First we had Oil Search (OSH), then Drillsearch Energy (DLS), now Beach Energy (BPT) has lifted its production guidance for the year in what is turning out to be a run of positives for the smaller end of the oil and gas sector.
Beach also lifted its estimates for capex for the year as a whole in its December quarter production report yesterday.
On top of that, Beach revealed sharp rises in pruduction sales and a 62% jump in revenue for the six months to December, and the likelihood of record earnings in next month’s announcement. And yet the market overlooked the news.
Beach said that higher production volumes from the Western Flank area of the Cooper Basin, was behind the upgraded estimates, and obviously the higher revenue figures which have left the company sitting on more than $400 million in cash at December 31.
"The main driver behind the increase is strong oil production from the Western Flank, with flowlines remaining at maximum available capacity year to date," Beach said yesterday.
"It is anticipated that oil production levels will be maintained over the remainder of the financial year due to new oil wells being brought on-line, the completion of the Bauer facility expansion and an active exploration and appraisal drilling campaign," the company said.
(Drillsearch made similar comments on Wednesday).
Production guidance for the June 30, 2014 year was boosted to a range of 9.2 million and 9.6 million barrels of oil equivalent (mmboe), from 8.7 million to 9.3 mmboe in August (or up 4.4%).
Capital expenditure guidance was also revised up to between $450 million and $500 million, an increase of 5.6% from $420 million to $480 million predicted last August.
"The increase in the range is mainly due to updated figures received for the calendar year 2014 budget for the Delhi operations (SACB JV and SWQ JVs).
"The guidance range allows for discretionary expenditure as deemed appropriate and the potential impact of weather and other delays on the various capital expenditure programs. The range does not account for potential acquisitions, divestments or farm downs," Beach directors explained.
But Beach Energy shares were down 2.1% at $1.405 as investors fretted about anything but the news in front of them.
BPT 1Y – Beach will be a billion dollar company this year, and more after revenue surges
Also ignored was the news from the company that its strong financial position meant no new borrowings would be needed this year.
"As a result of an expected improvement in operating cash flow for FY14, and in conjunction with a cash balance at 31 December 2013 of $404 million and a secured $300 million finance facility, Beach anticipates it will be able to fund its FY14 capital expenditure activities in full," directors concluded.
Looking at the December half and quarter, the improved financial state of the company can be seen from the revenue and production data released yesterday.
In fact higher sales, production and revenue for the half point to a record result from Beach when it reports late next month.
Beach said that quarterly production of 2.5 MMboe, was1% up on the previous quarter, mainly due to record oil production
"Quarterly sales volumes of 2.8 MMboe, was 4% down, mainly due to a reduction in gas demand, partly offset by record oil sales."
"Record quarterly total revenue of $287 million, 6% up, mainly due to record oil sales, continued strong A$ Brent oil price and increased realised price across all products."
Total half year production of 4.9 MMboe, 25% up on the previous corresponding period (PCP), underpinned by record half year oil production."
Record half year sales volumes of 5.6 MMboe, 23% up on PCP."
"Record half yearly sales revenue of $557 million, 62% up on PCP and participation in 32 wells with a success rate of 90%," the company added.
Beach is heading to be a company with annual revenue of a billion dollars or more in 2013-14, with a decent profit and no doubt something more for shareholders.
