In morning trade the Beach Energy Ltd (ASX: BPT) share price is storming higher following the release of its fourth quarter update.
At the time of writing the energy producer's shares are up 5% to $1.56.
How did Beach Energy perform in the fourth quarter?
Beach Energy reported fourth quarter total production of 6.8 MMboe, which brings its full year total production to a total of 26.7 MMboe. This represents a 2% increase on FY 2019 pro forma production of 26.2 MMboe.
FY 2020 oil production came in at 8.8 MMbbl, which was up 27% over FY 2019. This was in-line with its guidance of 8.7 MMbbl to 9.2 MMbbl.
However, despite its solid oil production, its overall production was a touch short of its full year production guidance.
Management explained that the effects of COVID-19 impacted the pace of new Western Flank well connections and gas demand during the quarter, resulting in its production being 1% below guidance.
Sales suffer from oil price collapse.
Beach Energy's sales took a big hit during the fourth quarter following the collapse in oil prices.
It recorded fourth quarter sales revenue of $320 million, which was 26% lower than the prior quarter. This was driven by a 37% decline its realised oil price to $46.90 a barrel and offset slightly by cost saving measures.
Management continues to target further operating cost reductions to help offset the impact of lower oil prices. It is aiming for a 10% reduction in field operating costs/boe in FY 2021 relative to FY 2019 levels of $9.30/boe.
Overall, Beach Energy ended FY 2020 with $50 million net cash and access to $500 million in liquidity.
FY 2020 earnings to fall short of guidance.
In light of the above, management warned that it expects its FY 2020 underlying EBITDA to be marginally below its prior guidance of $1,175 million.
This is primarily due to oil/liquids prices, the impact of COVID-19 on production, and includes the costs relating to the Tawhaki 1 exploration well.
No guidance was given with today's update. However, management intends to release its FY 2021 guidance and a five year outlook with its FY 2020 results in August.
