(BPT) Cash Flow Inflection Point Offers Significant Upside Potential
Beach Energy (ASX:BPT)
Current Share Price: $1.16 | Target Price: $2.06 | April 2025
Investor Profile Snapshot
INCOME: ★★★ 65% | VALUE: ★★★★ 92% | GROWTH: ★★★ 70% | QUALITY: ★★★ 75% | THEMATIC: ★★★ 80%
Note: This report provides analysis and commentary based on public information and is not intended as investment advice. Investors should conduct their own research and consult with financial advisors before making investment decisions.
Executive Summary
Beach Energy Limited (BPT) demonstrated impressive operational momentum in H1 FY2025, with production increasing 15% to 10.2 MMboe and underlying EBITDA growing 20% to $587 million despite a challenging industry backdrop. This strong performance was driven by successful completion of key development projects in the Otway Basin and significant operational efficiency improvements. The standout performer was the Otway Basin, where production more than doubled year-on-year to 3.4 MMboe following the successful connection of the Enterprise field and Thylacine West wells, transforming segment profitability with gross profit growing 534% to $161.1 million.
The company is advancing its strategic transformation following the comprehensive review initiated in FY2024. Beach has exceeded its 30% headcount reduction target while reducing field operating costs to $12.5/boe against an FY25 target of $14/boe, demonstrating strong execution of its cost reduction initiatives. These operational improvements have substantially enhanced free cash flow generation, with operating cash flow surging 88% to $659 million while capital expenditure decreased 31% to $363 million. This free cash flow inflection has enabled Beach to reduce net debt by 33% to $389 million, improving its net gearing ratio from 15% to 10%, while increasing its interim dividend by 50% to 3.0 cents per share.
Beach's near-term growth trajectory is primarily centered on the commissioning of the Waitsia Gas Plant, targeted for Q4 FY25. Management has taken proactive steps to ensure timely completion, including seconding 20 senior personnel to streamline the commissioning process. While project execution risk remains, successful commissioning would significantly enhance Beach's production profile and cash flow generation. The company operates within an increasingly favorable Australian domestic gas market, characterized by tight supply-demand dynamics and structurally higher pricing, with average realized gas prices up 18% to $10.5/GJ in H1 FY25. The East Coast gas market is projecting deficits of approximately 300 TJ/day following coal-fired power retirements, with demand forecast to grow by ~15% into the early 2030s, supporting Beach's strategic pivot toward gas.
Our DCF-based valuation yields a base case target price of $2.06 per share, representing 78% upside from the current price of $1.16. This valuation reflects our expectation of Beach's successful transition from capital-intensive development to cash generation as major projects enter production and operational efficiencies take hold. Even our bear case scenario of $1.50 implies meaningful upside, suggesting a favorable risk-reward profile. Key catalysts include Waitsia Gas Plant commissioning, results from the planned 10-well Western Flank oil development campaign, and sustained strength in Australian domestic gas prices. While project execution and reservoir performance risks remain, Beach's strengthened balance sheet, improved operational efficiency, and strategic positioning in the domestic gas market support our positive outlook on the company's prospects.
