BEACH PETROLEUM - BPT

[shasta]

I thought I'd be nice about this little subject because you had got it so wrong and let it go...yes, I remember the bagging you gave PPP and the baggings I gave OEL. But who got it right?

You were bagging PPP as a cashbox with no direction when it was in low 20/late teen bracket. You even wanted to bet OEL against it on which one would make it to 50 cents first...well the rest is history even if the bet didnt go ahead.

PPP ~ 49 cents vs OEL ~ 7 cents!

So, shasta, whats this about having it both ways? I dont see any connection I'm sorry.

Maybe if I have time, I'll bring up some quotes from the threads to haunt you! Quickly, go delete em!



Cool they've got drilling! No leverage though!



As I said, a lot more 'unprofitable' gas than oil.

(1) One question. When does hedging run out? Look to the quarterly activities...looks like you've only 1 million barrels left in hedging. Bugger! No more $50 profit per barrel me thinks...

(2) What your forgeting here is that as fields age, their production declines, and production costs becomes a greater portion of revenue, eventually making it uncommercial. Thats very basic thinking, and I'm surprised you didnt think of that. To think that they're going to make same amount of dollars in cashflow on the first barrel of oil as the last is just ridiculous. Go back to school.

(3) We can talk about contingent resources all day...if your into that, lets look at CUE!

(4) Again, as per (2), your dreaming thinking your going to get the same cashflow per barrel for the last drop of oil as the first.

(5) As per (2) and (4). Same reasoning.

(6) This really confuses me?! Doesnt sum of parts mean using 'cashflow'?

Why use a profit figure?

Oh dear, you havent even taken into account time value of money. C'mon shasta, this is part of 100 level accounting papers.

Maybe I can borrow a few k off you and pay it back in 50 years. No interest though right?

Show me an analyst report that has done a valuation with profit, assumes its constant for all reserves, then does a sum of parts, then doesnt discount it back?

Dont get me wrong, BPT looks 'ok' and probably is undervalued.

However, again, I reiterate, do not trust tricha's valuations. I'll even add for you not to trust shasta's valuation on this particular occasion.

Try that calculation again, using discounted cashflow analysis, then add your parts together.

Unprofitable gas?

I don't think so - BPT clearly state the profit is ~$A20/bbl for Gas

Not as profitable as Oil, but they have a massive amount of gas!

1. As for hedging, Oil seems to be moving higher - the hedging was to protect the downside, you clearly don't understand how it works!

2. I'm well aware of the decline in production wells etc, my figures were rough calcs (of course production is higher to start with, but i haven't gone throught each & every field & attributed a flow rate) - the figures are indicative only, to try to show you Tricha's figures aren't so pie in the sky!

3. Not sure how CUE gets into this argument, great little company.

The contingent resources were delibrately left out of my first figures, but if Santos say they are there, i'll go with there figures.

4 & 5. My figures effectively average this out, as you can see i haven't calculated any discounted cash flows, thats not the purpose of this exercise.

6. This is merely a simple addition. Showing actual cashflows rather than valuing the reserves based on a nominal profit figure will result in a large figure that has to be discounted over the useful life, so again i didnt use a DCF - again not the purpose of this exercise.

7. You seem hung up on using a DCF, yet i'm merely showing a back-of-the-envelope calculation, i'm not an analyst nor am i really wanting to calculate cashflows, it would seem any method i used, you'd argue with!

Perhaps you can provide us with a DCF, instead of knocking the attempts of Tricha & myself.

[tricha]

Unprofitable gas?

I don't think so - BPT clearly state the profit is ~$A20/bbl for Gas

Not as profitable as Oil, but they have a massive amount of gas!

1. As for hedging, Oil seems to be moving higher - the hedging was to protect the downside, you clearly don't understand how it works!

2. I'm well aware of the decline in production wells etc, my figures were rough calcs (of course production is higher to start with, but i haven't gone throught each & every field & attributed a flow rate) - the figures are indicative only, to try to show you Tricha's figures aren't so pie in the sky!

3. Not sure how CUE gets into this argument, great little company.

The contingent resources were delibrately left out of my first figures, but if Santos say they are there, i'll go with there figures.

4 & 5. My figures effectively average this out, as you can see i haven't calculated any discounted cash flows, thats not the purpose of this exercise.

6. This is merely a simple addition. Showing actual cashflows rather than valuing the reserves based on a nominal profit figure will result in a large figure that has to be discounted over the useful life, so again i didnt use a DCF - again not the purpose of this exercise.

