Unlike WorleyParsons (WOR), the rebound in commodity prices – specifically oil and gas, did manage to reach the top and bottom line of Beach Energy (BPT) in the six months to December, and shareholders got a small bonus in a small reinstated interim dividend (unlike shareholders in WorleyParsons who had to go without for yet another six months).
Beach, which is 21% owned by Kerry Stokes’ Seven Group, reported a better than expected profit of $103.4 million for the half against a write-downs dominated loss of $600.1 million a year earlier. The company declared an interim dividend of 1c, up from zero a year earlier, which will make shareholders, including Kerry Stokes and Seven Group, happy.
It also confirmed it upgraded its forecast for 2016-17 production in January to 10.3 million-10.7 million barrels of oil equivalent.
Beach shares ended the day up 1.4% at 70.5 cents. Underlying profit surged eleven-fold to $88.7 million.
Beach said it is “actively assessing” new exploration ventures in the wake of the return to profits in the half year.
Beach has been scouring the market for opportunities to take advantage of the tight east coast gas supply market after its takeover of smaller rival Drillsearch Energy almost a year ago, but has yet to make a move. There is talk it could bid for assets unwanted by Origin Energy which is in a dieting phase at the moment.
In a presentation released with the first-half earnings, the company said it was "progressing opportunities in a disciplined manner" and noted it had already dismissed a number "due to inadequate return vs risk".
It is "prepared to wait for the right opportunities," Beach said, highlighting "high impact" exploration ventures that are under study.
Revenue jumped 27% to $344.4 million, thanks to a 22% rise in production to 5.5 million barrels of oil equivalent. The average price Beach got for its oil also climbed from the 2015 lows, by 9% to $US67.5 a barrel.
Beach said its break-even oil price on a cash flow basis had been cut by 23% to $US20 a barrel, so that is a handy gross margin.
