PERTH (miningweekly.com) – Australian oil and gas major Beach Energy has revised its full year production expectations for 2019, after a better-than-expected first half.

The ASX-listed company is expecting full-year production to reach between 28-million and 29-million barrels of oil equivalent, up from the previous guidance of between 25-million and 27-million barrels of oil equivalent.

The higher output expectations also stemmed from the timing of the Otway sale, changing from the end of December 2018 to the end of March 2019.

Beach on Thursday reported that production during the three months to December had reached 7.4-million barrels of oil equivalent, which was 4% below the September quarter production, but brought the half-year production to 15.2-million barrels of oil equivalent, which was higher than expected.

Sales volumes during the December quarter reached 7.7-million barrels of oil equivalent, which was 7% below that of the September quarter, primarily owing to lower seasonal sales gas.

Revenue for the quarter also declined by 14% on the previous quarter, to A$441-million.

“This December quarter was one of increased activity and continued delivery for Beach, being our busiest ever with the drill bit,” said CEO Matt Kay.

“Beach participated in 39 wells during the quarter with an overall success rate of 77%. This was also a strong quarter on the reliability front, with our facility reliability averaging over 97%.”

He noted that the December quarter also marked the final milestone in the acquisition of the Lattice assets, with Beach discharging the transitional services agreement (TSA) with fellow listed Origin Energy at the end of December, some seven months ahead of schedule.

Kay said that discharging the TSA signified the completion of the integration of the assets, and has advanced realised synergies of some A$56-million a year, with the target of A$60-million by the end of the 2019 financial year.

Beach in 2017 struck a A$1.58-million deal to acquire Lattice Energy, which held a 67% interest in the Otway gas project, in Victoria, as well as interests in various adjacent exploration permits, along with the Halladale, Speculant and Black Watch gasfields in the Otway basin. Lattice also owned a 42.5% interest in the Bass gas project, in Victoria, as well as interests in discoveries located in nearby exploration permits.

The company in October last year inked a deal with O.G Energy to divest of a 40% interest in its Victorian Otway assets for A$344-million.

“Although integration is complete and synergy targets within sight, our focus on additional efficiency continues. At the end of the December quarter, run rate direct controllable cost savings were around A$8-million, well on track towards realising our targeted reduction of A$30-million a year by the end of 2020,” said Kay.

Meanwhile, the company is on track to be debt free with the completion of the Otway sale.

“To be debt free more than two years ahead of the timeline outlined by the announcement of the Lattice acquisition is testament to our team’s ability to maximise output from our expanded portfolio while maintaining a focus on operating margins,” Kay said.

Beach’s rate of capital expenditure (capex) is expected to increase in the second half of 2019, as the company progresses the development of value-accretive growth projects, including drilling in the onshore South Australian Otway basin, the ordering of long lead items for the Victorian Otway drilling programmes, the addition of a drilling rig in the Western Flank and four drilling rigs operating in the Cooper Basin joint venture for the entire second half of the financial year.

Beach has narrowed its capex expectations for the full year from the previous range of A$440-million to A$520-million, to between A$450-million and A$500-million.