It has been a disappointing day so far for the Beach Energy Ltd (ASX: BPT) share price.
In morning trade, the energy producer's shares are down 5% to $1.42.
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Why is the Beach share price tumbling lower?
The catalyst for the weakness in the Beach share price on Wednesday has been the release of its quarterly report.
According to the release, Beach's first quarter production was down 4% on the prior quarter to 5.7MMboe. This was driven largely by natural Western Flank oil decline, which was partially offset by increased nominations at Otway and the Cooper Basin joint venture.
Also potentially weighing on the Beach share price was its revenue for the quarter. Beach reported an 8% decline in sales revenue to $388 million despite an 11% increase in the realised oil price thanks to improving global product demand. This revenue decline was due to an 11% reduction in sales volumes to 5.76MMboe and a small decline in realised gas/ethane price.
Beach also revealed that its first quarter capital expenditure was $195 million, up 13% on the prior quarter. Management advised that its development, plant and equipment spend increased 14% as the offshore Otway drilling activities continued and increased drilling activity within the Cooper Basin joint venture and Western Flank.
Management commentary
Beach's Managing Director, Matt Kay, acknowledged that production was softer during the quarter but remains positive on the future.
He said: "While production is slightly down for the quarter, we are in a phase where our focus is on executing our major growth gas projects. The Offshore Otway development drilling campaign now moves to the Thylacine targets, following successful results at Geographe 4 and 5. This is Beach's largest ever drilling campaign and will be an important source of gas for the East Coast market."
"A major milestone of the quarter was signing a HOA [heads of agreement] with bp for the sale of 3.75 MT of LNG from the Waitsia Stage 2 Gas Project – heralding our arrival into global LNG markets for the first time in our 60-year history. We also achieved first gas from the Kupe compression project, which means that asset, which is critical for New Zealand's energy needs, will be able to maintain production at up to 77 TJ per day."
"It is also exciting to commence an exploration campaign in the Western Flank, where we've already had two successful gas finds in this quarter – with an oil exploration campaign set for later in the year. This is to be followed by an uplift in production from first gas from the Geographe wells and the Cooper Basin development drilling in the second half of FY22," he added.
