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With the business potentially at an important milestone, we thought we'd take a closer look at Blue Energy Limited's (ASX:BLU) future prospects. Blue Energy Limited, an oil and gas exploration company, engages in the exploration, evaluation, and development of conventional and unconventional oil and gas resources primarily in Queensland and the Northern Territory in Australia. On 30 June 2024, the AU$15m market-cap company posted a loss of AU$14m for its most recent financial year. The most pressing concern for investors is Blue Energy's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for Blue Energy
Blue Energy is bordering on breakeven, according to some Australian Oil and Gas analysts. They expect the company to post a final loss in 2026, before turning a profit of AU$1.4m in 2027. So, the company is predicted to breakeven approximately 3 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2027? Working backwards from analyst estimates, it turns out that they expect the company to grow 110% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Blue Energy given that this is a high-level summary, however, take into account that generally energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 0.05% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Blue Energy, so if you are interested in understanding the company at a deeper level, take a look at Blue Energy's company page on Simply Wall St. We've also compiled a list of essential aspects you should further research:
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Historical Track Record: What has Blue Energy's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Blue Energy's board and the CEO’s background.
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Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.