Beach Energy Limited (BPT)
HOLD

Waiting on Waitsia

 26 Jul 2023
Sector: Energy

4Q23 PRODUCTION

Need To Know

  • 4Q23 production does enough to meet lowered FY23 guidance.
  • LNG prices still buoyant providing gloss to the revenue line.
  • Ryan Stokes joins the Board, but will this help?

Investment Implications

Another quarterly production miss (against consensus) for Beach Energy is a standard refrain from this company where guidance and outcomes seldom meet. FY23 will not rank as a ‘personal best’ for BPT and maybe that is why the major shareholder (Seven Group) has sent in Ryan Stokes to sit on the Board, perhaps literally.

4Q23 production of 5 mmbbls got FY23 inside the lower end of guidance at 19-20.5mmbbls to which consensus had quiescently attached its hopes. Fortunately, higher LNG prices saved the day for revenue which beat consensus only to find that capex had blown out to $1.1bn above guidance of $0.9-1.0bn. To be fair, BPT had accelerated some capex on the SACB JV and Waitsia needed some extra labour dollars. BPT had net debt of $166m as at 30 June 2023.

CEO Morne Engelbrecht says “Beach’s value proposition has never been stronger” and while he genuinely means it, investors are granted a wry smile and tweaked eyebrow at the thought. The Waitsia project will soon be shipping LNG and other projects are inching towards contributing, so the optimists still have a flag to wave.

The current share price does not have much enthusiasm baked in, hence despite our mostly negative take on BPT’s position, the balance of risk is arguably more to the upside. Hence we retain our Hold recommendation with a decent swell of scepticism.

Investment View

Marking BPT’s financial and production releases is an exercise in futility. The period always begins with hope of a new guidance metric and talk of project development progress only to end with excuses and minuses in the ‘change’ column. BPT has said FY24 guidance will be provided at the 14 August FY23 result announcement after it was withdrawn at the 1H23 result.

But just as BPT fervently insists the projects are about to fire, commodity prices have removed the sparkle factor that would have made it all worthwhile. We will have to wait for the FY23 result to determine what the cost base has been doing to BPT’s earnings before making a more informed call on the stock. For now, it remains a Hold.

Figure 1: BPT annual production continues to disappoint

View the latest Research Report

Stock Overview

Share Price

Company Overview

BPT is an Australia-based oil and gas company with assets in Australia and New Zealand. They explore and produce oil and gas, and own infrastructure in the industry.

Disclaimers and Disclosures

Issuer

The information and opinions contained within Sandstone Insights Research were prepared by MST Financial Services Pty Ltd (ABN 54 617 475 180, AFSL 500557) ("MST").

Reliance

Whilst MST make every effort to use reliable, comprehensive information in the construction of its reports, MST make no representation, warranty or undertaking of the accuracy, timeliness or completeness of information in this report. Save for any statutory liability that cannot be excluded, MST and MST employees, representative and agents shall not be liable (whether in negligence or otherwise) for any error or inaccuracy in, or omission from, this advice or any resulting loss suffered by the recipient or any other person.

General Advice

Any advice contained within Sandstone Insights Research is general advice only and has been prepared without taking into account any person’s objectives, financial situation or needs. Any person, before acting on any advice contained within Sandstone Insights Research, should first consider consulting with a financial adviser to assess whether that advice is appropriate for their objectives, financial situation and needs. 

General Disclosures

This report should be read in conjunction with MST Disclaimers and Disclosures and is published in accordance with MST Conflict Management Policy which are available on the MST website: https://www.sandstoneinsights.com.au. 

Currency of Research

The recommendations made in a Sandstone Insights Research report are current as of the publication date. If you are reading a report materially after publication, it is likely that circumstances will have changed and at least some aspects of the analysis may no longer hold.

Access and Use

Any access to or use of Sandstone Insights Research is subject to the Terms of Use. By accessing or using Sandstone Insights Research you hereby agree to be bound by our Terms and Conditions and hereby liable for any monies due in payment of accessing this service. In addition you consent to us collecting and using your personal data (including cookies) in accordance with MST Privacy Policy, including for the purpose of a) setting your preferences and b) collecting readership data so MST may deliver an improved and personalised service to you. If you do not agree to MST Terms of Use and/or if you do not wish to consent to MST use of your personal data, please do not access this service.

Equities Research Methodology

Please click here for information about MST equities research methodology.