Financial Highlights
| Key Metrics | H1 FY2025 | H1 FY2024 | YoY Change |
|---|---|---|---|
| Sales revenue | $989.8m | $941.0m | +5% |
| Total revenue | $1,043.6m | $982.0m | +6% |
| Underlying EBITDA | $587m | $490m | +20% |
| Underlying NPAT | $236.9m | $172.7m | +37% |
| Statutory NPAT | $222.3m | $-345.1m | +164% |
| Operating cash flow | $659.0m | $350.1m | +88% |
| Free cash flow | $295.7m | $-179.6m | NM |
| Production | 10.2 MMboe | 8.9 MMboe | +15% |
| Sales volumes | 12.3 MMboe | 11.0 MMboe | +12% |
| Realized gas price | $10.5/GJ | $8.9/GJ | +18% |
| Net debt | $389.3m | $580.1m | -33% |
| Gearing ratio | 10% | 15% | -5pp |
| Interim dividend | 3.0 cps | 2.0 cps | +50% |
Financial Forecasts
| Income Statement ($m) | FY24A | FY25E | FY26E | FY27E | FY28E | FY29E |
|---|---|---|---|---|---|---|
| Revenue | 1,765.6 | 1,950.0 | 2,122.0 | 2,193.0 | 2,104.0 | 2,020.2 |
| Growth (%) | -3.8% | +10.4% | +8.8% | +3.3% | -4.1% | -4.0% |
| EBITDA | 920.0 | 1,157.0 | 1,294.5 | 1,359.0 | 1,282.3 | 1,219.2 |
| EBITDA Margin (%) | 52.1% | 59.3% | 61.0% | 62.0% | 60.9% | 60.3% |
| Depreciation | 418.8 | 440.0 | 465.0 | 482.8 | 463.0 | 444.4 |
| EBIT | 501.2 | 717.0 | 829.5 | 876.2 | 819.3 | 774.8 |
| EBIT Margin (%) | 28.4% | 36.8% | 39.1% | 40.0% | 39.0% | 38.4% |
| Net Profit | 341.0 | 473.4 | 554.0 | 588.5 | 549.7 | 519.0 |
| EPS (cents) | 14.9 | 20.8 | 24.3 | 25.8 | 24.1 | 22.8 |
Cash Flow & Balance Sheet
| Key Metrics | FY24A | FY25E | FY26E | FY27E | FY28E | FY29E |
|---|---|---|---|---|---|---|
| Operating Cash Flow | 774.0 | 1,270.0 | 1,340.0 | 1,470.0 | 1,390.0 | 1,320.0 |
| Capital Expenditure | 963.0 | 700.0 | 562.0 | 450.0 | 421.0 | 404.0 |
| Capex/Revenue (%) | 54.5% | 35.9% | 26.5% | 20.5% | 20.0% | 20.0% |
| Free Cash Flow | -189.0 | 570.0 | 778.0 | 1,020.0 | 969.0 | 916.0 |
| Dividends | 91.3 | 148.2 | 193.9 | 205.5 | 193.6 | 182.3 |
| Dividend Payout (%) | 26.8% | 31.3% | 35.0% | 34.8% | 35.3% | 35.1% |
| Net Debt | 580.1 | 280.0 | 200.0 | 50.0 | Net Cash | Net Cash |
| Gearing Ratio (%) | 15% | 8% | 5% | 1% | - | - |
Operational KPIs
| Key Metrics | FY24A | FY25E | FY26E | FY27E | FY28E | FY29E |
|---|---|---|---|---|---|---|
| Production (MMboe) | 18.2 | 19.5 | 22.0 | 23.0 | 22.0 | 21.0 |
| Field Operating Costs ($/boe) | 14.8 | 12.5 | 11.5 | 11.0 | 11.0 | 11.2 |
| Gas-to-Oil Production Ratio | 70:30 | 73:27 | 77:23 | 80:20 | 82:18 | 83:17 |
| Equivalent Availability Factor (%) | 85.8% | 84.0% | 84.5% | 85.0% | 85.0% | 85.5% |
| 2P Reserves (MMboe) | 217 | 210 | 206 | 200 | 190 | 180 |
| 2P Reserves Replacement Ratio | 70% | 85% | 90% | 95% | 85% | 80% |
Key Outlook Points
- Production guidance for FY25 narrowed to 18.5-20.5 MMboe (previously 17.5-21.5 MMboe)
- Waitsia Gas Plant commissioning targeted for Q4 FY25, with first gas sales expected shortly thereafter
- Field operating costs of $12.5/boe tracking favorably against FY25 target of $14/boe
- Free cash flow breakeven oil price progressing toward FY25 target of approximately US$30/bbl
- 10-well Western Flank oil development and appraisal campaign scheduled for Q4 FY25
- Hercules gas exploration well in the Otway Basin targeted for H2 FY25
- Continued focus on cost reduction initiatives with target of below $11/boe field operating costs by FY27
- Capital expenditure expected to progressively decline to around 20% of revenue by FY27
Valuation Summary
Our base case valuation of $2.06 per share represents 78% upside to the current price. This valuation is derived using a weighted average of three complementary methodologies: discounted cash flow, multiple-based analysis, and precedent transactions.
