Beach Energy (BPT) shares fell more than 10% in early trading yesterday after the company produced what seemed to be a poor quarterly update, and global oil prices took another downward lurch, with US prices dropping briefly under $US80 a barrel again.
But the shares recovered some ground in later trading and closed the day down 6.8% at $1.235.
Beach shares have fallen more than 25% since August, tracking the slide in global prices.
Beach Energy posted a 14% decline in September quarter revenues (understandable given the fall in oil prices and a dip in production).
But operationally, the company said it had one of its best quarters for years, despite the weaker income side of the balance sheet.
Revenues for the three month period slid to $232.9 million, as production eased to 2.4 million barrels of oil equivalent, down from 2.46 million a year earlier.
Sales volumes were roughly flat but rose from the June quarter to the highest for six years, thanks to increased gas production, peak winter demand and "continued strong" oil production from the Western Flank of the Cooper Basin.
BPT YTD – Beach shares follow slide in global oil prices
Beach said it got an average price of $114.10 a barrel for its oil in the September quarter, down from over $128 a barrel in the same period a year earlier.
Beach said to help ease the pain of falling prices, it put in place additional hedging in the September quarter to protect it at least in part from a slump in crude oil prices. As a result it has a floor price for Brent crude at $70 a barrel for 37,500 barrels a month of sales from April 2015 to March 2016. It has existing hedges at $65 a barrel land $70 a barrel through to the 2016 financial year, with hedged volumes of 2.25 million barrels in total.
Beach said its balance sheet "remains in a strong position", with cash reserves of $343 million at the end of September, down $68 million because of the payment of the final dividend for 2013-14 and the timing of creditor payments. It also has an undrawn loan of $300 million.
And in an update on its unconventional gas exploration venture with US oil major Chevron in the Nappamerri Trough area of the Cooper Basin, Beach said flow testing of recent wells would start prior to next month.
The results from the flow testing are expected to be important for Chevron’s decision, due by March 2015, whether to proceed with a second stage of its farm-in arrangement with Beach, or drop the venture.
