Beach production rise welcome news for investors after series of downgrades

Investors upset by Beach Energy’s spate of unpleasant surprises rewarded the company by lifting its share price after a quarterly result largely in line with expectations.

Beach Energy, majority owned by billionaire Kerry Stokes, has won favour with investors by reporting a quarterly result in line with market expectations.

It’s a move it hopes will repair trust after a spate of downgrades which left investors underwhelmed.

The result announced by chief executive Brett Woods showed production rose 10 per cent during the three months ended September 30 to a total of 5.23 million barrels of oil equivalent (mmboe) from the previous quarter which was well up on the 4.5 mmboe reported one year earlier.

Despite the increase in production, Beach said lower commodity prices meant revenues fell 1 per cent from the previous quarter. However, shares in the company rose 2.5 per cent after the result was announced, underscoring investors were generally pleased.

“I think it is a positive first step in building that reliable trajectory that I am trying to establish,” Mr Woods told The Australian.

“The 10 per cent beat is good and across all sectors we were aligned with consensus.”

The result was done so cautiously after a series of false dawns.

Beach in August posted an annual loss of $475m – and underwhelmed investors by revealing lower-than-expected gas reserves at one site and possible delays at a project earmarked to drive growth.

Beach Energy chief executive Brett Woods.

Beach said its Waitsia stage 2 was still on track for first gas in 2025, a project Mr Woods accepted was critical for company growth and positive relations with shareholders.

Beach has earmarked this project for much-needed production growth, allowing it to capitalise on an expected eastern seaboard gas shortfall.

The market had been concerned about potential further delays after Beach earlier this year said the development had been delayed a few weeks and any contingency in its guidance to the market of first gas in early 2025 had now been exhausted.

Mr Woods has won favour with shareholders with his apparent determination to cut costs. In June and then just six months into the job, he said Beach would slash spending and trim costs in a bid to make the company a low-cost supplier.

Beach had foreshadowed this by weeks earlier announcing its intention to cut about 30 per cent of its workforce.

Investors will be on alert for any sign of previous missteps. In 2022, Beach slashed the estimated gas reserves at its LNG export basin near Perth by 11 per cent after the Waitsia Stage 2 drilling campaign.

In 2021, Beach suffered its biggest ever one-day sharemarket fall when it suddenly slashed its estimate for reserves from the Western Flank oil reserves in northeast South Australia – which triggered class-action lawsuits.

Originally published as Beach production rise welcome news for investors after series of downgrades