Beach Energy Limited

Release of Fourth Quarter Activities Report: Beach Energy Limited (ASX: BPT) released its report for the fourth quarter in which it stated that expanded asset portfolio helped in delivering record sales and production volumes. As mentioned in the report, Q4 FY19 production of 7.0 MMboe was highlighted by a further 5% rise witnessed in Western Flank oil output. The company also stated that Western Flank gas production witnessed a rise of 32% on the quarter after commissioning of Middleton liquids handling expansion. Additionally, it was mentioned that the sales revenue for Q4 FY19 stood at $501 million, which reflects a rise of 7% on prior quarter and, as a result, the FY 219 sales revenue stood at $1.9 billion on the full year sales volumes of 31.2 MMboe.


Key Numbers for Q4 FY 2018 (Source: Company Reports)

Decent Standing in Key Margins: BPT is having respectable footing when it comes to its key margins as its net margin stood at 26.8% in 1H FY 2019 which reflects a YoY rise of 2.4% and, thus, it can be said that the company’s capability to convert its top line into bottom line has improved. Also, its EBITDA margin stood at 68.1%, which implies a YoY rise of 6.6%. The company’s current ratio stood at 1.43x, which is marginally higher than the industry median of 1.26x that reflects that the company would be able to meet its short-term obligations. Also, respectable standing from the liquidity standpoint might help it in making deployments towards strategic objectives which could act as the growth catalysts in the long-term.

The company’s Debt/Equity ratio stood at 0.25x in 1H FY 2019, which is lower than the industry median of 0.32x and, thus, it looks like that the company’s exposure to debt component is somewhat less as compared to the broader industry. The lower debt on the balance sheet can be considered as positive as it largely helps in stabilizing the balance sheet position.

Update Regarding Perth Basin: BPT earlier advised that it executed agreements with AWE (Beharra Springs) Pty Ltd (which is a related body corporate of Mitsui E&P Australia) to move to 50:50 ownership of the production licences L11 and L22 (Beharra Springs), exploration permit EP 320 as well as pipeline licence PL 18 in Perth Basin. Therelease also stated that the transaction has an effective date of January 1, 2019 and there are expectations that it would be wrapped up during Q1 FY20, subject to the satisfaction of several conditions which includes regulatory approval.

What to Expect From BPT: The following table provides a brief overview of the FY 2019 guidance:


FY 2019 Guidance (Source: Company Reports)

BPT reported FY19 production and capex of 29.4 MMboe and $447 million, respectively. The company stated that the FY19 results are being finalised. The results, including underlying EBITDA and DD&A, would be released on August 19, 2019.

Stock Recommendation: The stock of Beach Energy Limited has delivered the return of 5.37% in the span of previous one month while, in the time frame of previous three months, the stock’s return stood at -6.36%. As per ASX, the company’s stock is trading towards its 52-week higher level of $2.270 with an annual dividend yield of 0.97%. The company stated that free cash flow of Q4 FY19 of $130 million together with $262 million Otway Sale proceeds results to $172 million of net cash position at June 30, 2019.

As stated above, the company’s FY19 results are being finalised and the company would be providing FY20 guidance ranges with the full year result on August 19, 2019, thus, we advise the market players to keep a close watch on the stock at the current market price of A$2.060 per share.
 

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.