The arbitrator has issued a partial award in favour of Beach Energy in the price dispute on the Origin Energy ((ORG)) contract for gas from the Otway plant. However, Morgans think gas production through the Otway plant will be weaker than previous expectations.
The broker also increases capital expenditure forecasts for the Western Flank to take a conservative view on the impact of faster decline rates. The Add rating is maintained and the target price decreases to $2.20 from $2.25.
Morgans feels the market will be looking for confidence the company has a resolution to the uncertainty around Western Flank oil production.
Target price is $2.20.Current Price is $1.81. Difference: $0.39 – (brackets indicate current price is over target). If BPT meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges – negative figures indicate an expected loss).