Australian independent Beach Energy plans to reduce capital expenditure (capex) by 20pc for the second half of the current 2014-15 fiscal year after reviewing its spending in response to lower oil prices.
Beach has also narrowed its production guidance range to between 24,384-25,753 b/d of oil equivalent (boe/d) from 23,562-25,753 boe/d previously with production expected to reach the upper end of the guidance.
The change in guidance followed a 4pc fall in output to 25,943 boe/d in the October-December quarter against the same period a year earlier. Beach produces natural gas, oil, condensate and LPG from the Cooper basin in South Australia.
Some projects have been identified for deferment, Beach said. This will provide an initial reduction in estimated 2014-15 second-half capex of up to A$55mn ($44mn), down by 20pc from a year earlier. The revised guidance for 2014-15 is A$430mn-A$470mn down from the original guidance of A$450mn-A$500mn, with Beach warning that further downwards revisions could be made.
The reduction mainly consists of lower spending on the South Australia Cooper Basin (SACB) and South West Queensland (SWQ) joint-venture gas projects. Beach owns 20.2pc of SACB with fellow Australian independent Santos as the operator with a 66.6pc stake and the remaining 13.2pc owned by Australian upstream and utility group Origin Energy.
The same shareholders are in the SWQ venture with Beach owning 23.2pc, Santos 60pc and Origin 16.7pc. A further revision of the SACB and SWQ joint ventures 2015 capital expenditure budget was expected in the coming weeks and that may further impact on the Beach capital expenditure guidance, the company said.
Its 2015 guidance has yet to be received Santos in relation to the SACB and SWQ ventures, with Santos continuing to warn of significant cuts across its business, Beach said.
Revised development spending on SACB and SWQ is estimated between A$260mn and A$275mn, of which more than 90pc will be spent in the Cooper basin region and exploration spending is estimated between A$110mn and A$125mn, Beach said. Nearly all of the exploration spending will be in the Cooper basin area.
SACB accounted for about 75pc of Beach's capital expenditure in 2013-14 when the venture accounted for between A$200mn and A$220mn of spending.
Gas sales from the Cooper basin rose to 65.22TJ/d (160.22mn m³) in the October to December quarter from 46.74TJ/d a year earlier, Beach said. The average gas and ethane price received was A$5.8/GJ ($4.75/mn Btu) in the October-December quarter from A$6/GJ for the same period a year earlier.
The Nappamerri Trough gas joint venture with Chevron continues to progress, with the stage one work programme in ATP 855 completed following fracture stimulation of the Geoffrey-1 well, it said. Chevron has until 31 March to advise Beach if it will progress the venture to the second stage.
Beach reported a 17pc fall in revenues to A$194mn in the October-December quarter.
km/rjd
Send comments to feedback@argusmedia.com
Request more information about Argus' energy and commodity news, data and analysis services.
Copyright © 2015 Argus Media Ltd - www.argusmedia.com - All rights reserved.
