Beach Energy Reports Loss After Impairment Charge to Oil and Gas Fields
Beach Energy, an Australian oil and gas company, has revealed a half-year loss due to a substantial impairment charge on its assets. The company reported a net loss of A$345.1 million (US$224.9 million) for the six months ending in December, compared to a profit of A$207.2 million in the same period last year. The underlying profit also dropped by 10% to A$172.7 million.
The loss was expected after Beach announced in January that it planned to write down its assets by A$505 million after tax. The largest portion of the charge, at A$328 million, was associated with its oil and gas fields in the Cooper Basin in central Australia. This was driven by increased joint-venture spending and projected operating costs.
Despite the loss, Beach Energy declared an interim dividend of 2 Australian cents per share, matching the payout from the previous year. The company’s group revenue increased by 15% to A$953.9 million, aided by the sale of a liquefied natural gas (LNG) cargo to BP and a one-time condensate cargo. The average oil price for Beach’s output in the first half was A$142.0 per barrel, slightly lower than A$148.1 per barrel in the same period last year. The company’s first-half output decreased by 12% to 8.8 million barrels of oil equivalent compared to the previous year.
Beach Energy remains optimistic about the future, with new gas supply expected to come online in 2024 from the Kupe, Enterprise, Waitsia, and Thylacine West projects. Brett Woods, who became Beach’s CEO at the end of January, expressed enthusiasm for the year ahead.
Analyst comment
Negative news. Beach Energy reported a half-year loss due to impairment charges on its assets. The loss was expected after the company announced asset write-downs. The company’s group revenue increased, but the underlying profit dropped. However, Beach Energy remains optimistic about the future with new gas supply expected in 2024. Market reaction: Beach Energy’s stock may decline in the short term due to the loss, but may recover if the new gas projects are successful.
