herald sun article, page-9

Beach Petroleum (BPT.ASX,$1.34/sh, Mkt cap $1.7b) - A quality oil producer to hedge against escalating risk in Syria – TRADING BUY

•The geo-political issues in both Syria and Egypt have become forefront of investor concerns and have continued to drive oil prices higher. Oil Prices have increased to 6month high for both Brent and WTI which are trading at US$119/bl and US$113/bbl respectively.

•We recommend investors gain exposure to quality oil producers as a hedge against troubles escalating in the middle-east over the coming weeks, with BPT being our preferred pick

•We note that if oil prices continue to hover at these high prices the average price used in analyst forecasts for CY13 ($US110/bbl) will need to increase and the oil producers will be cum upgrades. We estimate for BPT that a US$1 change in the oil price impacts underlying NPAT by ~1.5%

•BPT recently delivered a solid result with FY13 NPAT of A$141m 10% ahead of consensus and paying an annual fully franked dividend of 2.75c. The balance sheet remains strong with A$348m of cash and A$320m of undrawn debt facilities.

•The company re-iterated FY14 production guidance of 8.7-9.3mmboe representing an increase of up to 14% driven primarily by its western flank oil portfolio. The increased production should coincide with a strengthening in Australian dollar oil prices and boost profits.

•On the exploration front, the unconventional program will recommence in October with the production of Holdfast-2 (horizontal) with results eagerly anticipated by late in Q4CY14. While exploration results from the Western Flank continue to impress and add high high-margin oil production . Ironically, a great discovery was made in Egypt with El salmiya-2 well flowing oil at a rate of 3,530 bbl.

•TRADING BUY

http://www.fostock.com.au/announcements/beach-petroleum-bpt-asx