The Beach Energy Ltd (ASX: BPT) share price jumped 6% today despite the $3.3 billion Queensland focused oil and natural gas explorer releasing no specific news to the market. Beach claims to be the largest “onshore” oil producer in Australia and continues to explore tenements in the the oil rich Cooper Basin for more commercial success.
As a price taker the Beach Energy share price is leveraged to the oil price that suffered a terrible final quarter to calendar year 2018 amid signs that supply is once again overtaking demand, despite the efforts of the OPEC cartel of oil-producing nations to keep the oil price high via supply constraints.
For the quarter ending September 30 2018 Beach reported free cash flow of $152 million on revenue of $514 million and is forecasting it will deliver investors over $2.6 billion in free cash flow over the next 5 years.
It also expects to pay down all of any outstanding debt within 12 months, which puts it in a better position in terms of capital returns (dividends) and negotiating terms with future creditors for more investment in exploration projects.
Motley Fool contributor Tom Richardson 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.