Oil and gas company Beach Energy is gearing up to be the world’s latest LNG player, but investors trashed the stock after full-year earnings missed the mark.
The Adelaide-based company is looking to expand gas extraction domestically and overseas due to rising gas prices and strong demand.
“The area of the east coast and the west coast is an integral part of our growth aspirations,” Chief Executive Morné Engelbrecht said Monday during an investor briefing.
For Beach, the current fiscal year focuses on projects that will form the basis for growth in 2024.
The lack of exploration outside of the Cooper Basin over the past year was a key issue the company would address this year and next, he said.
Beach reported underlying net profit after tax (NPAT) of $504 million, up 39%, and lower production.
Total revenue increased 13% to $1.8 billion and underlying earnings before interest, taxes, depreciation and amortization (EBITDA) increased 17% to $1.1 billion.
But investors trashed the company, slashing the stock price by more than 13% or 25 cents to $1.60 in afternoon trading, after the result fell short of market expectations.
Beach is “in great shape” and the goal is to support the market with new sources of gas supply, Mr. Engelbrecht said.
Beach operates across Australia and New Zealand and will enter the global liquefied natural gas market after signing an LNG supply agreement with BP Singapore last week.
“This is a very valuable contract that will provide a significant revenue stream for Beach over its five-year term,” he said.
In the Otway Basin, offshore South Australia and Victoria, the Explorer’s seven-well drilling campaign was successfully completed and delivered a new gas discovery at the Artisan field and six wells successful development projects in the Geographe and Thylacine fields.
Geographe 4 and 5 were connected to the Otway Gas Plant and contributed to a 47% increase in production from the Otway Basin, and the company said the connection of the last four wells was planned for the mid-2023.
In the Perth Basin, the “transformational” Waitsia Stage 2 project has started with good progress being made in the construction of the plant and the drilling of development wells.
“Another key milestone was the recent signing of the LNG Sale and Purchase Agreement which will see BP purchase the 3.75 million tonnes of Waitsia Stage 2 LNG,” Mr Engelbrecht said.
Beach also announced a new mid-term emissions reduction plan to support the aspiration to achieve net zero emissions by 2050.
He said a key part of their emissions reduction is the Moomba carbon capture and storage project, one of the largest CCS projects in the world which has been on the drawing board for more than a decade. .
Santos and joint venture partner Beach announced their decision to move forward with Moomba in November.
“We are aiming for the first carbon injection in 2024,” Mr. Engelbrecht said.