Beach Energy Announces FY21 Full Year Results

Source: 8/16/2021, Location: Not categorized

FY21 summary
• Final Investment Decision at Waitsia Gas Project Stage 2
• Conducted Waitsia LNG marketing negotiations, targeting execution of LNG sales contract in FY22
• Two exploration successes (Enterprise 1 and Artisan 1) in Otway exploration program
• Successfully drilled Geographe 4 development well, offshore Otway Basin, results in-line with expectation1
• Completed Cooper and Otway Basin Lattice GSA price reviews with favourable outcomes to Beach
• Two strategic bolt-on acquisitions in the Cooper and Bass Basins
• Downgrade of Western Flank 2P reserves, as previously announced2
• Estimated FY21 emissions
3 12% lower than FY18 levels and on track to reach 25 by 25 emissions target
• Progressing FEED studies for the 1.7 million tonnes CO2 per annum Moomba CCS project (Beach ~33%)
• Beach announces its aspiration to reach net zero Scope 1 and 2 operated emissions by 2050

Operational summary
• Safest year on record with three million hours worked without a Lost Time Injury
• Production of 25.6 MMboe, down 4% on FY20, primarily due to lower Western Flank oil volumes
• Otway Gas plant operated at 99.3% reliability, with Kupe and Middleton facilities at ~98.5%
• Progressed Kupe compression project to commissioning stage on budget
• Completion of 28-day statutory shutdown at the Otway Gas Plant in November 2021, on time and budget

Financial summary
• Net profit after tax (NPAT) of $317 million, impacted by $117 million non-cash, pre-tax impairment
• Underlying net profit after tax (NPAT) of $363 million
• Underlying EBITDAX of $1,010 million and underlying EBITDA of $953 million, supported by favourable arbitral outcome in relation to the carbon liability associated with a Kupe GSA
• Strong balance sheet maintained to deliver on gas growth projects with net debt of $48 million, net gearing of 1.5% and liquidity of $402 million at 30 June 2021
• Beach in net cash position as of 13 August 2021
• Final dividend of 1.0 cps, fully franked

Beach ends year of mixed fortunes with good progress on gas growth
Beach Energy has today released its FY21 Full Year results as well as FY22 guidance, announcing an underlying Net Profit After Tax of $363 million.

Beach retained a strong balance sheet with net debt of $48 million, net gearing of 1.5% and liquidity of $402 million at year end. Despite the recent downgrade to Western Flank production and reserves, the Board has maintained its 1 cent per share dividend for shareholders.

The Company’s underlying EBITDA of $953 million was towards the mid-point of original FY21 EBITDA guidance of $900 – 1,000 million provided in August 2020. This was supported by two favourable arbitration outcomes over a contract dispute relating to a Kupe GSA and the Otway Lattice gas price review.

Managing Director, Matt Kay, said that while FY21 was a challenging year for Beach on the Western Flank, the Company remains in a strong position as it delivers on its gas growth projects, primarily in the Perth and Victorian Otway Basins.

“Beach had two exploration successes in the Victorian Otway, we delivered two value accretive bolt-on acquisitions to grow existing production hubs, and we reached FID on the Waitsia Gas Project Stage 2, bringing Beach closer to supplying gas into the global LNG market for the first time.

“In our 60-year history, there has never been a bigger project than our Otway Offshore campaign. This saw the successful drilling of Geographe 4 and Xmas trees placed on top-hole locations at Geographe 4 and 5.

“We also doubled the production deliverability at our Perth Basin facilities, and we are in the final stages of commissioning at the Kupe compression project, extending the life of this important asset in New Zealand.

Commenting on FY22 guidance, Mr Kay said that Beach expects production to be further impacted by the declining Western Flank fields, ahead of the ramp up of production in the Perth Basin and Victorian Otway Basin development projects.

“The Offshore Otway campaign will progress throughout the year with first gas from the new Geographe development wells on track for mid-FY22 and all six development wells expected to be drilled by the end of FY22, pending stable weather conditions.

“These wells, once connected to the Otway Gas Plant, will help to supply the constrained East Coast gas market, which is facing supply shortfalls in the coming years.

“We are also excited to see construction commence at the Waitsia 250 TJ/day gas processing facility.

“FY21 was also Beach’s safest year on record, and we have chalked up 3 million hours without a Lost Time Injury - that alone, is a reason to be very proud of the efforts of the Beach team.

“On the sustainability front, Beach commenced FEED studies on the Santos-operated Moomba CCS project in the Cooper Basin, where we have a 33% interest. The project plans to leverage existing Cooper Basin JV infrastructure and sequester up to 1.7 million tonnes of CO2 per annum. It is supported by the Federal Government and was recently granted $15 million of funding from the Carbon Capture Use and Storage Development Fund.

“Beach also announces an aspiration of reaching net zero Scope 1 and 2 operated emissions by 2050 and made progress on our 25 by 25 emissions targets, delivering five key emission reduction initiatives. At the end of FY21 our estimated emissions were 12 per cent lower than they were in FY18.”

Key highlights:
• FY21 production of 25.6 MMboe8, 4% year-on-year variance
• 2P reserve life unchanged at 13 years9
• 2P gas and associated liquids reserve life of 16 years
• Sales gas and ethane volumes contribute 79% of 2P reserves
• Three-year 2P reserve replacement ratio10 (RRR) of 132%
• Four-year Western Flank 2P oil RRR of 125%, despite FY21 downgrade
• No impairment of Cooper Basin cash generating unit as a result of Western Flank reserve downgrade
• Net 18 MMboe 2P oil and gas reserve11 reduction resulting from Western Flank revisions12
• Addition of 20 MMboe net 2P reserves at the Enterprise gas discovery
• Reserves include the impact of asset acquisitions of Mitsui’s Bass Basin interests (+14 MMboe) and Senex’s Cooper Basin assets (+7 MMboe) from 1 July 2020
• Net 7 MMboe 2C resource Artisan gas field discovery in offshore Otway Basin
• La Bella reclassified from reserves to contingent resource following Otway exploration success
• Beach has an effective interest of 35.2% for CBJV 2P reserves

This release has been authorized for release by the Beach Energy Board.

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