Oz Beach Energy Cuts Spending

Sydney-listed Beach Energy will cut its capital expenditure by 30% in the financial year 2020-2021 (July-June) relative to its prior planning due to drop in oil prices, it said March 27 in a statement. The capital expenditure for the year to June 2020 remains unchanged at A$875-950mn.

“Even with its strong financial position, Beach believes the prudent course of action is to target a material reduction in growth activities in FY21. To this end, it expects to reduce growth investment in FY21 by up to 30% relative to prior planning. This is expected to be achieved via the deferral and re-phasing of drilling and development activity, or where there is heightened execution risk due to Covid-19 travel restrictions,” the company said.

Beach joins other Australian companies such as Woodside, Santos and Oil Search to announce cuts in spending in response to uncertain market conditions created by low oil prices and Covid-19 outbreak.

The production estimate for the year to June 2020 remains unchanged at 27-28mn boe while underlying earnings guidance has been reduced to A$1.175-1.25bn from A$1.275-1.35bn primarily reflecting a material reduction in forecast Brent oil price.

Beach said that it has A$151mn in net cash, A$600mn in liquidity and gas revenues that cover all operating and stay-in business costs and “is in a very strong financial position to weather a sustained period of low oil prices”.

The company is reviewing its 5-year outlook, which is currently planned to be released after the FY20 full-year results. In February, Beach reported an underlying net profit, which excludes the impact of one-off items, for the six months to December 31 was down 2% yr/yr to A$274mn (US$167mn).