* Western Flank oil reserves slashed by 38%
* Downgraded earnings outlook well below brokers' outlook
* Shares sink 24%
MELBOURNE, April 30 (Reuters) - Beach Energy
slashed its reserves estimate and earnings outlook on Friday
after oil production fell at its Western Flank field in South
Australia, sending its shares tumbling by almost a quarter.
Beach's market value plunged by A$935 million ($727 million)
after the grim forecast, following a review of declining output
at Western Flank, first flagged in February. The company also
warned of an impairment charge and withdrew its five-year
"It's clear this was a pretty big risk for the company -
what could come out of this review. It's much more disappointing
than the market had expected," said JPMorgan analyst Mark
Beach, Australia's largest onshore oil producer, downgraded
its estimate of proven and probable Western Flank oil reserves
by 17.6 million barrels, a 38% cut on what it booked in its 2020
It cut its gas reserves estimate by 7.2 million barrels of
oil equivalent (mmboe), a 45% reduction on the reserves booked
"The past five years has seen the Western Flank outperform
our expectations, but we are now witnessing material decline
from a number of fields," Chief Executive Matt Kay said in a
The downgrade in reserves across Western Flank oil and gas
assets "could lead to carrying value adjustments" at its annual
results, due on Aug. 16, Beach said.
The company pared its forecast for underlying earnings
before interest, tax, depreciation and amortisation (EBITDA) for
the current year by 5% to between A$850 million and A$900
million, well below broker forecasts around A$973 million.
It also cut its annual pro-forma production forecast to 25.2
mmboe to 25.7 mmboe from 26.5 mmboe to 27.5 mmboe earlier.
Beach withdrew its five-year outlook, and said it will no
longer provide a five-year outlook in its current form.
The company reported production of 5.89 MMboe for the
quarter ended March 31 versus 6.94 MMboe for the year-ago
quarter, and posted a near 9% fall in sales revenue.
Beach's shares fell 24% on Friday, giving it a market value
of around A$2.9 billion.
($1 = 1.2860 Australian dollars)
(Reporting by Sonali Paul in Melbourne; Additional reporting by
Arundhati Dutta in Bengaluru; Editing by Devika Syamnath and