Beach Energy has flagged a slide in production in the coming year, despite having just achieved a record 12 months of sales and oil production.
The oil and gas producer expects to produce between 8.6 and 9.4 million barrels of oil equivalent during 2014/15, down from the record 9.6 million mmboe in the year to June 30.
Beach said the result reflected the timing of new oil facilities being brought online, the ramp up of production in South Australia’s Cooper Basin, and a natural decline in the Bauer oil field.
Beach Energy lifted sales volumes 20 per cent during the June quarter to 2.8 million mmboe, taking sales for the full year to a record 10.8 mmboe.
In its updated activities statement the company said quarterly sales volumes were up 20 per cent up on the prior quarter, “mainly due to favourable timing of shipments and increased winter gas demand”.
Its record full-year sales revenue of $1.05 billion, (51 per cent up on the previous corresponding period), resulted from record oil production and a strong A$ Brent oil price.
The company said it also expects to spend between $450 million and $500 million on development and exploration during 2014/15.
Shares in Beach Energy were down five cents, or 2.8 per cent, lower at $1.71 in early trade today.
Manager partner of 100 Doors Peter Esho said the stock had gone “pretty hard” recently so the weakness was no real surprise.
“There was a bit of disappointment around the actual guidance in terms of what they’ll do next year,” Mr Esho said.
He predicts the stock will retreat to around $1.60.
“The rest of it will really be dictated by where energy prices go as a lot of energy companies around the world struggle to see upside when it comes to production guidance and Beach is no exception.”
In other mining and resources news, there was little response to BHP Billiton’s announcement that it hopes to step up trials of a hi-tech method of extracting minerals from ore at its Olympic Dam mine in the hope of reigniting an expansion plan.
The mining giant put plans for a $US30 billion expansion of the massive site on ice in 2012, blaming falling commodity prices and higher costs.
It has since been searching for cheaper ways to develop new smelting and extraction technologies to cut costs and offset lower commodity prices.
One of the processes it has been trialling is heap leaching, a complex chemical process used to extract copper, uranium and precious metals from ores.
BHP said yesterday that laboratory and pilot scale studies of heap leaching had shown promising results at the mine, 560km north of Adelaide.
It is now seeking approval from the federal and South Australian governments to build a plant to carry out heap leaching at the copper, uranium, gold and silver mine.
If it wins government approval, BHP plans to build a demonstration plant at the mine in late 2015 so it can test the process on a bigger scale the following year; all of which leaves the prospect of major expansion a long way into the future.
The miner already operates the world’s largest underground mine at Olympic Dam, but wants to establish an open pit so it can tap into the massive ore deposit there.
Using heap leaching at the mine could help reduce BHP’s processing costs.
Prime Minister Tony Abbott has suggested in the past that speeding up the Olympic Dam expansion could help boost the South Australian economy once Holden ends car manufacturing there in 2017.
Olympic Dam features the world’s largest uranium deposit, and fourth-largest copper and gold deposits.
