Beach Energy (BPT) is an oil and gas exploration and production company based in South Australia. BPT has oil and gas reserves of 92 million barrels of oil equivalent (mmboe) equivalent and contingent resources of 466.6 mboe.

The company holds interests in more than 300 exploration and production tenements in Australia, New Zealand, Papua New Guinea, Tanzania and Egypt among others.

FY12 and 1Q13 results

BPT reported an FY12 net profit of $164 million, a massive swing from FY11’s net loss of $97.5 million. A solid underlying profit figure of $122 million was posted, up a staggering 190% on the prior year.

Sales revenue was up 25% to $619 million, driven by higher oil and gas prices and increased sales volume. FY12 production was 7.5 mmboe, up 14% from FY11 due to better operational access and the first oil production in Egypt.

The group has more recently reported its quarterly results, with production increasing 2% on the previous quarter to 2.1 mmboe. BPT’s quarterly results put it on tract to reach its forecasted FY13 production of 8.5 – 9.0 mmboe.

Oil outlook

The chart above shows oil prices (white line) compared to BPT’s stock price (yellow line). As is evident from the chart, oil prices and BPT’s share price are highly correlated.

China accounts for over 10% of the global oil consumption and is one the fastest growing consumers of the liquid. The country’s recently released October import figures revealed that its demand for oil increased 6.6% on the prior year, to 9.76 million barrels per day.

This is the third highest level of Chinese demand on record, and as China’s economy recovers this should translate into further demand and thus an increase in the oil price.

Looking ahead

The group is in the process of expanding its current wells and exploring potential development. To that end the company has forecasted  for around $155 million in development expenditure and $195 million in exploration expenditure for FY13.

These developments and explorations are more or less funded, as the company has $352 million cash on its balance sheet and access of another $150 million via a financing facility.

We see limited risk to the groups FY13 production of 8.5 – 9.0 mmboe, given the 1Q result and in our view conservative forecast.

Given the strength of oil prices over the last month and the potential upside from its current capital expenditure program we feel that BPT share price has further appreciation ahead.

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Caltex (CTX) is Australia’s leading transport fuel supplier and convenience retailer and the only integrated oil refining and marketing company listed on the ASX.

CTX operates two major refineries, at Kurnell in Sydney, and Lytton in Brisbane. CTX also operates a convenience store network in association with service station sites.

CTX has been one of the hot stocks in recent months, surging from around $9 in July to be now trading around $14.40.

On 9 November, CTX announced that it expects FY10 underlying profit to fall by 7% due to a strong Aussie dollar and a maintenance-related shutdown at one of its refineries.

CTX expects operating profit (which excluded the impact of oil price volatility) to be between $285 million and $295 million, compared to last year’s $203 million.

The stronger Aussie dollar was expected to wipe $65 million from Caltex’s refinery margins from 2009.

CTX declined 0.6% following that day’s profit warning.

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Energy Resources Australia (ERA) is one of the largest uranium producers in the world, providing over 10% of the world’s uranium production through long-term contracts.

ERA sells its product, drummed uranium oxide, to power utilities in Asia, Europe and North America under strict international and Australian Government safeguards.

The company is majority-owned by mining giant Rio Tinto (RIO), which has a 68% stake in the company.

Since October 2009, ERA has slumped from around $27 to just $13, making it one of the shares to sell during the period.

On 13 October, ERA released its 3Q10 production report. Uranium oxide production rose 10% from the previous quarter, however was down 36% from the same period last year.

Due to the lower-than-expected production numbers, ERA has lowered its full year production guidance to 3,900 tonnes, from the previous 4,300 – 4,700 tonnes.

ERA shares sank 6.4% on the day of the announcement, making it one of the worst performers on the ASX.

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New Hope Corp (NHC) is a coal producer with open-cut mines at Acland on the Darling Downs, and at Rosewood near Ipswich.

NHC markets its thermal coal and approximately 65% of sales are exported to customers in the Asia-Pacific area, including Japan, Korea and also Chile. The remaining 35% is sold domestically for electricity production and to industry.

NHC is also listed in the energy sector under the All Ordinaries index.

On 21 September, NHC reported a 91% slide in FY10 net profit to $183.8 million, with the result hammered by lower coal export prices, higher production costs and a higher exchange rate.

Revenue increased 6.3% to $745 million, while coal production edged up 15% to 5.9 million metric tons.

NHC forecast similar coal output for FY11 and that annual contract thermal coal prices are likely to remain steady in US$ terms.

NHC declared a final dividend of 4.5 cents, which was unchanged from a year ago.

NHC was one of the shares to buy in recent months, with the stock benefiting from rising interest in Australia’s coal sector.

However, the disappointing results announcement saw its share price slumped 3.9% today.

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ASX Shares to Sell – Energy Resources Australia (ERA)

Energy Resources Australia (ERA) produces uranium and distributes its products to utility companies in Asia, Europe and North America. It is 68.4% owned by major mover on the ASX, Rio Tinto.

In Australian news, ERA has reported a 7% on-quarter drop in uranium oxide production for 2Q10.

The drop in production at its Ranger mine was attributed to mine sequencing issues and higher than normal rainfall.

As a result, ERA downgraded FY10 uranium oxide production to 4,300 – 4,700 tonnes, from the previous 5,240 tonnes.

ERA shares slumped over 4% following its disappointing production numbers to close at $14.05 a share.

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The Australian market has surged in price over the last six months as the global financial crisis has receded and there are plenty of hot stocks that still provide opportunity.

Australia is uniquely positioned with its large natural resources base and its proximity to China. This has allowed our market to be one of the best performers in recent times.

The question is, of course, what stocks are hot right now?

Some of the most obvious hot stocks have been the retailers, which have benefited from Australia’s strong employment market.

Earlier this year, there were extremely gloomy forecasts about how high unemployment would rise. But, employment levels have remained strong, and with more money in ordinary Australians’ pockets, they are out at the shopping centres and buying up big!

Hot shares in the retail sector include JB Hi-Fi and David Jones, both of which have more than doubled over the last six months.

The launch of Myer back on to the market is another signal of how hot this sector is at the moment.

There has also been many hot stock picks in the energy sector as crude oil moves back toward US$80 per barrel.

What stocks are hot in the energy sector?

The big oil players like Woodside and Oil Search have seen moves of more than 100% since the start of the year.

However, the hot stock picks in the sector have been the smaller companies with exposure to natural gas. Eastern Star Gas and Karoon Gas have both seen massive moves since the start of the year.

We continue to expect that the sector will remain in favour and there will be plenty of hot stock tips in the sector over the next few months.

Finally, for investors looking to pick up a bargain, the property sector offer plenty of opportunity.

The best hot share tips in the sector are companies that are managing their debt levels well, with Stockland and Lend lease both pushing higher over the last few months.

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