Slater and Gordon Lawyers has filed a class action against oil and gas company Beach Energy on behalf of investors who bought shares over an eight-month period during which there was a significant decline in the company’s projected earnings from its Western Flank oil and gas reserves in South Australia’s Cooper Basin.
The claim, filed in the Victorian Supreme Court, is being brought on behalf of shareholders who incurred losses after acquiring Beach Energy shares between 17 August 2020 and 29 April 2021.
The class action alleges the energy company engaged in misleading or deceptive conduct and breached its continuous disclosure obligations under the Corporations Act.
On August 17 last year, the company advised the ASX that it had updated its 5-Year Outlook which included expected annual production of between 37 and 43 million barrels of oil equivalent (MMboe) in FY25, and cumulative free cash flow of $2.1 billion for FY21 to FY25.
The company also provided guidance for FY21 which included expected production of between 26 and 28.5 MMboe and underlying EBITDA of between $900 million and $1 billion.
On February 15 this year, it announced expected FY21 production of between 26.5 and 27.5 MMboe and underlying EBITDA of between $900 million and $950 million. However, the company maintained its five-year outlook target.
But on April 30, the company completely withdrew its 5-Year Outlook and announced significant downgrades to its 2P oil and gas reserves at the Western Flank. It also downgraded its FY21 guidance, revising expected production to 25.2 and 25.7 MMboe and underlying EBITDA to between $850 million and $900 million. In the day of trading that followed, the company’s share price dropped by about 25 per cent.
Slater and Gordon Class Actions Lawyer Eleanor Toohey said Beach Energy knew or ought to have been aware that it had failed to consider factors that would affect its performance. This included the largely unsuccessful FY20 exploration and appraisal drilling results in the Western Flank, the declining reserves position on the Western Flank, and the reliability of the modelling system used to assess reserves on the Western Flank.
“As a result of our investigation following Beach Energy’s profit downgrades in the 2021 financial year, we concluded that there was a strong basis to allege that the company provided misleading guidance and was obliged to correct the market’s understanding of its financial position at a much earlier time,” Ms Toohey said.
“Investors are entitled to assume that when they purchase shares in a listed company all of the material information relevant to its financial position has been disclosed. The downgrades by Beach Energy during the August 2020 to April 2021 claim period caught the market by surprise and revealed that this had not been the case.”
The lead plaintiffs in the case, John and Gail Nelson, bought 3,000 shares in Beach Energy on 28 April 2021. Just two days later, their investment had plummeted by a quarter.
Investors who purchased shares between 17 August 2020 and 29 April 2021 (inclusive) should register for the class action at https://www.slatergordon.com.au/bpt.
The class action has been issued on a No Win-No Fee basis and group members will not be exposed to any out-of-pocket costs as a result of their participation in the claim. Slater and Gordon intends to apply, at the appropriate time, for a group costs order. Group members can access further information and updates about the proceedings by contacting Slater and Gordon at https://www.slatergordon.com.au/bpt.