance sheet reflects provisional accounting adjustments. Actual results may change between the date of this Bidders Statement and the completion of the proposed transaction.

4.3 Profile of the Merged Group

Beach believes that the combined group would have potential for creating additional value and future savings through synergies. Beach and Drillsearch are already joint venture partners in 5 of Drillsearch's 11 tenement interests and the combined entity would have an increased strong presence in the Cooper Basin region.

Until Beach conducts a review of the combined group's assets and operations (with the benefit of all Drillsearch's information) it is not possible to attribute a value to potential cost savings.

Beach is confident of having sufficient funding options to continue to meet Drillsearch's commitments for proposed production and development of its portfolio of assets. This is evidenced by Beach's strong cash flows and balance sheet, an overview of which is set out in section 1.4 of this Bidder's Statement.

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5. Investment risks

5.1 Introduction

There are many factors that may influence the future operating and financial performance of Beach and the future value of Beach Shares together with future dividends paid on Beach Shares including those that:

apply to investments generally; and
apply, and will continue to apply, specifically to the business of Beach.

Some of the specific risks can be integrated by use of safe practices and appropriate commercial action while others are likely to remain outside of the control of Beach and its Directors.

Drillsearch shareholders who accept the Offer (other than Foreign Shareholders) will receive Beach Shares in consideration for their Drillsearch Shares. It is therefore important to be aware of risks and uncertainties associated with an investment in Beach which include those set out below. Additionally note that there may be other risks and uncertainties that Beach is presently unaware of, or that it does not consider to be material, that may also become factors that materially affect Beach's operating and financial performance.

5.2 Risks associated with owning Beach Shares

a) General economic climate

Beach’s future revenues and operating costs can be affected by such factors as supply and demand for goods and services, industrial disruption, interest rates, currency fluctuation, inflation and global economic conditions. Accordingly, the future profitability and share prices of Beach may be affected by these factors. These factors are beyond the control of Beach.

b) Global security environment and political risks

Outbreak of hostilities or a material escalation of hostilities including a declaration of war in major countries in the world or terrorist acts perpetrated on any major countries or any diplomatic, military, commercial or political establishment of any major countries anywhere in the world may affect the global economic and commercial environment and in turn affect Beach’s future revenues and operating costs and share prices.

In addition, Beach is subject more directly to risks in respect of its assets located outside Australia. It 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 Beach's business or financial position.

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c) Climatic

Adverse climatic conditions affecting the tenement areas may prevent access to those areas and not allow Beach’s exploration and development activities to be carried out in a timely manner and hamper production operations.

d) Exploration and development

The business of exploration and project development involves a degree of risk. To prosper, Beach depends on the following factors: successful exploration and the establishment of commercial oil and gas reserves, design, construction and operation of efficient oil and gas gathering and processing facilities and managerial performance and efficient marketing of oil and gas. In particular, exploration is a speculative endeavour with the risk of failure to find oil and gas 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 and quality of oil and gas and plant malfunction. Exploration and development activities may also be delayed by nonavailability of drilling rigs and contractors for extended periods.

e) Reserves estimates

Oil and gas reserves estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates which were valid when originally calculated may alter significantly or become uncertain when new information becomes available on the oil and gas reservoirs through additional drilling or reservoir engineering tests over the life of a field. As estimates change, development and production plans may be altered in a way that may adversely affect Beach’s results of operations.

f) Negotiation with third parties

Various aspects of Beach’s future performance and profitability are dependent on the outcome of future negotiations with third parties. In addition to the outcome of negotiations on land access arrangements and native title issues, future negotiation with government is expected in relation to:

licence renewals and work obligations; and
security for rehabilitation of areas of operation within Beach’s tenements;

g) Environmental impact constraints

Beach’s exploration and development programs will, in general, be subject to approval by government authorities. Development of any of Beach’s properties will be dependent on the project meeting planning and environmental laws and guidelines and approval by government authorities. Likewise oil and gas production, developments or expansions will be subject to various regulatory approvals (e.g. planning and environmental).

The Australian Federal Government has indicated that it intends to introduce regulatory change in response to a belief that greenhouse gas emissions may be provoking global warming and potentially climate change. The Government has proposed a national emissions trading scheme (the Carbon Pollution Reduction

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Scheme or CPRS) to be implemented by 2011 (although there is still uncertainty as to this date and the final nature of the scheme).

If the CPRS is introduced in the form presently proposed by the Australian Federal Government, Beach may be exposed to additional operating costs which will have an adverse impact on its financial performance. Until the CPRS has been finalised, its impact on Beach's business and financial position is uncertain.

If similar regulatory changes are made in other countries in which Beach operates, there may be similar adverse effects in respect of Beach's business and financial position.

h) Health safety and environment

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

Environmental regulation is likely to become more, rather than less, stringent and Beach could become subject to increased levels of environmental responsibility and liability. The results of non-compliance, or alleged non-compliance, may result in sanctions that may include administrative, civil and criminal penalties, the loss of licences or permits or corrective action orders.

i) Land access and Native Title risk

Immediate and continuing access to tenements cannot in all cases be guaranteed. Beach is required to obtain the consent of owners and occupiers of land within Beach’s licence areas. Compensation may be required to be paid by Beach to the owners and occupiers of land in order for Beach to carry out exploration activities.

Beach operates in a number of areas within Australia that are, or may become subject to, claims or applications for native title determinations. These have the potential to introduce delays in the granting of petroleum or geothermal tenements and other licences and consequently to have an affect on the timing and costs of exploration, development and production licences, as well as in respect of operating costs associated with such licences.

Beach has previously successfully negotiated a number of native title claims in relation to some of its existing Cooper Basin licences.

j) Funding and dividends

The continued activities of Beach in oil and gas exploration and development are dependent on Beach’s ability to obtain financing through debt and equity financing, or generating sufficient cash flows from future operations. There is a risk that Beach may not be able to access capital from the debt or equity markets for future projects or developments, which could have a material adverse impact on Beach's business and financial condition.

Beach's future dividend levels will be determined by the board of Beach having regard to financial results and the financial position of Beach. There is no guarantee that any dividend will be paid in future or, if paid, that they will be paid at previous levels.

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k) Insurance

Beach maintains insurance for certain activities within ranges of coverage that it believes to be consistent with industry practice and having regard to the nature of activities being conducted. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial condition and results of Beach. In respect to joint venture arrangements, the operator of the joint venture normally puts in place the insurance coverage for that joint venture to which Beach contributes its share.

l) Joint venture

Beach and its subsidiaries are participants in joint ventures for the exploration and development of joint venture properties. Under joint venture operating agreements, Beach or a subsidiary may not control the approval of work programs and budgets which the joint venture may vote to participate in and could be subject to the risk of dilution of its interest generally or in respect of a particular program or be at risk of not gaining the benefit of the program at a later time, except at a significant cost penalty. Not being able to control joint venture budgets neither Beach nor its subsidiaries is able to predict budgets before they are provided by the joint venture operator. Delays in programs may arise due to joint venture partners not reaching agreements on exploration and development activities. Neither Beach nor its subsidiaries has any assurance of the financial viability of other joint venture partners and may incur unforseen costs and losses in the event of default of joint venture participants.

m) Gas and oil prices

Beach’s performance relies on prevailing market prices for oil and gas. A decline in the price of oil and gas may have a material adverse effect on Beach. Beach has a hedging management policy for oil price and currency. However, crude oil prices are influenced by factors beyond Beach's control and the international price for crude oil has been historically very volatile. It is impossible to predict future crude oil price changes with certainty. A sustained period of low or declining crude oil prices could adversely affect Beach's business its operations and financial condition and its ability to finance planned project developments, amongst other activities.

n) Credit and market risks

(i) Market risk and interest rate volatility

From time to time, Beach may borrow money domestically and internationally and accordingly will be subject to interest rates which may be fixed or floating. A change in interest rates would be expected to result in a change in the interest cost to Beach and, hence, may adversely affect its profit. Beach has an interest rate and hedging management policy which is regularly reviewed in order to mitigate the risks of interest rates (as well as commodity prices and exchange rates). Such hedging activities may provide some protection in the event of adverse movements in the rate or commodity hedged, but there may be circumstances where such hedging may limit the benefits in the event that movements are favourable for increased benefits.

(ii) Counterparty risk

As part of Beach's commercial activities, Beach enters into various contracts with third parties in respect of bank deposits, financial instruments, sales contracts for the

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supply of petroleum and other products, amongst other matters. An inability of counterparties to meet their commitments under such contracts may have an impact on Beach's financial position.

o) Changes in government policy and laws

Changes in government policy (such as in relation to taxation) or statutory changes may affect Beach and the value of an investment in Beach. Changes in government regimes in the countries in which Beach operates may result in changes to fiscal, monetary, property rights and other issues that may result in a material adverse impact on Beach'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 Beach'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, or through delays or the prevention of certain of Beach's operations. Accordingly, this could have a material adverse effect on Beach's financial position and business.

Companies in the oil and gas industries are subject to requirements to pay other direct and indirect taxes, royalties and other imposts in addition to normal company taxes. Beach currently operates (or is contemplating operating) in Australia, New Zealand, Papua New Guinea, Egypt, Spain, Albania 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.

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 Beach securities or the holding or disposal of those securities.

p) Loss of personnel

One of Beach’s key resources is its people, many of whom hold significant knowledge and qualifications. Beach’s operations could be adversely affected if it loses certain key people and is unable to replace them with equally qualified personnel. Beach has had a stable senior management group for many years and actively manages its human resources to attract and retain key personnel.

q) Stock market volatility

A number of factors affect the performance of stock market investments which could also affect the price at which Beach Shares trade on ASX. Among other things, the Australian stock market may be affected by movements on international stock markets, local interest rates and exchange rates, domestic and international economic conditions, the price of oil and gas as well as government taxation and other policy changes.

r) Dispute with BW Offshore

In February, Beach received notice of a claim against the participants in the BMG Project by BW Offshore (BW) in the Federal Court of Australia seeking recovery of costs relating to the termination of third party vendor contracts entered into by BW in relation to performance of initial activities under a Letter of Intention (LOI) to provide

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an FPSO vessel to the BMG Project. Costs claimed are in the order of US$90.1 million.

Beach and the other participants in the BMG Project dispute that these costs are payable and, filed a defence to the notice of claim. In addition, Anzon Australia Limited as operator on behalf of the BMG joint venture, has filed and served a cross claim on BW due to the reliance by the BMG Joint Venture on the supply of the FPSO pursuant to the LOI, seeking recovery of drilling related costs in a range of between US$63.4 million and US$86 million with further losses to be particularised at a later date.

5.3 Risks relating to the Offer

a) Value

Market fluctuations may affect the market value of the consideration offered to you because the exchange ratio proposed in the Offer is fixed. You are being offered Beach Shares, rather than a number of Beach Shares with a specified market value. As a result, the value of the Offer will fluctuate depending upon the market value of Beach Shares.

Accordingly, the market value of the Beach Shares at the time you receive them may vary significantly from their market value on the date of your acceptance of the Offer.

b) Availability of roll-over relief

A condition of the Offer is that the level of acceptance must result in Beach obtaining a relevant interest in at least 90% of all Drillsearch Shares. However, Beach reserves the right to waive this condition.

Consequently, Beach may not acquire the number of Drillsearch Shares sufficient to bring its total interest in Drillsearch to at least 80% of the voting shares, in which case scrip-for-scrip CGT rollover relief will not necessarily be available to holders of Drillsearch Shares.

c) Sale of Beach Shares

Under the Offers, Beach may issue a significant number of new Beach Shares. Some holders of Drillsearch may not intend to continue to hold their Beach Shares and may wish to sell them. There is a risk that this may adversely impact on the price of Beach Shares.

Beach Shares that would otherwise be issued to Foreign Shareholders under the Offer will be sold on ASX and the net proceeds distributed amongst those shareholders. The sale of these Beach Shares could also adversely impact the price of Beach Shares.

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d) Consequences of Drillsearch not becoming a wholly owned subsidiary

If the Offer results in Beach being entitled to a relevant interest in at least 90% of the Drillsearch Shares, Beach will be able to compulsorily acquire the balance of the Drillsearch Shares so that Drillsearch will become a wholly-owned subsidiary of Beach.

Beach reserves its rights to declare the Offer free from the minimum acceptance condition (or any other condition). If Beach waives the condition that it obtain a relevant interest in 90% of Drillsearch Shares and it receives acceptances to attain a relevant interest in at least 50% of the Drillsearch Shares, the non-accepting Drillsearch shareholders will retain their Drillsearch Shares so that Drillsearch will not be a wholly-owned subsidiary of Beach. If this occurs, the combined entity’s ability to deal with the assets of Drillsearch will be constrained and there will be further associated costs of having minority shareholders.

e) Merger integration

Integrating Beach and Drillsearch may produce some risks, including the integration of management, information systems and work practices. Furthermore, there is no guarantee that any synergy benefits or costs savings will be achieved on time or at all.

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6. Tax considerations

6.1 Introduction

The following is a general overview of the principal Australian tax implications of accepting the Offer and exchanging Drillsearch Shares for Beach Shares. It is based on tax law and practice in effect at the date of this Bidder’s Statement. It is not intended to be, and is not, an authoritative or complete analysis of the tax laws of Australia.

The Australian taxation implications for Drillsearch shareholders who accept the Offer will depend on a variety of factors, including the type of the entity which holds the Drillsearch Shares (i.e. whether the shareholder owns the shares individually or through a company, trust, partnership or superannuation fund), whether capital gains tax (CGT) roll-over relief is chosen, the residency status of the entity and whether the shareholder holds the Drillsearch Shares on revenue or capital account.

Drillsearch shareholders should take their own professional advice to ensure that they fully understand the taxation implications of accepting the Offer in the particular circumstances applying to them.

6.2 Australian residents holding Drillsearch Shares on capital account

Outlined below are the general tax consequences for Australian resident shareholders who hold their Drillsearch Shares on capital account. This may include Drillsearch shareholders who hold their Drillsearch Shares as passive investments with the intention of generating dividend income and long-term capital growth. The tax implications will depend on whether or not shareholders choose CGT rollover relief on the exchange of their Drillsearch Shares for Beach Shares.

(a) General application of CGT where you choose CGT rollover relief

Drillsearch shareholders who accept the offer may choose CGT rollover relief where the following conditions are satisfied:

1) Beach becomes the owner of 80% or more of Drillsearch Shares as a result of the Offer; and
2) the Drillsearch shareholder would otherwise make a capital gain from the exchange.

The Drillsearch shareholder chooses the rollover by the time it lodges its income tax return for the year in which the event occurs. The shareholder does not generally need to lodge a written election with the Australian Taxation Office (ATO).

Where the shareholder chooses the rollover:

the capital gain the shareholder would otherwise make on disposing of the Drillsearch Shares and acquiring the Beach Shares will be disregarded; and
it calculates the cost base of the Beach Shares by reference to the cost base of its Drillsearch Shares.

Where the Drillsearch shareholder acquired his, her or its Drillsearch Shares (or was deemed to acquire his, her or its shares) before 20 September 1985 or the

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shareholder makes a capital loss from the transfer, CGT rollover relief is not available.

(b) General application of CGT where you do not choose CGT rollover relief

Shareholders who accept the offer and either do not choose CGT rollover relief, or are unable to chose CGT rollover relief (i.e. if they own pre-CGT shares or would otherwise make a capital loss) will be treated as having disposed of their Drillsearch Shares for tax purposes. This will result in a CGT event occurring on the date the Offer is accepted and a possible capital gain or capital loss.

Where the shareholder acquired the Drillsearch Shares (or is treated as having acquired the Drillsearch Shares) before 20 September 1985 the capital gain or loss will be disregarded for tax purposes.

Where the shareholder acquired the Drillsearch Shares after 20 September 1985, they generally calculate their capital gain or loss as the difference between the value of the Beach Shares they receive (calculated as at the date of the CGT event) and their “cost base” of the Drillsearch Shares.

The shareholder may discount a capital gain it makes in certain circumstances. Generally, to be eligible for a discount:

the shareholder must not be a company holding the shares in its own right;
the Drillsearch Shares must have been held (or be deemed to have been held) for at least 12 months before the date the Offer is accepted; and
the shareholder must not have used the indexed cost base in calculating the capital gain.

Where the shareholder is eligible for the CGT discount it may generally discount the gain by 50% for an individual or trust shareholder or by 33% for a superannuation fund shareholder. The shareholder applies the discount after reducing the capital gain by any available capital losses.

Where the shareholder acquired the Drillsearch Shares on or before 11.45am on 21 September 1999, it will have the option of either applying the discount discussed above or applying indexation to the CGT cost base of the relevant Drillsearch Share. Under the indexation option, the shareholder indexes the CGT cost base of the relevant Drillsearch Share by an indexation factor calculated based on the share acquisition date and 30 September 1999.

Shareholders who hold shares acquired before 21 September 1999 should seek advice relevant to their own personal circumstances in considering the different outcomes under the discount and indexation options.

(c) Drillsearch Shares acquired through an employee share plan

The tax rules relating to employee share plans are complex and are outside the scope of this general taxation outline. However, we note:

there are elections under the employee share plan provisions which may affect the cost base of the Drillsearch Shares; and

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the Offer may result in specific issues relating to vesting periods under the terms of your employee share plan.

Therefore, you should seek your own independent advice on the tax consequences where you acquired your Drillsearch Shares via an employee share plan.

b) Income Tax consequences on disposal of Beach Shares

Where the shareholder subsequently disposes of his, her or its Beach Shares he, she or it may realise a capital gain or loss calculated based on the proceeds received from the disposal and the cost base of the Beach Shares acquired.

Where the Drillsearch shareholder did not choose the CGT rollover, the cost base of his, her or its Beach Shares will generally be the market value of the shares at the date of the CGT event (i.e. the date the Offer is accepted). The shareholder (except a company shareholder) will generally need to hold the Beach Shares for 12 months to be eligible for the CGT discount.

Where the Drillsearch shareholder chose the CGT rollover, he, she or it calculates the cost base of Beach Shares by reference to the cost base of Drillsearch Shares. The 12 month period for the CGT discount is measured from when the shareholder originally acquired Drillsearch Shares (i.e. he, she or it may not need to hold the Beach shares for a further 12 months).

6.3 Australian resident – shares held on revenue account

Where the Drillsearch shareholder holds the shares on revenue account the tax consequences listed above will be substantially different. A shareholder may hold his, her or its Drillsearch Shares on revenue account where he, she or it conducts a share trading business, hold the shares for some other routine commercial operation, or acquired the Drillsearch Shares with the dominant purpose of reselling them at a profit under a commercial transaction.

Where the Drillsearch Shares are held on revenue account the shareholder will bring the gain or loss to account as ordinary income or an ordinary deduction. The CGT discount, indexation adjustment and scrip for scrip rollover relief described above will not apply to the gain or loss.

Certain elections under the trading stock provisions may impact the cost of the Drillsearch Shares for the purpose of calculating the gain or loss on disposal and the timing of the gain or loss may differ from the case where the Drillsearch Shares are held on capital account.

6.4 Non-resident shareholders

A non-resident shareholder holding Drillsearch Shares on capital account will generally not be liable for Australian income tax on a capital gain arising on the disposal of his, her or its Drillsearch Shares (subject to some exceptions).

The tax implications for non-residents holding Drillsearch Shares on revenue account will generally depend on:

whether the shares are held as part of carrying on a business through a permanent establishment in Australia; and

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the impact of any tax treaties Australia has with the overseas country.

The tax implications for non-residents is a complex area of the income tax law. We recommend shareholders in these circumstances seek their own independent advice on the tax consequences of accepting the Offer.

