- Big cap oil and gas explorer Beach Energy (BPT) surged today on the back of a strong annual report
- Despite the challenges brought to the energy sector by the COVID-19 pandemic, Beach managed to make $501 million in statutory net profit after tax
- The company also ended the year with $50 million in the bank after forking out a one-cent dividend to shareholders
- While the result is still soft on last year’s financial results, shareholders seemed impressed with the numbers amid a share price jump
- Looking ahead, Beach plans to pull in between $900 million and $1 billion in underlying earnings before interest, tax, depreciation, and amortization (EBITDA) for the 2021 financial year
- Shares in the company tacked on 7.12 per cent today to close worth $1.58 each
Big cap oil and gas explorer Beach Energy (BPT) surged today on the back of a strong annual report.
The report comes after the COVID-19 pandemic ravaged the energy sector and oil prices tumbled. In April, West Texas Intermediate went negative for the first time in history — meaning oil producers were literally paying others to take excess oil off their hands.
Yet, despite the challenges faced by energy companies across the globe, Beach Energy still managed to pull in $501 million in net profit after tax on a statutory level. On an underlying basis — meaning taking one-off gains or losses into account — Beach’s net profit was $461 million.
Of course, this year’s result is still soft on last year’s record-breaking profit; in the 2019 financial year, Beach pulled in $560 million in underlying profit.
Similarly, Beach made $1.65 billion in sales revenue this year compared to last year’s $1.925 billion.
Still, investors seemed impressed with Beach’s annual performance and $50 million cash on hand at the end of the year. The company’s one-cent final dividend likely helped keep shareholders pleased.
Beach Managing Director Matt Kay said the company is well-positioned to succeed in a lower-oil-price environment after entering the COVID-19 pandemic with a strong balance sheet.
“In a year like no other, FY20 demonstrated the resilience of the Beach business,” he said.
“Our net cash balance sheet position, high margin oil business, stable gas revenues and dedicated staff delivered a strong full-year result despite the choppy waters that confronted us in the second half of FY20,” he added.
Despite the pandemic, Beach was still able to make new gas discoveries in the Perth and Otway basins and commission a new gas plant in South Australia.
As far as production goes, the company’s Western Flank operation in the Cooper/Eromanga Basin produced as much as 23,000 barrels of oil a day in the second half of the financial year.
“Our current projections have Beach remaining in a net cash position through our peak investment years at around US$40 per barrel Brent. This means Beach has the ability to pursue growth despite the current macro challenges,” he said.
What’s next?
Beach gave some bold predictions for the 2021 financial year, expecting between 26 and 28.5 million barrels of oil equivalent (MMboe) as far as production goes.
The company is planning to pull in between $900 million and $1 billion in underlying earnings before interest, tax, depreciation, and amortization (EBITDA) for the 2021 financial year, with capital expenditure of between $650 million and $750 million.
Despite a tough day for the wider energy sector, Beach shares tacked on 7.12 per cent today to close worth $1.58 each.