Oil and gas producer Beach Energy (BPT) yesterday provided ample justification for its planned merger with fellow Cooper basin producer and explorer Drillsearch (DLS) with a sharp slide in September quarter revenues – both from the June quarter and from the same quarter in 2014.
Beach told the ASX in its quarterly production and exploration report that production was largely flat in the three months ended September, but sales revenue has fallen sharply.
The Cooper Basin-focused producer said quarterly production was 2.26 million barrels of oil equivalents (MMboe), up 1% from the June quarter, but down from the 2.398 million for the September quarter of 2014.
But that small gain was more than offset by the slide in oil and gas prices, resulting in a 15% slide quarter-on-quarter (from the June quarter) decline in sales revenue to $145 million. But compared to the September 2014 quarter, the fall was a more substantial 33%, or $87 million.
Beach said it realised an average $68 per barrel, down 19% from the price it received in the three months to June.
Global crude oil prices have halved over the past year to below $US50 a barrel, amid rising supplies and lacklustre demand and that was best seen from the 33% slide over the year in group revenues. The slide in prices overtook the much smaller fall in production over the past year.
BPT vs DLS 2Y – Beach battles lower energy prices
The company said September quarter capital expenditure of $44 million was down 36% and in line with the revised full year program.
In July Beach had its 2015-15 capital expenditure for the year estimate to the range of $240 million to $270 million, compared to $416.1 million in 2014-15, in an effort to ride out weak oil prices.
But compared to the September quarter of 2015, the Beach result looks even worse. Sales fell to 2.26 MMboe in the 2015 quarter from 2.875 MMboe, with the average oil price falling from $A114.1 to just $A67.6 a barrel. That’s a fall of more than 40%, and one made to look a little better by the 17% slide in the value of the Aussie dollar in the past year.
Last Friday Beach announced it plans to merge with Drillsearch, to create a $1.2 billion energy company.
The move is expected to save $20 million a year in savings and position the new company for growth when oil prices rise. Kerry Stokes’ Seven Group Holdings is the prime driver in this merger – it owns 20% of both companies and will emerge with a similar stake in the merged group.
Beach shares fell more than 7% yesterday to 63.5 cents.