6.5 Other Taxation Implications

Shareholders accepting the Offer should also consider the Goods and Services Tax (“GST”) and stamp duty consequences of exchanging their shares.

a) GST consequences

The transfer of the Drillsearch Shares will not be a taxable supply for GST purposes. The Drillsearch shareholder may need to consider the availability of input tax credits on any costs it incurs relating to the transfer.

b) Stamp duty consequences

Drillsearch shareholders who accept the Offer will not be required to pay any stamp duty on the disposal of their Drillsearch Shares under the Offer or the acquisition of Beach Shares under the Offer or on a subsequent disposal of Beach Shares.

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7. Other material information

7.1 Drillsearch options

Beach's current intention is not to seek to acquire nor enter into arrangements with the holders of Drillsearch options to effect the transfer or cancellation of those options.

7.2 Disclosure of interests of certain persons

No director or proposed director of Beach or any person named in this Bidder’s Statement as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Bidder’s Statement holds, or held at any time during the last two years, any interest in:

a) the formation, or promotion of Beach;
b) property acquired or proposed to be acquired by Beach in connection with its formation or promotions, or the offer of Beach’s Shares; or
c) Beach’s Shares to be issued under the Offer,

except as set out in this Bidder’s Statement and in particular in section 1.8.

7.3 Disclosure of fees and benefits received by certain persons

No person has paid or agreed to pay an amount, and no person has given or agreed to give any benefit, to any person named in this Bidder’s Statement as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Bidder’s Statement for services provided in connection with the formation or promotion of Beach or the Offer other than as set out below or elsewhere in this Bidder’s Statement.

The Directors have received or are currently entitled to receive the following fees and benefits:

the fees and benefits as disclosed in Beach’s annual report;
director’s and officer’s liability insurance taken out on behalf of Directors; and
the indemnity provided under Beach’s constitution against liability resulting from their services as directors of Beach.

Piper Alderman has acted as legal adviser to Beach in connection with the Offer. Beach has paid or agreed to pay up to $150,000.00 for these services to the date of this Bidder’s Statement. Beach has paid or agreed to pay Piper Alderman other fees for advising on other matters and Beach may pay or agree to pay it additional fees (based on an agreed hourly rate) for legal services provided in connection with the Offer after the date of this Bidder’s Statement.

Adelaide Equity Partners Limited has acted as financial and corporate adviser to Beach in connection with the Offer. It is entitled to receive a fee to a maximum of 1.5% of the transaction value of the Offer. Beach has paid or agreed to pay Adelaide Equity Partners Limited other fees for advising on other matters and Beach may pay or agree to pay it additional fees for financial or corporate advice provided in connection with the Offer after the date of this Bidder's Statement.

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Grant Thornton South Australian Partnership has acted as accounting advisers to Beach in connection with the Offer. Beach has paid or agreed to pay up to $8,000.00 for these services to the date of this Bidder's Statement. Beach has paid or agreed to pay Grant Thornton other fees for advising on other matters and Beach may pay or agree to pay it additional fees for financial or corporate advice provided in connection with the Offer after the date of this Bidder's Statement.

Computershare Investor Services Pty Ltd has acted as the share registry to Beach in connection with the Offer. Beach has paid or agreed to pay up to $100,000.00 for these services. Beach may pay or agree to pay it additional fees for share registry services provided in connection with the Offer after the date of this Bidder's Statement.

7.4 Consents

Each person who is named in this Bidder's Statement as acting in a professional capacity for Beach in relation to the Offer:

does not make, or purport to make, any statement in this Bidder's Statement or any statement on which a statement in this Bidder's Statement is based, other than a statement included in this Bidder's Statement with the consent of that person; and
to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Bidder's Statement, other than any statement which has been included in this Bidder's Statement with the consent of that party.

7.5 Broker commission

Beach may offer to pay a commission to brokers who solicit acceptances of Beach’s Offer from their clients.

Any commission payments will be paid only in respect of parcels of Drillsearch Shares held by retail shareholders who accept the Offer.

7.6 Other benefits

During the period of four months before the date of this Bidder’s Statement, neither Beach nor any associate of Beach gave, offered to give or agreed to give a benefit to another person which was likely to induce the other person, or an associate of the other person, to:

accept an Offer under the takeover bid; or
dispose of Drillsearch Shares,

and which is not offered to all holders of Drillsearch Shares under the Offer.

7.7 No escalation agreements

Neither Beach nor any associate of Beach has entered into any escalation agreement that is prohibited by section 622 of the Corporations Act.

7.8 Expiry date

No shares will be issued on the basis of this Bidder’s Statement after the date which is 13 months after the date of the Offer.

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7.9 Other material information

Except as disclosed in this Bidder’ Statement there is no other information that:

is material to the making of the decision by a Drillsearch shareholder whether or not to accept the Offer; and
is known to Beach,

which has not previously been disclosed to Drillsearch shareholders.

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8. Definitions and interpretation

8.1 Definitions

In this Bidder’s Statement and in the Acceptance Form unless the context otherwise appears, the following terms have the meanings shown below:

$ or A$

Australian dollars

Acceptance Form

the acceptance form enclosed with this Bidder’s Statement

Announcement Date

the date of the announcement of the Offer by Beach, being 5 May 2009

ASIC Australian Securities and Investments Commission ASTC

ASX Settlement and Transfer Corporation Pty Ltd ABN 49 008 504 532

ASTC Settlement Rules

the operating rules of the ASTC which govern the administration of the Clearing House Electronic Subregister System

ATP Authority to Prospect ASX ASX Limited ABN 98 008 624 691 Beach Beach Petroleum Limited ABN 20 007 617 969 Beach Share an ordinary fully paid share in the capital of Beach Bidder’s Statement this document, being the statement of Beach under Part 6.5 Division 2 of the Corporations Act relating to the Offer Business Day a day on which banks are open for business in Adelaide, excluding a Saturday, Sunday or public holiday CHESS Holding a number of Drillsearch Shares which are registered on Drillsearch’s share register being a register administered by ASTC and which records uncertificated holdings of Drillsearch Shares Controlling Participant in relation to Drillsearch Shares, has the same meaning as in the ASTC Settlement Rules Corporations Act Corporations Act 2001 (Cth) Directors the directors of Beach Drillsearch Drillsearch Energy Limited ABN 73 006 474 844

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Drillsearch Share	an ordinary fully paid share in the capital of Drillsearch
Foreign Shareholder	a citizen or resident of a jurisdiction other than Australia
	or New Zealand
FPSO	floating production, storage and offtake
FY	financial year beginning 1 July and ending on 30 June
Holder Identification Number	has the same meaning as in the ASTC Settlement
	Rules
Issuer Sponsored Holding	a holding of Drillsearch Shares on Drillsearch’s issuer
	sponsored subregister
Listing Rules	the Official Listing Rules of ASX, as amended and
	waived by ASX from time to time
LNG	liquefied natural gas
mmboe	million barrels of oil equivalent (in terms of energy)
Offer	the offer for Drillsearch Shares under the terms and
	conditions contained in Annexure A of this Bidder’s
	Statement
Offer Period	the period during which the Offer will remain open for
	acceptance in accordance with section 2 of Annexure A
	to this Bidder’s Statement
Participant	an entity admitted to participate in the Clearing House
	Electronic Sub-register system under Rules 4.3.1 and
	4.4.1 of the ASTC Settlement Rules
PEL	Petroleum Exploration Licence
Prescribed Occurrence	an event listed in section 652C of the Corporations Act
PJ	petajoule
Register Date	the date set by Beach under section 633(2) of the
	Corporations Act, being[ # ]2009
Rights	all accreditations, rights or benefits of whatever kind
	attaching to or arising from Drillsearch Shares directly
	or indirectly at or after the Announcement Date
	(including, but not limited to, all dividends and all rights
	to receive them or rights to receive or subscribe for
	shares, notes, bonds, options or other securities
	declared, paid or issued by Drillsearch or any of its
	subsidiaries)

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Securityholder Reference has the same meaning as in the ASTC Settlement Number Rules Share Registrar Computershare Investor Services Pty Ltd ABN 48 078 279 277 Takeover Bid the off-market takeover bid constituted by the dispatch of the Offers in accordance with the Corporations Act Takeover Transferee Holding has the same meaning as in the ASTC Settlement Rules 2P reserves proved and probable reserves 3P reserves proved, probable and possible reserves

8.2 Interpretation

In this Bidder’s Statement and in the Acceptance Form, unless the context otherwise appears:

a) words and phrases have the same meaning (if any) given to them in the Corporations Act;
b) words importing a gender include any gender;
c) words importing the singular include the plural and vice versa;
d) an expression importing a natural person includes any company, partnership, joint venture, association, corporation or other body corporate and vice versa;
e) a reference to a section, annexure and schedule is a reference to a section of and an annexure and schedule to this Bidder’s Statement as relevant;
f) a reference to any statute, regulation, proclamation, ordinance or by-law includes all statutes, regulations, proclamations, ordinances, or by-laws amending, varying, consolidating or replacing it and a reference to a statute includes all regulations proclamations, ordinances and by-laws issued under that statute;
g) headings and boldings are for convenience only and do not affect the interpretation of this Bidder’s Statement;
h) a reference to time is a reference to time in Adelaide, Australia; and
i) a reference to writing includes facsimile transmissions.

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9. Approval of Bidder’s Statement

This Bidder’s Statement has been approved by a resolution passed by the Directors of Beach.

Dated: 29 May 2009

Signed on behalf of Beach Petroleum Limited

................................................................ Bob Kennedy, Chairman

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Annexure A– The Offer

Offer
a) Beach offers to acquire all your Drillsearch Shares on the terms and subject to the conditions set out in this annexure.
b) The consideration offered for every 27 of your Drillsearch Shares is one Beach Share rounded up.
c) If Beach acquires your Drillsearch Shares under this Offer, it will also be entitled to all Rights in respect of your Drillsearch Shares.
d) An offer in this form and bearing the same date is being made to:
- 1) each person registered as the holder of Drillsearch Shares in the register of Drillsearch shareholders as at close of business on the Register Date; and
- 2) any person who becomes registered as the holder of Drillsearch Shares during the period commencing on the Register Date and ending at the end of the Offer Period due to the conversion of, or exercise of rights attached to, other securities convertible into Drillsearch Shares (including Drillsearch options) and which are on issue at the Register Date.
e) If at the time this Offer is made to you, or at any time during the Offer Period, another person is, or is entitled to be, registered as the holder of some or all of your Drillsearch Shares then:
- 1) a corresponding offer will be deemed to have been made to that other person in respect of those Drillsearch Shares;
- 2) a corresponding offer will be deemed to have been made to you in respect of any other Drillsearch Shares you hold to which this Offer relates; and
- 3) this Offer will be deemed to have been withdrawn immediately after that time.
f) If at any time during the Offer Period you are registered or entitled to be registered as the holder of one or more parcels of Drillsearch Shares as trustee or nominee for, or otherwise on account of, another person, you may accept as if a separate offer on the same terms as this Offer had been made in relation to each of those parcels and any parcel you hold in your own right. To validly accept the offer for all of a parcel, you must comply with the procedure in section 653B(3) of the Corporations Act. If, for the purposes of complying with that procedure, you require additional copies of this Bidder’s Statement and the Acceptance Form, please call the Beach Offer information line on 1800 171413 (within Australia) or +61 8 8232 8648 (from outside Australia) to request those additional copies.
g) Beneficial owners whose Drillsearch Shares are registered in the name of a broker, investment dealer, bank, trust company or other nominee should contact that nominee for assistance in accepting this Offer.

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2. Offer Period

a) This Offer will remain open for acceptance during the period that commences on the date of this Offer and ends at 5.00 pm Adelaide time on [#] 2009 unless it is withdrawn or extended in accordance with the Corporations Act.
b) Beach may, in accordance with the Corporations Act but subject to compliance with the procedures specified in section 11, at any time and from time to time before the end of the Offer Period, extend the period during which this Offer remains open for acceptance, by giving written notice of the extension and by making a public announcement of the extension, as described below, and by following the procedures prescribed by section 650C of the Corporations Act. Subject to any rights you may have to withdraw your acceptance of this Offer, Beach also reserves the right to retain until the end of the Offer Period Drillsearch Shares which have been tendered during any periods for which this Offer is extended. During any such extension, your Drillsearch Shares previously tendered and not withdrawn will remain subject to the terms and conditions of this Offer, subject to any rights you may have to withdraw your acceptance of this Offer.

3. Official quotation of Beach Shares

The consideration offered by Beach under the Offer is Beach Shares that will be issued by Beach and rank equally with Beach Shares currently on issue.

Beach is admitted to the Official List of ASX and shares of the same class as those to be issued as consideration are quoted by ASX. An application will be made within seven days of the beginning of the Offer Period to ASX for the grant of official quotation of the Beach Shares to be issued. Official quotation is not granted automatically on application.

4. How to accept this Offer

a) Accept for all your Drillsearch Shares

Subject to section 8, you may only accept this offer for all your Drillsearch Shares.

b) Drillsearch Shares - Issuer Sponsored Holdings

If your Drillsearch Shares are held in an Issuer Sponsored Holding (in which case your Securityholder Reference Number will commence with “I”), to accept this Offer in respect of those Drillsearch Shares you must:

1) complete and sign the enclosed blue Acceptance Form in accordance with the instructions on it; and
2) return the Acceptance Form (where applicable, using the enclosed reply paid envelope if you wish), together with all other documents required by the instructions on it, so that they are received before the end of the Offer Period at one of the addresses indicated on the Acceptance Form.

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c) Drillsearch Shares - CHESS Holdings

If your Drillsearch Shares are held in a CHESS Holding (in which case your Holder Identification Number will commence with “X”), to accept this Offer in respect of those Drillsearch Shares you must either:

1) instruct your Controlling Participant, in accordance with the sponsorship agreement between you and the Controlling Participant, to initiate acceptance of this Offer in accordance with Rule 14.14 of the ASTC Settlement Rules, so as to be effective before the end of the Offer Period; or
2) complete, sign and return the enclosed blue Acceptance Form (where applicable using the enclosed reply paid envelope if you wish) in accordance with the instructions on it, together with all other documents required by those instructions, so that they are received before the end of the Offer Period at one of the addresses indicated on the Acceptance Form. This will authorise Beach to initiate, or alternatively to instruct your Controlling Participant to initiate, acceptance of this Offer on your behalf in accordance with Rule 14.14 of the ASTC Settlement Rules before the end of the Offer Period. You must ensure that the Acceptance Form (and the other required documents) is received in sufficient time for Beach to give instructions to your Controlling Participant, and for your Controlling Participant to carry out those instructions, before the end of the Offer Period.

However, if you are the Controlling Participant in respect of your Drillsearch Shares, to accept this Offer you must yourself initiate the acceptance in accordance with Rule 14.14 of the ASTC Settlement Rules before the end of the Offer Period.

Status and effect of the Acceptance Form
a) The Acceptance Form which accompanies this Bidder’s Statement forms part of this Offer and the instructions on the Acceptance Form must be followed in using it to accept this Offer.

b) By signing and returning the Acceptance Form in accordance with section 4 you irrevocably authorise Beach and its nominees:

1) to rectify any errors in, or omissions from, the Acceptance Form that are necessary to make it an effective acceptance of this Offer or to enable registration of the transfer of all your Drillsearch Shares to Beach; and
2) in respect of any of your Drillsearch Shares in a CHESS Holding to:
- (A) initiate, or alternatively instruct your Controlling Participant to initiate, acceptance of this Offer in respect of all such Drillsearch Shares in accordance with Rule 14.14 of the ASTC Settlement Rules; and
- (B) give any other instructions concerning those Drillsearch Shares to your Controlling Participant on your behalf under the sponsorship agreement between you and the Controlling Participant.
c) Notwithstanding section 4, Beach may treat the receipt by it of a signed Acceptance Form before the end of the Offer Period as valid even though it does not receive the other documents required by the instructions on the Acceptance Form or there is not

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compliance with any one or more of the other requirements for acceptance. If Beach does treat such an Acceptance Form as valid, Beach will not be obliged to give the consideration to you until Beach receives all those documents and all of the requirements for acceptance referred to in section 4 and in the Acceptance Form have been met.

6. Effect of acceptance

By signing and returning the Acceptance Form, initiating or causing acceptance of this Offer under the ASTC Settlement Rules in accordance with section 4:

a) you accept this Offer in respect of all your Drillsearch Shares at the date your acceptance is processed even if the number of Drillsearch Shares specified on the Acceptance Form differs from the number of your Drillsearch Shares and agree to the terms and conditions of this Offer;
b) subject to all of the conditions being fulfilled or waived before the end of the Offer Period, you transfer, and consent to the transfer in accordance with the ASTC Settlement Rules of, all your Drillsearch Shares to Beach in accordance with this Offer and subject to the conditions of the constitution of Drillsearch on which they were held immediately before your acceptance of this Offer and Beach agreed to take those Drillsearch Shares subject to those conditions;
c) you represent and warrant to Beach that, at the time of your acceptance and at the time the transfer of your Drillsearch Shares to Beach is registered, all your Drillsearch Shares are and will be fully paid, and Beach will acquire good title to them and full beneficial ownership of them free from all encumbrances;
d) subject to all of the conditions being fulfilled or waived before the end of the Offer Period, you irrevocably appoint Beach and each of its directors and nominees severally as your attorney to exercise all powers and rights that you have as the registered holder of your Drillsearch Shares, including:
1) attending any meeting of Drillsearch, and voting in respect of your Drillsearch Shares, proposing or seconding any motion, and demanding a poll for any vote at, any such meeting;
2) requisitioning the convening of any general meeting of Drillsearch and convening a general meeting pursuant to any such requisition; and
3) signing any form, notice, instrument or other document (including any proxy appointment) relating to your Drillsearch Shares.

