Beach Energy's profit drops to a 2-1/2-year low due to a downgrade of reserves
Beach Energy, an Australian oil and natural gas company backed by billionaire Kerry Stokes fell to its lowest level in more than two-and-a half years on Monday, after reporting a drop in profits and downgrading reserves for a major gas field in Victoria.
The shares of the company closed at A$1.245 on Friday, a 12.6% decline. This was their lowest closing price since December 29, 2021. It was also its worst session since April 1. The stock fell by as much as 132% in the morning.
The stock was the biggest loser on the benchmark ASX 200 benchmark.
Beach reported an 11% drop in net profit year-over-year to A$341million ($224.3million). The adverse weather conditions caused a 7% drop in its fiscal 2024 production to 18.2 million barrels equivalent to oil (MMboe).
Beach has also reduced reserves in its Enterprise project. This allows raw gas from the offshore reservoirs to flow to its Otway Gas Plant in Victoria.
Investors were informed that the company had noticed a decrease in pressure on site, resulting in a smaller reservoir. This raised concerns that the company's production target would not be met.
Nik Burns, Jarden's energy analyst, said that the reduction in Enterprise gas volumes was disappointing.
Citi analysts warned investors about the condition of reservoir.
Citi analysts stated in a report that since Enterprise came online, the reservoir pressure has decreased more than expected, indicating smaller container sizes.
(source: Reuters)
