Beach Energy extends loss as earnings slump on weak oil prices

Beach Energy has booked its second straight full-year loss, as oil prices and impairments continue to drag.

Beach Energy CEO Matthew Kay.

Beach Energy has reported a second straight full-year loss of over half a billion dollars as weak oil prices weigh on the energy sector.

And in a further indication of the challenges of developing a fracking-focused shale or tight gas industry in Australia, Beach has cut its contingent unconventional gas resources by 500 million barrels of oil equivalent as its resources in the Nappamari Trough of Cooper Basin were cut to nil.

For the year to June 30, Beach (BPT) reported a net loss of $588.8 million, 15 per cent blow out from last year’s corresponding $514.1m loss.

The weak result, which slightly outstripped depressed expectations, was driven by impairments of $635m tied to its exploration assets.

Beach said its underlying earnings slumped 61 per cent to $35.7m, although this edged out projections for a reading of $30.8m.

The group’s revenue weakened 23 per cent to $558m despite a record production number of 9.7 million barrels of oil equivalent, highlighting the impact of falling energy prices.

For the upcoming year, the group expects an expansion in output to a range of 9.7-10.3 million barrels of oil equivalent.

Chief executive Matt Kay pointed to Beach having cut its cash-breakeven oil price to $US26 this year, from $US74 a year earlier and that the company had $550m of cash and liquidity to pursue growth.

“We have reshaped our business to be resilient to low prices and we are also one of the most leveraged companies to an oil price recovery,” Mr Kay said.

He said further cost cuts were on the way this year, including more than 15 per cent of cuts at the Cooper Basin joint venture operated by Santos.

The Nappamari Trough Natural Gas project was where oil major Chevron last year opted not to continue a potential $300m spend on exploring shale and tight gas potential in the Cooper Basin after studying the results of the first stage.

“Analysis of these results demonstrated that the high cost of addressing fundamental technical issues means the NTNG project is unlikely to be developed commercially in the medium term,” Beach said after cutting nearly 500 million barrels of oil equivalent gas resource.

“Beach is continuing to refine its strategy on management of these permits going forward based upon minimal spend commitments.”

The group declared a fully-franked final dividend of 0.5c, a 1c decline from last year. This brought the full-year dividend to 0.5c, down from 3c last year.

At 11am, shares were down 0.3c at 54.7c.