Beach Energy has announced a 20% decrease in its annual net profit, along with an updated forecast for the completion of the Waitsia Stage 2 natural-gas project in Western Australia. The company’s net profit for the 12 months ending in June totaled 400.8 million Australian dollars (US$261.7 million), compared to 500.8 million Australian dollars the previous year. On an underlying basis, Beach’s net profit fell by 24% to 384.8 million Australian dollars.
Despite this decline in profitability, Beach Energy produced 19.5 million barrels of oil equivalent in fiscal year 2023, although slightly lower than the 21.8 million BOE produced the previous year. The benefit of a slight increase in average realized prices to 1.40 Australian dollars per barrel, from 1.38 Australian dollars per barrel in fiscal year 2022, was overshadowed by the production decrease. As a result, the company’s annual sales revenue fell by 7.5% to 1.62 billion Australian dollars.
The company’s directors responded to these challenges by declaring a final dividend of 2 Australian cents per share, doubling the payout of 1 cent per share from the previous year. This brings the total dividend for fiscal year 2023 to 4 cents.
During fiscal year 2023, Beach Energy faced several obstacles that impacted investor confidence and affected its stock performance. One notable setback was the delay in commissioning one of the pipelines connecting the Thylacine wells to the Otway gas plant in Victoria state. Despite these challenges, Beach Energy remains committed to its projects and aims to achieve success moving forward.
Beach Energy’s Project Updates
Replacement of Contractor for Waitsia Stage 2 Project
The Waitsia Stage 2 project faced a setback when the original contractor became insolvent. Beach Energy, in collaboration with joint-venture partner Mitsui, quickly appointed Webuild as a replacement for Clough. Alongside this change, the estimated project cost was revised and is now expected to reach up to A$450 million.
Revised Completion Date and Cost Considerations
Due to prevailing challenges in the labor market, Beach Energy decided to withdraw the target completion date previously set for the Waitsia Stage 2 project. The company acknowledged the possibility of cost overruns and deemed it necessary to reassess its projections. While initially targeting first gas production by the year-end, Beach Energy now anticipates that the Waitsia Stage 2 project will deliver its first gas in mid-2024. The revised capex range for the project is A$450 million-A$500 million.
Production Guidance for 2024 Fiscal Year
In a notable development, Beach Energy has provided production guidance for the 2024 fiscal year for the first time. The company expects to produce between 18 million and 21 million barrels of oil equivalent (BOE) in the twelve months leading up to June 2024. To support this production target, capital expenditure is estimated to fall within the range of A$850 million-A$1.0 billion.
New Chief Executive and Interim CEO
To drive Beach Energy forward, the company welcomes its incoming Chief Executive, Brett Woods, who will officially take on the role on February 21. Until then, Bruce Clement will serve as the interim CEO.
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