Beach Energy share price climbs on BP deal

The Beach Energy Ltd (ASX: BPT) share price is heading north today.

During early morning trade, the energy producer’s shares are up 0.29% to $1.735.

For context, the S&P/ASX 200 Index (ASX: XJO) is in negative territory by 0.30% to 6,993.7 points.

What’s fuelling Beach Energy shares today?

Investors are bidding up the Beach Energy share price this morning after the company announced its latest deal.

In its release, Beach Energy advised it has entered into a liquefied natural gas (LNG) sale and purchase agreement (SPA) with BP Singapore.

Under the SPA, BP will be purchasing all 3.75 million tonnes of Beach Energy’s expected LNG volumes. This will come from the Waitsia Stage 2 project, with supply forecasted to commence in the second half of 2023 and flow for approximately 5 years.

Supply will be delivered on a Free on Board (FOB) basis from the North West Shelf facilities in Karratha, Western Australia. BP is a joint venture partner in NWS.

The price for the LNG contract is said to be linked to Brent crude oil and Japan Korea Marker price indices. While there is no restriction on upside price participation, there is a downside price protection mechanism. This is to safeguard any severe falls in LNG prices where commodity cycle prices become unstable.

Beach Energy CEO, Morné Engelbrecht touched on the deal, saying:

Signing of the LNG SPA with bp is a significant milestone in our delivery of material growth and another step closer to Beach becoming a supplier of LNG to the global market…

Once LNG sales commence, Beach will have further diversified its commodity pricing exposure. Beach’s oil and gas portfolio will provide exposure to Brent oil prices, spot LNG prices, east coast, west coast and New Zealand domestic gas prices, and oil-linked gas prices. This places Beach in an enviable position within the Australian energy sector.

Beach Energy share price snapshot

While the ASX 200 index has recorded losses in 2022, the Beach Energy share price has surged by almost 40%.

These gains have mostly come off the back of favourable trading conditions as energy prices continue to spike.

Beach Energy has a price-to-earnings (P/E) ratio of 9.84 and commands a market capitalisation of roughly $3.95 billion.

The post Beach Energy share price climbs on BP deal appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• How is the Beach Energy share price managing to hang tough despite falling oil prices?
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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