Adelaide, July 1, 2008 AEST (ABN Newswire) - Beach Petroleum Limited (ASX:BPT)(PINK:BEPTF) has increased its exposure to the expected higher oil prices in global spot price markets, by yesterday closing out a significant portion of its oil hedge book for the next six months, as it moves closer to finalizing its $110 million acquisition of the North Shadwan area in the Gulf of Suez.
Beach's Managing Director, Mr Reg Nelson said "Following BP's waiver of pre-emptive rights for North Shadwan, the prospect of Beach's obtaining a 20% interest in the concession is looking most favourable".
The Australian oil & gas group announced today it had paid out A$50 million to free up its forward oil sales for the opening half of the 2008-09 financial year.
Up to 90% of Beach's oil sales are now available immediately to be sold into the spot price oil market in the opening half of the new financial year - at prices considerably higher than what the Company would have realised under its now dispensed with oil hedge obligations.
"This will maximise the benefits to Beach from a global oil market expected by industry analysts to pay US$150 a barrel and higher for oil in what we believe will be a supply starved and upwards price pressured market in the near to medium term," Mr Nelson, said today.
"As a result of the close out of these hedges, we expect revenue and cash flow generation to be boosted significantly in the next six months," Mr Nelson said.
The 534 kbbls portfolio compares to a hedge inventory at 31 December last year of 1,566 kbbls, most of which was an overhang of oil hedges entered into on the financing of Beach's acquisition of the Delhi Cooper Basin oil assets.
This overhang included oil hedges inherited from Delhi (84 kbbls remaining) or put in place as part of the acquisition financing conditions (450 kbbls remaining) with the Company determined to eliminate the hedge inventory altogether subject to market opportunities.
"Beach will continue to monitor prices over forthcoming months to close out remaining committed oil hedges as opportunities arise," Mr Nelson said.
The close out of the these hedges is the second major achievement for Beach in almost as many days - the group yesterday reporting record oil production in 2007-08 from its Cooper/Eromanga basin oil interests - backed by an increase in the Company's oil reserves in the basin and forecasts of higher 2008-09 output.
Beach's preliminary figures for the just ended financial year showed an 18% rise in Cooper/Eromanga oil production to a record 2.0 mmbls - up from 1.6 mmbls in 2006-07.
Despite record onshore oil production, Beach also lifted Cooper/Eromanga oil reserves by 27% to above 15 mmb, from 12 mmb at 30 June 2007.
Contact
Reg Nelson
Beach Petroleum
TEL: +61-8-8338-2833
Mark Lindh
Adelaide Equity
TEL: +61-414-551-361
Ian Howarth
Farrington National
TEL: +61-3-0223-2455
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