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    Oz Beach Plans to Spend Big in FY19

Summary

Australian oil and gas company Beach Energy saw its sales revenue surge in fiscal 2017-2018 (July-June) following the acquisition of the Lattice Energy assets and has announced plans for its biggest ever investment which is to take place in the current fiscal, the company said August 20.

by: Nathan Richardson

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Oz Beach Plans to Spend Big in FY19

Australian oil and gas company Beach Energy saw its sales revenue surge in fiscal 2017-2018 (July-June) following the acquisition of the Lattice Energy assets and has announced plans for its biggest ever investment which is to take place in the current fiscal, the company said August 20.

The company’s sales revenue for the 12-month period was A$1.25 billion ($0.91bn), which is up by 92% year on year. Its underlying net profit after tax of A$302mn, was up 86%, while its net profit after tax was A$199mn, down 49% due to the impact of exploration asset impairments, Beach said.

Beach chief executive officer Matt Kay said the results were evidence of the successful acquisition and integration of the former Lattice Energy assets.

“We have created a high performance team that has continued to deliver strong results through the integration process, a credit to Beach staff across the business,” he said.

Beach completed an acquisition of Lattice Energy from Origin at January 31 for a purchase price of A$1,585mn. The Lattice Energy assets include a 67% interest in the Otway Gas Project, all of the Halladale, Speculant and Black Watch gas fields, and a 42.5% stake in the Bass Gas Project.

“FY19 starts a new phase for Beach, as we embrace becoming a multi-basin oil and gas explorer, developer, operator and producer,” Kay said.

“Having conducted a comprehensive review of the assets across the business, we expect FY19 to be the biggest ever investment year for Beach,” he said.

The company’s capital expenditure for the current fiscal is expected to be within the range of A$460mn-A$540mn, it said.

RBC Capital Markets analyst Ben Wilson said the guidance was above the A$380mn which the investment bank had been expecting.

“We think the big story of the result will be FY19 capex guidance, which is higher than anticipated and to deliver production similar to pro forma FY18,” he said.

“While some of the capex is front-loaded to deliver future production (e.g., onshore and offshore Otway Basin), we think the market will query the large development capex figure,” he said.

Beach’s total production was 19mn barrels of oil equivalent in fiscal 2017-2018, up 80% year on year, and it is expecting 26mn boe-28mn boe in the current fiscal, it said.