Such appointment will terminate on the earlier of the withdrawal of your acceptance to this Offer and the end of the Offer Period or, if all conditions have been fulfilled or waived, the registration of Beach as the holder of your Drillsearch Shares;

e) you agree that, in exercising the powers and rights conferred by the power of attorney in section 6(d), each attorney may act in the interests of Beach as the intended registered holder and beneficial owner of your Drillsearch Shares;
f) except as contemplated by section 6(d) and while the appointment in that section continues and is in effect, you agree not to attend or vote in person or by proxy, attorney or corporate representative at any meeting of Drillsearch, or to exercise or

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purport to exercise (in person or by proxy, attorney, or corporate representative or otherwise) any of the powers conferred by the power of attorney in section 6(d);

g) you irrevocably authorise and direct Drillsearch to pay to Beach, or to account to Beach for, all Rights in respect of your Drillsearch Shares subject, however, to any such Rights received by Beach being accounted for by Beach to you if any contract resulting from your acceptance of this Offer is rescinded or rendered void;
h) subject to all of the conditions being fulfilled or waived before the end of the Offer Period, you irrevocably authorise Beach and its nominees to do all things necessary to transfer your Drillsearch Shares to Beach (including to cause a message to be transmitted in accordance with the ASTC Settlement Rule 14.17.1 so as to transfer your Drillsearch Shares, if held in a CHESS Holding, to the Takeover Transferee Holding), even if Beach has not at that time paid or provided the consideration due to you under this Offer; and
i) you agree to indemnify Beach and each of its agents in respect of any claim or action against it or any loss, damage or liability whatsoever incurred by it as a result of you not producing your Holder Identification Number or your Securityholder Reference Number or in consequence of the transfer of your Drillsearch Shares to Beach being registered by Drillsearch without production of your Holder Identification Number or your Securityholder Reference Number.
Receipt of Consideration
a) Subject to this section 7 and the Corporations Act, if you have accepted the Offer and the contract resulting from your acceptance becomes unconditional, Beach will issue the Beach Shares to which you become entitled (as set out in this Offer) to you on or before the earlier of:
- 1) one month after the date of your acceptance or, if the Offer is subject to a defeating condition when you accept the Offer, one month after the takeover contract resulting from your acceptance of the Offer becomes unconditional; and
- 2) 21 days after the end of the Offer Period.
b) Where the Acceptance From requires an additional document to be given with your acceptance (such as a power of attorney);
- 1) if that document is delivered with your acceptance, Beach will provide the consideration in accordance with section 7(a);
- 2) if that document is given after acceptance and before the end of the Offer Period, while the Offer is subject to a defeating condition, Beach will provide the consideration to you by the earlier of:
  - (A) one month after the takeover contract resulting from your acceptance of the Offer becomes unconditional; and
  - (B) 21 days after the end of the Offer Period;
- 3) if that document is delivered after acceptance and before the end of the Offer Period, while the Offer is not subject to a defeating condition, Beach will

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provide the consideration due to you for your Drillsearch Shares by the earlier of:

  - (A) one month after that document is delivered; and

  - (B) 21 days after the end of the Offer Period; or

4) if that document is given after the end of the Offer Period, Beach will provide the consideration within 21 days after that document is given. However, if at the time the document is given, the takeover contract is still subject to a defeating condition that relates to a circumstance or event referred to in subsection 652C(1) or (2) of the Corporations Act, Beach will provide the consideration due to you for your Drillsearch Shares within 21 days after the Offer becomes unconditional.
c) If you accept the Offer, Beach is entitled to all Rights in respect of your Drillsearch Shares, Beach may require you to provide all documents necessary to vest title to those Rights in Beach, or otherwise to give it the benefit or value of those Rights. If you do not do so, or if you have received the benefit of those Rights, Beach will be entitled to deduct from the consideration otherwise due to you the amount (or value, as reasonably assessed by Beach) of those Rights.
d) Subject to the Corporations Act, Beach will send a holding statement for the Beach Shares due to you at your risk by pre-paid ordinary mail, or in the case of any address outside Australia, by airmail, to the address shown in the Acceptance Form.
e) If at the time you accept the Offer any of the following:
1) Banking (Foreign) Exchange Regulations 1959 (Cth);
2) Part 4 of the Charter of the United Nations Act 1945 (Cth);
3) Charter of the United Nations (Terrorism and Dealing with Assets) Regulations 2002 (Cth);
4) Charter of the United Nations (Sanctions - Afghanistan) Regulations 2001 (Cth);
5) Iraq (Reconstruction and Repeal of Sanctions) Regulations 2003 (Cth); or
6) any other law of Australia,

require that an authority, clearance or approval of the Reserve Bank of Australia, the Australian Taxation Office or any other government authority be obtained before you receive any consideration for your Drillsearch Shares, or would make it unlawful for Beach to provide any consideration to you for your Drillsearch Shares, you will not be entitled to receive any consideration for your Drillsearch Shares until all requisite authorities, clearances or approvals have been received by Beach.

As far as Beach is aware, as at the date of this Bidder’s Statement, the persons to whom this section 7(e) will apply are: prescribed supporters of the former government of Yugoslavia; ministers and senior officials of the Government of Zimbabwe; persons associated with the former government of Iraq (including senior officials, immediate family members of senior officials, or any entities controlled by any of those persons);

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Osama bin Laden, the Taliban, members of the Al-Qaeda organisation; and a person named in the list maintained pursuant to paragraph 2 of Resolution 1390 of the Security Council of the United Nations.

8. Foreign Shareholders

If you are a Foreign Shareholder and you accept the Offer, Beach will

a) arrange for the issue to a nominee approved by ASIC (Nominee) of the number of Beach Shares to be issued in accordance with the Offer to which you and all other Foreign Shareholders would have been entitled but for this section 8;
b) cause those Beach Shares allotted to the Nominee to be offered for sale within 21 days after the end of the Offer Period in such manner, at such price and on such other terms and conditions as are determined by the Nominee; and
c) cause the Nominee to pay to you the amount calculated by applying the formula:

Net Proceeds of Sale x Your Beach Shares Total Beach Shares

Where:

Net the amount (if any) remaining after deducting the Proceeds of expenses of sale and of appointing the Nominee from the Sale total proceeds of sale of the Beach Shares allotted to the Nominee Your Beach the number of Beach Shares which would, but for this Shares clause, have been issued to you Total Beach Shares the total number of Beach Shares issued to the Nominee under this section as a result of your acceptance and acceptances by other Drillsearch shareholders who are Foreign Shareholders.

Payment will be made by cheque in Australian dollars. The cheque will be sent to you at your own risk by airmail to your address as shown in Drillsearch’s register of members. Interest will not be paid on the proceeds of this sale.

9. Conditions

Subject to this section 9 this Offer and any contract resulting from the acceptance of this Offer are subject to the fulfilment of the following conditions:

a) Minimum acceptance

at or before the end of the Offer Period, Beach has relevant interests in at least 90% of Drillsearch Shares;

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b) Regulatory approvals

before the end of the Offer Period, Beach receives all approvals:

1) that are necessary to permit this Offer to be lawfully made to, and accepted by, Drillsearch shareholders; or
2) that are required as a result of this Offer or the successful acquisition of Drillsearch Shares and are necessary for the continued operation of the business of Drillsearch substantially on the same terms as the relevant business was conducted as at the date of this Bidder’s Statement,

in each case on an unconditional basis or on the basis of conditions that impose only non-material requirements incidental to the approval, and, at the end of the Offer Period, all of those approvals remain in full force and effect in all respects and are not subject to any notice or indication of intention to revoke, suspend, restrict, modify or not renew those approvals;

c)

No regulatory actions

between the Announcement Date and the end of the Offer Period:

1) there is not in effect any preliminary or final decision, order or decree issued by a public authority;
2) no action or investigation is announced, commenced or threatened by any public authority; and
3) no application is made to any public authority (other than by Beach or any of its associates),

in consequence of or in connection with this Offer (other than an application to, or a decision or order of, ASIC or Takeovers Panel for the purpose, or in exercise, of the powers and discretions conferred on it by the Corporations Act) which restrains or prohibits or impedes, or threatens to restrain, prohibit or impede, the making of this Offer or the acquisition of Drillsearch Shares under this Offer or the completion or any transaction contemplated by this Bidder’s Statement, or seeks to require the divestiture by Beach of any Drillsearch Shares, or the divestiture of any material assets of Drillsearch or Beach;

d) No material adverse change

between the Announcement Date and the end of the Offer Period, no event, change or condition occurs, is announced or becomes known to Beach (whether or not it becomes public) where that event, change or condition has had, or could reasonably be expected to have, a material adverse effect on:

1) the business, assets, liabilities, financial or trading position, profitability or prospects of Drillsearch or any subsidiary of Drillsearch, since 1 January 2009; or
2) the status or terms of arrangements entered into by Drillsearch or any subsidiary of Drillsearch, or on the status or terms of any approvals, licences

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or permits from public authorities applicable to Drillsearch or any subsidiary of Drillsearch,

except for events, changes and conditions publicly announced by Drillsearch or otherwise disclosed in public filings by Drillsearch or any of its subsidiaries before the Announcement Date where the relevant disclosure is not, and is not likely to be, incomplete, incorrect, untrue or misleading.

e) No material mergers, acquisitions, disposals or new commitments

between the Announcement Date and the end of the Offer Period, except for any proposed transaction publicly announced by Drillsearch before the Announcement Date, neither Drillsearch nor any subsidiary of Drillsearch:

1) consolidates with or merges with or into any other person (other than, in the case of a subsidiary of Drillsearch, a wholly-owned subsidiary of Drillsearch) or announces an intention to do so;
2) acquires, offers to acquire or agrees to acquire one or more entities, businesses or assets (or any interest in one or more entities, businesses or assets) for an amount in aggregate greater than $1 million, or announces an intention to do so;
3) disposes, offers to dispose or agrees to dispose of one or more entities, businesses or assets (or any interest in one or more entities, businesses or assets) for an amount, or in respect of which the book value (as recorded in Drillsearch’s consolidated statement of financial position as at 31 December 2008) is, in aggregate, greater than $1 million, or announces an intention to do so;
4) enters, offers to enter or agrees to enter into any transaction or becomes the subject of any obligation which would require the expenditure, the foregoing of revenue or may result in Drillsearch or any subsidiary of Drillsearch incurring any actual or contingent liability of an amount which is, in aggregate, more than $1 million, or announces its intention to do so; or
5) enters, offers to enter or agrees to enter into, any agreement, joint venture or partnership which is for a term longer than two years, other than in the ordinary course of business, or announces its intention to do so,

and during that period the business of Drillsearch is otherwise carried on in the ordinary and usual course of business;

f) Change of control and other rights under certain agreements

no person has, or before the end of the Offer Period is granted, any right (whether conditional or not) under any agreement or arrangement which is material in the context of the business of Drillsearch (which includes any agreement or arrangement the termination of which is likely to adversely affect the revenue or costs of Drillsearch by more than $1 million per annum, or the assets or liabilities of Drillsearch by more than $1 million), as a result of the bidder acquiring Drillsearch Shares, to:

1) acquire, or require the disposal of, or require Drillsearch or a subsidiary of Drillsearch to offer to dispose of, any material asset of Drillsearch; or

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2) terminate, or vary the terms or performance of, any material agreement or arrangement with Drillsearch or a subsidiary of Drillsearch,

other than rights for which a written enforceable, irrevocable and unconditional waiver or release has been obtained by Drillsearch and a copy provided to Beach before the end of the Offer Period;

g) Dividends

during the period from the Announcement Date to the end of the Offer Period, Drillsearch does not make or declare any distribution whether by way of dividend, capital reduction or otherwise and whether in case or in specie;

h) No Prescribed Occurrences

during the period from the date of this Bidder’s Statement to the end of the Offer Period, none of the following occurrences (being those listed in section 652C of the Corporations Act) happens:

1) Drillsearch converts all or any of its shares into a larger or smaller number of shares;
2) Drillsearch or a subsidiary of Drillsearch resolves to reduce its share capital in any way;
3) Drillsearch or a subsidiary of Drillsearch enters into a buy-back agreement or resolves to approve the terms of a buy-back agreement under section 257C(1) or 257D(1) of the Corporations Act;
4) Drillsearch or a subsidiary of Drillsearch issues shares, or grants an option over its shares, or agrees to make such an issue or grant such an option other than 60 million Drillsearch Shares to CPC Energy Limited in relation to Drillsearch's acquisition of an interest in the Tintaburra Block ATP 299P and on the exercise of options existing at the Announcement Date;
5) Drillsearch or a subsidiary of Drillsearch issues, or agrees to issue, convertible notes;
6) Drillsearch or a subsidiary of Drillsearch disposes, or agrees to dispose, of the whole, or a substantial part, of its business or property;
7) Drillsearch or a subsidiary of Drillsearch charges, or agrees to charge, the whole, or a substantial part, of its business or property;
8) Drillsearch or a subsidiary of Drillsearch resolves to be wound up;
9) a liquidator or provisional liquidator of Drillsearch or of a subsidiary of Drillsearch is appointed;
10) a court makes an order for the winding up of Drillsearch or of a subsidiary of Drillsearch;
11) an administrator of Drillsearch, or of a subsidiary of Drillsearch, is appointed under section 436A, 436B or 436C of the Corporations Act;

page 74

  - 12) Drillsearch or a subsidiary of Drillsearch executes a deed of company arrangement; or

  - 13) a receiver, or a receiver and manager, is appointed in relation to the whole, or a substantial part, of the property of Drillsearch or of a subsidiary of Drillsearch.

Nature and benefit of conditions
a) Each of the conditions in section 9(h) is a condition subsequent to the formation of a binding contract on acceptance of this Offer. The non-fulfilment of any of those conditions will not, until the end of the Offer Period (or in the case of the conditions in section 9, until three Business Days after the end of the Offer Period), prevent a contract to sell your Drillsearch Shares resulting from the acceptance of this Offer from arising, but any such non-fulfilment at the end of the Offer Period will entitle Beach, by notice in writing to you, to rescind a contract that results from your acceptance of this Offer as if that contract had not been formed.
b) Each of the conditions in each paragraph and each sub-paragraph of section 9 constitutes, and is to be construed as, a separate, several and distinct condition. No condition will be taken to limit the meaning or effect of any other conditions.
c) Subject to the Corporations Act, Beach alone is entitled to the benefit of the conditions in section 9 and to rely on non-fulfilment of, or to waive compliance with, any of those conditions.

11. Waiver of conditions

a) Subject to the Corporations Act, Beach may free the Offer and any contract resulting from acceptance of the Offer from all or any of the conditions in section 9 generally or in relation to a specific occurrence by giving notice in writing to Drillsearch and to ASX in accordance with section 650F of the Corporations Act. Any such notice may be given:
1) in the case of the conditions in section 9(h) - not later than three Business Days after the end of the Offer Period; and
2) in the case of the other conditions in section 9 - not less than seven Business Days before the end of the Offer Period.
b) If, at the end of the Offer Period (or, in the case of the conditions in section 9, within three Business Days after the end of the Offer Period), the conditions in section 9 have not been fulfilled and Beach has not declared the Offer (or the Offer has not become) free from those conditions, all contracts resulting from the acceptance of the Offer and all acceptances that have not resulted in binding contracts will be automatically void.

12. Notice on status of conditions

The date for giving the notice as to the status of the conditions in section 9 required by section 630(1) of the Corporations Act is [# ]2009 (subject to variation in accordance with section 630(2) of the Corporations act if the Offer Period is extended).

page 75

13. Variation

Beach may vary this Offer in accordance with the Corporations Act.

14. Withdrawal

a) This Offer may be withdrawn with the consent in writing of ASIC, which consent may be subject to conditions. If so, Beach will give notice of the withdrawal to ASX and to Drillsearch and will comply with any other conditions imposed by ASIC.
b) If Beach withdraws this Offer, any contract resulting from its acceptance will automatically be void.

15. Stamp duty and brokerage

You will not be liable to pay any stamp duty on the transfer of your Drillsearch Shares as a result of acceptance of this Offer. As long as your Drillsearch Shares are registered in your name and you deliver them directly to Beach, you will not incur any brokerage in connection with your acceptance of this Offer (unless you are a Foreign Shareholder (see section 8).

If you are a beneficial owner whose Drillsearch Shares are registered in the name of a broker, investment dealer, bank, trust company or other nominee, you should ask that nominee whether it will charge any transaction fees or service charges in connection with acceptance of the Offer for the relevant Drillsearch Shares.

16. Governing law

This Offer and any contract that results from your acceptance of this Offer are governed by the laws of South Australia, Australia.

17. Date of Offer

This Offer is dated [#] 2009.

page 76

Annexure B - Beach’s ASX announcement of takeover bid

==> picture [423 x 566] intentionally omitted <==

page 77

==> picture [429 x 567] intentionally omitted <==

page 78

==> picture [425 x 446] intentionally omitted <==

page 79

Annexure C– Beach’s ASX announcements since the 2008 annual report

Released since release of the Beach 2008 annual report

Date
24/10/2008
28/10/2008
28/10/2008
29/10/2008
29/10/2008
30/10/2008
30/10/2008
03/11/2008
03/11/2008
03/11/2008
03/11/2008
05/11/2008
05/11/2008
06/11/2008
07/11/2008
07/11/2008
07/11/2008
10/11/2008
12/11/2008
13/11/2008
17/11/2008
19/11/2008
20/11/2008
26/11/2008
26/11/2008
27/11/2008
27/11/2008
27/11/2008
27/11/2008
28/11/2008
28/11/2008
28/11/2008
28/11/2008
28/11/2008
28/11/2008
03/12/2008
04/12/2008
04/12/2008
05/12/2008
05/12/2008
10/12/2008
10/12/2008
11/12/2008
11/12/2008
15/12/2008
17/12/2008
18/12/2008
19/12/2008
22/12/2008
22/12/2008
23/12/2008

Headline
Change in substantial holding from DBA
Appendix 3B
NZO: NZOG to join Canterbury Basin venture
DLS: Drilling Update
Weekly Drilling Report
Media Release BPTs record revenue start to 2008 2009
Quarterly Activities Report
Amendment to new gas discovery release
Media Release BPT gas discovery is Cooper Basin
Significant Gas Discovery in Cooper Basin
DLS: Gas and Oil Shows - Brownlow-1
Progress Report
DLS: Brownlow-1 Cased and Suspended
DLS: Drilling Update
DLS: Addendum to Quarterly report
BPT set to add Egyptian Oil Production
Government Approval in North Shadwan and South East July
Appendix 3B
Progress Report
DLS: Drilling Update
DLS: Canunda-1 Spuds in PEL 106
Weekly Drilling Report
DLS: Drilling Update
Weekly Drilling Report
Change in substantial holding
Ceasing to be a substantial holder
Success for Beach on Western Flank of the Cooper Basin
DLS: Further Gas Discovery in Cooper Basin Canunda-1
DLS: Drilling Update
Results of Meeting
Presentation slides BPT AGM 2008
CFO and COO Address AGM 2008
Managing Directors Address AGM 2008
Chairman's Address AGM 2008
Media Release BPT outlook bullish
Weekly Drilling Report
Appendix 3B
DLS: Drilling Update
Change of Director's Interest Notice
Change of Director's Interest Notice
EPR: VIC/P46 Fermat-1 Rig Move
Progress Report
CUE: Spikey Beach -1 Update T38P
DLS: Drilling Update
EPR: VIC/P46 Fermat-1 Drilling Report No. 1
Progress Report
COE: PEL110 Second Term Granted
ROC: Basker Manta Gummy (BMG) Oil and Gas Project
Appendix 3B
PTR: Paralana Joint Venture Update
Media Release Western Cooper Basin Production Surges

page 80

Date
24/12/2008
24/12/2008
31/12/2008
31/12/2008
05/01/2009
06/01/2009
07/01/2009
08/01/2009
13/01/2009
14/01/2009
15/01/2009
15/01/2009
16/01/2009
21/01/2009
23/01/2009
28/01/2009
29/01/2009
29/01/2009
30/01/2009
30/01/2009
03/02/2009
03/02/2009
03/02/2009
04/02/2009
04/02/2009
05/02/2009
06/02/2009
06/02/2009
11/02/2009
18/02/2009
19/02/2009
20/02/2009
20/02/2009
23/02/2009
24/02/2009
24/02/2009
24/02/2009
24/02/2009
25/02/2009
26/02/2009
04/03/2009
04/03/2009
04/03/2009
05/03/2009
10/03/2009
11/03/2009
13/03/2009
17/03/2009
18/03/2009
19/03/2009
20/03/2009
25/03/2009
26/03/2009
26/03/2009
31/03/2009
31/03/2009
01/04/2009
01/04/2009
01/04/2009

