Stokes in $160m hit as Beach lowers FY21 outlook

Seven Group-backed Beach Energy has downgraded its full-year production and earnings targets along with its Western Flank oil reserves, sending shares in both companies down.

Beach Energy, in which Kerry Stoke’s Seven Group Holdings has a 28.5 per cent stake, plummeted 24 per cent on the stock market on Friday, finishing at $1.28 compared with $1.68 on Thursday.

The decline means Mr Stokes incurred about a $158 million loss in the value of his shares, based on the closing price.

His associated entities have about a 61 per cent stake in Seven Group, which closed 4.8 per cent lower to $21.54.

On Friday, Adelaide’s Beach Energy lowered its full-year production guidance to between 25.5 million barrels of oil equivalent (MMboe), from its previous 26.5-27.5MMboe forecast.

Beach also downgraded oil and gas reserves within its Western Flank operations, in South Australia’s Cooper Basin.

The revisions follow a 5 per cent decline in production to 5.9MMboe, from 6.20MMboe achieved in the previous quarter.

Managing director Matthew Kay said the business, which also holds assets in the Perth Basin, was facing a number of challenges across its Western Flank operations.

“The past five years has seen the Western Flank outperform our expectations, but we are now witnessing underperformance from a number of fields,” he said.

“This has had a negative impact on our production for the quarter, as well as our FY21 production guidance and Western Flank 2P oil and gas reserves.”

Mr Kay said despite the underperformance, Beach had delivered sound third quarter results across the broader business.

The company’s sales revenue increased 14 per cent during the quarter, to $393 million, while its net debt improved to $20 million.

Though, it has lowered its FY21 earnings guidance to between $850 million and $900 million, from its previous $900-950 million forecast, as well as revised its capital expenditure to $700-740 million (from $720-760 million).