Beach Energy (ASX:BPT) share price tumbles 7% on production slide

Energy prices are widely expected to remain elevated in 2022.

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Key points

  • The Beach Energy share price is under pressure
  • Production levels fell quarter on quarter
  • Higher oil prices helped lift revenue

The Beach Energy Ltd (ASX: BPT) share price is taking a tumble today, down almost 5.51% at the time of writing to $1.337. It dropped as low as $1.305 in early trade.

That’s a good bit more than the 2.3% loss posted by the S&P/ASX 200 Index (ASX: XJO) at this same time.

Below, we take a look at the company’s quarterly update that looks to be putting pressure on the Beach Energy share price today.

What did Beach Energy report?

  • Production of 5.31 millions of barrels of oil equivalent (MMboe), down 7% quarter-on-quarter
  • Sales volumes of 5.48 MMboe, down 5% from the prior quarter
  • Realised oil price of $117.1 per barrel, up 6% quarter-on-quarter
  • Sales revenue increased 3% from the prior quarter to $398 million

What else happened in the quarter?

Beach Energy reported that the production slide followed a natural field decline, along with planned and unplanned maintenance in the Cooper Basin JV and Western Flank and unplanned downtime at BassGas. Increased production at its Kupe and Beharra Springs assets helped partly offset the decline.

Despite lower production, sales revenue increased thanks to higher oil prices. This saw Beach Energy’s liquidity increase to $673 million. As at 31 December, the company had a net cash position of $73 million.

During the quarter, Beach Energy also delivered the first gas from its Otway offshore campaign to the Otway Gas Plant via Geographe 4 and 5. The company said this effectively doubles the potential production at the Otway Gas Plant up to approximately 180 TJ/d.

Four horizontal development wells were also drilled in the Western Flank oil fields, with Beach reporting a fifth well drilling towards the end of the quarter.

What did management say?

Commenting on delivering the first gas from the Otway Offshore, Beach’s acting CEO Morné Engelbrecht said:

This is an exciting time at Beach as we set the key building blocks as part of our strategic production growth target of 28 MMboe in FY24. Last quarter it was first gas from the Kupe Inlet Compressor program and this quarter it was Geographe 4 and 5 coming online to deliver new volumes into the East Coast gas market.

Our offshore drilling campaign continues in the Otway Basin, where the Thylacine North 1 well has been successfully drilled, in line with our pre-drill expectations.

What’s next?

Looking ahead, Engelbrecht said:

At Waitsia Stage 2, our joint venture with Mitsui has executed a rig contract with Easternwell for the upcoming Perth Basin drilling campaign commencing this quarter. This campaign includes a minimum of five development wells in Waitsia and will be followed, subject to approvals, by further development and exploration drilling in the surrounding acreage.

On the sustainability front, he added, “Natural gas will continue to be a critical source of energy supporting the transition to a lower carbon future. We are committed to meeting the dual needs of developing new gas supplies while also reducing our own Scope 1 and 2 emissions footprint.”

Beach Energy share price snapshot

Despite today’s tumble, the Beach Energy share price remains up 6% in the New Year. By comparison, the ASX 200 is down 6% so far in 2022.

Over the past 12 months, Beach Energy shares are down around 28%.

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

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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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