Outlook for the O&G industry., page-29

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Kangaroos67

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21/03/20

20:30

Post #: 43624591
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Originally posted by bigal36: ↑

I have been buying back into BPT over the last few days.
The oil price may well stay low for the rest of the year but it will eventually recover to at least a level which is beneficial to BPT.
BPT now has a very strong balance sheet with solid reserves so is in a much better position than it was the last time the oil price crashed.

If you read the presentation they did on 11/02/19 the key slide for me is slide 6.
In that slide they clearly state that the Beach Portfolio is NOT exposed to spot Gas prices.
They state that 99% of the East Coast gas sales for 1H FY20 is sold under contract and 98% is expected to be under contract for 2H FY20.
Even though this is only about 35% of its own Revenue if these contracts are fixed priced to at least Dec 2020 and maybe beyond that it means that BPT can still actually make a NPAT of around $50M pa even with an oil price of around US$22.00

So what this means is the company can drill less new wells and reduce Capex to preserve cash and use the Gas Contracts to tide them over until at least Xmas and likely beyond that.
They should come out of this ok with a very solid balance sheet still in place.

Many Oil companies with high debt will be in serious trouble by xmas if the oil price remains at these levels.
This will provide BPT with some very good opportunities to purchase very cheap producing oil assets from companies in distress.
They did this the last time we had an oil price crash and they did very well out of that transaction and I fully expect them to do the same again which will make them an even stronger company than they currently are.

The risk is that the oil price stays at these levels for several years but I don't think that will happen as many companies will not survive at current prices, new wells will not be drilled and hence supply will fall combined with Demand which will pick up after the Corona Virus issues are resolved.

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You've done your homework and you are right on the money

BPT Price at posting: $1.08 Sentiment: Buy Disclosure: Held
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Outlook for the O&G industry., page-29

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Outlook for the O&G industry., page-29

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