Global oil prices plunged sharply in yesterday’s sell-off, so it’s no wonder shares in oil groups large and small were also sold down.
And those companies reporting, such as Beach Energy (BPT), found themselves in the firing line, especially after it reported a loss after impairments of more than half a billion dollars.
That was courtesy of a round of impairments which were updated last week in a surprise statement that was buried by the flood of profit reports.
In that statement Beach revealed new write-downs of $449 million after tax, mostly related to its interests in the Cooper Basin in central Australia and in Egypt.
That took the impairments for the full year to $614 million post tax, or a huge $789 million before tax.
And yet it will pay a token dividend of half a cent down from last year’s final of 2 cents. That makes a total for 2014-15 of 1.5 cents a share, down from from 4 cents the year before (including a one cent a share special dividend).
Beach shares fell more than 5% to 68 cents yesterday, the lowest they have been since 2010 when oil prices last traded around the $US40 a barrel mark.
BPT 1Y – Beach under pressure
Not helping Beach’s case was a confirmation of a second straight year of weakening production.
The company has continued to attack costs, cutting spending for a third year as it reacts to the slump in oil prices which is now approaching 60% since June 2014.
After 2014-15’s fall in output Beach says production could drop 14% in the next year from the 9.1 million barrels of oil equivalent (mmboe) reported for the year to June, according to the guidance issued by Beach yesterday. Output this coming year could range between 7.8 million and 8.6 million barrels of oil equivalent, it said.
Beach said it now expects to spend between $240 million and $270 million, down from $416 million in the 2015 financial year, confirming guidance given last month with the 2014-15 production and sales report.
“The work program for FY16 has been developed on the assumption of a continuing lower oil price environment and hence the need to preserve financial strength and flexibility,” said the company, which is 19.9% owned by Seven Group Holdings (which reports tomorrow and is facing losses of 30% on its investment in Beach).
In the latest impairments the Cooper Basin bore the brunt of the write-downs including $241 million after-tax for the conventional business, and a further $167 million on the unconventional business which was to be one of the company’s future jewels (in a joint venture with Chevron). But the collapse in global oil prices put paid to that venture.
The impairments pushed Beach to a $514.1 million net loss for the 2015 June 30 financial year, while underlying profit sagged 65% to $90.7 million, on a 30% drop in revenue to $735.5 million.