Headline
EPR: VIC/P46 Fermat-1 Progress Report No 3
Weekly Drilling Report
Weekly Drilling Report
EPR: VIC/P46 Fermat-1 Progress Report No. 4
Media release Callawonga 6 success
EPR: VIC/P46 Fermat-1 Update
Progress Report
EPR: VIC/P46 Fermat-1 Progress Report No. 5
Constitution
Progress Report
DLS: Weekly Drilling and Operations Update
EPR: VIC/P46 Fermat-1 Progress Report No. 6
Appendix 3B
Weekly Drilling Report
DLS: Weekly Drilling Update 23 January 2009
Weekly Drilling Report
DLS Operations Activities Update 29 January 2009
Year end reserve review
Record oil and gas production in December Quarter
Quarterly Activities Report
COE: Perlubie - 1 Well Discovers New Oil Field
Perlubie 1 Oil Discovery
Paralana Joint Venture Update
Weekly Drilling Report
Beach Petroleum launches new website
DLS: Operations Activities Update - 5 February 2009
Media Release: Major Coal Seam Gas Reserves Increase
Major Coal Seam Gas Reserves Increase
Weekly Drilling Report
Weekly Drilling Report
DLS: Operations Activities Update - 19 February 2009
Basker Manta Gummy Update
ROC: Basker-Manta-Gummy Oil and Gas Project
EPR: VIC/P46 Status Report
Half Year Financial Results Presentation
Details of 2009 Interim Dividend
Media Release - Half Year Results
Half Year Financial Report and Appendix 4D Disclosures
Weekly Drilling Report
DLS: Operations Activities Update - 26 February 2009
Weekly Drilling Report
COE: PEL92 Production Update
PTR: Paralana Project Update
PTR: Paralana Joint Venture Update
Cooper Basin Contingent Resource Update
Weekly Drilling Report
Half Yearly Update to Shareholders March 2009
ROC: Basker-Manta-Gummy Oil and Gas Project - Oper. Update
Weekly Drilling Report
Further details of 2009 Interim Dividend
Becoming a substantial holder
Weekly Drilling Report
Future Directions for the Oil Industry
Appendix 3B
Change in substantial holding for RMS
Cooper Basin Drilling Program
Weekly Drilling Report
Ceasing to be a substantial holder
Further details of 2009 Interim Dividend - DRP

page 81

Date
02/04/2009
02/04/2009
03/04/2009
03/04/2009
03/04/2009
03/04/2009
06/04/2009
07/04/2009
07/04/2009
08/04/2009
14/04/2009
15/04/2009
16/04/2009
17/04/2009
20/04/2009
20/04/2009
22/04/2009
22/04/2009
24/04/2009
29/04/2009
30/04/2009
30/04/2009
01/05/2009
05/05/2009
05/05/2009
05/05/2009
05/05/2009
05/05/2009
05/05/2009
06/05/2009
07/05/2009
08/05/2009
08/05/2009
11/05/2009
13/05/2009
13/05/2009
14/05/2009
15/05/2009
15/05/2009
15/05/2009
15/05/2009
19/05/2009
20/05/2009
20/05/2009
20/05/2009
21/05/2009
22/05/2009
22/05/2009
25/05/2009
27/05/2009
27/05/2009
27/05/2009
27/05/2009
29/05/2009

Headline
PTR: Paralana Joint Venture Update
Lodge Institutional Stockbroking Conference Presentation
EPR: VIC/P46 Status Report
AOE: Acquisition of BPT Stake in Tipton West Project
Media Release - Beach sells its 40% stake in Tipton West
Beach sells its 40% stake in Tipton West for up to $400 mill
Becoming a substantial holder - Revised
Becoming a substantial holder
Ceasing to be a substantial holder
Weekly Drilling Report
ADE: PEL 218 Farmin
Weekly Drilling Report
Change in substantial holding
ROC: Basker-Manta-Gummy Oil and Gas Project
Appendix 3B
Basker-Manta-Gummy (BMG) Oil and Gas Project
Weekly Drilling Report
PTR: $7 Million Geothermal Drilling Funding offer conditions
Change in substantial holding
Weekly Drilling Report
Quarterly Activities report
Media Release – Quarterly Report for end March 2009
Correction to Notice of initial substantial holder for DLS
BPT announces $50 mil Takeover Offer for Drillsearch Energy
EPR. Vic P46 Status Report
Drillsearch Energy's Announcement re take over
3D Oil response in relation to take over
Change of substantial shareholder in Drillsearch Energy
Ceasing to be a substantial shareholder
Weekly Drilling Report
Two Well Cooper Basin drilling program – September 2009
Notice of Change of Substantial Shareholder interest for DLS
Change in substantial holding Annexure B
PTR: Rig arrival signals start of drilling for Paralana
ADE: PEL 218 Farmin Update
Weekly Drilling Report
PTR: $63 Million Renewable Energy Demonstration Update
DLS: Appointment of Advisors for Beach Petroleum Takeover Bid
TDO: Drillsearch failure
Bidders Statement and Offer by BPT for DLS
Beach Bidders Statement offers balance sheet strength
May Investors Presentation
AOE: Completion of Tipton West Acquisition from BPT
Beach completes sale of its 40% stake in Tipton West
Weekly Drilling Report
Appendix 3B
ADE: PEL 218 Farmin
PEL 218 Farmin
COE: Tumby-1
Takeover offer for Drillsearch Energy Ltd
TDO: Drillsearch Fractures Reinforce High Risk
Weekly Drilling Report
ROC: Sale of 10% Interest in BMG Project to Pertamina
Becoming a substantial holder

page 82

Annexure D – Drillsearch’s announcements since the 2008 annual report

Released since release of DLS 2008 annual report

Date
01/10/2008
01/10/2008
01/10/2008
02/10/2008
03/10/2008
09/10/2008
15/10/2008
16/10/2008
17/10/2008
20/10/2008
21/10/2008
21/10/2008
22/10/2008
28/10/2008
29/10/2008
29/10/2008
29/10/2008
29/10/2008
29/10/2008
31/10/2008
03/11/2008
03/11/2008
05/11/2008
06/11/2008
13/11/2008
17/11/2008
20/11/2008
24/11/2008
27/11/2008
27/11/2008
28/11/2008
28/11/2008
28/11/2008
28/11/2008
28/11/2008
02/12/2008
02/12/2008
04/12/2008
04/12/2008
09/12/2008
11/12/2008
11/12/2008
19/12/2008
09/01/2009
12/01/2009
12/01/2009
15/01/2009

Headline
Financial Report for the year ended 30 June 2008
Appendix 3B – 13 August 2008
Appendix 3B – 30 September 2008
SW Queensland Weekly Drilling Update – 2 October 2008
2008 Date of AGM – 3 October 2008
Weekly Drilling Update – 9 October 2008
Appendix 3Y Change of Directors Interest Notice, Peter Simpson –
15 October 2008
Weekly Drilling Update – 16 October 2008
Appendix 3B – 14 October 2008
Brownlow-1 Spuds in PEL 106 – 20 October 2008
Board Restructure – 21 October 2008
Appendix 3Z Final Director's Interest Notice – 21 October 2008
Weekly Drilling Update – 22 October 2008
Notice of Completion and bidders Statement – 24 March 2009
2008 Annual Report – 29 October 2008
Proxy Form – 29 October 2008
Weekly Drilling Update – 29 October 2008
Notice of Annual General Meeting – 29 October 2008
Shareholder Update – 29 October 2008
Quarterly Report September 2008 – 31 October 2008
Gas and Oil Shows – Brownlow-1 – 3 November 2008
Quarterly Expenditure Summary – 3 November 2008
Brownlow-1 Cased and Suspended – 5 November 2008
Weekly Drilling Update – 6 November 2008
Weekly Drilling Update – 13 November 2008
Canunda-1 Spuds in PEL 106
Weekly Drilling Report – 20 November 2008
Expiration of Turtle-Barnett Retention Leases – 24 November 2008
Weekly Drilling Update – 27 November 2008
Canunda-1 Gas Discovery 27 November 2008
Managing Director's presentation AGM 28 November 2008
Chairman's Address AGM 28 November 2008
Technical Director's presentation AGM 28 November 2008
Chairman's Address presentation AGM 28 November 2008
Results of AGM 28 November 2008
New Constitution – 2 December 2008
AGM Presentations Audio – 2 December 2008
Weekly Drilling Update – 4 December 2008
Appendix 3Y Change of Directors Interest Notice, Jim McKerlie –
4 December 2008
Appendix 3Y Change of Directors Interest Notice, David Williams –
9 December 2008
Appendix 3Y Change of Directors Interest Notice, David Williams –
11 December 2008
Weekly Drilling Update – 11 December 2008
Resignation of Managing Director – 19 December 2008
Operations Activities Update – 9 January 2009
3D Oil Limited – Notice of Initial Substantial Holding – 12 January 2009
Form 603 Notice of Initial Substantial Holding – 12 January 2009
Operations Activities Update – 15 January 2009

page 83

Date
16/01/2009
23/01/2009
29/01/2009
30/01/2009
05/02/2009
12/02/2009
18/02/2009
19/02/2009
23/02/2009
26/02/2009
27/02/2009
02/03/2009
02/03/2009
04/03/2009
06/03/2009
06/03/2009
06/03/2009
09/03/2009
10/03/2009
10/03/2009
16/03/2009
27/03/2009
30/03/2009
31/03/2009
06/04/2009
08/04/2009
09/04/2009
16/04/2009
16/04/2009
20/04/2009
29/04/2009
30/04/2009
01/05/2009
01/05/2009
01/05/2009
04/05/2009
05/05/2009
05/05/2009
05/05/2009
05/05/2009
06/05/2009
06/05/2009
07/05/2009
08/05/2009
08/05/2009
08/05/2009
08/05/2009
11/05/2009
13/05/2009
15/05/2009
15/05/2009
15/05/2009
15/05/2009
15/05/2009
15/05/2009

Headline
Proposed Scrip Takeover Offer for 3D Oil Ltd – 15 January 2009
Weekly Drilling Update – 23 January 2009
Weekly Drilling Update – 29 January 2009
Activities Report December 2008 Quarter
Weekly Drilling Update – 5 February 2009
Weekly Drilling Update – 12 February 2009
Drillsearch and Red Sky Agreement for Planet Downs-1 Well – 18 February
2009
Weekly Drilling Update – 19 February 2009
Planet Downs-1 Spuds in ATP 539P – 23 February 2009
Weekly Drilling Update – 26 February 2009
Appendix 4D and half Yearly Report 31 December 2008
Appointment of Additional Director – 2 March 2009
Appendix 3X Initial Director's Interest Notice, Beng Kai Choo – 2 March 2009
3D Oil Bid Proceeding – 4 March 2009
Bidders Statement – 6 March 2009
Bidders Statement Media Release – 6 March 2009
Weekly Drilling Update – 6 March 2009
Appendix 3B – 9 March 2009
Notice of Relevant Date – 10 March 2009
Planet Downs-1 Plugged and Abandoned – 10 March 2009
Resignation of Director and Appendix 3Z – 16 March 2009
First Supplementary Bidder's Statement – 27 March 2009
Managing Director Departure – 30 March 2009
Drillsearch Refutes 3D Oil's Target Statement – 31 March 2009
Excellence In Oil and Gas Presentation by Peter Simpson – 6 April 2009
Boardroom Radio coverage of Peter Simpson's Oil & Gas presentation – 8 April
2009
Letter to 3D Oil Shareholders – 9 April 2009
Second Supplementary Bidder's Statement – 16 April 2009
Update on Takeover Offer – 16 April 2009
TDO: Lt re Drillsearch letter dated 9 Apr
Notice regarding General Meeting
Quarterly Report to 31 March 2009
Correction to Notice of initial substantial holder from BPT
Addendum to March 2009 Quarterly Report
Notice Regarding General Meeting
Addendum to March 2009 Quarterly Report
BPT announces $50 mill Takeover Offer for Drillsearch Energy
3D Oil response to Beach's take over offer
Announcement regarding Beach's take over offer
Notice of change of interest of substantial shareholder
Notice of completion of purchase of CPC Energy's interest in Tintaburra
Appendix 3B
Two well Cooper Basin drilling programme – September 2009
Sale of treasury stock
Notice of meeting and proxy
Notice of change of interests of substantial holder from BPT
Change in substantial holding Annexure B
Notice of Change of Interest of Substantial Holder for TDO
ODN: Legal Proceedings PEL 106 (Spinel Block)
Notice of Change of Interest of Substantial Holder for TDO
Closing date for 3D Oil T/O offer not to be extended
Appointment of Advisors for Beach Petroleum Takeover Bid
TDO – notice of failure of Takeover Bid
Bidders Statement and Offer by BPT for DLS
BPT: Beach Bidders Statement offers balance sheet strength

page 84

Date
18/05/2009
18/05/2009
18/05/2009
20/05/2009
21/05/2009
25/05/2009
25/05/2009
25/05/2009
26/05/2009
26/05/2009
26/05/2009
26/05/2009
27/05/2009
27/05/2009
27/05/2009
27/05/2009

Headline
Notice of Status of Conditions for TDO
Chairmans Undirected Proxies
Appointment of Managing Director
Appendix 3B - Amended
Appendix 3X – Brad Lingo
Sale of Surat Basin Permits to Primary Petroleum Pty Limited
Notice of Change of Interest of Substantial Holder for TDO
Takeovers Panel 3D Oil Limited Panel Receives Application
Notice of Change of Interest of Substantial Holder for TDO
Postponement of EGM and update on board renewal process
Extension of Offer Period
Takeover bid for shares in 3D Oil
BPT: Takeover offer for Drillsearch Energy Ltd
Notice of Change of Interest of Substantial Holder for TDO
TDO: Drillsearch Fractures Reinforce High Risk
Takeovers panel 3D Oil Limited Panel Application Withdrawn

page 85

Corporate directory

Directors

Robert Kennedy Chairman Reginald Nelson Managing Director John Butler Non-Executive Director Franco Moretti Non-Executive Director Hector Gordon Chief Operating Officer Glenn Davis Non-Executive Director Neville Alley Non-Executive Director

Company Secretaries

Kathryn Presser Catherine Oster

Registered office

Lawyers

Piper Alderman 167 Flinders Street Adelaide SA 5000

Auditor

Grant Thornton South Australian Partnership 67 Greenhill Road Wayville SA 5034

25 Conyngham Street Glenside SA 5065 Telephone: +61 8 8338 2833 Facsimile: +61 8 8338 2336 Email: [email protected] Website: www.beachpetroleum.com.au

Share Registry

Computershare Investor Services Pty Ltd Level 5, 115 Grenfell Street Adelaide SA 5000 Telephone: +61 8 8236 2300 Facsimile: +61 8 8236 2305

25542646v1

page 86

==> picture [164 x 104] intentionally omitted <==

Bidder's Statement

Offer

Beach Petroleum Limited

ABN 20 007 617 969

to acquire all your shares in

Drillsearch Energy Limited

ABN 73 006 474 844

The consideration offered is one Beach Share for every 27 of your Drillsearch Shares The Offer is dated [#] and will close at 5.00pm Adelaide time on [#], unless extended

==> picture [56 x 31] intentionally omitted <==

==> picture [127 x 29] intentionally omitted <==

Adelaide Equity Partners Limited AFSL License No: 313143

Piper Alderman

Corporate Adviser

Legal Adviser

THIS IS AN IMPORTANT DOCUMENT AND REQUIRES YOUR IMMEDIATE ATTENTION

IF YOU ARE IN DOUBT ABOUT THE OFFER, YOU SHOULD CONSULT YOUR FINANCIAL LEGAL OR OTHER PROFESSIONAL ADVISERS WITHOUT DELAY

Important information

This replacement Bidder’s Statement is given by Beach Petroleum Limited ABN 20 007 617 969 to Drillsearch Energy Limited ABN 73 006 474 844 under Part 6.5 of the Corporations Act.

You should read this Bidder’s Statement in its entirety.

This replacement Bidder’s Statement is dated ~~15 2~~ 9 May 2009 and includes in Annexure A an offer dated [# ]2009.

A copy of this replacement Bidder’s Statement was lodged with ASIC on ~~15 2~~ 9 May 2009. This replacement Bidder's Statement replaces the Bidder's Statement lodged with ASIC on 15 May 2009. References in this document to 'the date of this Bidder's Statement' should be read as references to 15 May 2009. Neither ASIC nor any of its officers takes any responsibility for the contents of this Bidder’s Statement.

Key Dates

Date and Time 5 May 2009 15 May 2009 29 May 2009 [# ]2009 5:00pm Adelaide time [#]2009	Event Date of announcement of Offer Bidder’s Statement lodged with Drillsearch, ASIC and ASX Replacement Bidder's Statement lodged with Drillsearch, ASIC and ASX Date of Offer Closing Date of Offer (unless extended)

These dates may vary as permitted under the Corporations Act. Any changes to the above timetable will be notified on Beach’s website www.beachpetroleum.com.au and announced to ASX.

Forward looking statements

Notice to Foreign Shareholders

page 1

Investment decision

Defined terms

A number of defined terms as set out in section 8 are used in this Bidder’s Statement along with certain rules of interpretation which apply to this Bidder’s Statement.

Information on Drillsearch

Privacy

Internet

Enquiries

If you have any questions in relation to the Offer or how to accept, please contact your legal, financial or other professional advisers or telephone the Beach Offer Information Line on:

if you are calling within Australia 1800 171413; or
if you are calling outside Australia +61 8 8232 8648.

page 2

Overview of Reasons Why You Should Accept

1. Attractive offer price

Beach’s Offer represents a 50% premium to Drillsearch Shares' three month average price.

2. Step up to a larger company

Beach is an S&P/ASX 200 listed company and is a significant Australian oil and gas producer.

3. Recognised growth potential

Analysts from a number of larger investment banks believe that Beach’s Share price has the potential to increase.

4. Greater financial strength

Compared with Drillsearch, Beach has a substantially stronger balance sheet and has proven it can generate consistently strong cashflows.

5. Solid management with a track record of success

Beach has a stable Board with a record of continuity and a sound track record of developing and growing oil and gas assets.

6. Exposure to diverse asset portfolio

Beach has a diversified exploration and production portfolio across a range of geographical regions offering greater opportunity for discoveries.

7. Consolidation of ownership

Beach and Drillsearch hold a number of Cooper Basin assets in common. Combining management of these assets should yield greater efficiencies.

8. Improved share liquidity

Beach traded approximately 5 times as many shares as Drillsearch in the 12 months prior to the Announcement, based on the relative number of issued shares.

9. A history of regularly paying dividends

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

The above should be read in conjunction with detailed reasons why you should accept the Offer on page 12 of this Bidder's Statement.

page 3

Chairman’s letter

[Beach Petroleum Limited Letterhead]

Dear Drillsearch shareholder

Scrip Offer for your Drillsearch Shares

On 5 May 2009 Beach announced an Offer to acquire all of your Drillsearch Shares.

The Offer is one Beach Share for every 27 of your Drillsearch Shares.

a 21% premium to Drillsearch's closing price of $0.025 per share on the day before the Announcement Date;
a 46% premium to Drillsearch Shares' one month volume weighted average price of $0.0207 to the Announcement Date; and
a 50% premium to Drillsearch Shares' three month volume weighted average price of $0.0201 to the Announcement Date.

The Offer is subject to a number of conditions which are set out in Annexure A of the Bidder’s Statement, including Beach obtaining a relevant interest in ~~receiving acceptances for~~ at least 90% of Drillsearch Shares and Drillsearch not issuing any shares to any person including shareholders of 3D Oil Limited other than 60 million shares to CPC Energy Limited in relation to Drillsearch's acquisition of an interest in the "Tintaburra Block" (ATP 299P) and on the exercise of options existing at the Announcement Date. I note that in relation to CPC Energy Limited those shares have now been issued and further that CPC Energy Limited has entered into a pre bid agreement with Beach in respect of its Drillsearch Shares.

I ask that you read this Bidder's Statement carefully and give full consideration to Beach's Offer to acquire your shares.

I encourage you to accept the Offer as soon as possible. To accept the Offer, you should follow the instructions on the enclosed Acceptance Form.

The Offer is scheduled to close at 5:00pm Adelaide time [#]2009.

