Market Sentiment Around Loss-Making Blue Energy Limited (ASX:BLU)

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 energy company, engages in the exploration, evaluation, and development of conventional and unconventional oil and gas resources primarily in Queensland and the Northern Territory, Australia. The AU$17m market-cap company posted a loss in its most recent financial year of AU$14m and a latest trailing-twelve-month loss of AU$1.4m shrinking the gap between loss and breakeven. 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.

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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. The company is therefore projected to breakeven around 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 103%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Blue Energy's upcoming projects, however, bear in mind that generally an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

View our latest analysis for Blue Energy

Before we wrap up, there’s one aspect worth mentioning. Blue Energy currently has no debt on its balance sheet, which is rare for a loss-making oil and gas company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Blue Energy which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Blue Energy, take a look at Blue Energy's company page on Simply Wall St. We've also put together a list of key factors you should look at:

1. 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.
2. 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.
3. 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.