Western Flank operation mars Beach Energy’s (ASX:BPT) FY21 performance

Highlights

  • Beach Energy has a robust portfolio, including five basins across Australia and New Zealand.
  • The company has reported a 36% drop in its net profit after tax, primarily due to the huge impairment charges at its Western Flank operation.
  • Beach produced 25.6Mmboe in FY21, down 4% relative to FY20.

The shares of Adelaide-based oil exploration and production company, Beach Energy Limited (ASX:BPT) plummeted sharply by over 9.5% on 16 August 2021 after the announcement of the company’s FY21 annual results.

In a significant update, it has reported a 36% drop in its net profit after tax, primarily due to the huge impairment charges at its Western Flank operations in the Cooper Basin.

Founded in 1961, BPT operates a robust portfolio across five basins across Australia and New Zealand. Also, Beach is a key supplier of gas on Australia's East Coast. Apart from this, the company also plans to debut in the global LNG market in H2 2023. The company aims to reduce the greenhouse emissions and targets a 25% reduction by 2025.

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FY21 Operational Highlights

During the FY21, the company remained focused on delivering its significant growth projects, in line with BPT's purpose to deliver energy sustainably. The company has downgraded production and reserves in the Western Flank. However, even after a downgrade in the production, BPT's balance sheet and income was efficiently supported by its diversified portfolio.

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  • In addition to that, the company reached the Final Investment Decision on the Perth Basin’s Stage 2 Waitsia Gas Project.
  • Beach Energy’s team started the offshore Otway Basin drilling campaign in Victoria, making the largest ever investment in a single campaign.
  • Additionally, the company has also made two exploration successes in the Otway Basin in the form of Enterprise-1 and Artisan-1, well delivering exceptional results.
  • Beach Energy also made two bold acquisitions in the financial year. One of which expands the company's operatorship in Western Flank while at Bass Basin, BPT has commenced FEED activity for the Trefoil project.
  • Apart from this, the O&G player has achieved the safest year on record with an improvement of 40% in the Total Recordable Injury Frequency Rate (TRIFR) relative to FY20, which landed at 2.1.
  • The company is well positioned to achieve the target of reducing 25% emission by 2025 against FY18 levels.

Related Article: How have Beach Energy’s quarterly numbers impacted its share price?

FY21 Performance Highlights

During the financial year, Beach made a profit of AU$317 million, relative to US$500.8 million in the last year. The results were primarily impacted by AU$117 million non-cash, pre-tax impairment.

  • The company’s underlying net profit after tax (NPAT) during the financial year landed at AU$363 million. Beach ended the financial year with a net debt of AU$48 million and liquidity of AU$402 million.
  • The company’s underlying EBITDA of AU$953 million was in line with FY21’s guidance range of AU$900 to AU$1,000 million.
  • Beach produced 25.6Mmboe in FY21, down 4% relative to FY20 due to a declining performance in the Western Flank.

Dividends

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The company paid a fully franked interim dividend as well as a fully franked final dividend of 1.0 cents per share each during the financial year. BPT will also pay a fully franked FY21 final dividend of 1.0 cents per share from profit distribution.

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FY22 Outlook

The company plans to connect new supply with a further four Thylacine development wells being drilled during the year.

  • In Perth Basin, BPT plans to ramp up operations at the Waitsia Gas Project Stage 2 with construction work starting on the new gas facility.
  • In Western Flank, the company plans a single rig program mainly on O&G exploration.
  • The Kupe Compression project of New Zealand will come online in the first half of FY22.

Bottom Line

The financial year proved to be a challenging year for Beach Energy. The company’s results were significantly affected by production and reserves downgrade in the Western Flank, however, the company holds numerous projects that are poised to grow in the future.

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