If you have any questions in relation to the Offer please contact the Beach Offer Information Line on 1800 171413 from within Australia or +61 8 8232 8648 from outside Australia.

page 4

I look forward to your joining me as a shareholder in what I consider to be one of Australia's leading energy companies.

Yours sincerely

Bob Kennedy Chairman

page 5

Important information	Important information	Important information	1
Chairman’s letter			4
Features of the Offer			8
1.	Profile of Beach		17
	1.1	Overview of Beach	17
	1.2	Principal activities of Beach	17
	1.3	Beach’s goals and strategies	22
	1.4	Financial information	23
	1.5	Information about Beach’s issued securities	25
	1.6	Disclosing entity information	31
	1.7	Directors of Beach	32
	1.8	Directors’ interests in Beach	34
	1.9	Interest in Drillsearch Shares	35
	1.10	Summary of pre-bid acceptance agreements	35
	1.11	Directors' interest in Drillsearch Shares	36
2.	Profile of Drillsearch and other information about Drillsearch’s Shares		37
	2.1	Overview	37
	2.2	Principal activities of Drillsearch	37
	2.3	Directors of Drillsearch	38
	2.4	Drillsearch securities on issue	39
	2.5	Drillsearch's share price	39
	2.6	Dividends	39
3.	Beach’s intentions in relation to Drillsearch		40
	3.1	Introduction	40
	3.2	Review	40
	3.3	Intentions on obtaining 90% or more of Drillsearch Shares	40
	3.4	Intentions on obtaining of less than 90% of Drillsearch Shares	41
	3.5	Intentions generally	42
4.	Overview of the combined Beach/Drillsearch		43
	4.1	Combined Group Disclaimer	43
	4.2	Pro-forma balance sheet	43
	4.3	Profile of the Merged Group	47
5.	Investment risks		48
	5.1	Introduction	48
	5.2	Risks associated with owning Beach Shares	48
	5.3	Risks relating to the Offer	53
6.	Tax considerations		55
	6.1	Introduction	55
	6.2	Australian residents holding Drillsearch Shares on capital account	55
	6.3	Australian resident – shares held on revenue account	57
	6.4	Non-resident shareholders	57
	6.5	Other Taxation Implications	58
7.	Other material information		59
	7.1	Drillsearch options	59
	7.2	Disclosure of interests of certain persons	59
	7.3	Disclosure of fees and benefits received by certain persons	59

page 6

	7.4 Consents	60
	7.5 Broker commission	60
	7.6 Other benefits	60
	7.7 No escalation agreements	60
	7.8 Expiry date	60
	7.9 Other material information	61
8.	Definitions and interpretation	62
	8.1 Definitions	62
	8.2 Interpretation	64
9.	Approval of Bidder’s Statement	65
Annexure A – The Offer		66
Annexure B - Beach’s ASX announcement of takeover bid		78
Annexure C – Beach’s ASX announcements since the 2008 annual report		81
Annexure D – Drillsearch’s announcements since the 2008 annual report		84
Corporate directory		87

page 7

Features of the Offer

This summary provides an overview of the Offer and should be read together with the detailed information set out in the rest of this Bidder’s Statement.

Features of the Offer:

Offer

Beach is offering to acquire all of your Drillsearch shares. You are offered one Beach Share for every 27 Drillsearch Shares you hold rounded up.

Closing Date

The Offer is scheduled to close at 5:00pm Adelaide time on [#] 2009 unless extended in accordance with the Corporations Act.

Payment Terms

If you accept the Offer and the contract resulting from your acceptance becomes unconditional, Beach will issue Beach Shares to you on or before the earlier of:

one month after you accept this Offer or, if the Offer is subject to a defeating condition when you accept it, within one month of the contract resulting from your acceptance becoming unconditional (whichever is the later); and
21 days after the Offer closes.

If you are a Foreign Shareholder, the Beach Shares to which you would have otherwise been entitled will be sold on your behalf and the proceeds of sale sent to you – see Annexure A.

Brokerage You will not pay brokerage or stamp duty if you accept. Any such costs will be paid by Beach.

Conditions

The Offer is subject to a number of conditions. In summary, these conditions are:

obtaining a relevant interest in at least 90% of Drillsearch Shares ~~minimum acceptance of the Offer;~~
no orders being made by, or applications to, a public authority which restrain or prohibit, or otherwise materially adversely impact on the Offer or the completion of any transaction contemplated by the Offer;
Drillsearch not issuing additional shares to any party, including to shareholders of 3D Oil Limited who accepted Drillsearch’s takeover offer for 3D Oil Limited other than 60 million Drillsearch Shares to CPC Energy Limited in relation to the acquisition by Drillsearch of an equity interest in Tintaburra Block (ATP 299P) and on the exercise of options existing at the Announcement Date;
no change, event or condition occurring, being announced or becoming known to Beach which has had, or is reasonably likely to have, a material adverse effect on Drillsearch;
no material acquisitions or disposals of assets by Drillsearch;
no declaration or payment of dividends or distribution of capital by Drillsearch;
~~the All Ordinaries Index does not fall below 3,000;~~

page 8

no Prescribed Occurrence occurring.

Frequently Asked Questions

If you have further questions please call the Offer Information Helpline on 1800 171413 (toll-free) from within Australia or on +61 8 8232 8648 from outside Australia.

Who is making the Offer?

Beach Petroleum Limited has made the Offer. Beach is an Australian listed company (ASX code: BPT) and is one of the top ten oil and gas exploration and production companies in Australia.

Why has the Offer been made?

What will I receive if I accept the Offer?

If you accept the Offer you will receive one Beach Share for every 27 Drillsearch Shares you hold (rounded up).

How do I accept the Offer?

To accept the Offer for all of your Drillsearch shares:

for CHESS Holdings of Drillsearch Shares you should either:
- instruct your stockbroker or other Controlling Participant to accept on your behalf; or
- complete the accompanying Acceptance Form and send the completed Acceptance Form directly to your broker or other Controlling Participant before the end of the Offer Period; or
complete, sign and return the Acceptance Form and lodge it by returning it to the address indicated on the form before last day of the Offer Period. For Issuer Sponsored Holdings of Drillsearch Shares you should complete, sign and return the accompanying Acceptance Form in accordance with the instructions on the form;
if you are a broker or a ASTC participant, to accept the Offer you must initiate acceptance in accordance with the requirements of the ASTC Settlement Rules before the end of the Offer Period;
for detailed instructions on how to accept this Offer see section 4 of The Offer in Annexure A to this Bidder's

page 9

Statement.

When does the Offer close?

When will I receive the offered Beach Shares?

The Offer is scheduled to close at 5:00pm Adelaide time on [#] 2009 unless extended in accordance with the Corporations Act.

If you accept the Offer and the contract resulting from your acceptance becomes unconditional, Beach will issue Beach Shares to you on or before the earlier of:

one month after you accept this Offer or, if the Offer is subject to a defeating condition when you accept it, within one month of the contract resulting from your acceptance becoming unconditional (whichever is the later); and
21 days after the Offer closes.

If you are a Foreign Shareholder, the Beach Shares to which you would have otherwise been entitled will be sold on your behalf and the proceeds of sale sent to you – see Annexure A.

Will I pay brokerage or stamp duty if I accept?

What conditions attach to the Offer?

You will not pay brokerage or stamp duty if you accept. Any such costs will be paid by Beach.

The Offer is subject to a number of conditions. In summary, these conditions are:

obtaining a relevant interest in at least 90% of Drillsearch Shares ~~minimum acceptance of the Offer;~~
regulatory approvals are obtained;
Drillsearch not issuing additional shares to any party, including to shareholders of 3D Oil Limited who accepted Drillsearch’s takeover offer for 3D Oil Limited other than 60 million Drillsearch Shares to CPC Energy Limited in relation to the acquisition by Drillsearch of an equity interest in Tintaburra Block (ATP299P) and on the exercise of options existing at the Announcement Date;
no orders being made by, or applications to, a public authority which restrain or prohibit, or otherwise materially adversely impact on the Offer or the completion of any transaction contemplated by the Offer;
no change, event or condition occurring, being announced or becoming known to Beach which has had, or is reasonably likely to have, a material adverse effect on Drillsearch;
no material acquisitions or disposals of assets by Drillsearch;
no change of control of Drillsearch or the change of rights

page 10

in respect to material assets of Drillsearch;

~~the All Ordinaries Index not falling below 3000;~~
no declaration or payment of dividends or distribution of capital by Drillsearch;
no Prescribed Occurrence occurring.

What are Beach’s intentions?

Beach is seeking to acquire all of the share capital of Drillsearch. If it obtains a relevant interest in at least ~~acquires~~ 90% of Drillsearch Shares ~~or more~~ it intends to compulsorily acquire the balance.

Subject to the successful completion of the Offer and Beach acquiring 100% of Drillsearch, Beach intends to:

undertake a full review of the operations of the combined Beach/Drillsearch;
remove Drillsearch from the official list of ASX; and
seek to maximise the performance of the business operations under the management of Beach.

What are the risks associated with owning Beach Shares?

Section 5 of this Bidder’s Statement provides information regarding the risks associated with owning Beach Shares.

What are the tax implications of accepting the Offer?

The tax implications for most Drillsearch shareholders of accepting the Offer are summarised in general terms in section 6 of this Bidder’s Statement.

You should, however, obtain your own tax advice regarding the tax implications of accepting the Offer.

What happens if I do not accept the Offer?

Can I withdraw my acceptance?

Can Beach extend the Offer Yes, the Offer Period can be extended at Beach’s election. period? Drillsearch shareholders will be sent written notice of any extension, and the extension will be announced to the ASX.

Can I sell my Drillsearch

Yes, but you may incur brokerage costs and GST if you do. If you have already accepted the Offer, you will be unable to settle any

page 11

shares on market?

subsequent sale of your Drillsearch Shares, subject to you being entitled to withdraw your acceptance - see “Can I withdraw my acceptance?” above.

page 12

Detailed Reasons Why You Should Accept

1. Attractive offer price

a 21% premium to Drillsearch Shares' closing price of $0.025 per share on the day before the Announcement Date;
a 46% premium to Drillsearch Shares' one month volume weighted average price of $0.0207 to the Announcement Date; and
a 50% premium to Drillsearch Shares' three month volume weighted average price of $0.0201 to the Announcement Date.

2. Step up to a larger company

Benefits of a larger company include:

Beach being a member of the S&P/ASX 200 index and having a number of institutional shareholders. This gives Beach potentially significantly greater access to capital at a time of considerable financial and economic volatility and uncertainty on global markets;
being one of the top ten oil and gas producing companies in Australia, Beach is regularly presented with quality energy investment opportunities.

3. Recognised growth potential

4. Greater financial strength

page 13

5. Solid management with a track record of success

Beach has stability and continuity. The chairman, Mr Robert Kennedy, joined Beach in December 1991 as a non-executive director and has been the chairman since 1995.

The directors of Drillsearch have collectively called an extraordinary general meeting, the purpose of which is to remove all directors from the board.

6. Exposure to diverse asset portfolio

You would receive the benefits of Beach’s diversified exploration and production portfolio across a range of geographical regions.

Beach's production is derived from the Cooper/Eromanga and Gippsland Basins, with first oil production from its Egyptian tenements expected to commence during FY10.

During FY10 Beach expects to participate in the drilling of approximately 60 wells, of which approximately 50 will be located in the Cooper/Eromanga Basin region.

Area	2P Reserves 1 July 2008	Net Prodn FY 2008
	(mmboe)	(mmboe)
Cooper Basin	63	8.1
Gippsland Basin	5.9	0.8
Surat Basin	761	0.4
TOTAL	145	9.3

1 Beach's Surat Basin reserves will reduce to zero on settlement of the Tipton West sale described in section 1.2 of this Bidders Statement.

page 14

7. Consolidation of ownership

The consolidation of ownership interests held in common by Beach and Drillsearch in the Cooper Basin (as illustrated in the map below) would, in Beach's view, deliver greater efficiencies.

==> picture [329 x 329] intentionally omitted <==

Beach is an experienced operator of Cooper Basin assets.

8. Improved share liquidity

	Beach	Drillsearch
Issued shares (at 4 May
2009)	1,036,284,644	1,668,431,597
Total Volume 12 Months
to 4 May 2009	1,726,675,047	561,010,919
As a % of Issued shares	167%	33%
Average Daily Volume	6,906,700	2,208,704
As a % of Issued shares	0.67%	0.13%
Average Daily Turnover
(A$)	6,985,761	96,205

page 15

9. A history of regularly paying dividends

Beach has regularly paid a dividend as illustrated in the following table:

Years	Period	Dividend per
		Share(cents)
2009	Interim	0.75
2008	Final	1.0
2008	Interim	0.75
2007	Final	1.00
2007	Interim	0.75
2006	Final	1.0
2006	Interim	0.5
2005	Final	0.5
2005	Interim	1.0
2004	Final	0.5
2004	Interim	0.5
2003	Final	0.5
2003	Special	0.5
2003	Interim	0.5
2002	Final	0.5

Risks of not accepting

Drillsearch Shares may revert to the price at which they were trading before the Offer was announced (or possibly even lower).

If you do not accept Beach’s Offer for Drillsearch, and no superior offer is made, there are factors that you should consider, including;

the risk that Beach’s relevant interest in Drillsearch of 13.2% is large enough to form a blocking stake which would prevent another bidder from attaining 100% of Drillsearch without Beach’s support, thereby reducing the chance of a counter bid emerging. This risk could increase should Beach successfully acquire an additional interest through this Offer;
the fact that Drillsearch made losses from ordinary activities of $5.5 million in the six months to December 2008, while Beach made a profit from ordinary activities of $127.5 million over the same period;
the potential for your investment in Drillsearch to continue to be exposed to the inherently higher risks of a smaller company operating in the capital intensive oil and gas industry, including greater vulnerability to:
funding and capital investment risk;
operating and technical risk;
exploration and development risk; and
environmental and community risks.

page 16

1. Profile of Beach

1.1 Overview of Beach

Beach is a long established oil and gas exploration and production company, based in Adelaide, South Australia and listed on ASX.

Beach significantly bolstered its position in the Australian oil and gas market in 2006 with its acquisition of Delhi Petroleum Pty Limited group for more than $500 million.

Beach also aims to diversify its energy mix, most notably through its participation in geothermal energy exploration.

1.2 Principal activities of Beach

Cooper/Eromanga Basin

page 17

Beach is associated with Drillsearch in three joint ventures in the South Australian western Cooper/Eromanga Basin, namely PEL's 91, 106 and 107.

Exploration in PEL 91 has proceeded more slowly. Beach has drilled four wells in PEL 91, three of which were plugged and abandoned, although sub-commercial oil was encountered - in one of these wells. The fourth well, Udacha 1, was a gas discovery in the Patchawarra Formation with mean recoverable gas reserves of approximately 4.9 BCF (Udacha-1 was drilled under a farmin arrangement with several other parties which reduced Drillsearch's equity in the Udacha field to 32.5% and Beach's equity to 15%).

Conversely, should both of the wells to be drilled this year fail, it is likely that there will be no further drilling by Beach in PEL 91 in the foreseeable future.

page 18

Completion and production testing of Brownlow-1 and Canunda-1 is scheduled for June 2009, in order to confirm reserves and commerciality. This work will complete Beach's farmin * program in the block .

			Gross Recoverable Sales	Gas (BCF)

		P90**	P50***	P10****	Mean
	Middleton	1.7	4.0	9.6	5.0
	Brownlow	1.2	3.8	12.6	5.9
	Canunda	1.5	3.2	6.6	3.7
Udacha (PEL 91)		1.9	4.1	8.8	4.9

Note: Brownlow & Canunda reserves are subject to confirmation by production testing, scheduled to commence in June 2009.

page 19

PEL 107 was granted in 2003. Since that time the joint venture has drilled eight exploration wells and acquired approximately 390km[2] of 2D seismic and 125km[2] of 3D seismic in this PEL - resulting in only one discovery (Kiana 1). Due to the poor drilling success rate and lack of sizeable, low risk prospects, Beach considers the remaining prospectivity in the PEL to be low.

The Kiana oilfield is located on the eastern part of PEL 107 and as at 30 June 2007 had a net 2P oil remaining reserves of 34,500 barrels.

The map below shows the location of Beach's interests in the Cooper/Eromanga Basin.

==> picture [453 x 350] intentionally omitted <==

Gippsland Basin

Production during the March 2009 quarter averaged 2,408 barrels of oil per day, net to Beach.

page 20

==> picture [378 x 235] intentionally omitted <==

Surat Basin

$260 million cash - payable on completion;
$70 million of Arrow Energy Limited's shares as listed on the ASX - issued on completion;
up to $40 million cash for the booking of additional gross 3P gas reserves;
$15 million cash upon gas owned by Arrow Energy Limited supplying any liquefied natural gas (LNG) project no later than 31 December 2016; and
$15 million cash upon any LNG project producing an annualised equivalent of 1 million tonnes per annum of LNG using gas supplied from Arrow Energy Limited tenements no later than 31 December 2017.

The transaction ~~is scheduled for completionc~~ ompleted ~~in~~ on 20 May 2009. Selling its interests in the Tipton West assets will yield Beach a profit of approximately $276 million (before tax) in this financial year.

The sale of the asset for up to $400 million represents a very significant return of over 11 times Beach's original investment.

Egypt

In 2008, Beach acquired a 20% interest in each of the North Shadwan and South East July Concessions, in the Gulf of Suez, Egypt.

The North Shadwan Concession is operated by BP Exploration (Delta) Limited and contains three existing undeveloped oil discoveries and several attractive exploration prospects.

page 21

==> picture [336 x 339] intentionally omitted <==

Other Exploration

Beach holds other exploration interests offshore Australia, New Zealand and Spain and expects to finalise acquisition of exploration tenements in Albania and Tanzania during FY10.

1.3 Beach’s goals and strategies

Beach’s approach of increasing reserves and production through exploration and acquisition has driven its growth to be among the top Australian listed petroleum producers.

Beach will continue to seek to drive growth in its existing business by:

maximising economic return from its producing assets;

page 22

expanding through exploration within its existing portfolio; and
diversifying into new regions.
Beach’s achievements can be measured in terms of:
market capitalisation;
recognition and awards;
integrity in corporate governance;
petroleum production and reserves;
exploration success;
profitability and earnings;
total shareholder return relative to its peers;
responsibility as a corporate citizen; and
ability to retain and attract good people.

These performance indicators will continue to be framed by Beach’s core values of teamwork, integrity and performance.

1.4 Financial information

(a) Basis of presentation of historical financial information

(b) Current financial year

page 23

==> picture [355 x 198] intentionally omitted <==

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

Gross Revenue
800
700
600
500
$ million 400
300
200
100
0
FY04 FY05 FY06 FY07 FY08
----- End of picture text -----

==> picture [355 x 199] intentionally omitted <==

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

Net Profit After Tax
120
100
80
60
$ million
40
20
0
FY04 FY05 FY06 FY07 FY08
----- End of picture text -----

page 24

==> picture [355 x 198] intentionally omitted <==

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

Operating Cash Flow
250
200
150
$ million
100
50
0
FY04 FY05 FY06 FY07 FY08
----- End of picture text -----

(d) Future performance

1.5 Information about Beach’s issued securities

a) Beach’s issued securities

As at the date of this Bidder’s Statement the issued securities of Beach consist of:

1,036,284,644 Beach Shares;
102,555,626 listed options over unissued Beach Shares; and
17,874,697 unlisted options over unissued Beach Shares.

