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Beach Energy share price on watch after first quarter update

The Beach Energy Ltd (ASX: BPT) share price has opened slightly up at $2.36 per share, and is one to watch this morning after reporting a strong first quarter result before market open. 

What was in the Beach first quarter result?

Beach reported its Western Flank oil production is up 9% to 1.6 million barrels.

The Aussie oil and gas group’s first-quarter FY20 production of 6.55 million barrels is down 6% on the previous quarter, however, the company’s Otway sale on 31 May meant that was a 1% increase on Q4 2019.

Beach’s drilling success rate remains high, with the company reporting 59 wells spudded during the period. The company reported a drilling success rate of 83%, which included a 73% success rate on 26 appraisal wells.

A new gas discovery prior to the end of the quarter should also boost shareholders’ hopes higher.

Was it all good news for Beach Energy?

The company’s sales volumes fell 12% on Q4 2019 levels to 6.76 million barrels. It was a similar story with sales revenue, which came in down 13% to $438 million.

Despite an increase in oil revenue, lower sales volumes from its 40% Otway stake sale and lower pricing hurt Beach’s revenues.

Beach’s realised oil price edged 1% higher on last quarter to $103.2 per barrel in a positive for the group; however, this was offset by lower average realised prices for both LPG and Condensate. The company’s LPG levels plummeted 29% on the prior quarter to $462 per tonne, while Condensate fell 9% to $81.3 per barrel.

First-quarter capital expenditure came in 33% higher on Q4 2019, which Beach said is part of its “multi-year investment program”.

The company remains well capitalised in a net cash position with $668 million in liquidity, as at quarter-end.

What’s ahead for Q2 2020?

Beach Energy expects to commence its Victorian Otway drilling campaign next quarter as operations ramp up, after wrapping up its drilling activities at Dombey-1 in the SA Otway Basin. 

What about FY20 guidance?

Beach’s FY20 guidance remained unchanged as at quarter-end. The company expects to see oil production of 27 million to 29 million barrels of oil equivalent.

Capital expenditure is expected to be between $750 million and $850 million with underlying earnings before interest, tax, depreciation and amortisation of $1.25 billion to $1.40 billion.

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Motley Fool contributor Kenneth Hall 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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