Financial Data and Key Metrics Changes - Beach Energy reported a total production increase of 9% to 19.7 million barrels of oil equivalent, with sales volumes rising 16% to 24.7 million barrels of oil equivalent [18][19] - Sales revenue increased by 13% to AUD 2 billion, driven by higher production and five Waitzier LNG swap cargoes, while underlying EBITDA rose 20% year on year to AUD 1.1 billion [19][30] - Underlying NPAT increased by 32% to AUD 451 million, with a significant improvement in underlying EBITDA margin by 300 basis points to 57% [19][31] - The company declared a record final dividend of AUD 0.06 per share, bringing the total full-year dividend to AUD 0.09 per share, representing a 31% payout ratio [19][20] Business Line Data and Key Metrics Changes - The Otway Basin saw a 64% increase in production to 6.8 million barrels of oil equivalent, while the Bass Basin experienced a 91% increase in production to 1.4 million barrels [18] - The Cooper Basin faced challenges due to severe flooding, impacting production but overall performance in other areas compensated for this [18][19] Market Data and Key Metrics Changes - Beach Energy's operated assets and non-operated interests now supply 19% of the entire East Coast domestic gas market, positioning the company as a significant supplier [4][6] - The East Coast gas production increased by 23% in FY 2025, with Beach supplying 90% of the East Coast gas demand [13][19] Company Strategy and Development Direction - The company aims to become Australia's leading domestic energy company, focusing on core East Coast and West Coast hubs while maintaining a strong balance sheet for growth opportunities [6][20] - Beach Energy has implemented a disciplined gas marketing strategy, rebalancing its customer portfolio and retaining approximately 30% of its East Coast gas supply for the spot market [16][19] Management's Comments on Operating Environment and Future Outlook - Management highlighted the declining gas supply available to the domestic market, with firm long-term gas demand, leading to widening structural supply deficits [12] - The company is optimistic about its growth potential, with plans for further exploration and development activities in FY 2026 [21][40] Other Important Information - Beach Energy achieved its best safety performance in 14 years, with no significant hydrocarbon spills and a focus on improving safety culture [25][27] - The completion of the Moomba CCS project is a significant milestone in the company's emissions reduction pathway, abating over 1 million tonnes of CO2 [28] Q&A Session Summary Question: Can you talk us through the dividend and concerns about M&A or net debt rising? - Management explained the decision to set the dividend payout slightly below the targeted range to ensure financial flexibility for potential growth opportunities [49][50] Question: Is there further cost reduction potential in 2026 and 2027? - Management confirmed ongoing efforts to reduce costs, particularly in the Cooper Basin, and expressed confidence in achieving the $11 per barrel target [52][54] Question: Can you provide details on the $11 per BOE cost target? - Management clarified that the target remains at $11 per barrel, set to outperform peers, with current operations achieving a unit operating cost of $10.68 [57][58] Question: What is the balance sheet capacity for growth? - Management indicated a willingness to stretch the balance sheet for value-accretive acquisitions while maintaining a target gearing level below 15% [59][60] Question: Can you outline the framework for assessing new growth opportunities? - Management reiterated a focus on domestic opportunities with a target return rate above 12%, emphasizing a cautious approach to acquisitions [69][72] Question: Are there any constraints in accessing larger domestic growth opportunities? - Management expressed confidence in finding a broader suite of opportunities, focusing on maximizing shareholder value and domestic supply [73][74] Question: Will there be any new acreage releases of interest? - Management mentioned ongoing interest in acreage releases in South Australia and Queensland, particularly in CSG [81] Question: What is the potential pricing delta upside from recontracting at the Cooper Basin? - Management indicated that recent recontracting would likely yield significant pricing improvements, with benefits expected to flow through in upcoming quarterly results [84]
BP Prudhoe Bay Royalty Trust(BPT) - 2025 H2 - Earnings Call Transcript