Morningstar | Beach Energy promises strong production growth on unconventional resources but with high risk.
Beach Energy produces about 28 million barrels of oil equivalent, or mmboe, per year of oil, gas, and gas liquids since the 2018 acquisition of Lattice from Origin Energy more than doubled output. Beach has traditionally had a strong balance sheet and resilient cash flow positive operations. Gearing is midrange after the acquisition of Lattice. Beach has achieved much of its value in trading assets rather than in increasing production and underlying earnings. The well-timed purchase and sell-down of coal seam gas assets generated a one-off cash bonanza. Perennial capital raisings have blunted shareholder benefits. Beach is a higher-risk investment proposition and is not for conservative investors. Its appeal stems from the potential for conversion of large contingent resources into reserves and economical production.Beach Energy is engaged in oil and gas exploration, development and production and investment in the resources industry. Co.'s operating segments include Cooper Basin, which includes oil and gas sales from Australian production; Other Australia, which includes Co.'s interest in all on-shore and off-shore production and exploration tenements within Australia other than the Cooper Basin; and International interests, which includes Co.'s interests in all areas outside Australia and oil and gas sales from Egyptian production. As of June 30 2016, Co. had total proved and probable reserve estimate of 69.8 million barrels of oil equivalent.
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