PERTH (miningweekly.com) – ASX-listed Beach Energy has reported some mixed results for its half-year ended December, days after announcing a cost blow-out at the Waitsia Stage 2 project.

Beach on Monday reported that sales revenue for the six months under review was up by 3% to A$813-million, while underlying earnings before interest, taxes, depreciation and amortisation were down 4% to A$491-million and underlying net profit after tax was down by 10%, to A$191-million.

Production during the first half of the year reached 10-million barrels of oil equivalent, with Beach spending A$569-million on capital expenditure )capex) during the period.

The company has updated its full year production guidance from the 20-million to 22.5-million barrels of oil equivalent previously set, to between 19-million and 20.5-million barrles of oil equivalent, with capex expectations jumping from between A$800-million and $1-billion, to between A$900-million and A$1-billion.

Beach last week flagged a capital cost increase at its Waitsia Stage 2 project, after reaching an agreement with contractor Webuild to complete the project build, after the fall of Clough.

Following Webuild’s due diligence and review of costs and work schedule, Beach revised the capex for Waitsia Stage 2 from the original A$350-million to A$400-million to between A$400-million and A$450-million.

The final investment decision on the Stage 2 project was reached in December 2020. The development involves the drilling of up to six wells, construction of a new 250 TJ/d gas processing facility and associated gas gathering infrastructure.

A Gas Processing Agreement and related agreements signed with the North West Shelf (NWS) project participants will enable up to approximately 1.5-million tonnes a year of Waitsia gas to be tolled and processed into liquefied natural gas (LNG) through the NWS facilities in Karratha between the second half of 2023 and the end of 2028.

“Our agreement with Webuild to complete the Waitsia Stage 2 project and the environmental plan approval for installation of the offshore Otway Thylacine wells are big steps forward for Beach in 2023. These two projects will trigger a step-change in production and free cash flow generation from 2024,” said Beach CEO Morné Engelbrecht.

“Our agreement with Webuild to complete the Waitsia Stage 2 project is particularly welcome news. Webuild and the Waitsia JV are now planning for first gas from the Waitsia gas plant by the end of 2023.

“We also completed our development drilling campaign at Waitsia during the half and we have since had success from the Perth basin exploration campaign, which soon turns to the Beach-operated phase commencing early in the fourth quarter of 2023 with the spudding of Trigg 1.

“In the Otway basin, the Thylacine well connections will add up to 100 TJ/d through the Otway gas plant. These extra volumes will be available for the East Coast market, which will again be stretched for supply in the coming winter,” said Engelbrecht.

“While we are focussed on delivering energy security through increased gas supply in Australia and New Zealand, we are equally focussed on reducing our emissions, and exploring new energy opportunities across our portfolio.

“The Moomba carbon capture and storage project is one of Australia’s most significant emissions reduction activities and will deliver up to 1.7-million tonnes of CO₂ abatement once operational.

“This is a key contributor to Beach’s strategy to reduce its portfolio emissions intensity by 35% by 2030,” he added.

“Our industry today is experiencing a dynamic regulatory environment where the rules of the game are frequently changing. This is generating new challenges for project scheduling as we navigate these regulatory headwinds. Meanwhile, the East Coast desperately needs as much gas as it can get.”