Perth, Feb 24, 2009 AEST (ABN Newswire) - The underlying strength of Beach Petroleum Limited's (ASX:BPT)(PINK:BEPTF) expanding oil and gas operations is reflected in a more than doubling of net profit after tax announced today for the six months ended 31 December 2008.
In a striking performance, Beach's net profit after tax jumped 117% to a record A$127.5 million from A$58.8 million in the previous corresponding opening half.
By excluding the gains from commodity hedging and write-off adjustments from the latest first half profit, the strength of Beach's normalised profit is further highlighted - up 142% to A$52 million compared with the previous corresponding period.
The profit hike was achieved with further strong growth in total revenue, up 41% from A$340 million to a record A$480 million, while higher oil and gas sales of 5.5 million barrels of oil equivalent (mmboe) and surging oil and gas production of 5.0 mmboe were also first half records for Beach.
The Company's shareholders registered on 31 March 2009 will be paid a steady interim dividend of 0.75 cents per share by late April 2009.
"Our Board has decided to maintain the interim dividend at last year's level, despite the tougher operating conditions and much conjecture surrounding the payment of dividends by companies in the current market," Beach's Chairman, Mr Bob Kennedy, said today.
Outlook
Mr Kennedy said while the current global economic uncertainty did not look like subsiding quickly, Beach Directors believed the Company was in an excellent position to withstand some of the issues facing the Australian economy, and the petroleum industry generally.
"With assets that generate good cash flow and a sound balance sheet, Beach is in a position to look for opportunities that may come to light in the current environment, while continuing to exploit the exploration opportunities within the Company's current suite of assets," he said.
"Beach will continue to do what it is good at; finding and developing oil and gas projects, while at the same time continuing to manage the business with sound judgement and conservatism and striving to maintain the strong position the Company currently enjoys, particularly in these uncertain times.
"Our Board strongly believes that the current low oil price environment is a temporary one and that the mid to long term will see a return to higher oil prices."
Coal seam gas assets - potential sale
Beach also today advised that it had sought expressions of interest from third parties for a potential sale of part or all of the Company's Tipton West coal seam gas and associated assets.
Mr Kennedy said further details of the results of this process were expected to be announced in the coming months.
"Our decision to seek expressions of interest has been undertaken following a strategic review of our interests in the Surat Basin (Queensland) coal seam gas region with a view to determining the best way to maximise value for our shareholders," Mr Kennedy said.
"The board considers that the value of the Company's underlying coal seam gas assets has not been fully reflected in Beach's share price."
The coal seam gas sector in Australia is currently going through a period of unprecedented consolidation. Beach has substantial exposure to the sector via the Surat Basin interests, including its Tipton West project (operated by Arrow Energy).
"Beach was one of the first to see the potential in this sector, when the coal seam gas industry was in its infancy, by earning its interest in the Tipton West project through a commitment of a A$35 million investment," Mr Kennedy said.
"We believe that our interest, according to recent market transactions, is worth considerably more than this," he said.
In August 2008, Beach announced a 282% increase to its proved and probable (2P) coal seam gas reserves to 443 petajoules (PJ) from 116 PJ and an increase in the Company's proven (1P) reserve entitlements by 45% to 94 PJ from a previous reserve certification of 65 PJ. Since 31 December 2008, the Company has also announced a further substantial increase to its net Proved, Probable and Possible (3P) coal seam gas reserves by 34% to more than 1115 PJ (192 million barrels of oil equivalent or mmboe).
Robust oil and gas sales/production
Another strong oil and gas sales and production performance contributed to Beach's continued strong revenue growth, with total sales revenue up 34% to a record A$334 million in the latest half year to 31 December 2008.
The sales revenue upsurge reflected higher production and sales volumes for both oil and gas. Oil and gas sales for the half year totaled 5.5 mmboe, yielding revenue of A$334 million and the Company's strong production profile was reflected in an increase to 5.0 mmboe compared with 4.6 mmboe in the previous corresponding period.
The other main contribution to the Company's record A$480 million total revenue came from the significant hedging and foreign exchange gains of A$139 million during the latest period.
Increased focus on Egypt
Beach's Managing Director, Mr Reg Nelson, said the past half year had also been a period of considerable activity in new areas where Beach continued its strategy of looking at assets outside of its traditional areas in Australia.
"This strategy is developing according to plan and Directors believe that it will, in time, yield material results to Beach and its shareholders," Mr Nelson said.
"In Egypt for instance, during the period we received Government approval of the acquisition by Beach of a 20% interest in the North Shadwan and the South East July concessions and we are now moving to develop this area as one of the Company's core focus regions for the Company," Mr Nelson said.
"Closer to home, we saw further strong operating performances from our core assets in the Cooper Basin and Gippsland Basin, and it was most pleasing that Beach's recent track record of exploration success continued through the period under review, particularly in the Cooper Basin where we continue to open up the Western flank.
Activity was concentrated in the Callawonga area of PEL 92 (Beach 75%). Two exploration wells were drilled during the period, both of which were successful. Brownlow-1 and Canunda-1, discovered new gas fields in the Patchawarra Formation. Both wells are located in PEL 106 (Beach farm-in block) where Beach is earning a 50% interest.
Beach also participated in 40 oil and gas wells operated by Santos Limited on behalf of the Cooper Basin Joint Venture. Of the 23 wells that were addressing oil targets as part of the 'Cooper Oil Project' 17 of these wells were successful and cased for future completion as oil production wells.
During the period, the Callawonga-Tantanna pipeline commenced operation, with the Parsons Field being connected to the pipeline.
Mr Nelson said Beach's operating expenses were in line with the prior period. Depreciation and amortisation increased due to higher capital expenditure and production levels. Borrowing costs have reduced as debt levels and interest rates have fallen and as the prior period contained legal fees which were incurred for the refinancing.
The company still maintains a strong cash position of A$139 million as at the end of the period with the group's conservative gearing at only 4.6% in terms of net debt. Beach Petroleum's debt to debt plus equity ratio also further reduced from 18% at 30 June 2008 to 14% as at 31 December 2008, reflecting Beach's objective to continue to reduce its current debt levels.
Contact
Hector Gordon
Chief Operating Officer
TEL: +61-8-8338-2833
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