Details of issues of Beach Shares since 30 June 2008 are as follows:

Issue	Date	Price	Number Issued	Amount Raised
		(A$)		(A$)
Employee	18/07/08	1.220	4,411,430	5,381,945
Share Issue
Share	30/07/08	1.430	1,215,894	1,738,728
Purchase
Plan

page 25

Employee	15/09/08	0.934	309,500	289,073
Share Issue
Option	03/10/08	2.00	39	78
Conversion
DRP	24/10/08	0.903	3,309,811	2,988,759
Employee	07/11/08	0.823	50,000	41,150
Share Issue
Employee	22/12/08	0.834	36,850	30,733
Share Issue
Option	16/01/09	2.00	3	6
Conversion
Employee	20/03/09	0.77	36,850	28,375
Share Issue
DRP	20/04/09	0.866	2,360,297	2,044,017

b) Substantial shareholders

As at the date of this Bidder’s Statement the following entity had notified Beach of substantial shareholdings in Beach:

Substantial Shareholder	Number of Shares	Voting Power
Mathews Capital Partners	107,697,297	12.09%

c) Recent trading in Beach Shares

The latest recorded sale price for Beach Shares on ASX before the date on which this Bidder’s Statement was lodged with ASIC was $0.785 on 14 May 2009.

The latest sale price for Beach Shares on ASX before the Announcement Date was $0.815 on 4 May 2009.

The highest and lowest sale price for Beach Shares on ASX during the four months before the Bidder’s Statement was lodged with ASIC were:

• highest - $0.97 on 6 January 2009 • lowest - $0.695 on 6 February 2009.

d) Dividends

The following unfranked dividends have been paid by Beach in the 2005 to 2009 financial years:

Years	Period	Dividend per Share
		(cents)
2009	Interim	0.75
2008	Final	1.0
2008	Interim	0.75

page 26

2007	Final	1.00
2007	Interim	0.75
2006	Final	1.0
2006	Interim	0.5
2005	Final	0.5
2005	Interim	1.0
2004	Final	0.5
2004	Interim	0.5
2003	Final	0.5
2003	Special	0.5
2003	Interim	0.5
2002	Final	0.5

e) Rights and liabilities attaching to Beach Shares

The Beach Shares received as consideration under the Offer will rank equally with existing Beach Shares.

The rights and restrictions attaching to Beach Shares are set out principally in Beach’s constitution and the Corporations Act.

A summary of the rights follows.

Dividend entitlement

The Beach Shares received as consideration under the Offer will participate in all dividends declared after their allotment and rank equally with existing Beach Shares.

Voting rights

page 27

Transfer of shares

Generally, Beach Shares are freely transferable. Where the Listing Rules or the law requires Beach to do so, the Directors must decline to register a transfer.

Future increases in capital

Variation of rights

Rights on winding up

In the event of a winding up of Beach:

any surplus will be divided among the shareholders in the proportion that the amount paid up on the Beach Shares bears to the total amount paid up on all Beach Shares on issue;
surplus assets in kind may, with the sanction of a special resolution, be divided among shareholders in such proportion as the liquidator may determine.

f) Dividend reinvestment plan

A copy of the DRP is available on request to the company secretary.

Some of the key features of the DRP are listed below:

1) Eligibility

all Beach shareholders who have registered addresses or places of residences in Australia or New Zealand;

2) Participation

page 28

3) Price

4) Shares issued under the DRP

5) Modification and termination by the Directors

the DRP may be varied, suspended or terminated at any time by the Directors;

6) Costs

no brokerage, commission or other transaction costs and no stamp duty or other duties are payable by participants on Beach Shares issued under the DRP.

g) Executive long term incentive plan (LTI)

Beach has an executive long term incentive plan approved at the shareholders’ general meeting on 23 November 2006.

Participants in the plan are offered options or rights to subscribe for Beach Shares which become exercisable at the end of an exercise date only if stated exercise conditions have been met.

An option that has not been exercised will lapse and have no further rights on the first to occur of:

the expiry date for the option;
any VPC is not satisfied or waived;

page 29

the participant has given notice that he or she wishes the option to lapse;
the Directors determine in their discretion that the option will be forfeited because the participant has been dismissed for acting fraudulently or dishonestly or has committed a breach of his or her obligations to Beach; or
the participant ceases to be employed by Beach.

Until such time as options vest they cannot be transferred, encumbered or otherwise dealt with. Options are not quoted on ASX.

Currently under the LTI there are;

8,091,552 options on issue to acquire Beach Shares at an exercise price of $1.406 per share;
4,439,958 options on issue to acquire Beach Shares at an exercise price of $1.422 per share;
5,343,187 rights on issue to acquire Beach Shares for nil consideration but subject to achievement of performance criteria.

h) Employee Incentive Plan (EIP)

Currently Beach has 14,185,635 Beach Shares on issue under the EIP.

A summary of the rules of the EIP is set out below. Copies of the EIP rules are available on request to the company secretary.

The rules of the EIP in respect of share issues are summarised as follows:

the EIP is open to permanent employees of Beach or a controlled entity of Beach which will include a director holding salaried employment in Beach or a controlled entity of Beach (Eligible Persons);
under the EIP, the Directors at their discretion may offer Beach Shares to Eligible Persons. Any offer to a Director must be first approved by shareholders;
the shares issued under the EIP have the same rights as other Beach Shares subject to restrictions on transfer, which apply where a loan made by Beach remains unpaid;
the subscription price for shares shall be the market value of Beach Shares on the day of offer;
Beach at the time of making an offer to purchase shares may also provide an interest free loan to assist with the purchase of those shares. Unless otherwise specified in the offer document, the terms of the loan will be:
interest free and for a term of 10 years;
if a disqualifying event (as defined in the EIP Rules) occurs, Beach may sell the shares and after costs apply the sale proceeds to repay

page 30

by accepting an offer of shares in accordance with the EIP, a participant agrees to be bound by the rules or other conditions contained in the offer document;
the EIP rules must comply with the Listing Rules and the Corporations Act requirements.

1.6 Disclosing entity information

During the Offer Period, Beach will provide free of charge the following documents to any person upon request:

Beach’s constitution;
Beach’s annual report for the year ended 30 June 2008 (being the annual report most recently lodged with ASX before this Bidder’s Statement was lodged with ASIC);
Beach’s half yearly report for the six month period to 31 December 2008;

page 31

any continuous disclosure notice given to ASX by Beach after the lodgement with ASIC of Beach’s 2008 annual report and before lodgement of this Bidder’s Statement with ASIC. A list of such notices is provided in Annexure C; and
any continuous disclosure notice given to ASX by Drillsearch after the lodgement with ASIC of Drillsearch's 2008 annual report and before lodgement of this Bidder’s Statement with ASIC. A list of such notices is provided in Annexure D.

The text of the announcement given to ASX by Beach in relation to this Offer is attached in Annexure B.

1.7 Directors of Beach

Details of Directors of Beach are set out below:

Robert Michael Kennedy

Non-Executive Chairman

Reginald George Nelson

Managing Director

page 32

John Charles Butler

Non-Executive Director

Franco Giacomo Moretti

Non-Executive Director

Hector Mackenzie Gordon

Executive Director/Chief Operating Officer

Glenn Stuart Davis

Non-Executive Director

page 33

Neville Foster Alley

Non-Executive Director

Dr Alley’s contribution to the board is his technical and commercial knowledge of the resources industry.

1.8 Directors’ interests in Beach

The relevant interest of each Director in Beach marketable securities as at the date of this Bidder’s Statement is as follows:

Director	Beach Shares	Options	Options
R M Kennedy	1,257,881	125,789	(listed)
R G Nelson	2,301,903	230,192	(listed)
		7,267,220	(LTI)
		2,500,000	(LTI rights)
J C Butler	128,490	12,850	(listed)
F G Moretti	174,161	17,417	(listed)
H M Gordon	764,434	76,445	(listed)
		2,348,272	(LTI)
		780,000	(LTI rights)
G S Davis	---	---
N F Alley	---	---

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1.9 Interest in Drillsearch Shares

Beach's voting power in Drillsearch is 13.2% because of its direct relevant interest and conditional relevant interest in Drillsearch Shares totalling 13.2% of the issued shares of Drillsearch.

1.10 Summary of pre-bid acceptance agreements

Under the pre-bid acceptance agreements, the Vendors agree to accept the Offer. The prebid acceptance agreements will terminate if (among other things):

before acceptance of this Offer by the Vendor, another bidder:
1) makes offers under a takeover bid for the whole of Drillsearch;
2) makes an offer at a price per Drillsearch Share higher than the then offer price;
3) makes an offer which is or has become free from defeating conditions other than a Prescribed Occurrence or FIRB approval;

4) vary this Offer in accordance with section 650D of the Corporations Act to increase the offer price to equal to or greater than those offers; and
5) waive any remaining defeating conditions;
before acceptance of the Offer by the Vendor, Drillsearch announces a scheme of arrangement under which a third party will become the controlling shareholder of Drillsearch and the shareholders will dispose of all of the Drillsearch Shares to the third party at a price per Drillsearch Share higher than the then current offer price and Beach does not, on or before the 23 Business Days before the scheme meeting:
vary this Offer in accordance with section 650D of the Corporations Act to increase the offer price to equal to or grater than the scheme price; and
waive any remaining defeating conditions; or

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after the Vendor accepts the Offer, Beach validly withdraws this Offer or this Offer otherwise expires or lapses in accordance with its terms and conditions.

1.11 Directors' interest in Drillsearch Shares

No Director or other associate of Beach has a relevant interest in Drillsearch Shares.

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2. Profile of Drillsearch and other information about Drillsearch’s Shares

2.1 Overview

2.2 Principal activities of Drillsearch

Australian production interests

Drillsearch's Australian oil production is primarily derived from the Cooper/Eromanga Basin in south-west Queensland.

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Canadian production interests

Cooper Basin gas and condensate development interests

Drillsearch holds interests in a number of undeveloped gas resources in PEL's 91 and 106 in the western Cooper Basin.

Particulars of the Middleton, Udacha, Brownlow and Canunda discoveries in which Beach ' holds an interest are set out in section 1.2 of this Bidder s Statement ~~.In PEL106 Drillsearch has participated in eleven wells, resulting in ten gas and condensate discoveries.~~

~~Of the ten discoveries, six have been completed and tested. The most recent discoveries were made in the December 2008 quarter by Drillsearch's joint venture partner, Beach, which drilled two exploration wells that resulted in gas discoveries.~~

Reserves

Exploration interests

2.3 Directors of Drillsearch

As at the date of this Bidder's Statement, the directors of Drillsearch are:

a) Peter Simpson, Chairman.
b) Russell Langusch, Director.
c) Jim McKerlie, Director.
d) Peter Wicks, Director.

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e) Dato Ben Kai Choo, Director.

On 18 May 2009 Drillsearch announced the appointment of Brad Lingo as a non-executive director effective 19 May 2009 and as Managing Director effective 15 June 2009.

2.4 Drillsearch securities on issue

According to filings with ASX, at the date of this Bidder's Statement, the issued securities of Drillsearch consist of:

1,728,431,597 fully paid ordinary shares;
57,500,000 options over unissued Drillsearch Shares.

2.5 Drillsearch's share price

The latest recorded sale price of Drillsearch Shares on ASX before the date on which this Bidder's Statement was lodged with ASIC was $0.028 on 14 May 2009.

The latest sale price of Drillsearch shares before the Announcement Date was $0.025.

2.6 Dividends

Since listing on ASX on 2 July 1987, Drillsearch has not paid a dividend.

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3. Beach’s intentions in relation to Drillsearch

3.1 Introduction

the continuation of the business of Drillsearch;
any major changes to be made to the business of Drillsearch, including any redeployment of the fixed assets of Drillsearch; and
the future employment of the present employees of Drillsearch.

3.2 Review

3.3 Intentions upon on obtaining acquisition of 90% or more of the D rillsearch Shares

This section 3.3 sets out Beach's current intentions if it is entitled to a relevant interest of at leas ~~tacquires~~ 90% ~~or more o~~ f ~~the D~~ rillsearch Shares.

a) Compulsory acquisition

If Beach becomes entitled to compulsorily acquire Drillsearch Shares under Part 6A.1 Division 1 of the Corporations Act, it intends to exercise these rights.

b) Directors

c) ASX Listing

At the conclusion of the compulsory acquisition process, Beach intends to arrange for Drillsearch to be removed from the official list of ASX (subject to any required approvals on

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the part of ASX), thereby eliminating the corporate administration costs associated with maintaining Drillsearch as a listed company.

d) Operations and assets

Beach has not had access to all the information relevant to making a final decision regarding what changes, if any, will be made to Drillsearch's operations.

The extent of the review is not able to be determined at this stage, although it is likely to involve some, or all, of the following:

consolidating Drillsearch's Sydney office into the Adelaide office of Beach;
assessing Drillsearch's assets on an asset by asset basis to assess performance, prospects, commitments & profitability;
eliminating duplication of functions where it is economic to do so.

e) Employees

The status of Drillsearch's existing employees will be considered as part of the review outlined in section 3.3(d).

3.4 Intentions upo n obtaining acquisition of less than 90% of the D rillsearch Shares

a) ASX listing

b) Directors

c) Operations and assets

If, following the close of the Offer, Drillsearch becomes a controlled entity but not a whollyowned subsidiary of Beach, it is the present intention of Beach to attempt to procure that the

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Drillsearch board implements the objectives and goals outlined in section 3.3 to the extent possible and appropriate, recognising the legal duties to other Drillsearch Shareholders.

d) Limitations in giving effect to intentions

The ability of Beach to implement the intentions set out in this section 3.4 ~~3~~ will be subject to the legal obligations of Drillsearch directors to have regard to the interests of Drillsearch and all Drillsearch Shareholders, and the requirements of the Corporation Act and the Listing Rules relating to transactions between related parties and conflicts of interest. Drillsearch will only make a decision on the above mentioned courses of action following legal and financial advice in relation to those requirements.

3.5 Intentions generally

Except for the changes and intentions set out in this section 3, including the review described in sections 3.2 and 3.3, Beach intends, based on the information presently known to it:

to continue the business of Drillsearch;
not to make any material changes to the business of Drillsearch, including any redeployment of the fixed assets of Drillsearch; and
to continue the employment of Drillsearch's employees.

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4. Overview of the combined Beach/Drillsearch

4.1 Combined Group Disclaimer

4.2 Pro-forma balance sheet

Financial information is provided for illustrative purposes only. In considering the pro-forma information, holders of Drillsearch Shares must take the following matters into account:

(a) the pro-forma balance sheet has been prepared by aggregating the last audit reviewed balance sheet of Beach as at 31 December 2008 and Drillsearch as at 31 December 2008. In addition, a number of pro-forma adjustments have been made to reflect material subsequent transactions as follows:
the staged acquisition of Drillsearch and estimated transaction costs;
the execution by Beach of a Share Sale Agreement to sell its 40% interest in the Tipton West Joint Venture coal seam gas assets to Arrow Energy Ltd as announced to the ASX on 3 April 2009;
the issue of 60,000,000 ordinary shares by Drillsearch in consideration for the acquisition of a further 1% interest in the Tintaburra joint venture;
the on market sale of 47,910,488 Drillsearch shares held by Great Artesian Oil and Gas Limited (Great Artesian), a wholly owned subsidiary of Drillsearch for $1,400,109. These shares were classified as treasury stock on the merger of Drillsearch and Great Artesian in August 2008; and
the recognition of the interim dividend paid by Beach in April 2009.

Details of these adjustments are set out in the notes to the pro-forma balance sheet;

(b) the actual date of the acquisition will be later than 31 December 2008. In accordance with the requirements of AASB 3 – Business Combinations it will be necessary to assess the fair value of the net assets of Drillsearch on completion of the acquisition. Consequently the actual fair values may differ from those reflected in the pro-forma balance sheet and can only be determined on the actual date of acquisition and following a full assessment of the assets and liabilities acquired;
(c) the pro-forma balance sheet is indicative only. The Directors have drawn their conclusions based on the known facts and other publicly available information as at the date of this Bidder’s Statement. If the facts, circumstances, assumptions and other information should prove different to that described, the conclusions and outcome may change accordingly.

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Pro-forma balance sheet of Beach and Drillsearch as at 31 December 2008	Pro-forma balance sheet of Beach and Drillsearch as at 31 December 2008	Pro-forma balance sheet of Beach and Drillsearch as at 31 December 2008

	Beach Balance Sheet as at 31 Dec 2008	Drillsearch Balance Sheet as at 31 Dec 2008	Pro-forma adjustments	Combined Group Balance Sheet as at 31 Dec 2008
	$'000	$'000	$'000	$'000
Current assets
Cash and cash equivalents	139,236	10,980	253,686	403,902
Trade and other receivables	84,462	5,958	(3,285)	87,135
Inventories	88,007	3,069	-	91,076
Financial assets - held for trading	13,166	-	-	13,166
Derivative financial instruments	41,213	-	-	41,213
Other	7,130	-	-	7,130
Total current assets	373,214	20,007	250,401	643,622

Non-current assets
Other receivables	-	999	-	999
Available for sale financial assets	2,297	-	67,703	70,000
Derivative financial instruments	9,488	-	-	9,488
Plantpropertyand equipment	388,149	38,178	(19,640)	406,687
Oil andgas development assets	651,749	-	(27,919)	623,830
Exploration and evaluation expenditure	287,426	29,612	(33,343)	283,695
Deferred tax assets	52,396	526	(395)	52,527
Total non-current assets	1,391,505	69,315	(13,594)	1,447,226
Total assets	1,764,719	89,322	236,807	2,090,848

Current liabilities
Trade and otherpayables	109,161	5,351	(1,249)	113,263
Derivative financial instruments	11,840	-	-	11,840
Provisions	1,861	90	-	1,951
Taxpayable	25,871	4,520	58,700	89,091
Loans and borrowings	59,707	-	-	59,707
Total current liabilities	208,440	9,961	57,451	275,852

Non-current liabilities
Loans and borrowings	136,942	-	-	136,942
Deferred tax liabilities	136,240	154	7,201	143,595
Derivative financial instruments	12,115	-	-	12,115
Provisions	79,007	3,837	(1,318)	81,526
Total non-current liabilities	364,304	3,991	5,883	374,178
Total liabilities	572,744	13,952	63,334	650,030
Net assets	1,191,975	75,370	173,473	1,440,818

Equity
Issued capital	948,149	93,776	(42,230)	999,695
Reserves	(4,063)	1,107	11,237	8,281
Retained earnings/(accumulated losses)	247,889	(21,549)	204,466	430,806
Total equity attributable to equity holders of theparent	1,191,975	73,334	173,473	1,438,782
Minorityinterest	-	2,036	-	2,036
Total equity	1,191,975	75,370	173,473	1,440,818

The above balance sheet is to be read in conjunction with the accompanyingnotes.

