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UPDATE 2-Australia Beach Energy's market value dives by $730 mln as reserves estimate cut

* Western Flank oil reserves slashed by 38%

* Downgraded earnings outlook well below brokers’ outlook

* Shares sink 24% (Recasts throughout with share price reaction)

MELBOURNE, April 30 (Reuters) - Beach Energy slashed its reserves estimate and earnings outlook on Friday after oil production fell at its Western Flank field in South Australia, sending its shares tumbling by almost a quarter.

Beach’s market value plunged by A$935 million ($727 million) after the grim forecast, following a review of declining output at Western Flank, first flagged in February. The company also warned of an impairment charge and withdrew its five-year production outlook.

“It’s clear this was a pretty big risk for the company - what could come out of this review. It’s much more disappointing than the market had expected,” said JPMorgan analyst Mark Busuttil.

Beach, Australia’s largest onshore oil producer, downgraded its estimate of proven and probable Western Flank oil reserves by 17.6 million barrels, a 38% cut on what it booked in its 2020 annual report.

It cut its gas reserves estimate by 7.2 million barrels of oil equivalent (mmboe), a 45% reduction on the reserves booked in 2020.

“The past five years has seen the Western Flank outperform our expectations, but we are now witnessing material decline from a number of fields,” Chief Executive Matt Kay said in a statement.

The downgrade in reserves across Western Flank oil and gas assets “could lead to carrying value adjustments” at its annual results, due on Aug. 16, Beach said.

The company pared its forecast for underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for the current year by 5% to between A$850 million and A$900 million, well below broker forecasts around A$973 million.

It also cut its annual pro-forma production forecast to 25.2 mmboe to 25.7 mmboe from 26.5 mmboe to 27.5 mmboe earlier.

Beach withdrew its five-year outlook, and said it will no longer provide a five-year outlook in its current form.

The company reported production of 5.89 MMboe for the quarter ended March 31 versus 6.94 MMboe for the year-ago quarter, and posted a near 9% fall in sales revenue.

Beach’s shares fell 24% on Friday, giving it a market value of around A$2.9 billion. ($1 = 1.2860 Australian dollars) (Reporting by Sonali Paul in Melbourne; Additional reporting by Arundhati Dutta in Bengaluru; Editing by Devika Syamnath and Muralikumar Anantharaman)

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