Investors in Beach Energy have taken a large writedown in their stride, with shares in the Cooper Basin-focused producer joining a rally in energy sector stocks.
Beach said late on Friday it would take impairment charges of up to $650 million in its half year accounts - its second major writedown in the last six months.
The company joined a growing list of energy players, including Santos, Woodside Petroleum and BHP Billiton, that have been hit by the slump in commodity prices.
However, shares in the company rose more than 10 per cent in early trade on Monday, as a jump in crude oil prices lifted sentiment in the beaten down sector.
At 1230 AEDT, Beach Energy shares were trading 3.5 cents, or 9.5 per cent higher at 41 cents each. Shares in larger rivals Woodside, Santos and Oil Search were trading between 2-4 per cent higher.
"We haven't seen any change in the fundamentals for the sector. This rally is just reflective of the price moves in the oil market," IG's market analyst Angus Nicholson said.
Oil prices jumped more than nine per cent on Friday to trade above $US30 a barrel, on higher short-term demand and as traders cashed in short positions. Analysts, however, expect the rally to be short-lived.
Shares in the sector have been battered over the past year, losing between 30 to 80 per cent in value, as oil prices tumbled to 13-year lows.
Beach said its impairment charge, to be taken against non-operated oil and gas assets in the Cooper Basin, largely reflected continuing oil price declines.
The company further slashed its FY 2016 capital expenditure guidance by a quarter to between $180 to 210 million, but slightly firmed up its production guidance for the year to between 8.0 to 8.6 million barrels of oil equivalent (mmboe).
"The actual write down doesn't make so much difference, unless debt covenants are impacted," Argonaut oil and gas analyst Phillip Kin said.
"However, the lower oil price assumptions will universally put pressure on credit ratings in the sector."
Last week, ratings agency Moody's placed credit ratings of four major mining companies and energy giants Woodside and Santos on review for downgrades because of a prolonged slump in commodity prices.
Beach Energy announced in October plans to merge with fellow central Australia-based producer Drillsearch, to create a larger energy company that could better navigate the sector downturn.
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