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$1.32 beach energy limited

Hi there Big Al. You obviously put a bit of time and thought...

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gklaw

1,546 Posts.

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21/10/22

20:28

Post #: 64330175
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Originally posted by bigal36: ↑

Why is the PE ratio so low on BPT?
THe answer is that you do not just use the PE ratio to value a company particularly an oil and gas company.
The valuation is based on both its profit margins and more importantly its reserves.
The issue with BPT is that over the past few years the reserves have declined particularly with the high profit western flank oil reserves.
When you look at the high level of capex that has been spent the reserves should have gone up and not down.
The valuation of the company is not based on one year its based on the life of the reserves and that currently is not great.
In 5 years time there will not be much oil left.
Offsetting that oil decline gas production is being ramped up by huge capex spend but again this will eat substantially into the gas reserves so in 5 years time unless they either find new reserves or acquire new assets the reserves will look pretty bad.
New exploration or new asset purchases will both be very costly and likely need new capital to be raised.
It's a myth that the company is generating huge surplus cash as yes it does generate healthy cash but it's almost all being used to attempt to maintain production volume by spending it on capex.
That's why they can't increase the dividend as the surplus cash nearly all goes into capex.
The market also thinks in 5 years time oil and gas demand will fall substantially due to EV's, windfarms, solar and other environmental stuff being developed.
This could cause a big fall in oil and gas prices.
Then there is the issue of how much will it cost BPT to comply with getting to net zero.
They have already flagged costs of $80m+ this year and their presentations are talking more and more about this.
Then you have globally pension funds withdrawing funds from oil gas and coal companies as they want to be seen as green funds.
Then you have the issue of bad management which plays a part in the valuation too.
Then you have sovereign risk, yes Australian sovereign risk as there is no way the current government will let gas prices go too high and they will take action to cap them by preventing gas from going overseas. It's also possible that a windfall tax on oil and gas company profits might happen or even a special environmental tax on them could also happen.
The climate change deniers will say this is all rubbish so it depends who you think is right in deciding what is a fair share price for BPT.

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Hi there Big Al. You obviously put a bit of time and thought into your post into my question as
to why the BPT, PE ratio is so low. Thanks for your opinions on the issues that are affecting
the SP & the PE ratio but in actual fact some of your observations do contradict themselves a bit
but I do understand that different scenarios can play out as only a small number of your predictions
will actually take place but most of them are possibilities. Thanks again I dont always agree with
your views but I do value your opinion.
IMHO DYOR.

Last edited by gklaw: 21/10/22

BPT Price at posting: $1.59 Sentiment: Buy Disclosure: Held
3 Upvote

1 Great analysis

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Last $1.32		Change 0.000(0.00%)		Mkt cap ! $2.999B

Open	High	Low	Value	Volume
$1.32	$1.32	$1.30	$7.791M	5.946M

Buyers (Bids)

No.	Vol.	Price($)
6	21143	$1.31

Sellers (Offers)

Price($)	Vol.	No.
$1.32	21590	3

View Market Depth

No.	Vol.	Price($)
6	21143	1.310
5	109153	1.305
12	160003	1.300
7	124844	1.295
12	140959	1.290

Price($)	Vol.	No.
1.315	21590	3
1.320	93594	8
1.325	484991	7
1.330	200711	8
1.335	32017	4

Last trade - 16.10pm 19/08/2024 (20 minute delay)

BPT (ASX) Chart

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