The Beach Energy Ltd (ASX: BPT) share price has been heavily sold early in the session on Monday in a sharp and swift reaction to the company's FY24 results posted today.
At the time of writing, shares in the energy company are down more than 10% to $1.27 apiece, bringing losses to more than 6% this past month.
Let's dive in and see what Beach put up in FY24 and what this means for its share price moving forward.
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Beach Energy share price tumbles on mixed FY24 results
The major highlights of the year include the following points:
- Sales revenue was up 9% to $1.8 billion
- Pre-tax income decreased by 3% year over year to $950 million
- Underlying net profit was down 11% compared to last year at $341 million
- Production fell 7% to 18.2 million barrels of oil equivalent (MMboe)
- Completed an audited 2P reserves revision at its Enterprise field, resulting in a reduction of 11.5 MMboe
What else happened in FY24?
The Beach Energy share price is selling off sharply on Monday as investors digest the company's numbers.
Critically, the company has made a downward revision to all of its resource reserves, particularly at its Enterprise field asset.
New 2P reserve estimates are 205 MMboe versus 255 MMboe previously. Similar declines were observed across its 1P, 3P and 2C reserves, respectively.
There have been no changes to production guidance, however.
Beach revised its estimates of gas reserves following new pressure that indicated "a smaller resource pool than originally estimated".
Beach Energy also faced several operational challenges during the year. Production volumes were lower at its Cooper Basin joint venture due to weather disruptions, and the Otway Basin was down from "lower customer nominations".
The company did, however, achieve several milestones.
One is the continued progress of its Waitsia Gas Plant, which is expected to deliver its first resource by early next year. It also had a good year on the injury front.
An internal strategic review also led to a headcount reduction of 26%. Management is targeting a reduction of 30% by the end of H1 FY25.
What did management say?
Beach Energy's Managing Director and CEO, Brett Woods, got straight to the point on the resource revisions:
Disappointingly, over recent weeks we have observed pressure decline at Enterprise which is consistent with a smaller reservoir than originally estimated. We have moved rapidly to assess the impact.
This has resulted in a reserves revision which has been included in our annual reserves statement and audited by external experts. There is no impact to production guidance. The Enterprise field remains a valuable asset within Beach's portfolio and an important source of new gas supply for the East Coast market.
What's next?
Looking forward, Beach Energy expects production in the range of 17.5 to 21.5 MMboe for this financial year.
It is targeting capital expenditure between $700 million and $800 million for maintenance of its assets.
The company is also planning the next phase of offshore drilling at its Victoria assets and will continue exploring oil and gas in the Cooper Basin joint venture.
Beach Energy share price snapshot
The Beach Energy share price is retreating sharply after its FY24 numbers as investors work out what to do next.
It is down 15% in the past 12 months