7. You seem hung up on using a DCF, yet i'm merely showing a back-of-the-envelope calculation, i'm not an analyst nor am i really wanting to calculate cashflows, it would seem any method i used, you'd argue with!

Perhaps you can provide us with a DCF, instead of knocking the attempts of Tricha & myself.

Yeah good point Shasta, upside_umop give us your best shot.

Do u have a valuation. I got this feeling u r at the railway station watching the next ship sail past.

Any which way I look at it, Beach is cheap.

[upside_umop]

Unprofitable gas?

I don't think so - BPT clearly state the profit is ~$A20/bbl for Gas

Not as profitable as Oil, but they have a massive amount of gas!

1. As for hedging, Oil seems to be moving higher - the hedging was to protect the downside, you clearly don't understand how it works!

2. I'm well aware of the decline in production wells etc, my figures were rough calcs (of course production is higher to start with, but i haven't gone throught each & every field & attributed a flow rate) - the figures are indicative only, to try to show you Tricha's figures aren't so pie in the sky!

3. Not sure how CUE gets into this argument, great little company.

The contingent resources were delibrately left out of my first figures, but if Santos say they are there, i'll go with there figures.

4 & 5. My figures effectively average this out, as you can see i haven't calculated any discounted cash flows, thats not the purpose of this exercise.

6. This is merely a simple addition. Showing actual cashflows rather than valuing the reserves based on a nominal profit figure will result in a large figure that has to be discounted over the useful life, so again i didnt use a DCF - again not the purpose of this exercise.

7. You seem hung up on using a DCF, yet i'm merely showing a back-of-the-envelope calculation, i'm not an analyst nor am i really wanting to calculate cashflows, it would seem any method i used, you'd argue with!

Perhaps you can provide us with a DCF, instead of knocking the attempts of Tricha & myself.

(1) Opps, was meaning less profitable. Hedging? I've done an Honours paper on Risk Management shasta. I could talk delta's, gamma's and vega's through your head mate.

Straight from their quarterly:

Beach continues to have protection from lower oil prices with over 1 million barrels of oil sales in 2009/10 hedged at a minimum of US$60/bbl (including 600 kbbls at a minimum of US$80/bbl).
Beach, in addition to it's natural hedge of oil against the USD/AUD, also has further protection from unfavourable currency movements with AUD/USD currency ceilings and collars in place capping the exchange rate for the hedged amounts shown

They have hedging in place for both $80 and $60.

$60 is out of the money. $80 is in. Once this runs out, as long as oil prices are below $80, their profit margins wont be as high.

Contracts covering 1 million barrels is only just over 10% of production. Looks like they used most of their hedging on the 09 financial year. Lower oil prices will be realised this year, unless as you say, oil continues tracking up. The best way to forecast prices is to see what the market is thinking. Use oil futures.

You will also notice that BPT have taken out a 'collar' on foreign currency. So, they somewhat limited to the upside, just not with oil.


(2) Rough estimates make very rough calculations and sloppy valuations. Dont do it.

(3) CUE has a lot of 'contingent' resources.

(4), (5), and (6) - This was completely the purpose of this exercise. If your not discounting, your not doing it right. What type of valuation is it if its not a 'sum of parts'?

(7) Hung up on DCF? Only mentioning it because its what most reputable analysts use! I'd argue with major misconceptions in any calculation, shasta, and yours have many. DCF is the industry standard and to do like your doing is unheard of. Maybe you can do a bit of emperical testing and see whether this really does work? Compare against analyst valuations? Do this for multiple companies, and if it works giving consistent results, good for you. I'd say it wont hold up though.

There is no way I will be doing a DCF calculation for this company. It would take days if not weeks. I have far too much on my plate with my Finance Honours, and much prefer smaller, easier to calculate companies.

I'm quite happy to keep you two honest, and critique for the sake of my fellow sharetrader buddies funds.

[tricha]

(1) Opps, was meaning less profitable. Hedging? I've done an Honours paper on Risk Management shasta. I could talk delta's, gamma's and vega's through your head mate.

Straight from their quarterly:



They have hedging in place for both $80 and $60.

$60 is out of the money. $80 is in. Once this runs out, as long as oil prices are below $80, their profit margins wont be as high.

Contracts covering 1 million barrels is only just over 10% of production. Looks like they used most of their hedging on the 09 financial year. Lower oil prices will be realised this year, unless as you say, oil continues tracking up. The best way to forecast prices is to see what the market is thinking. Use oil futures.

