Class action over Beach Energy’s Western Flank claims lodged
Slater and Gordon says it has a ‘strong basis’ for a class action against Beach Energy over what was said and when about its Western Flank oil assets.
Slater and Gordon has lodged a class action against Beach Energy over its claims about the performance of its Western Flank oil assets.
The claim, lodged in the Victorian Supreme Court, is one of two mooted actions against Beach, with Shine Lawyers also canvassing interest in an action looking at broadly the same issue.
Slater and Gordon said in a statement it had brought the action on behalf of investors who bought shares over an eight-month period during which there was a significant decline in the company’s projected earnings from the Western Flank assets.
“The claim, filed in the Victorian Supreme Court, is being brought on behalf of shareholders who incurred losses after acquiring Beach Energy shares between 17 August 2020 and 29 April 2021,’’ Slater and Gordon said.
“The class action alleges the energy company engaged in misleading or deceptive conduct and breached its continuous disclosure obligations under the Corporations Act.’’
Beach told investors on August 17 last year that it had had “outstanding drilling results in FY20” and was aiming to maintain its “gross average output above 20,000 barrels of oil per day in FY21’’.
It said most of its development wells were generating an internal rate of return of more than 100 per cent, with a six-month pay-back time on average, and horizontal drilling had delivered an eight-times increase in productivity at one and a half times the cost of a vertical oil well.
Beach’s FY21 guidance was set at $900m-$1000m in underlying earnings with production of between 26 and 28.5 million barrels of oil equivalent.
But on April 30 those figures were revised following “recent declines in oil production and recent drilling results’’, as the company told the ASX in a statement.
The company’s production was downgraded to 25.2-25.7mmboe and Beach said Western Flank oil production was expected to be 4-5 million barrels of oil below previous estimates.
Beach also withdrew its five-year outlook and said it would no longer produce a five-year forecast in that form.
The company’s shares closed almost 25 per cent lower at $1.27 following the announcement, and have since failed to recover to the $1.68 closing price on April 29, and at one stage traded as low as $1.01.
Beach chairman Glenn Davis told the company’s annual meeting this month that any claim would be “vigorously defended’’, but it did not have any information about a potential claim at that time.
“In that circumstance, it’s not really appropriate for me to say much more about it at this stage other than we think whatever has been asserted so far is absolutely baseless,’’ he said.
Slater and Gordon class actions lawyer Eleanor Toohey said on Thursday Beach Energy knew or ought to have been aware that it had failed to consider factors that would affect its performance.
“As a result of our investigation following Beach Energy’s profit downgrades in the 2021 financial year, we concluded that there was a strong basis to allege that the company provided misleading guidance and was obliged to correct the market’s understanding of its financial position at a much earlier time,” Ms Toohey said.
“Investors are entitled to assume that when they purchase shares in a listed company all of the material information relevant to its financial position has been disclosed. The downgrades by Beach Energy during the August 2020 to April 2021 claim period caught the market by surprise and revealed that this had not been the case.”
Slater and Gordon said the lead plaintiffs in the case, John and Gail Nelson, bought 3000 Beach shares on April 28, 2021, and their investment fell in value by a quarter within the space of two days.
Slater and Gordon said it is running the case on a no win, no fee basis.
Beach has been contacted for further comment.