Beach Energy’s plans for growth are looking positive after a strong 2019 financial year.
The company increased its earnings before interest, tax, depreciation and amortisation (EBITDA) and net profit after tax (NPAT) by 80 and 86 per cent, respectively, during the 2019 financial year compared with the previous year.
Beach also exceeded expectations by producing 29.4 million barrels of oil equivalent (MMboe), compared with guidance of of 26-28 MMboe, with an 85 per cent drilling success rate.
The company reached its highest ever free cash flow of $559 million, with a net cash position two years ahead of schedule.
Beach managing director Matt Kay said it would be a gross understatement to say he was proud of the company’s team.
“We have delivered on every promise we made at last year’s investor briefing and the focus is now about investing in the company’s high-value growth assets,” Kay said.
The company also recorded its best safety and environmental performance on record.
Beach will fast-track investment in the 2020 financial year, targeting 194 wells, particularly in Cooper Basin and Otway Basin.
Its initial expectations for investment and production this financial year are $750-$850 million and 27-29 MMboe, respectively.
“Our accelerated investment campaign will see approximately $1.5 billion of additional investment over five years, starting in financial year 2020 where 90 per cent of our growth expenditure is projected to generate greater than 50 per cent rates of return,” Kay said.
“This means the drill-bit will see even more activity with participation in up to 196 wells, up from 134 in financial year 2019 and utilising 10 rigs, up from five.
“In particular, we’ll be investing up to $200 million in Western Flank oil, with up to 16 horizontal wells and further appraisal of the high producing Bauer field.
“Our Victorian Otway Basin campaign will get underway in financial year 2020 with the Black Watch onshore-to-offshore well, the first of as many as 10 drilling opportunities in the next few years ensuring continued supply to the Otway gas plant.”
Beach’s five-year outlook has improved with production targets of 34-40 MMboe, up from 30-36 MMboe, and a free cash flow target of $2.7 billion.
“As we move into the next phase of our growth story the focus remains the same – we will continue to execute our strategy, take a targeted and disciplined approach and deliver on our promises and driving best in-class returns for our investors,” Kay said.