In the next few years the energy sector will drive the economy more, especially the LNG export industry as it begins to supply the always-hungry Asian energy market. While the news has been running stories about the mining pullback, smart investors are keeping up on energy producers both big and small.
Beach Energy Limited (ASX: BPT) could be a promising addition to your portfolio. Here are four reasons why it is moving ahead now and taking the next step up from mid-tier player.
1) Largest onshore producer
Recent oil discoveries in its Western Flank areas within the Cooper-Eromanga Basin region have led to a great increase in production. The company is now the largest onshore oil producer in Australia with record oil production in the latest quarter.
2) Enviable cash position
Higher revenue and earnings have allowed the company to build up cash reserves of $428 million that it can apply to further production development. Underlying net profit has more than doubled in the past two years.
3) $1 billion revenue
By the end of the financial year, the company projects that its full year revenue will be on track to reach $1 billion. In FY 2013, total revenue was $700.5 million, so reaching $1 billion would be an impressive 43% increase.
4) Gas sales agreement with Origin
In April, Beach Energy entered into an eight-year agreement to supply gas to Origin Energy Limited (ASX: ORG). As a member of the South Australian Cooper Basin joint venture, the company can use existing pipeline infrastructure operated by Santos Ltd (ASX: STO) and shared with other companies like Senex Energy Ltd (ASX: SXY) and send it to Origin. Origin needs to secure gas supplies for its LNG export facilities in Queensland which will deliver first LNG by mid-2015.
The Cooper-Eromanga basin region is opening up great amounts of oil and gas, yet still most of the area has not been fully developed. Beach Energy has good opportunities over the next few years to add to both oil and unconventional gas production.
