Floods and Reserves Cut Cloud Beach Energy’s FY26 Outlook Despite Strong FY25
Beach Energy reported a 9% rise in FY25 production to 19.7 million barrels of oil equivalent and a 13% increase in sales revenue to $2 billion, driven by strong basin performances and the Waitsia LNG project. However, a significant $674 million impairment charge due to lower commodity prices and reserves revision at Beharra Springs tempers the upbeat results.
- FY25 production up 9% to 19.7 MMboe
- Sales revenue increased 13% to $2.0 billion
- Waitsia Stage 2 gas plant commissioning nearing completion
- Non-cash impairment charge of $674 million announced
- Cooper Basin flood impacts to affect FY26 production guidance
Strong Production Growth and Revenue Gains
Beach Energy closed FY25 with a solid 9% increase in production, reaching 19.7 million barrels of oil equivalent (MMboe), alongside a 13% rise in sales revenue to $2 billion. This growth was underpinned by robust performances in the Bass Basin and the contribution of five Waitsia LNG cargoes, highlighting the company’s expanding footprint in Australia’s energy sector.
The Otway Gas Plant notably operated at or near full capacity for 25 days during winter, meeting heightened East Coast gas demand. Bass Basin’s low-cost production optimisation also continued to deliver strong results, reinforcing Beach’s operational efficiency.
Waitsia Stage 2 Nears First Gas
The Waitsia Stage 2 gas plant, a key growth project for Beach, has completed construction and is in the final commissioning stages. First gas is anticipated in the first quarter of FY26, marking a significant milestone. Beach has seconded over 20 senior personnel to support the project, which is expected to bolster future production and sales volumes.
Impairment Charge Reflects Market Realities
Despite operational successes, Beach will record a substantial non-cash impairment charge of $674 million (pre-tax), primarily driven by a lower commodity price outlook and a reserves revision at Beharra Springs Deep 3. The reserves downgrade of approximately 10.7 MMboe reflects partial depletion in the northern compartment of the field, a setback that will be detailed in the upcoming FY25 Reserves and Resources Statement.
This impairment, while significant, is excluded from underlying earnings and reflects prudent financial management amid volatile market conditions.
Cooper Basin Floods and Production Outlook
The Cooper Basin experienced severe flooding during the quarter, impacting production by approximately 0.3 MMboe in Q4 FY25 and expected to continue affecting output into the first half of FY26. Floodwaters have peaked and are receding slowly, but the company anticipates a production impact of up to 0.7 MMboe in FY26. This natural disaster underscores the operational risks inherent in resource extraction.
Looking ahead, Beach plans a 10-well appraisal and development campaign in the Cooper Basin’s Western Flank, delayed due to flooding but scheduled to commence in H2 FY26. The company also continues to advance appraisal and exploration activities across its portfolio, including the Perth, Otway, and Bass basins.
Financial Strength and Strategic Positioning
Beach’s balance sheet remains robust, with net debt at $368 million and liquidity of $652 million at quarter-end. Operating cash flow surged 46% to $1.1 billion, supported by an 18% reduction in unit field operating expenses. The company’s pre-growth free cash flow breakeven oil price has fallen below US$30 per barrel, positioning Beach well to navigate commodity price fluctuations.
Additionally, Beach is expanding its Otway Basin footprint through equity transfers that will consolidate ownership and provide optionality for future exploration and development, subject to government approvals.
As Beach Energy prepares to release its full FY25 results on 4 August 2025, investors will be watching closely for further details on the impairment, production guidance, and progress on key projects like Waitsia Stage 2.
Bottom Line?
Beach Energy’s FY25 growth story is tempered by a hefty impairment and flood disruptions, setting the stage for a pivotal FY26.
Questions in the middle?
- How will the Beharra Springs reserves revision affect Beach’s long-term production profile?
- What is the timeline and expected ramp-up rate for Waitsia Stage 2 gas plant post-commissioning?
- How quickly can Cooper Basin production recover from flood impacts and what contingency plans are in place?