Stock Spotlight: Beach Energy Limited (ASX:BPT)
This week's Stock Spotlight is ASX-listed Beach Energy Limited.
About Beach Energy Limited.
Beach Energy Limited operates as an oil and gas exploration and production company. It engages in the operated and non-operated, onshore and offshore, and oil and gas production in producing basins across Australia and New Zealand. The company also explores, develops, produces, and transports hydrocarbons; and sells gas and liquid hydrocarbons. The company was formerly known as Beach Petroleum Limited and changed its name to Beach Energy Limited in December 2009. The company was incorporated in 1961 and is headquartered in Adelaide, Australia.
Source: Yahoo Finance
Key Stats
Key Stats
Source: Yahoo Finance, ASX. Data as of 17/09/24.
Price Performance
Growth Potential
- Trading on undemanding valuation and below our price target – recent issues and potential ongoing impacts from these issues are likely to be in the current valuation.
- Leveraged to the tight East Coast gas market – leverage improves as contracts roll over.
- Execution improves – better than performance at Waitsia, Perth Basin exploration and Otway production.
- Improving shareholder returns via a clearly defined capital management strategy (including franking credits available to be distributed to shareholders) – dividend yield could materially improve for BPT.
- Higher than expected commodity prices.
- Strong balance sheet
- Potential M&A activity (although major shareholder Seven Group could present challenges for any proposed transaction).
Key Risks
- Execution risk – Drilling and exploration risk. Unable to resolve the issue at Western Flank, leading to long-term downgrades to key estimates for the project.
- Commodity price risk – movement in oil & gas price will impact uncontracted / re-contracting volumes.
- Regulatory risk – such as changes in tax regimes which adversely impact profitability.
- M&A risk – value destructive acquisition in order to add growth assets.
- Financial risk – potentially deeply discounted equity raising to fund operating & exploration activities should debt markets tighten up due external macro factors.
- Currency risk
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Disclaimer: This article does not constitute financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking financial, legal and taxation advice before investing.
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