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Notes to the Pro-forma balance sheet

Acquisition of Drillsearch– Net impact ($28,968)
Sale of Tipton West – Net impact $205,015
Tintaburra asset acquisition through the Issue of 60,000,000 ordinary shares by Drillsearch – Net impact $1,740
Sale of 47,910,488 Drillsearch Shares classified as treasury stock - Net impact $1,400
Beach interim dividend April 2009 – Net impact ($5,714)

The impact of these adjustments on the related balance sheet accounts are as follows:

Cash and Cash Equivalents - Tipton West proceeds - Estimated Drillsearch transaction costs - Sale of treasury stock by Drillsearch - Interim dividend (cash component) Trade and Other receivables - Tipton West sale Available for sale financial assets - Tipton West proceeds – Arrow Energy Ltd shares - Reclassification of Beach’s existing shareholding of Drillsearch to an investment in subsidiary Property, Plant and Equipment - Tipton West sale Oil and Gas development assets - Tipton West sale - Tintaburra asset acquisition via share issue Exploration assets - Tipton West sale - Fair value adjustment – Drillsearch acquisition Deferred tax assets - Tipton West sale Trade and other payables - Tipton West sale	$’000 260,000 (2,000) 1,400 (5,714)
	253,686
	(3,285)
	70,000 (2,297)
	67,703
	(19,640)
	(29,659) 1,740
	(27,919)
	(8,672) (24,671)
	(33,343)
	(395)
	(1,249)

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Tax Payable - Tipton West sale Deferred tax liabilities - Tipton West sale Provisions - Tipton West sale Issued capital - Shares issued under Beach Dividend Reinvestment Plan – April 2009 - Shares issued by Drillsearch as consideration for the Tintaburra acquisition - Proceeds from the sale of treasury stock by Drillsearch - Fair value of Beach shares issued to existing Drillsearch shareholders as part of this Offer - Consolidation adjustment to eliminate the issued capital of Drillsearch Reserves - Drillsearch acquisition – reclassification of previous decrements recognised through available for sale reserve to the income statement - Consolidation adjustment to eliminate the pre- acquisition reserves of Drillsearch Retained earnings/(accumulated losses) - Provisional Tipton West profit after tax - Drillsearch acquisition – previous decrements recognised through available for sale reserve - Interim dividend paid - Beach - Drillsearch acquisition transaction costs - Consolidation adjustment to eliminate the pre- acquisition reserves of Drillsearch	$'000 58,700
	7,201
	(1,318)
	2,040 1,740 1,400 49,506 (96,916)
	(42,230)
	12,344 (1,107)
	11,237
	205,015 (12,344) (7,754) (2,000) 21,549
	204,466

Other Pro-forma assumptions:

the Tipton West sale ~~has not been c~~ ompleted on 20 May 200 ~~9at the date of this Offer as it is subject to outstanding conditions precedent.~~ The estimated proceeds from the sale included in this pro-forma does not include any contingent payments noted in Beach's ASX release on 3 April 2009 associated with the booking of additional gross 3P reserves ($40 million), Arrow Energy Limited supplying a liquefied natural gas project ($15 million) and any LNG project producing 1 million tonnes per annum of LNG using gas supplied by Arrow Energy Limited's tenements ($15 million);
the pro-forma balance sheet does not reflect any adjustments in relation to the Drillsearch takeover offer for 3D Oil Ltd. As at 5 May 2009 Drillsearch has received less than 1% in acceptances since announcing its takeover offer. The scheduled closing date for the offer

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~~is~~ was originally 26 May 2009, however ASIC granted an exemption from section 650C(2) of the Corporations Act to permit Drillsearch to extend the offer period to 9 June 2009;
• 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 Beach;
the pro-forma information has been prepared by aggregating Beach and Drillsearch’s reviewed balance sheet as at 31 December 2008;
the pro-forma adjustments reflect transactions announced by Beach and Drillsearch since 31 December 2008. The pro-forma also excludes the impact of the general trading of Beach and Drillsearch including capital expenditure which has occurred since 31 December 2008. These transactions are not considered to materially impact the net asset position of the pro-forma balance sheet as presented;
the pro-forma balance sheet reflects provisional accounting adjustments. Actual results may change between the date of this Bidders Statement and the completion of the proposed transaction.

4.3 Profile of the Merged Group

Until Beach conducts a review of the combined group's assets and operations (with the benefit of all Drillsearch's information) it is not possible to attribute a value to potential cost savings.

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5. Investment risks

5.1 Introduction

apply to investments generally; and
apply, and will continue to apply, specifically to the business of Beach.

Some of the specific risks can be integrated by use of safe practices and appropriate commercial action while others are likely to remain outside of the control of Beach and its Directors.

5.2 Risks associated with owning Beach Shares

a) General economic climate

b) Global security environment and political risks

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c) Climatic

d) Exploration and development

e) Reserves estimates

f) Negotiation with third parties

licence renewals and work obligations; and
security for rehabilitation of areas of operation within Beach’s tenements;

g) Environmental impact constraints

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Scheme or CPRS) to be implemented by 2011 (although there is still uncertainty as to this date and the final nature of the scheme).

If similar regulatory changes are made in other countries in which Beach operates, there may be similar adverse effects in respect of Beach's business and financial position.

h) Health safety and environment

i) Land access and Native Title risk

Beach has previously successfully negotiated a number of native title claims in relation to some of its existing Cooper Basin licences.

j) Funding and dividends

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k) Insurance

l) Joint venture

m) Gas and oil prices

n) Credit and market risks

(i) Market risk and interest rate volatility

(ii) Counterparty risk

As part of Beach's commercial activities, Beach enters into various contracts with third parties in respect of bank deposits, financial instruments, sales contracts for the

page 51

supply of petroleum and other products, amongst other matters. An inability of counterparties to meet their commitments under such contracts may have an impact on Beach's financial position.

o) Changes in government policy and laws

p) Loss of personnel

q) Stock market volatility

r) Dispute with BW Offshore

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an FPSO vessel to the BMG Project. Costs claimed are in the order of US$90.1 million.

5.3 Risks relating to the Offer

a) Value

Accordingly, the market value of the Beach Shares at the time you receive them may vary significantly from their market value on the date of your acceptance of the Offer.

b) Availability of roll-over relief

c) Sale of Beach Shares

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d) Consequences of Drillsearch not becoming a wholly owned subsidiary

If the Offer results in Beach being entitled to a relevant interest in ~~is accepted in respect of~~ at least 90% of the Drillsearch Shares, Beach will be able to compulsorily acquire the balance of the Drillsearch Shares so that Drillsearch will become a whollyowned subsidiary of Beach.

Beach reserves its rights to declare the Offer free from the minimum acceptance condition (or any other condition). If Beach waives the ~~90% minimum acceptance~~ condition that it obtain a relevant interest in 90% of Drillsearch Shares and it ~~does not~~ receives acceptances to attain a relevant interest in at least 50% ~~in respect of at least 90% o~~ f the Drillsearch Shares, the non-accepting Drillsearch shareholders will retain their Drillsearch Shares so that Drillsearch will not be a wholly-owned subsidiary of Beach. If this occurs, the combined entity’s ability to deal with the assets of Drillsearch will be constrained and there will be further associated costs of having minority shareholders.

e) Merger integration

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6. Tax considerations

6.1 Introduction

6.2 Australian residents holding Drillsearch Shares on capital account

(a) General application of CGT where you choose CGT rollover relief

Drillsearch shareholders who accept the offer may choose CGT rollover relief where the following conditions are satisfied:

1) Beach becomes the owner of 80% or more of Drillsearch Shares as a result of the Offer; and
2) the Drillsearch shareholder would otherwise make a capital gain from the exchange.

Where the shareholder chooses the rollover:

the capital gain the shareholder would otherwise make on disposing of the Drillsearch Shares and acquiring the Beach Shares will be disregarded; and
it calculates the cost base of the Beach Shares by reference to the cost base of its Drillsearch Shares.

Where the Drillsearch shareholder acquired his, her or its Drillsearch Shares (or was deemed to acquire his, her or its shares) before 20 September 1985 or the

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shareholder makes a capital loss from the transfer, CGT rollover relief is not available.

(b) General application of CGT where you do not choose CGT rollover relief

Where the shareholder acquired the Drillsearch Shares (or is treated as having acquired the Drillsearch Shares) before 20 September 1985 the capital gain or loss will be disregarded for tax purposes.

The shareholder may discount a capital gain it makes in certain circumstances. Generally, to be eligible for a discount:

the shareholder must not be a company holding the shares in its own right;
the Drillsearch Shares must have been held (or be deemed to have been held) for at least 12 months before the date the Offer is accepted; and
the shareholder must not have used the indexed cost base in calculating the capital gain.

(c) Drillsearch Shares acquired through an employee share plan

The tax rules relating to employee share plans are complex and are outside the scope of this general taxation outline. However, we note:

there are elections under the employee share plan provisions which may affect the cost base of the Drillsearch Shares; and

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the Offer may result in specific issues relating to vesting periods under the terms of your employee share plan.

Therefore, you should seek your own independent advice on the tax consequences where you acquired your Drillsearch Shares via an employee share plan.

b) Income Tax consequences on disposal of Beach Shares

6.3 Australian resident – shares held on revenue account

6.4 Non-resident shareholders

The tax implications for non-residents holding Drillsearch Shares on revenue account will generally depend on:

whether the shares are held as part of carrying on a business through a permanent establishment in Australia; and

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the impact of any tax treaties Australia has with the overseas country.

6.5 Other Taxation Implications

Shareholders accepting the Offer should also consider the Goods and Services Tax (“GST”) and stamp duty consequences of exchanging their shares.

a) GST consequences

b) Stamp duty consequences

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7. Other material information

7.1 Drillsearch options

Beach's current intention is not to seek to acquire nor enter into arrangements with the holders of Drillsearch options to effect the transfer or cancellation of those options.

7.2 Disclosure of interests of certain persons

a) the formation, or promotion of Beach;
b) property acquired or proposed to be acquired by Beach in connection with its formation or promotions, or the offer of Beach’s Shares; or
c) Beach’s Shares to be issued under the Offer,

except as set out in this Bidder’s Statement and in particular in section 1.8.

7.3 Disclosure of fees and benefits received by certain persons

The Directors have received or are currently entitled to receive the following fees and benefits:

the fees and benefits as disclosed in Beach’s annual report;
director’s and officer’s liability insurance taken out on behalf of Directors; and
the indemnity provided under Beach’s constitution against liability resulting from their services as directors of Beach.

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7.4 Consents

Each person who is named in this Bidder's Statement as acting in a professional capacity for Beach in relation to the Offer:

does not make, or purport to make, any statement in this Bidder's Statement or any statement on which a statement in this Bidder's Statement is based, other than a statement included in this Bidder's Statement with the consent of that person; and
to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Bidder's Statement, other than any statement which has been included in this Bidder's Statement with the consent of that party.

7.5 Broker commission

Beach may offer to pay a commission to brokers who solicit acceptances of Beach’s Offer from their clients.

Any commission payments will be paid only in respect of parcels of Drillsearch Shares held by retail shareholders who accept the Offer.

7.6 Other benefits

accept an Offer under the takeover bid; or
dispose of Drillsearch Shares,

and which is not offered to all holders of Drillsearch Shares under the Offer.

7.7 No escalation agreements

Neither Beach nor any associate of Beach has entered into any escalation agreement that is prohibited by section 622 of the Corporations Act.

7.8 Expiry date

No shares will be issued on the basis of this Bidder’s Statement after the date which is 13 months after the date of the Offer.

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7.9 Other material information

Except as disclosed in this Bidder’ Statement there is no other information that:

is material to the making of the decision by a Drillsearch shareholder whether or not to accept the Offer; and
is known to Beach,

which has not previously been disclosed to Drillsearch shareholders.

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8. Definitions and interpretation

8.1 Definitions

In this Bidder’s Statement and in the Acceptance Form unless the context otherwise appears, the following terms have the meanings shown below:

$ or A$

Australian dollars

Acceptance Form

the acceptance form enclosed with this Bidder’s Statement

Announcement Date

the date of the announcement of the Offer by Beach, being 5 May 2009

ASIC Australian Securities and Investments Commission ASTC

ASX Settlement and Transfer Corporation Pty Ltd ABN 49 008 504 532

ASTC Settlement Rules

the operating rules of the ASTC which govern the administration of the Clearing House Electronic Subregister System

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Drillsearch Share	an ordinary fully paid share in the capital of Drillsearch
Foreign Shareholder	a citizen or resident of a jurisdiction other than Australia
	or New Zealand
FPSO	floating production, storage and offtake
FY	financial year beginning 1 July and ending on 30 June
Holder Identification Number	has the same meaning as in the ASTC Settlement
	Rules
Issuer Sponsored Holding	a holding of Drillsearch Shares on Drillsearch’s issuer
	sponsored subregister
Listing Rules	the Official Listing Rules of ASX, as amended and
	waived by ASX from time to time
LNG	liquefied natural gas
mmboe	million barrels of oil equivalent (in terms of energy)
Offer	the offer for Drillsearch Shares under the terms and
	conditions contained in Annexure A of this Bidder’s
	Statement
Offer Period	the period during which the Offer will remain open for
	acceptance in accordance with section 2 of Annexure A
	to this Bidder’s Statement
Participant	an entity admitted to participate in the Clearing House
	Electronic Sub-register system under Rules 4.3.1 and
	4.4.1 of the ASTC Settlement Rules
PEL	Petroleum Exploration Licence
Prescribed Occurrence	an event listed in section 652C of the Corporations Act
PJ	petajoule
Register Date	the date set by Beach under section 633(2) of the
	Corporations Act, being[ # ]2009
Rights	all accreditations, rights or benefits of whatever kind
	attaching to or arising from Drillsearch Shares directly
	or indirectly at or after the Announcement Date
	(including, but not limited to, all dividends and all rights
	to receive them or rights to receive or subscribe for
	shares, notes, bonds, options or other securities
	declared, paid or issued by Drillsearch or any of its
	subsidiaries)

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8.2 Interpretation

In this Bidder’s Statement and in the Acceptance Form, unless the context otherwise appears:

a) words and phrases have the same meaning (if any) given to them in the Corporations Act;
b) words importing a gender include any gender;
c) words importing the singular include the plural and vice versa;
d) an expression importing a natural person includes any company, partnership, joint venture, association, corporation or other body corporate and vice versa;
e) a reference to a section, annexure and schedule is a reference to a section of and an annexure and schedule to this Bidder’s Statement as relevant;
f) a reference to any statute, regulation, proclamation, ordinance or by-law includes all statutes, regulations, proclamations, ordinances, or by-laws amending, varying, consolidating or replacing it and a reference to a statute includes all regulations proclamations, ordinances and by-laws issued under that statute;
g) headings and boldings are for convenience only and do not affect the interpretation of this Bidder’s Statement;
h) a reference to time is a reference to time in Adelaide, Australia; and
i) a reference to writing includes facsimile transmissions.

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9. Approval of Bidder’s Statement

This Bidder’s Statement has been approved by a resolution passed by the Directors of Beach.

Dated: ~~15 May 20092~~ 9 May 2009

Signed on behalf of Beach Petroleum Limited

................................................................ Bob Kennedy, Chairman

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Annexure A– The Offer

Offer
a) Beach offers to acquire all your Drillsearch Shares on the terms and subject to the conditions set out in this annexure.
b) The consideration offered for every 27 of your Drillsearch Shares is one Beach Share rounded up.
c) If Beach acquires your Drillsearch Shares under this Offer, it will also be entitled to all Rights in respect of your Drillsearch Shares.
d) An offer in this form and bearing the same date is being made to:
- 1) each person registered as the holder of Drillsearch Shares in the register of Drillsearch shareholders as at close of business on the Register Date; and
- 2) any person who becomes registered as the holder of Drillsearch Shares during the period commencing on the Register Date and ending at the end of the Offer Period due to the conversion of, or exercise of rights attached to, other securities convertible into Drillsearch Shares (including Drillsearch options) and which are on issue at the Register Date.
e) If at the time this Offer is made to you, or at any time during the Offer Period, another person is, or is entitled to be, registered as the holder of some or all of your Drillsearch Shares then:
- 1) a corresponding offer will be deemed to have been made to that other person in respect of those Drillsearch Shares;
- 2) a corresponding offer will be deemed to have been made to you in respect of any other Drillsearch Shares you hold to which this Offer relates; and
- 3) this Offer will be deemed to have been withdrawn immediately after that time.
f) If at any time during the Offer Period you are registered or entitled to be registered as the holder of one or more parcels of Drillsearch Shares as trustee or nominee for, or otherwise on account of, another person, you may accept as if a separate offer on the same terms as this Offer had been made in relation to each of those parcels and any parcel you hold in your own right. To validly accept the offer for all of a parcel, you must comply with the procedure in section 653B(3) of the Corporations Act. If, for the purposes of complying with that procedure, you require additional copies of this Bidder’s Statement and the Acceptance Form, please call the Beach Offer information line on 1800 171413 (within Australia) or +61 8 8232 8648 (from outside Australia) to request those additional copies.
g) Beneficial owners whose Drillsearch Shares are registered in the name of a broker, investment dealer, bank, trust company or other nominee should contact that nominee for assistance in accepting this Offer.

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2. Offer Period

a) This Offer will remain open for acceptance during the period that commences on the date of this Offer and ends at 5.00 pm Adelaide time on [#] 2009 unless it is withdrawn or extended in accordance with the Corporations Act.
b) Beach may, in accordance with the Corporations Act but subject to compliance with the procedures specified in section 11, at any time and from time to time before the end of the Offer Period, extend the period during which this Offer remains open for acceptance, by giving written notice of the extension and by making a public announcement of the extension, as described below, and by following the procedures prescribed by section 650C of the Corporations Act. Subject to any rights you may have to withdraw your acceptance of this Offer, Beach also reserves the right to retain until the end of the Offer Period Drillsearch Shares which have been tendered during any periods for which this Offer is extended. During any such extension, your Drillsearch Shares previously tendered and not withdrawn will remain subject to the terms and conditions of this Offer, subject to any rights you may have to withdraw your acceptance of this Offer.

3. Official quotation of Beach Shares

The consideration offered by Beach under the Offer is Beach Shares that will be issued by Beach and rank equally with Beach Shares currently on issue.

4. How to accept this Offer

a) Accept for all your Drillsearch Shares

Subject to section 8, you may only accept this offer for all your Drillsearch Shares.

b) Drillsearch Shares - Issuer Sponsored Holdings

1) complete and sign the enclosed blue Acceptance Form in accordance with the instructions on it; and
2) return the Acceptance Form (where applicable, using the enclosed reply paid envelope if you wish), together with all other documents required by the instructions on it, so that they are received before the end of the Offer Period at one of the addresses indicated on the Acceptance Form.

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c) Drillsearch Shares - CHESS Holdings

1) instruct your Controlling Participant, in accordance with the sponsorship agreement between you and the Controlling Participant, to initiate acceptance of this Offer in accordance with Rule 14.14 of the ASTC Settlement Rules, so as to be effective before the end of the Offer Period; or
2) complete, sign and return the enclosed blue Acceptance Form (where applicable using the enclosed reply paid envelope if you wish) in accordance with the instructions on it, together with all other documents required by those instructions, so that they are received before the end of the Offer Period at one of the addresses indicated on the Acceptance Form. This will authorise Beach to initiate, or alternatively to instruct your Controlling Participant to initiate, acceptance of this Offer on your behalf in accordance with Rule 14.14 of the ASTC Settlement Rules before the end of the Offer Period. You must ensure that the Acceptance Form (and the other required documents) is received in sufficient time for Beach to give instructions to your Controlling Participant, and for your Controlling Participant to carry out those instructions, before the end of the Offer Period.

