The Beach Energy Ltd (ASX: BPT) share price has been among the best performers on the ASX 200 on Tuesday.
In morning trade, the energy producer's shares are up over 7% to $1.33.
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Why is the Beach share price charging higher today?
There have been a few catalysts for the rise in the Beach share price on Tuesday.
This includes the announcement of an agreement with energy giant BP after the market close yesterday, another rise in oil prices overnight, and an investor update this morning.
In respect to the latter, the company's update outlined its low risk strategy targeting production of 28 MMboe by FY 2024. This target excludes exploration upside and pre-final investment decision projects.
If Beach were to achieve this target, it would be a big increase on FY 2022's guidance. This year the company is targeting production of 21 to 23MMboe.
How will Beach get there?
Beach's Managing Director and CEO, Matt Kay, advised that material gas production growth is expected in the near-term through the recently completed Kupe Inlet Compression project, future connection of the Offshore Otway wells, and the delivery of the Waitsia Stage 2 Gas Project.
He commented: "Beach's corporate strategy focuses on filling our gas plants and supplying gas into the tightening Australian East Coast, New Zealand gas and international LNG markets."
"The successful delivery of first gas from the Kupe Inlet Compression project and the recently signed HOA with BP for all our marketed Waitsia Stage 2 LNG volumes represent the first runs on the board as we look to deliver our growth strategy."
"The offshore Otway and Waitsia Stage 2 developments are expected to provide significant production uplifts over the next two years, with the first of the offshore Otway wells on track to be connected in early 2022 with the recent Geographe 4 and Geographe 5 results meeting pre-drill expectations," Mr Kay said.
All in all, Beach's base case scenario provides production of 28 MMboe in FY 2024, a 27% increase on the midpoint of FY 2022 guidance.
But it may not stop there. The CEO notes that these plans are expected to lead to strong free cash flow generation which may be reinvested.
"Material cash flows from our stable gas business will provide Beach with optionality, including re-investment into our high returning gas assets to maintain plateau production, maximising the value of our infrastructure and other capital management decisions," he added.
The Beach share price is down 29% in 2021 despite today's decline. Shareholders will no doubt be hoping that this update is an inflection point for the Beach share price.
