Flooding and Costs Weigh on Beach Energy’s Half-Year Results

Financial Performance and Market Context

Beach Energy Limited has released its half-year results for the six months ended 31 December 2025, revealing a net profit after tax (NPAT) of $150.2 million. This represents a 32% decline from the $222.3 million recorded in the same period last year. The dip in profitability was driven by a combination of lower realised oil and liquids prices, production disruptions caused by flooding in key basins, and increased costs including a significant $61.2 million exploration expense related to an unsuccessful well in the Otway Basin.

Sales revenue edged down 1% to $981.7 million, reflecting weaker oil prices and reduced third-party sales, partially offset by stronger gas prices and favourable volume mix, including two additional LNG cargoes from the Waitsia project. The average realised gas price rose 13% to $11.82 per gigajoule, while liquids prices fell 20% to US$57.54 per barrel of oil equivalent.

Operational Highlights and Production Trends

Production volumes declined 7% to 9.5 million barrels of oil equivalent (MMboe), impacted notably by flooding in the Cooper Basin and natural declines in some fields. However, this was partly offset by the ramp-up of the Waitsia Stage 2 gas plant in the Perth Basin, which achieved the Ready For Start Up milestone in November 2025 and delivered its first sales gas in early December. Ramp-up activities continue, with commissioning of additional compressors expected to drive production towards nameplate capacity in the coming months.

Other operational areas showed mixed results – the Otway Basin saw a slight production decrease due to planned maintenance, while the Bass Basin production increased by 29% following successful well interventions. The Western Flank experienced a 41% drop in production, largely due to flooding and delayed drilling campaigns, though recovery efforts are underway. The Cooper Basin JV faced ongoing flood recovery challenges but restored most flood-impacted wells by year-end.

Cost Pressures and One-Off Expenses

Cost of sales rose 10% to $745.7 million, driven by inventory movements, higher third-party purchases, and increased tolls and tariffs associated with LNG cargoes. Other expenses surged 174% to $79.6 million, primarily due to the write-off of the unsuccessful Hercules 1 exploration well offshore Otway Basin. The company adjusted for these one-off items to report an underlying NPAT of $219 million, closer to last year’s performance.

Balance Sheet and Dividend

Beach Energy maintains a robust balance sheet with net assets steady at $3.17 billion and cash balances increasing 37% to $235 million. The company declared a fully franked interim dividend of 1.0 cent per share, following a 6.0 cent final dividend paid in September 2025. This reflects management’s confidence in the company’s financial position despite near-term challenges.

Outlook and Strategic Focus

Looking ahead, Beach Energy plans to sustain its active work programs across core hubs, including further ramp-up of Waitsia Stage 2, continuation of the Equinox rig campaign in the Otway and Bass basins, and ongoing appraisal and development drilling in the Western Flank. The company reaffirmed its full-year production guidance of 19.7 to 22.0 MMboe and capital expenditure guidance of $675 to $775 million, with a significant portion allocated to the Equinox rig campaign.

While operational headwinds such as flood recovery and commodity price volatility remain, Beach Energy’s strategic investments in gas infrastructure and exploration position it well to navigate the evolving energy landscape.