Adelaide, Dec 23, 2008 AEST (ABN Newswire) - Beach Petroleum Limited (ASX:BPT)(PINK:BEPTF) is largely protected from declining oil prices for the remainder of the financial year, with more than half of its forecast oil production in the second half underpinned at a minimum of $US60 a barrel.
Beach announced today that at least 57% of its forward estimate of 1.5 million barrels of oil sales for the six months between January 1 and 30 June 2009 is underpinned at a minimum of US$60 per barrel.
This includes ten percent underpinned at a minimum US$80 per barrel.
Beach said today it was further cushioned against the weakening oil prices as most of its sales were made against the Singaporean-based oil price benchmark, Tapis, which has traded at a premium for most of 2008 to the West Texas Intermediate (WTI) price that is most often quoted.
"The renewed Tapis trend is replicating the relative strength that we saw for Tapis prices against WTI prices in the first half of 2008," Beach Petroleum’s Managing Director, Mr Reg Nelson, said today.
"If the price differential continues it will further enhance margins to Beach's oil sales over the forthcoming final half year,"
"The market is still extremely volatile, but even if oil prices were to average around US$35 a barrel for the next six months, our hedging should still deliver Beach an average for that period of around A$76 a barrel, based on an exchange rate of 65 cents.
"That is a comfortable outcome for us and, if combined with our performance in the opening half when global conditions were stronger, should yield a full year average of around A$100 a barrel.
"In such unpredictable market environments, the Company's oil hedging portfolio approach has provided a measurable level of insulation against the low end of the current oil price cycle."
Record Western Flank performance
Mr Nelson also announced today a record performance for the Company's continually emerging frontier production from the Western Flank of the Cooper Basin in South Australia.
"Our producing assets in our PEL 92 joint venture have recently yielded their one millionth barrel of oil for 2008, a record performance, emphasising the rising importance of this acreage for Beach's oil production," Mr Nelson said.
"We have made some substantial investments to improve lifting and delivery capacity this year, including installing the first electrical submersible pump (ESP).
"Critically, the development by Beach over the past 12 months of new pipeline infrastructure to service this region has allowed production, distribution and revenue generation to be maintained despite torrential summer rainstorms which swept the region in the opening weeks of December.
"Through our investment in the Callawonga to Tantanna pipeline, we have been able to maintain continuous flows at levels of up to 5700 barrels of oil per day into the pipeline rather than be shut-down.
Beach is currently drilling a number of development and appraisal wells within PEL-92 which are expected to contribute further to the block's increasingly strong production profile in the opening half of calendar 2009.
The first of these, Callawonga-5, has recently delivered an excellent result, intersecting the Namur oil reservoir as prognosed. It is being completed as a new producing well.
Beach is Operator of the PEL 92 Joint Venture (Beach 75%, Cooper Energy Limited 25%).
Contact
Reg Nelson
Beach Petroleum
08 8338 2833
Mark Lindh
Adelaide Equity
0414 551 361
Ian Howarth
Farrington National
03 9223 2455
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