Shares in Beach Energy Ltd (ASX: BPT) were trading lower on Monday despite the company ticking off a key milestone at its Waitsia project in Western Australia.
The Adelaide-based oil and gas producer told the ASX in a statement that it had delivered the first sales gas from its Watsia gas plant into the pipeline network, "marking the critical first gas export milestone for the project''.
The company said further:
Following the recently announced ready for start up milestone, certification procedures and processes have been completed which enabled export of sales gas into the pipeline network. Following achievement of first gas, the facility is now completing the planned emergency power restart test procedures before commencing the production ramp-up.
Project late and over budget
Beach announced the "ready for start up" milestone at Waitsia in November, in a belated positive announcement regarding the project which has been delivered overdue and over budget.
Beach said at the time that once fully operational, the Waitsia plant will have a capacity of 250 terajoules of gas per day.
RBC Capital Markets analysts said at the time that the major revenue impact from Waitsia now looked like it would arrive next financial year.
As they said in a note to clients:
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".
Beach in October 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.
Beach was valued at $2.66 billion at the close of trade on Friday. Its shares were trading 1.1% lower on Monday at $1.15.
