Photo by: Bloombeg
PERTH (miningweekly.com) – Australian oil and gas producer Beach Energy on Monday warned of an impairment charge of between A$450-million and A$650-million for the 2016 half-year, on the back of lower oil prices.
The company also announced a A$60-million reduction in its planned capital expenditure for 2016, to between A$180-million and A$210-million.
The company told shareholders that the reduced range reflected savings of about A$20-million achieved in the first half of 2016, and a further A$40-million in reductions and deferrals identified for the remainder of the year.
Subject to joint venture (JV) approval, the savings would be achieved through a curtailed operated drilling programme, well inventory management, deferral of the Bauer facility upgrade and noncritical projects, and a reduced capital programme within its South Australian Cooper Basin JV and the South West Queensland JV, which were operated by fellow-listed Santos.
“During these challenging times it is extremely pleasing to demonstrate Beach’s ability to live within its means and maintain financial strength,” said acting CEO Neil Gibbins.
“Despite lower oil prices over the past six months, we have held our net cash position relatively constant, secured increased debt financing facilities and improved terms, and identified up to A$40-million of second half savings and deferrals in our capital programme.”
Operationally, Beach continued to perform well, Gibbins said, adding that production levels were maintained during the second quarter of 2016, giving the company greater confidence in its full-year guidance, while the recent infrastructure projects have delivered results better than expected.
Beach on Monday narrowed its full-year production expectations from the previous guidance of between 7.8-million and 8.6-million barrels of oil equivalent, to between 8-million and 8.6-million barrels of oil equivalent.
Last week, Australian oil and gas major Woodside also announced an impairment, citing the lower short- and long-term oil price. The company flagged an impairment of between A$1-billion to A$1.2-billion impairment for 2015. Mining giant BHP Billiton had also warned of a $4.9-billion post-tax impairment ($7.2-billion pretax) on its onshore US oil and gas assets during the half-year ended December.