Beach Energy (ASX:BPT) share price on watch on FY21 earnings

Beach Energy's oil production and profits fell in FY21.

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The Beach Energy Ltd (ASX: BPT) share price will be on watch today after the oil and gas explorer and producer reported its results for financial year 2021 (FY21).

Beach Energy share price in focus after 36% drop in net profit after tax

  • A 36% fall in net profit after tax to $363 million
  • $953 million of underlying earnings before interest, tax, depreciate, and amortisation (EBITDA), within its previously forecasted range
  • Produced 25.6 million barrels of oil equivalent – 4% less than in FY20
  • Ended FY21 with $126.7 million of cash in the bank, 15% more than it did at the end of FY20.
  • Shareholders to receive a 1 cent final dividend

What happened in FY21 for Beach Energy?

FY21 brought good and bad times for Beach Energy and its share price.

Beach Energy made a final investment decision for the Western Australian Waitsia Gas Project Stage 2 in December. It also had exploration success in the Otway exploration program over FY21. It also purchased assets in the Cooper Basin for $83 million in November.

The company estimates its emissions over FY21 were 12% lower than those of FY18. It also announced it hopes to reach net zero scope 1 and 2 operated emissions by 2050.

It's working towards FEED studies for the Moomba carbon capture and storage project, which is expected to remove 1.7 million tonnes of carbon from the atmosphere each year. Beach Energy owns 33% of the Moomba project.  

Additionally, FY21 was Beach Energy's safest year on record.

However, the biggest news to come out of the company over the financial year just been was when it downgraded its Western Flank 2P reserves. The news saw the Beach Energy share price slip 24% and it hasn't yet recovered.

The company stated the reserves' lower volumes drove its FY21 oil production to decrease.

What did management say?

Beach Energy's managing director, Matt Kay, commented that FY21 was challenging, but the company is in a good position to deliver on its gas growth projects. He said:

Beach had two exploration successes in the Victorian Otway, we delivered two value accretive bolt-on acquisitions to grow existing production hubs, and we reached FID on the Waitsia Gas Project Stage 2, bringing Beach closer to supplying gas into the global LNG market for the first time.

We also doubled the production deliverability at our Perth Basin facilities, and we are in the final stages of commissioning at the Kupe compression project, extending the life of this important asset in New Zealand.

The Offshore Otway campaign will progress throughout the year with first gas from the new Geographe development wells on track for mid-FY22 and all six development wells expected to be drilled by the end of FY22.

What's next for Beach Energy?

Beach Energy's chair, Glenn Davis, commented on the company's future plans.

He said it will spend FY22 and FY23 investing into its existing assets with a focus on sustainability. Davis stated the company plans to deliver its Kupe compression and Geographe gas during the current financial year, its Thylacine gas in FY23, and its Waitsia gas in FY24.

The company's production guidance for the current financial year is between 21 and 23 million barrels of oil equivalent.

Beach also expects to spend between $900 million and $1.1 billion over FY22.

Finally, it's expecting its FY22 unit field operation cost to be between $11.50 and $12.50 per barrel of oil equivalent – ­up from $10.15 in FY21.

Beach Energy share price snapshot

The Beach Energy share price has fallen 34% year to date. It's also 23% lower than it was this time last year.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has gained 25% over the past 12 months.

Motley Fool contributor Brooke Cooper has no position 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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