You will also notice that BPT have taken out a 'collar' on foreign currency. So, they somewhat limited to the upside, just not with oil.


(2) Rough estimates make very rough calculations and sloppy valuations. Dont do it.

(3) CUE has a lot of 'contingent' resources.

(4), (5), and (6) - This was completely the purpose of this exercise. If your not discounting, your not doing it right. What type of valuation is it if its not a 'sum of parts'?

(7) Hung up on DCF? Only mentioning it because its what most reputable analysts use! I'd argue with major misconceptions in any calculation, shasta, and yours have many. DCF is the industry standard and to do like your doing is unheard of. Maybe you can do a bit of emperical testing and see whether this really does work? Compare against analyst valuations? Do this for multiple companies, and if it works giving consistent results, good for you. I'd say it wont hold up though.

There is no way I will be doing a DCF calculation for this company. It would take days if not weeks. I have far too much on my plate with my Finance Honours, and much prefer smaller, easier to calculate companies.

I'm quite happy to keep you two honest, and critique for the sake of my fellow sharetrader buddies funds.

Degrees, hmm, u r going to be a long time at that railway station, I think

[upside_umop]

Yeah good point Shasta, upside_umop give us your best shot.

Do u have a valuation. I got this feeling u r at the railway station watching the next ship sail past.

Any which way I look at it, Beach is cheap.

Tricha, no valuation. Better things to spend time on.

My ships have been sailing much faster than BPT.

As I've said, BPT probably is undervalued, its just not my cup of tea as it doesnt appear to have 'grunt'.

[upside_umop]

Degrees, hmm, u r going to be a long time at that railway station, I think

Says the guy who sold his CUE ~ month back

Listen tricha, i've been doing just fine, dont you worry about that!

Opps, your hurting your buddy too. Shasta should have a degree too!

[Huang Chung]

Upside....being a finance honours, I'd love to get your view on the Capital Asset Pricing Model someday.

My 2c.....Can't see what the catalyst would be for a significant re-rating of Beach (other than the poo going north of $100 a bbl again).

[tricha]

Says the guy who sold his CUE ~ month back

Listen tricha, i've been doing just fine, dont you worry about that!

Opps, your hurting your buddy too. Shasta should have a degree too!

There u go again, what has Cue got to do with Beach and get your facts right i'm not pissing in Shasta's pocket - "OEL is like ADY unfortunately Shasta, they couldn't run a pissup in a brewery."

OEL was one of my worst mistakes. It's a gambling stock. BPT on the other hand has CASH, NO DEBT and plenty of Liquid Gold.

[upside_umop]

Upside....being a finance honours, I'd love to get your view on the Capital Asset Pricing Model someday.

My 2c.....Can't see what the catalyst would be for a significant re-rating of Beach (other than the poo going north of $100 a bbl again).

Its an interesting model alright, will have to start a topic up some time and share views on it. Theres so much about it...a lot of emperical research against it too. Ie Fama-French. Save it for another thread some day.

There u go again, what has Cue got to do with Beach and get your facts right i'm not pissing in Shasta's pocket - "OEL is like ADY unfortunately Shasta, they couldn't run a pissup in a brewery."

OEL was one of my worst mistakes. It's a gambling stock. BPT on the other hand has CASH, NO DEBT and plenty of Liquid Gold.

Your pissing in shastas pocket by pissing on degrees tricha.

Whats CUE got to do with it? You missed the last 'train' while you were stuck on the beach. Thats all.

BPT is safe, no doubt. Your valuations arent thats all I'm saying.

Enough from me today/tonight.

[shasta]

Its an interesting model alright, will have to start a topic up some time and share views on it. Theres so much about it...a lot of emperical research against it too. Ie Fama-French. Save it for another thread some day.



Your pissing in shastas pocket by pissing on degrees tricha.

Whats CUE got to do with it? You missed the last 'train' while you were stuck on the beach. Thats all.

BPT is safe, no doubt. Your valuations arent thats all I'm saying.

Enough from me today/tonight.

Grow up you have a lot to learn, & i'm afraid you won't learn much quoting old accounting degree books either.

You could learn alot from those of us with "real world" commercial experience.

Neither Tricha nor i are passing off our valuations as being "technically correct", or that we are licensed sharebrokers/analysts, but simply highlighting "perceived value", if you can't see that then you shouldn't in the sharemarket period.

Now let's keep the thread to BPT matters