Crude Oil

Beach Energy fails to live up to oil and gas production expectations; shares slump

Wed 19 Oct 22, 11:48am (AEST)
File photo - Offshore installation in the middle of the ocean at sunset time
Source: File photo - Offshore installation in the middle of the ocean at sunset time

Key Points

  • Falling oil and gas production has caused a domino effect, resulting in lower sales volume and revenue for the September quarter
  • Beach Energy flagged that average sales price across oil and gas products was down -11% quarter on quarter
  • Management reaffirm near-term growth initiatives that'll lift the company's production profile.

Beach Energy (ASX: BPT) shares fell -4.2% in early trade as the company has again, failed to live up to production expectations.

September quarter production fell -8% quarter-on-quarter to 5.2m barrels as a result of 'natural field decline, Cooper Basin flooding and unplanned outages'.

Looking back, Beach Energy shares fell -11% on the day of its FY22 results on 15 August after posting a -15% year-on-year decline in oil production.

Impacted projects

Production at the Victorian Otway Basin fell -13% compared to the prior quarter to 1.3m barrels as a result of strong customer demand forcing wells to operate at maximum deliverability rates resulting in natural field declines.

Cooper Creek production fell -10% compared to the prior quarter due to flooding and weather-related downtime delaying well-related activities. Despite the delays, Beach reaffirmed its target for flat oil production at Cooper Creek in FY23.

Earnings slump

Total sales volume fell -10% quarter-on-quarter due to lower production and the timing of revenue recognition.

Headwinds including the cycling of high oil and gas prices and one-off accounting changes resulted in a -20% quarter-on-quarter decline in revenue to $437m.

Beach Energy said its average realised sales price across all products was US$76.1 a barrel, an 11% decline compared to the June quarter.

Management reaffirm growth catalysts

Beach Energy is targeting 'up to 28MMboe' production in FY24 compared to the report 21.8MMboe in FY22 - an ambitious 28.4% jump in production.

Even though the company's recent production track record has more often than not missed expectations, management remain confidence on the delivery of major projects.

“On the East Coast, Beach is one of the only gas producers increasing its market share and in doing so we are playing our part in supporting domestic energy security," said CEO Morné Engelbrecht.

"When connected in mid-2023, the Thylacine wells are expected to increase our East Coast market share by more than 30%."

"On the West Coast, we will soon be the newest entrant to the global LNG market. Waitsia Stage 2 is progressing towards first LNG sales to BP in the second half of 2023," notes Engelbrecht.

"Beach will be selling up to 200 million MMBtu at attractive LNG prices over roughly five years. This revenue stream will be transformational for Beach."

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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