Beach Energy Ltd. (BPT), an explorer developing shale gas resources in central Australia, slumped the most in seven months in Sydney trading after results at one of its wells disappointed some investors.
Beach fell as much as 8.9 percent to A$1.325, the biggest drop since June 4, while the benchmark S&P/ASX 200 Index decreased as much as 0.2 percent. The shares were 7.2 percent lower at A$1.35 as of 12:03 p.m. local time.
The energy producer, whose operations include 20 oilfields and six gas discoveries in the Cooper Basin, recorded a peak rate of 2.6 million standard cubic feet per day at its Moonta-1 gas well, the Adelaide-based company said Jan. 18. Beach is among explorers in the Cooper Basin, an area straddling the border of South Australia and Queensland states, seeking to benefit from rising prices and demand driven by projects on the east coast to ship liquefied natural gas to Asia.
Although Beach’s flow rate is the highest it has achieved, “it is likely to fall short of expectations,” according to a Jan. 18 note from Macquarie Group Ltd. Expectations were as high as 4 million standard cubic feet per day, said Macquarie, which forecasts Beach shares will rise to A$1.70 in 12 months.
“While we expect some weakness on the back of this result, it does confirm that Beach can deliver meaningful flow rates from this previously untested interval,” Macquarie said.
Beach, Santos Ltd. (STO) and Senex Energy Ltd. (SXY) are among oil and gas producers developing shale prospects in Australia, which has almost 400 trillion cubic feet of estimated shale gas reserves that may be recoverable, according to a 2011 report from the U.S. Energy Information Administration.
Beach has fallen 8.8 percent this year, valuing the company at A$1.71 billion ($1.79 billion), compared with a 2.5 percent gain in Australia’s benchmark index.
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