Beach Energy Ltd (ASX: BPT) shares surged this morning as the company increased revenue by 147% and doubled underlying profit in 1H19.
Beach reported a 199% increase in underlying net profit to $279 million and announced a $0.01 per share, fully-franked dividend following the strong result. Facility reliability averaged above 97% for the half-year whilst 1H19 production of 15.2 million barrels of oil equivalent (MMboe) showed the company's operations are running smoothly.
The company drilled 68 wells in 1H19 with a 79% success rate while its Bauer horizontal development well average spud-to-online (i.e. from beginning of drilling to output) improved by 24% to 23.5 days.
An increase in operating cash flow to $479 million and free cash flow of $293 million leaves Beach in good financial health heading into the second half of the year, which has seen the company upgrade its guidance for the full financial year (FY18).
Beach has upgraded production guidance for the full year from 25-27 MMboe to 2-29 Mboe, while capex guidance has narrowed to $450-$500 million. FY19 EBITDA guidance also increased by $200 million to $1.25-$1.35 billion for the full year ended 30 June 2019.
Foolish Takeaway
Beach's result follows a similarly strong earnings season for AGL Energy Ltd (ASX: AGL) as national electricity prices remain sky-high. While the energy companies remain an easy target, I expect today's result and updated guidance to see the stock soar with no sign of falling wholesale electricity prices in the near-term.
I'd be keeping an eye on Seven Group Holdings Ltd (ASX: SVW) this morning given its 70% stake in Beach and wouldn't be surprised to see the duo lead the ASX200 higher in early trade.
