Trading Symbol: NWX (TSX-V)
The economic shut down from COVID-19 has resulted in a reduction in demand for crude oil and petroleum products worldwide. Also, failure of the
What is already certain is that significant capex cuts are being made by most producers, with energy companies cutting and deferring costs wherever they can. At the same time oil production from North American companies is declining, bank capital substantially reduced; in some cases banks are refusing energy companies access to credit facilities that were already in place, with other companies in breach of their debt covenants. As a consequence, dividends in energy companies are being slashed or suspended. This latter point is obviously of concern to shareholders and potential investors in Newport.
As stated in a
That statement is still valid and Management remains confident in the Company's ability to weather the current oil price disruption. After the recent dividend payment the Company has over
The Company's ability to maintain its dividend schedule is subject to Beach continuing to produce oil and gas from their
At the end of
Western Flank oil assets are low cost producers, with field operating costs of approximately AUD$5/bbl.
Revenues from Beach's gas business cover all their group operating and stay-in-business costs; projected FY2021 free cash flow break-even oil price is less than
Beach's actual realized oil price in January and
Beach crude oil sells at a material premium to the Brent Crude oil price and the declining Australian dollar provides a further buffer against lower US dollar oil prices.
Beach is well positioned to manage an extended period of low oil prices, as well as the impact of the Covid-19 pandemic.
While its strong balance sheet means Beach is well placed to continue growth investment, in recognizing the current downturn, it is being prudent in targeting up to a 30% deferral in FY2021 capital investment relative to its previous guidance.
Obviously, Newport's management will re-examine the Company's dividend schedule on the basis of Beach's FY2020 Financial Results and any revised guidance. At the present time shareholders should be aware that Newport can support the current quarterly dividend schedule, and Beach is in an incredibly strong position to handle the current market disruption.
About Newport
Newport holds a 2.5% GOR on several oil and gas licences and permits in the
The Company has an advantageous business model, with the 2.5% GOR over permits with strong technical fundamentals and with excellent operators in Beach. As stated in a Company News Release dated
The Company continues to strongly encourage shareholders and potential investors to access information released independently by Beach and Santos in order to keep current during exploration, development and production on all the licences subject to the Company's 2.5% GOR.
The Company currently has 104,429,874 common shares issued and outstanding and over
Neither the
Cautionary Statement on Forward-Looking Information
This news release is intended to provide readers with a reasonable basis for assessing the future performance of the Company. The words "believe", "should", "could", "expect", "anticipate", "contemplate", "target", "plan", "intends", "continue", "budget", "estimate", "may", "will", "schedule" and similar expressions identify forward-looking statements. Forward-looking statements may pertain to assumptions regarding Beach's drilling plans, future dividends, the price of oil and fluctuations in currency markets (specifically the Australian dollar). Forward-looking statements are based upon a number of estimates and assumptions that, which are considered reasonable by the Company, are inherently subject to business, economic and competitive uncertainties and contingencies. Factors include, but are not limited to, the risk of fluctuations in the assumed prices of oil, the risk of changes in government legislation including the risk of obtaining necessary licences and permits, taxation, controls, regulations and political or economic developments in
The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by applicable laws.
SOURCE
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