BPT fell 4.25% on Wednesday following downgrades from Macquarie, Jarden, and Citi—a painful trifecta for the oil and gas company after it presented its Strategic Review and plan to become Australia’s leading domestic energy company on Tuesday. The positives from the presentation included plans to reduce their cost base aggressively, ultimately cutting their Free Cash Flow (FCF) breakeven from $US54/barrel to under $US30/barrel after FY25 – these seemed very optimistic numbers fraught with danger.
- Unfortunately, the negatives continued to outweigh the positives for BPT with a net 2P reserve downgrade across all key assets, plus it guided to FY25 production being ~20% below consensus.
- We believe the negative sentiment toward Tuesday’s news will likely persist as it compounds early April’s major cost blowout. Hence, we see no reason to catch this falling knife.