Beach Energy Share Price Jumps 8% on Investor Update (ASX:BPT)

The Beach Energy Ltd [ASX:BPT] today outlined its low-risk strategy targeting production of 28 MMboe (million barrel of oil equivalent) in FY24.

The targeted growth represents a compound annual growth rate (CAGR) of 13%.

This also follows BPT’s sustainability focus to deliver a 25% emission reduction from FY18 baseline by 2025 and an ambition to reach net zero emissions by 2050.

Beach’s investor update was well received.

Beach Energy Ltd [ASX:BPT] share price is currently trading at $1.34 per share, up 8.5%.

ASX BPT - Beach Energy Share Price Chart

Source: Tradingview.com

However, today’s spike runs against the grain, following a sustained slump for BPT this year.

Year to date, Beach Energy is down 25%.

Beach Energy’s investor update

Firstly, Beach Energy provided a base production target of 28 MMboe in FY24, excluding exploration success and pre-FID projects.

Beach said growth will be fully funded, delivered through development projects already in the execution phase.

Moreover, the company reported the completion of drilling at Geographe 4 and 5. Both wells intersected reservoir in line with pre-drill expectations.

BPT also reminded the market of its recent Heads of Agreement (HOA) with BP for all 3.75 million tonnes of Beach’s share of expected LNG volumes from Waitsia Gas Project Stage 2.

The company is also on track to deliver a ‘25 by 25’ operated emissions target with Moomba Carbon Capture and Storage (CCS) to potentially deliver the ‘next step change in emissions reduction.’

BPT’s ’25 by 25’ goal refers to a 25% emissions reduction by 2025 and an aspiration to reach net zero emissions by 2050.

Beach Energy Managing Director and CEO Matt Kay said the firm’s diversified business is slated to deliver ‘material gas production growth in the near-term.’

Beach’s corporate strategy focuses on filling our gas plants and supplying gas into the tightening Australian East Coast, New Zealand gas and international LNG markets.

The successful delivery of first gas from the Kupe Inlet Compression project and the recently signed HOA with bp for all our marketed Waitsia Stage 2 LNG volumes represent the first runs on the board as we look to deliver our growth strategy.

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Beach Energy Share Price Outlook

Today’s move in BPT’s share price suggests investors are bullish on the firm’s laid-out growth plans, backed by an emissions reduction target.

Beach has also increased its liquidity to roughly $650 million. This came after the successful refinance and upsizing of a revolving debt facility to $600 million.

The utility is targeting material-stable free cash flow from eight gas plants by FY24.

BPT’s base case scenario as provides production uplift targeting 28 MMboe in FY24, a 27% increase on the midpoint of FY22 guidance.

Beach Energy’s Matt Kay said,

We have built a business that is no longer reliant upon Western Flank upside, with base production growth not banking on FY22 exploration drilling success, although we do retain upside potential across all of our five basins.

Material cash flows from our stable gas business will provide Beach with optionality, including re-investment into our high returning gas assets to maintain plateau production, maximising the value of our infrastructure and other capital management decisions.

While BPT’s outlook is looking rosier — which is reflected in a buoyant market response today — some investors may nonetheless seek opportunities elsewhere.

Opportunities that do not have to rely so much on cyclical and volatile developments in traditional energy sectors.

With the recent upheaval triggered by fears of an Evergrande contagion, some investors may be thinking about the potential benefits of ETFs as opposed to individual stocks.

If this is what you are into, be sure to check out The Rum Rebellion’s latest report on our top five ETFs — it’s well worth a read.

Regards,

Kiryll Prakapenka,

For The Rum Rebellion

PS: The Rum Rebellion is a fantastic place to start your investment journey. We talk about the big trends driving the Australian Economy. Learn all about it here.

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