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How Beach Energy Ltd (ASX:BPT) expanded production and quadrupled reserves

Shares in oil and gas company Beach Energy Ltd (ASX: BPT) rose 1.7% to $1.84 on Thursday, after the company released its quarterly report.

It was another strong result for Beach Energy, with a 10% increase in production on the previous quarter, to 7.2 million barrels of oil equivalent (MMboe). This brings FY18 pro forma production – which includes a 12-month contribution from the Lattice assets, acquired from Origin Energy Ltd (ASX: ORG) and actually consolidated only 6 months ago – to 26.7 MMboe. At the higher end of the company’s guidance.

Higher sales, combined with an 11% increase in the average realised oil price, drove a 20% increase in revenue on the previous quarter, to $471 million. The strong free cash flow allowed the company to reduce its gearing ratio from 29% to 26%, while acquiring additional stakes in the Oatway gas project, which is now fully owned, and in the BassGas project, in which Beach Energy now has a controlling interest of 54%.

Thanks to the Lattice deal and recent exploration activities, Beach Energy increased its proved and probable reserves by 320%, to 313 MMboe, extending the remaining life of reserves from 7 years to 11 years.

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Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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