beach energy bullish about profit

Beach Energy bullish about profit as it ramps up production

BY: MATT CHAMBERS From: The Australian July 31, 2012 12:00AM


BEACH Energy is forecasting a big boost to cashflow and profit this financial year as it ramps up production at its central Australian and Egyptian operations.

The Adelaide-based oil and gas producer yesterday said its fourth-quarter revenue was up 6 per cent on the previous quarter at $167 million as it lifted sales by 26 per cent to 2.49 million barrels of oil equivalent.

Production of 2.06mboe in the June quarter was up 3 per cent from the previous quarter and meant Beach just beat full-year production guidance of 7.4mboe.

"We have achieved a significant increase in both (full-year) production, up 15 per cent to 7.5mboe, and sales revenue, up 25 per cent to $618m, in what was in many respects a challenging year due to a number of weather interruptions," managing director Reg Nelson said.

"As a result of this performance we are expecting a material increase in operating cashflow and profit in 2012-13."


The reported production, sales and revenue were almost exactly in line with UBS forecasts.

Despite this, Beach shares fell 3c, or 2.3 per cent, to $1.07 after the report was released. But they are still up 9 per cent for the month.

Beach, which has $379m of cash, is set to benefit from a looming shortage of Queensland coal-seam gas for the giant liquefied natural gas export projects that are being planned at Gladstone.

At least two of the plants are struggling to ramp up enough gas for their early stages, meaning Beach's conventional tight and shale gas potential in the Cooper Basin is becoming increasingly valued by investors.

For the quarter, Beach's average received oil equivalent price fell from $79.50/boe (which measures both oil and gas) to $67.30, although it was up from $59.10 a year earlier.

During the quarter, Beach started production from its new Bauer facility on the Western Flank of its onshore Cooper Basin ground near the Queensland and South Australian borders, which helped lift production.

"The Western Flank is a highly profitable oil province," Mr Nelson said.

"New oil production pipelines are being built which we believe will help deliver record Western Flank oil production in the 2013 financial year."

The Bauer oilfield, which has been producing 800 barrels of oil a day, is expected to increase its output to 2000 barrels a day in the second half of this financial year.

The 100,000 extra barrels of production Beach reported above guidance for the financial year was the result of a better than expected oil-trucking performance in the Cooper Basin.