Status and effect of the Acceptance Form
a) The Acceptance Form which accompanies this Bidder’s Statement forms part of this Offer and the instructions on the Acceptance Form must be followed in using it to accept this Offer.

b) By signing and returning the Acceptance Form in accordance with section 4 you irrevocably authorise Beach and its nominees:

1) to rectify any errors in, or omissions from, the Acceptance Form that are necessary to make it an effective acceptance of this Offer or to enable registration of the transfer of all your Drillsearch Shares to Beach; and
2) in respect of any of your Drillsearch Shares in a CHESS Holding to:
- (A) initiate, or alternatively instruct your Controlling Participant to initiate, acceptance of this Offer in respect of all such Drillsearch Shares in accordance with Rule 14.14 of the ASTC Settlement Rules; and
- (B) give any other instructions concerning those Drillsearch Shares to your Controlling Participant on your behalf under the sponsorship agreement between you and the Controlling Participant.
c) Notwithstanding section 4, Beach may treat the receipt by it of a signed Acceptance Form before the end of the Offer Period as valid even though it does not receive the other documents required by the instructions on the Acceptance Form or there is not

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6. Effect of acceptance

By signing and returning the Acceptance Form, initiating or causing acceptance of this Offer under the ASTC Settlement Rules in accordance with section 4:

a) you accept this Offer in respect of all your Drillsearch Shares at the date your acceptance is processed even if the number of Drillsearch Shares specified on the Acceptance Form differs from the number of your Drillsearch Shares and agree to the terms and conditions of this Offer;
b) subject to all of the conditions being fulfilled or waived before the end of the Offer Period, you transfer, and consent to the transfer in accordance with the ASTC Settlement Rules of, all your Drillsearch Shares to Beach in accordance with this Offer and subject to the conditions of the constitution of Drillsearch on which they were held immediately before your acceptance of this Offer and Beach agreed to take those Drillsearch Shares subject to those conditions;
c) you represent and warrant to Beach that, at the time of your acceptance and at the time the transfer of your Drillsearch Shares to Beach is registered, all your Drillsearch Shares are and will be fully paid, and Beach will acquire good title to them and full beneficial ownership of them free from all encumbrances;
d) subject to all of the conditions being fulfilled or waived before the end of the Offer Period, you irrevocably appoint Beach and each of its directors and nominees severally as your attorney to exercise all powers and rights that you have as the registered holder of your Drillsearch Shares, including:
1) attending any meeting of Drillsearch, and voting in respect of your Drillsearch Shares, proposing or seconding any motion, and demanding a poll for any vote at, any such meeting;
2) requisitioning the convening of any general meeting of Drillsearch and convening a general meeting pursuant to any such requisition; and
3) signing any form, notice, instrument or other document (including any proxy appointment) relating to your Drillsearch Shares.

e) you agree that, in exercising the powers and rights conferred by the power of attorney in section 6(d), each attorney may act in the interests of Beach as the intended registered holder and beneficial owner of your Drillsearch Shares;
f) except as contemplated by section 6(d) and while the appointment in that section continues and is in effect, you agree not to attend or vote in person or by proxy, attorney or corporate representative at any meeting of Drillsearch, or to exercise or

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purport to exercise (in person or by proxy, attorney, or corporate representative or otherwise) any of the powers conferred by the power of attorney in section 6(d);

g) you irrevocably authorise and direct Drillsearch to pay to Beach, or to account to Beach for, all Rights in respect of your Drillsearch Shares subject, however, to any such Rights received by Beach being accounted for by Beach to you if any contract resulting from your acceptance of this Offer is rescinded or rendered void;
h) subject to all of the conditions being fulfilled or waived before the end of the Offer Period, you irrevocably authorise Beach and its nominees to do all things necessary to transfer your Drillsearch Shares to Beach (including to cause a message to be transmitted in accordance with the ASTC Settlement Rule 14.17.1 so as to transfer your Drillsearch Shares, if held in a CHESS Holding, to the Takeover Transferee Holding), even if Beach has not at that time paid or provided the consideration due to you under this Offer; and
i) you agree to indemnify Beach and each of its agents in respect of any claim or action against it or any loss, damage or liability whatsoever incurred by it as a result of you not producing your Holder Identification Number or your Securityholder Reference Number or in consequence of the transfer of your Drillsearch Shares to Beach being registered by Drillsearch without production of your Holder Identification Number or your Securityholder Reference Number.
Receipt of Consideration
a) Subject to this section 7 and the Corporations Act, if you have accepted the Offer and the contract resulting from your acceptance becomes unconditional, Beach will issue the Beach Shares to which you become entitled (as set out in this Offer) to you on or before the earlier of:
- 1) one month after the date of your acceptance or, if the Offer is subject to a defeating condition when you accept the Offer, one month after the takeover contract resulting from your acceptance of the Offer becomes unconditional; and
- 2) 21 days after the end of the Offer Period.
b) Where the Acceptance From requires an additional document to be given with your acceptance (such as a power of attorney);
- 1) if that document is delivered with your acceptance, Beach will provide the consideration in accordance with section 7(a);
- 2) if that document is given after acceptance and before the end of the Offer Period, while the Offer is subject to a defeating condition, Beach will provide the consideration to you by the earlier of:
  - (A) one month after the takeover contract resulting from your acceptance of the Offer becomes unconditional; and
  - (B) 21 days after the end of the Offer Period;
- 3) if that document is delivered after acceptance and before the end of the Offer Period, while the Offer is not subject to a defeating condition, Beach will

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provide the consideration due to you for your Drillsearch Shares by the earlier of:

  - (A) one month after that document is delivered; and

  - (B) 21 days after the end of the Offer Period; or

4) if that document is given after the end of the Offer Period, Beach will provide the consideration within 21 days after that document is given. However, if at the time the document is given, the takeover contract is still subject to a defeating condition that relates to a circumstance or event referred to in subsection 652C(1) or (2) of the Corporations Act, Beach will provide the consideration due to you for your Drillsearch Shares within 21 days after the Offer becomes unconditional.
c) If you accept the Offer, Beach is entitled to all Rights in respect of your Drillsearch Shares, Beach may require you to provide all documents necessary to vest title to those Rights in Beach, or otherwise to give it the benefit or value of those Rights. If you do not do so, or if you have received the benefit of those Rights, Beach will be entitled to deduct from the consideration otherwise due to you the amount (or value, as reasonably assessed by Beach) of those Rights.
d) Subject to the Corporations Act, Beach will send a holding statement for the Beach Shares due to you at your risk by pre-paid ordinary mail, or in the case of any address outside Australia, by airmail, to the address shown in the Acceptance Form.
e) If at the time you accept the Offer any of the following:
1) Banking (Foreign) Exchange Regulations 1959 (Cth);
2) Part 4 of the Charter of the United Nations Act 1945 (Cth);
3) Charter of the United Nations (Terrorism and Dealing with Assets) Regulations 2002 (Cth);
4) Charter of the United Nations (Sanctions - Afghanistan) Regulations 2001 (Cth);
5) Iraq (Reconstruction and Repeal of Sanctions) Regulations 2003 (Cth); or
6) any other law of Australia,

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Osama bin Laden, the Taliban, members of the Al-Qaeda organisation; and a person named in the list maintained pursuant to paragraph 2 of Resolution 1390 of the Security Council of the United Nations.

8. Foreign Shareholders

If you are a Foreign Shareholder and you accept the Offer, Beach will

a) arrange for the issue to a nominee approved by ASIC (Nominee) of the number of Beach Shares to be issued in accordance with the Offer to which you and all other Foreign Shareholders would have been entitled but for this section 8;
b) cause those Beach Shares allotted to the Nominee to be offered for sale within 21 days after the end of the Offer Period in such manner, at such price and on such other terms and conditions as are determined by the Nominee; and
c) cause the Nominee to pay to you the amount calculated by applying the formula:

Net Proceeds of Sale x Your Beach Shares Total Beach Shares

Where:

9. Conditions

Subject to this section 9 this Offer and any contract resulting from the acceptance of this Offer are subject to the fulfilment of the following conditions:

a) Minimum acceptance

at or before the end of the Offer Period, Beach has relevant interests in at least 90% of Drillsearch Shares;

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b) Regulatory approvals

before the end of the Offer Period, Beach receives all approvals:

1) that are necessary to permit this Offer to be lawfully made to, and accepted by, Drillsearch shareholders; or
2) that are required as a result of this Offer or the successful acquisition of Drillsearch Shares and are necessary for the continued operation of the business of Drillsearch substantially on the same terms as the relevant business was conducted as at the date of this Bidder’s Statement,

c)

No regulatory actions

between the Announcement Date and the end of the Offer Period:

1) there is not in effect any preliminary or final decision, order or decree issued by a public authority;
2) no action or investigation is announced, commenced or threatened by any public authority; and
3) no application is made to any public authority (other than by Beach or any of its associates),

d) No material adverse change

1) the business, assets, liabilities, financial or trading position, profitability or prospects of Drillsearch or any subsidiary of Drillsearch, since 1 January 2009; or
2) the status or terms of arrangements entered into by Drillsearch or any subsidiary of Drillsearch, or on the status or terms of any approvals, licences

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or permits from public authorities applicable to Drillsearch or any subsidiary of Drillsearch,

e) No material mergers, acquisitions, disposals or new commitments

1) consolidates with or merges with or into any other person (other than, in the case of a subsidiary of Drillsearch, a wholly-owned subsidiary of Drillsearch) or announces an intention to do so;
2) acquires, offers to acquire or agrees to acquire one or more entities, businesses or assets (or any interest in one or more entities, businesses or assets) for an amount in aggregate greater than $1 million, or announces an intention to do so;
3) disposes, offers to dispose or agrees to dispose of one or more entities, businesses or assets (or any interest in one or more entities, businesses or assets) for an amount, or in respect of which the book value (as recorded in Drillsearch’s consolidated statement of financial position as at 31 December 2008) is, in aggregate, greater than $1 million, or announces an intention to do so;
4) enters, offers to enter or agrees to enter into any transaction or becomes the subject of any obligation which would require the expenditure, the foregoing of revenue or may result in Drillsearch or any subsidiary of Drillsearch incurring any actual or contingent liability of an amount which is, in aggregate, more than $1 million, or announces its intention to do so; or
5) enters, offers to enter or agrees to enter into, any agreement, joint venture or partnership which is for a term longer than two years, other than in the ordinary course of business, or announces its intention to do so,

and during that period the business of Drillsearch is otherwise carried on in the ordinary and usual course of business;

f) Change of control and other rights under certain agreements

1) acquire, or require the disposal of, or require Drillsearch or a subsidiary of Drillsearch to offer to dispose of, any material asset of Drillsearch; or

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2) terminate, or vary the terms or performance of, any material agreement or arrangement with Drillsearch or a subsidiary of Drillsearch,

other than rights for which a written enforceable, irrevocable and unconditional waiver or release has been obtained by Drillsearch and a copy provided to Beach before the end of the Offer Period;

g)Index out

~~h)during the period from the Announcement Date to the end of the Offer Period, the All Ordinaries Index does not fall below 3000 at any time on an ASX trading day;~~

g) Dividends

h) No Prescribed Occurrences

during the period from the date of this Bidder’s Statement to the end of the Offer Period, none of the following occurrences (being those listed in section 652C of the Corporations Act) happens:

1) Drillsearch converts all or any of its shares into a larger or smaller number of shares;
2) Drillsearch or a subsidiary of Drillsearch resolves to reduce its share capital in any way;
3) Drillsearch or a subsidiary of Drillsearch enters into a buy-back agreement or resolves to approve the terms of a buy-back agreement under section 257C(1) or 257D(1) of the Corporations Act;
4) Drillsearch or a subsidiary of Drillsearch issues shares, or grants an option over its shares, or agrees to make such an issue or grant such an option other than 60 million Drillsearch Shares to CPC Energy Limited in relation to Drillsearch's acquisition of an interest in the Tintaburra Block ATP 299P and on the exercise of options existing at the Announcement Date;
5) Drillsearch or a subsidiary of Drillsearch issues, or agrees to issue, convertible notes;
6) Drillsearch or a subsidiary of Drillsearch disposes, or agrees to dispose, of the whole, or a substantial part, of its business or property;
7) Drillsearch or a subsidiary of Drillsearch charges, or agrees to charge, the whole, or a substantial part, of its business or property;
8) Drillsearch or a subsidiary of Drillsearch resolves to be wound up;
9) a liquidator or provisional liquidator of Drillsearch or of a subsidiary of Drillsearch is appointed;

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10) a court makes an order for the winding up of Drillsearch or of a subsidiary of Drillsearch;
11) an administrator of Drillsearch, or of a subsidiary of Drillsearch, is appointed under section 436A, 436B or 436C of the Corporations Act;
12) Drillsearch or a subsidiary of Drillsearch executes a deed of company arrangement; or
13) a receiver, or a receiver and manager, is appointed in relation to the whole, or a substantial part, of the property of Drillsearch or of a subsidiary of Drillsearch.

10. Nature and benefit of conditions

a) Each of the conditions in section 9(h) is a condition subsequent to the formation of a binding contract on acceptance of this Offer. The non-fulfilment of any of those conditions will not, until the end of the Offer Period (or in the case of the conditions in section 9, until three Business Days after the end of the Offer Period), prevent a contract to sell your Drillsearch Shares resulting from the acceptance of this Offer from arising, but any such non-fulfilment at the end of the Offer Period will entitle Beach, by notice in writing to you, to rescind a contract that results from your acceptance of this Offer as if that contract had not been formed.
b) Each of the conditions in each paragraph and each sub-paragraph of section 9 constitutes, and is to be construed as, a separate, several and distinct condition. No condition will be taken to limit the meaning or effect of any other conditions.
c) Subject to the Corporations Act, Beach alone is entitled to the benefit of the conditions in section 9 and to rely on non-fulfilment of, or to waive compliance with, any of those conditions.

11. Waiver of conditions

a) Subject to the Corporations Act, Beach may free the Offer and any contract resulting from acceptance of the Offer from all or any of the conditions in section 9 generally or in relation to a specific occurrence by giving notice in writing to Drillsearch and to ASX in accordance with section 650F of the Corporations Act. Any such notice may be given:
1) in the case of the conditions in section 9(h) - not later than three Business Days after the end of the Offer Period; and
2) in the case of the other conditions in section 9 - not less than seven Business Days before the end of the Offer Period.
b) If, at the end of the Offer Period (or, in the case of the conditions in section 9, within three ~~Bbu~~ siness D ~~da~~ ys after the end of the Offer Period), the conditions in section 9 have not been fulfilled and Beach has not declared the Offer (or the Offer has not become) free from those conditions, all contracts resulting from the acceptance of the Offer and all acceptances that have not resulted in binding contracts will be automatically void.

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12. Notice on status of conditions

13. Variation

Beach may vary this Offer in accordance with the Corporations Act.

14. Withdrawal

a) This Offer may be withdrawn with the consent in writing of ASIC, which consent may be subject to conditions. If so, Beach will give notice of the withdrawal to ASX and to Drillsearch and will comply with any other conditions imposed by ASIC.
b) If Beach withdraws this Offer, any contract resulting from its acceptance will automatically be void.

15. Stamp duty and brokerage

16. Governing law

This Offer and any contract that results from your acceptance of this Offer are governed by the laws of South Australia, Australia.

17. Date of Offer

This Offer is dated [#] 2009.

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Annexure B - Beach’s ASX announcement of takeover bid

==> picture [423 x 566] intentionally omitted <==

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==> picture [429 x 567] intentionally omitted <==

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==> picture [425 x 446] intentionally omitted <==

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Annexure C– Beach’s ASX announcements since the 2008 annual report

Released since release of the Beach 2008 annual report

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page 82

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Annexure D – Drillsearch’s announcements since the 2008 annual report

Released since release of DLS 2008 annual report

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Date 18/05/2009 18/05/2009 18/05/2009 20/05/2009 21/05/2009 25/05/2009 25/05/2009 25/05/2009 26/05/2009 26/05/2009 26/05/2009 26/05/2009 27/05/2009 27/05/2009 27/05/2009 27/05/2009	Headline Notice of Status of Conditions for TDO Chairmans Undirected Proxies Appointment of Managing Director Appendix 3B-Amended Appendix 3X–Brad Lingo Sale of Surat Basin Permits to Primary Petroleum Pty Limited Notice of Change of Interest of Substantial Holder for TDO Takeovers Panel 3D Oil Limited Panel Receives Application Notice of Change of Interest of Substantial Holder for TDO Postponement of EGM and update on board renewal process
	Extension of Offer Period Takeover bid for shares in 3D Oil BPT: Takeover offer for Drillsearch Energy Ltd Notice of Change of Interest of Substantial Holder for TDO TDO: Drillsearch Fractures Reinforce High Risk Takeovers panel 3D Oil Limited Panel Application Withdrawn

Date
18/05/2009
18/05/2009
18/05/2009
20/05/2009
21/05/2009
25/05/2009
25/05/2009
25/05/2009
26/05/2009
26/05/2009
26/05/2009
26/05/2009
27/05/2009
27/05/2009
27/05/2009
27/05/2009

Extension of Offer Period
Takeover bid for shares in 3D Oil
BPT: Takeover offer for Drillsearch Energy Ltd
Notice of Change of Interest of Substantial Holder for TDO
TDO: Drillsearch Fractures Reinforce High Risk
Takeovers panel 3D Oil Limited Panel Application Withdrawn

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Corporate directory

Directors

Company Secretaries

Kathryn Presser Catherine Oster

Registered office

Lawyers

Piper Alderman 167 Flinders Street Adelaide SA 5000

Auditor

Grant Thornton South Australian Partnership 67 Greenhill Road Wayville SA 5034

25 Conyngham Street Glenside SA 5065 Telephone: +61 8 8338 2833 Facsimile: +61 8 8338 2336 Email: [email protected] Website: www.beachpetroleum.com.au

Share Registry

Computershare Investor Services Pty Ltd Level 5, 115 Grenfell Street Adelaide SA 5000 Telephone: +61 8 8236 2300 Facsimile: +61 8 8236 2305

25528311v3

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AI assistant

BEACH ENERGY LIMITED — M&A Activity 2009

64558_rns_2009-05-28_642785c1-8034-4d8f-8fd8-1f869889743f.pdf

Drillsearch Energy Limited – off-market takeover bid by Beach Petroleum Limited – replacement bidder's statement

Supplementary Bidder's Statement 29 May 2009

Beach Petroleum Limited

ACN 007 617 969

Drillsearch Energy Limited

1. Changes to Bidder's Statement

2. Authorisations

Dated 29 May 2009

Signed on behalf of Beach Petroleum Limited

Bidder's Statement

Offer

Beach Petroleum Limited

Drillsearch Energy Limited

THIS IS AN IMPORTANT DOCUMENT AND REQUIRES YOUR IMMEDIATE ATTENTION

Important information

Key Dates

Forward looking statements

Notice to Foreign Shareholders

Investment decision

Defined terms

Information on Drillsearch

Privacy

Internet

Enquiries

Overview of Reasons Why You Should Accept

1. Attractive offer price

2. Step up to a larger company

3. Recognised growth potential

4. Greater financial strength

5. Solid management with a track record of success

6. Exposure to diverse asset portfolio

7. Consolidation of ownership

8. Improved share liquidity

9. A history of regularly paying dividends

Chairman’s letter

[Beach Petroleum Limited Letterhead]

Scrip Offer for your Drillsearch Shares

Table of Contents

Features of the Offer

Features of the Offer:

Offer

Closing Date

Payment Terms

Conditions

Frequently Asked Questions

Detailed Reasons Why You Should Accept

1. Attractive offer price

2. Step up to a larger company

3. Recognised growth potential

4. Greater financial strength

5. Solid management with a track record of success

6. Exposure to diverse asset portfolio

7. Consolidation of ownership

8. Improved share liquidity

9. A history of regularly paying dividends

1. Profile of Beach

1.1 Overview of Beach

1.2 Principal activities of Beach

Egypt

1.3 Beach’s goals and strategies

1.4 Financial information

(a) Basis of presentation of historical financial information

(b) Current financial year

(d) Future performance

1.5 Information about Beach’s issued securities

a) Beach’s issued securities

b) Substantial shareholders

c) Recent trading in Beach Shares

d) Dividends

e) Rights and liabilities attaching to Beach Shares

Dividend entitlement

Voting rights

Transfer of shares

Future increases in capital

Variation of rights

Rights on winding up

f) Dividend reinvestment plan

BEACH ENERGY LIMITED M&A Activity 2009