Beach Energy’s Q2 FY26 report reveals a 9% production decline amid Otway Basin slowdowns, offset by flood recovery and the Waitsia Gas Plant ramp-up, with sales revenue down 17% to $445 million.
- Production down 9% to 4.5 million barrels of oil equivalent
- Waitsia Gas Plant achieves first gas export and begins ramp-up
- Sales revenue falls 17% to $445 million due to lower LNG prices and volumes
- Flood recovery boosts Cooper Basin and Western Flank production
- Strong liquidity position with $925 million available and new $300 million term loan
Production Challenges and Recovery Efforts
Beach Energy’s second quarter of fiscal 2026 saw a 9% drop in production to 4.5 million barrels of oil equivalent (MMboe), primarily driven by reduced output in the Otway Basin due to seasonal customer demand and planned maintenance. However, this decline was partially offset by successful flood recovery efforts in the Cooper Basin and Western Flank, where production increased by 12% and 5% respectively as flood-impacted wells were progressively restored.
The company’s sales volumes also declined by 13% to 5.9 MMboe, reflecting the operational challenges and timing of liftings, while sales revenue fell 17% to $445 million. This was influenced by lower LNG prices despite a modest 2% rise in realised gas prices to $11.9 per gigajoule.
Waitsia Gas Plant Milestone and Ramp-Up
A highlight of the quarter was the commissioning and ramp-up of the Waitsia Gas Plant in Western Australia. The plant achieved its first gas export milestone on 6 December and reached a peak production rate of 165 terajoules per day shortly after the quarter ended. Ramp-up activities are ongoing, with further compressor commissioning planned to reach nameplate capacity during the third quarter.
This new infrastructure is a critical addition to the Western Australian gas market, unlocking additional supply and supporting national energy security. The ramp-up phase has involved some expected downtime during compressor commissioning, but Beach is working closely with partners to optimise operations.
Drilling Campaigns and Exploration Success
Beach continued its active drilling programs across core assets, including a 12-well oil appraisal and development campaign on the Western Flank, where three oil wells were successfully drilled and suspended. This campaign will be followed by a 10-well oil exploration program extending into early FY27.
In the Cooper Basin joint venture, Beach participated in 20 wells with a 70% success rate, including a notable gas discovery at the Purraroo 1 well. The Equinox rig campaign progressed with the safe plug and abandonment of the White Ibis 1 well offshore Bass Basin, with offshore activities expected to resume in late Q3 FY26.
Financial Strength and Liquidity
Despite the production and sales volume challenges, Beach Energy reported positive free cash flow and a strengthened liquidity position. The company secured a $300 million term loan with strong lender support, boosting total liquidity to $925 million at quarter-end, comprising $235 million in cash reserves and $690 million in undrawn committed facilities.
This robust financial footing positions Beach well to pursue growth opportunities across its East and West Coast hubs while continuing to support Australia’s energy security needs.
Bottom Line?
Beach Energy’s operational resilience and strategic investments set the stage for a pivotal ramp-up phase and exploration-driven growth in FY26.
Questions in the middle?
- How will the Waitsia Gas Plant’s ramp-up impact Beach’s production and revenue in coming quarters?
- What are the prospects and timelines for restoring full production from remaining flood-impacted wells?
- How might LNG price volatility and the Mitsui balancing arrangement affect Beach’s future earnings?