Beach Energy Ltd (ASX: BPT) shares have had a tough time this week.
The energy producer's shares have fallen heavily after investors responded negatively to its half-year results.
Has this created a buying opportunity? Let's see what Bell Potter is saying about the company.
What did the broker say about its results?
Bell Potter was pleased with Beach Energy's half-year results, noting that its underlying EBITDA was stronger than expected and its net profit was in line with expectations. It said:
BPT reported 1H FY26 underlying EBITDA of $558m (BP est $531m), underlying NPAT of $219m (BP est $218m) and reported NPAT of $150m (BP est $163m). An interim fully franked dividend of 1cps was declared (BP est. 3cps, pcp 3cps). The underlying versus reported result reflects costs associated with unutilised NWS capacity of $33m (incurred because of delays to Waitsia Stage 2), exploration of $61m (unsuccessful Hercules well) and Cooper Basin flooding costs of $8m.
The dividend payout (10% of pre-growth free cash flow) was well below BPT's targeted range of 40-50%; the company referencing near-term capital requirements. As previously disclosed, BPT ended the quarter with net debt of $445m and funding liquidity of $925m. 1H FY26 free cash flow was $61m and pre-growth capex free cash flow $225m.
Another positive was that its guidance has been reaffirmed for the remainder of the year. It adds:
BPT maintained FY26 guidance, including production of 19.7-22.0MMboe and capital expenditure of $675-775m. One off expenses are now expected to total $41m (previously $24m) and have been incurred in the 1H FY26 result.
Are Beach Energy shares a buy?
Despite the above, Bell Potter believes that Beach Energy shares are fully valued now.
As a result, the broker has retained its hold rating with an improved price target of $1.15 (from $1.10). This is in line with where its shares trade today.
The broker notes that the company is currently in a replacement cycle and should return to growth in FY 2027. Commenting on its recommendation, the broker said:
BPT is in a production replacement cycle with respect to exploration and appraisal. Production growth should return in FY27 and capex ease, enabling positive free cash flow to support balance sheet deleveraging and ongoing dividends. We are positive on BPT's exposure to Australian east coast gas markets (around half of sales volumes) and cautious with respect to global oil markets.
