Here’s why the Beach Energy (ASX:BPT) share price is in the red today

The energy provider’s shares are slipping in trading today.

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Beach Energy Ltd (ASX: BPT) shares have spent all of Tuesday’s session so far in the red. At the time of writing, the Beach Energy share price is trading 2.15% lower at $1.25. Whilst the wider market is also trending lower, the S&P/ASX 200 Index (ASX: XJO) is currently only down by 0.41%

There has been no market-sensitive information released by the company today but let’s take a look at what it’s been up to lately that may be contributing to today’s negative share price action.

But first – what is Beach Energy?

Beach Energy is an Australian oil and natural gas producer that has projects dotted across Australia and New Zealand.

Since forming in 1961, it has grown to be a major purveyor of Australia’s east cost natural gas supplies.

Beach Energy has a market capitalisation of around $2.9 billion at the time of writing.

What has Beach Energy been up to lately?

The Beach Energy share price lost considerable momentum when the company provided its results for Q3 FY21.

In the report, Beach outlined its production had dropped 5% from the previous quarter and had declined 15% year on year.

The company also made major downgrades to its oil reserves, sparked by the dismantling of its Western Flank 2P oil reserve estimates.

From the review into Western Flank 2P, Beach recalibrated a net downgrade in reserves of 13.4 million barrels of oil.

The net downgrade totalled a ~5% write down in Beach Energy’s total reserves at its Western Flank 2P site.

As a result, the company withdrew guidance over the coming 5 years, whilst concurrently downgrading FY21 guidance by around 5% to 6.5%.

Investors immediately punished the company, wiping $900 million in market capitalisation off the company’s value on the day of the announcement.

Since the announcements were made on 29 April, the Beach Energy share price has plummeted around 26% into the red.

One might even venture to say, ‘life’s a beach‘ for the company lately.

Beach Energy share price snapshot

Beach Energy shares have declined by around 15% over the previous 12 months, spurred on by a 31% loss since 1 January this year.

In contrast, the ASX 200 has posted a year-to-date return of around 10%.

Beach Energy trades at a price-to-earnings (P/E) ratio of 8.3 at the time of writing.

Should you invest $1,000 in Beach Energy right now?

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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