Beach Energy Earnings: Robust Result but Reserve Declines Test Market Patience

No-moat Beach Energy’s fiscal 2024 earnings beat our forecast materially, but it’s not all plain sailing for the small Australian hydrocarbon producer. Beach shares fell more than 10% following the announcement, the market presumably unimpressed with yet more reserve write-downs. The group's proven and probable, or 2P, reserve position of 205 million barrels of oil equivalent, or mmboe, is down by 50 mmboe or nearly 20% from this time last year. Half of this was already in the market, including the loss of 7mmboe from a poor Kupe South 9 development well outcome in June, and 18mmboe coming simply via production. But the balance is new, reflecting re-evaluation of Enterprise and Thylacine North reservoirs in the Otway Basin, in addition to more moderate Cooper Basin and Beharra Springs Deeps adjustments.