Beach Energy returns to profit

28 Aug 2012, 7:03 pm   -   Source: AAP

A cashed-up Beach Energy will spend $200 million this year moving Cooper Basin assets closer to production.

A cashed-up Beach Energy will spend $200 million this year to develop its Cooper Basin assets closer to production, after the company returned to profitability.

The oil and gas producer and explorer on Tuesday reported a net profit of $164.2 million for the year to June 30, compared with a loss of $97.5 million in the previous 12 months.

The previous result was hampered by writedowns on its now-defunct Bass Strait asset, following a dramatic downwards revision to the reserves estimate and the costs of a legal spat over it.

"Beach's financial and operational performance has been exceptionally strong and there is every reason to believe that this year will demonstrate a similarly powerful performance," managing director Reg Nelson said in a statement.

The company expects production at between 8.5 and 9.0 million barrels of oil equivalent (mmboe) in the 2012/13 financial year, up from 7.5 mmboe in 2011/12.

Crude oil production from the western edge of the Cooper Basin is expected to reach 10,000 barrels a day by the end of the 2012/13 financial year, and exploration efforts were also expected to deliver "excellent results", Mr Nelson said.

The company now had $379 million in cash, a $150 million financing facility and close to $300 million in cashflow.

It would focus more on developing its oil and gas projects towards production, than on exploration.

Beach forecast between $350 million and $450 million would be spent on capital expenditure in the 2012/13 financial year.

This was up from $257 million in the year to June 30, 2012.

LimeStreet Capital analyst Grant Craighead said investor interest was focused on the company's unconventional shale gas testing program.

It had the potential to book significant resources in the period ahead, with Beach capable of selling gas both domestically and exporting it.

Sales revenue of $619 million, up 24 per cent from the previous year, was a main contributor to the profit growth along with a 14 per cent production increase.

Successful drilling in the western flank of the Cooper Basin - which straddles the South Australian and Queensland border - and stronger average oil prices also helped.

Beach also produces gas and oil from assets in the Gippsland Basin, the United States and Egypt.

It declared a fully-franked final dividend of 1.5 cents, up from one cent.

Beach shares closed five cents down at $1.215

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