Beach Energy underwhelms market with dividend payout despite surge in earnings

The payout to investors overshadowed a 20 per cent jump in earnings that cements expectations that the company is well-placed in achieving its corporate turnaround.

Beach Energy, majority owned by billionaire Kerry Stokes, has underwhelmed investors with a smaller than expected interim dividend despite posting a 20 per cent jump in half year earnings that fuels expectations that the once troubled oil and gas company is cementing its corporate turnaround.

Earnings for the first half of 2025 totalled $587m, up 20 per cent from the same period one year earlier. The jump was fuelled by a 15 per cent increase in production over the six months.

The result was in line with market expectations, but the market seized on the decision of the company to issue a 2c dividend. The market had expected a 3c divided, and shares fell nearly 2 per cent.

Citi analyst James Byrne said the dividend indicated that either the company is seeking clarity on future earnings from a critical growth project or is looking to bolster capital for a possible acquisition.

Beach is close to completing its Waitsia stage 2 project, and it revealed gas was on course to be injected this quarter - a timetable that Mr Byrne said heightens the risk of missing its target of first cargo sales by the end of the year.

The dividend overshadowed the strong production numbers and subsequent earnings.

Beach has recently completed works on a carbon capture and storage project with Santos, which is the operator.

Recently installed chief executive Brett Woods has won favour with shareholders with his apparent determination to cut costs. In June 2024 and then just six months into the job, he 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.

Mr Woods said the results are an indication that the strategy to make Beach a low-cost producer is working.

“Beach’s pleasing half year results demonstrate early turnaround signs following the strategic review initiatives announced last year. Over the past six months, we have worked hard to deliver the organisational reset, including a more than 30 per cent reduction in headcount and appointment of new executive leadership,” said Mr Woods.

“Major projects have been completed, and strong operations delivered with outstanding safety and environmental performance. This has underpinned growth in earnings and cash flow and a further strengthening of our financial position.

Still, Beach concedes it has yet to fully earn the trust of Investors - which will be on 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.

More to come.

Originally published as Beach Energy underwhelms market with dividend payout despite surge in earnings