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Beach posts annual loss, downgrades reserves and warns of possible delays

Beach Energy vowed no more unpleasant surprises months ago, but on Monday revealed supplies from a gas field were lower than expected, sending shares to a near three-year low.

beach Energy is majority owned by Seven West Media chairman Kerry Stokes. Picture: Supplied
beach Energy is majority owned by Seven West Media chairman Kerry Stokes. Picture: Supplied

Beach Energy, majority-owned by billionaire Kerry Stokes, has posted an annual loss of $475m and underwhelmed investors by revealing lower-than-expected gas reserves at one site and possible delays at a project earmarked to drive growth.

The outlook renewed concerns from investors who had been promised a reset after a spate of disappointments that saw a slew of executives depart. Shares in Beach fell more than 11 per cent after the result to hit a near three-year low.

The dive came despite a largely anticipated financial performance. Beach said net profit after tax for the year fell 11 per cent to $341m as annual production fell 7 per cent, driven by adverse weather and reduced domestic demand.

Shareholders seized on Beach’s outlook, particularly the company’s warning that recent data indicated that supplies at its Enterprise gas project in the Otway Offshore Basin were less than had previously been flagged to the market.

Beach said the lower production would have no bearing on its 2025 financial year results, but were likely begin to show in the next set of results.

Beach chief executive Brett Woods described the downgrade as disappointing, coming just months after the company had vowed no more unpleasant ­surprises.

Brett Woods, during his time at Santos. Mr Woods is now beach CEO. Picture: Supplied
Brett Woods, during his time at Santos. Mr Woods is now beach CEO. Picture: Supplied

“To be honest, it is very disappointing. One of the things that I pride myself on is my technical background. We’ve looked through the business in a lot of detail over the last six months, spent a lot of time working on the strategic review and utilising the work from independent experts as well as internal, We recognised there was a large range of uncertainties associated with (the Enterprise project in the Otway Offshore basin),” Mr Woods told The Australia.

“I can’t be anything but disappointed that Enterprise came in on the low side. However, the good thing about Enterprise is we would have still done Enterprise, even if we knew this outcome.” With dwindling supplies, Beach is now under even greater pressure to deliver its West Australian growth project, Waitsia stage 2.

Beach has earmarked this project for much-needed production growth, allowing it to capitalise on an expected east coast gas shortfall. But, while work is nearly finalised, chief executive Brett Woods told investors on Monday testing of the facility had been delayed a few weeks and any contingency in its guidance to the market of first gas in early 2025 had now been exhausted.

The company’s outlook will test the patience of investors, who are desperate for the much-promised corporate turnaround.

In June Mr Woods, then just six months into the job, said Beach would slash spending and trim costs in a bid to make the company a low-cost supplier. Beach had foreshadowed this by weeks earlier announcing its intention to cut about 30 per cent of its workforce.

The promise won favour with beleaguered investors, but they remain wary after a series of false dawns – and many will now be on heightened alert for any sign of previous missteps.

In 2022, Beach slashed the estimated gas reserves at its LNG export basin near Perth by 11 per cent after the Waitsia Stage 2 drilling campaign.

The company – 30 per cent owned by billionaire Mr Stokes – said the reduction in total proven and provable reserves by 10.6 million barrels of oil equivalent was due to “increased structural complexity in the Waitsia field and poor reservoir quality in the High Cliff reservoir at Waitsia”.

In 2021, Beach suffered its biggest ever one-day sharemarket fall when it suddenly slashed its estimate for reserves from the Western Flank oil reserves in northeast South Australia, triggering class action lawsuits.

Originally published as Beach posts annual loss, downgrades reserves and warns of possible delays

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Original URL: https://www.goldcoastbulletin.com.au/business/beach-posts-annual-loss-downgrades-reserves-and-warns-of-possible-delays/news-story/e1128e27a14a93ce734e59eddc1f1f54