Beach Energy March quarter production is up 4 percent quarter-on-quarter

About Beach Energy Limited

Beach Energy Limited, (Beach, or the Group) is an oil and gas exploration and production company headquartered in Adelaide that was formerly known as Beach Petroleum Limited. Beach has been listed on the Australian Securities Exchange since 1961.

Beach supplies Australia’s East Coast gas market, operating the Otway Gas Plant and the Lang Lang Gas Plant in Victoria. All the gas Beach produces on the East Coast of Australia is sold to retailers within Australia. Beach also provides gas to the Western Australian domestic market and is currently developing its first LNG project in the Perth Basin.

Beach also operates an oil business in the Cooper Basin and is today Australia’s largest onshore oil producer and is a joint venture partner on the Moomba Gas Project. The Group has a suite of exploration permits and is undertaking active exploration drilling programs in the Perth and Cooper Basin.

Third quarter production affected by poor weather

Oil and gas production for the March 2024 quarter was consistent with the March 2023 quarter at 4.5 million barrels of oil equivalent (MMboe) and up 4 percent compared to the December 2023 quarter production volume of 4.3 MMboe. Production volume would have been higher but for extensive rain interrupting Cooper Basin production throughout the quarter. The resultant drop in production from the Cooper basin was partially offset by higher production from the Otway and Taranaki basins.

Total sales volumes for the March quarter came in at 4,841 kilo barrel of oil equivalent (kboe), down 21 percent on the December 2023 quarter, mainly due to one less cargo oil lifting in the March quarter. This product sits in the tanks and pipeline systems awaiting the next shipment. Realised oil prices for the quarter were $141/bbl, a drop of 2 percent on the December 2023 quarter, but 6 percent up on the March 2023 realised oil price. Realised gas prices were on average 9 percent higher to $9.70 per Gigajoule.

Although full year 2024 production guidance has been revised marginally lower to 18.0 – 18.5 MMboe, down from 18 – 20 MMboe, the revision reflects year-to-date performance and recognises the ongoing risk of unfavourable weather events in the Cooper Basin.

Material production step-change likely from 2025

Beach full year FY24 capital expenditure guidance is in the upper end of the $900 – $1000 million range and is predominantly aimed at development and expenditure on plant and equipment, rather exploration and appraisal. This spending on major infrastructure and production growth projects supports materially higher production volumes in the medium-term from FY25 as major projects are completed and commissioned. This includes the Waitsia Gas Plant which is experiencing quality issues during its pre-commissioning process. The latest contractor schedule has been scrutinised with first gas from this plant now scheduled for early in calendar year 2025 with a planned three-month ramp-up of production. Responding to the delayed production schedule, Beach has commercial arrangements with Western Australia gas market participants who have excess gas to enable LNG cargo liftings in FY24, where Beach can return these volumes when needed.

In supplying key markets, Beach currently has 12 percent market share of the East Coast gas market and 2 percent of the West Coast gas market and 7 percent of the New Zealand gas market. The East Coast gas market is increasingly tight, and the demand outlook is strong. It is a similar situation in the West Coast gas market where new industries and new demand opportunities are emerging as rapid decarbonisation and industrialisation drive up gas demand.

Beach is in a strong financial position with 12 percent net gearing which is comfortably within the Group’s 15 percent net gearing target.

The newly appointed CEO who commenced in January 2024 has multiple organic growth opportunities that should enable Beach to generate positive shareholder returns well into the future as major projects are completed.