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Beach reports slimmer profits, reduced production forecast

Business

Adelaide-headquartered Beach Energy has posted a slimmer net profit, forecast lower production and cited tax payments for a sharp drop in operating cash flow in a report to investors this morning.

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The result is being treated with caution by investors, with the company’s share price falling by almost 4 per cent in the first four hours of trade this morning.

The oil and gas exploration and production company reported net profits of $274 million for the six months to December 31 in its report to the Australian Stock Exchange today – down two per cent from the same period in 2018.

The figure was affected by the temporary shutdown of its Kupe gas plant in New Zealand late last year.

Beach reported operating cash flow of $351 million for the final six months of 2019 – down 27 per cent from last year – citing $238 million in tax payments during the period.

It has also revised forecast production levels for the current financial year down slightly, from between 27 and 29 million barrels of oil equivalent (mmboe) to between 27 and 28 mmboe.

This has coincided with an increase in its forecast capital expenditure for FY20, from $750 – $850 million to $875 – $950 million.

Managing director Matt Kay said the company was in a strong financial position and was making record investments in growth this year.

“In a year in which we are undertaking a record level of growth investment, I am extremely proud to see the Beach team maintain a razor-sharp focus on execution and sustain a discipline towards cost management across the business,” Kay said.

“Of particular note has been our ability to generate value through safe, reliable and efficient operations.”

He said the company had been extremely active in the Cooper, Perth and Otway basins, with 105 wells drilled at a success rate of 83 per cent during the first half.

“Of note, the Beharra Springs Deep-1 well made a material gas discovery in the Perth Basin, Dombey-1 delivered a gas discovery in the SA Otway Basin and appraisal work in the Bauer Field confirmed another field extension,” Kay said.

“It is this sort of success from our drilling team that supports the decision to increase our investment in FY20.”

Beach Energy was ranked third in InDaily‘s SA Business Index of South Australia’s top 100 companies last year.

The company’s shares were trading at $2.28 on the ASX at noon, down 9 cents or 3.8 per cent on its opening price this morning of $2.37.

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