Beach Energy Ltd (ASX: BPT) will finally start producing gas from its long-awaited Waitsia Gas Plant project in Western Australia, with the news giving its shares a modest lift.
The Adelaide-based energy company said in a statement to the ASX on Friday that the plant had achieved the "ready for start up" milestone as it was transitioning from the construction phase to the commissioning and production phase.
The company went on to say:
Final start-up processes and procedures are underway to enable the processing of raw gas and export of sales gas through the pipeline network. First sales gas export is expected within two weeks. The Waitsia Stage 2 Project, a joint venture between Mitsui E&P Australia as operator and Beach, will then focus on ramping up the Waitsia Gas Plant's production rates towards nameplate capacity.
Once fully operational, the plant will have a capacity of 250 terajoules of gas per day, Beach said.
Overdue and over budget
Analysts at RBC Capital Markets said the news was positive for Beach shares, but the project was only delivered after delays and cost blowouts.
As they said in a note to clients on Friday:
We expect investors to be pleased this project is finally going to start up, as it drives a stepped increase in Beach earnings; however, the delivery of this project has been a significant disappointment in our view. Waitsia Stage 2 has undergone a significant delay (initially a late 2023 start up) and a material circa 70% cost increase.
The RBC analysts said their initial forecast was for Waitsia Stage 2 to achieve 90% capacity by the end of January 2026, "but it now appears more likely this will be by the end of February 2026 … making Waitsia more of an FY27 earnings impact story for Beach".
RBC has a price target of $1.10 on Beach shares compared with the current price of $1.27, up 2% on Friday.
Beach recently reported first-quarter sales of 6.8 million barrels of oil equivalent, up 15%, and sales revenue of $537 million, up 18%.
Managing director Brett Woods said at the time it was a strong start to the year, "with increased production, two Waitsia LNG cargoes lifted during the quarter and the Waitsia gas plant nearing the important ready for start up milestone''.
The company also said it was playing a critical role in supplying the domestic gas market, accounting for 19% of total east coast gas demand last financial year.