| Methodology | Implied Price Per Share |
|---|---|
| DCF - Base Case | $2.06 |
| DCF - Bull Case | $2.53 |
| DCF - Bear Case | $1.50 |
| EV/EBITDA Multiple - NTM (6.5x) | $2.62 |
| P/E Multiple - NTM (10.0x) | $2.28 |
| PEG Ratio (P/E to Growth) | $1.81 |
| Precedent Transactions | $2.88 |
| Implied Valuation Range | $1.80 - $2.40 |
| Current Share Price | $1.16 |
| Up/Downside to Base Case | +78% |
Key explicit assumptions in our base case include:
- Successful Waitsia Gas Plant commissioning in Q4 FY25 with an 18-month ramp-up period
- Continued operational efficiency improvements with field operating costs approaching $11/boe by FY27
- Moderate domestic gas prices of $9-10/GJ
- Revenue growth following a 3.0% CAGR in our base case, driven by increasing production from Waitsia and Otway Basin
- EBITDA margins expanding from 59.3% in H1 FY25 to approximately 62% in FY27 before moderating slightly
- Capital expenditure declining to 20% of revenue by FY27
- WACC of 11.9% with 2.0% terminal growth rate (resulting in 6.3x terminal EV/EBITDA multiple)
Analysis Summary
Based on our valuation analysis and assessment of Beach Energy's strategic positioning, the data suggests significant share price appreciation potential, with our model indicating a fair value of $2.06 per share (78% upside).
Key factors supporting this view include:
- Strong financial recovery with exceptional free cash flow generation (88% increase in H1 FY25)
- Successful completion of key Otway Basin projects with production more than doubling year-on-year
- Strategic pivot toward gas production aligning with favorable domestic market dynamics
- Disciplined capital allocation with focus on high-return projects and cost reduction
- Clear pathway to substantially reduced capital intensity as major projects complete
However, investors should consider key risks including:
- Execution challenges in Waitsia Gas Plant commissioning
- Reservoir performance uncertainty following Enterprise field's smaller-than-expected size
- Production decline in mature Cooper Basin assets
- Commodity price volatility despite increasing gas weighting
- Energy transition challenges in the longer term
Beach Energy's transformation journey presents a compelling investment opportunity at current valuation levels, with the apparent disconnect between share price and intrinsic value potentially reflecting market skepticism regarding execution capabilities and transition timeline. Our analysis suggests the current market valuation significantly underprices the long-term potential from successful execution of the company's development program and operational efficiency initiatives.
Key Tailwinds
Australian Domestic Gas Market Dynamics: Beach Energy is benefitting from increasingly favorable Australian domestic gas market conditions, characterized by tightening supply-demand dynamics. The East Coast gas market is projecting deficits of approximately 300 TJ/day following coal-fired power retirements, with demand forecast to grow by approximately 15% into the early 2030s. This structural tightness has supported an 18% increase in Beach's realized gas prices to $10.5/GJ in H1 FY25. The company's strategic positioning as a supplier to both East and West Coast gas markets provides diversification benefits, with the renegotiated Base Gas Supply Agreement with Origin Energy securing a more than 50% increase in take-or-pay volumes. Australia's energy policy continues to support gas as a transition fuel, providing a favorable regulatory backdrop for Beach's gas-focused growth strategy.
Operational Efficiency Transformation: Beach's comprehensive strategic review has delivered tangible operational improvements that enhance the company's competitiveness and financial performance. Field operating costs have been reduced to $12.5/boe against an FY25 target of $14/boe, tracking favorably toward the longer-term target of below $11/boe. The company has exceeded its 30% headcount reduction target while improving production trends, demonstrating the effectiveness of its organizational restructuring. These efficiency gains are driving margin expansion, with EBITDA margin increasing from 52.1% in H1 FY24 to 59.3% in H1 FY25. The company's free cash flow breakeven oil price is on track to achieve the FY25 target of approximately US$30/bbl, substantially improved from the US$54/bbl baseline prior to the strategic review.
Major Projects Entering Production Phase: Beach is at an inflection point as it transitions from a capital-intensive development phase to a production and cash generation phase. The successful connection of the Enterprise field and Thylacine West wells in the Otway Basin has already transformed segment performance, with production more than doubling year-on-year and gross profit growing 534% in H1 FY25. The commissioning of the Waitsia Gas Plant, targeted for Q4 FY25, represents the next major growth catalyst. This transition from development to production is driving a fundamental shift in Beach's financial profile, with capital expenditure declining from 56.3% of revenue in H1 FY24 to 36.7% in H1 FY25, and projected to further decrease to 20% by FY27.
Balance Sheet Strength and Flexibility: Beach has significantly strengthened its financial position, with net debt reduced by 33% to $389 million and net gearing decreasing from 15% to 10% as of H1 FY25. The company maintains strong liquidity with $631 million in available cash and undrawn facilities, providing flexibility for both organic investment opportunities and potential increases in shareholder returns. This enhanced balance sheet strength coincides with Beach's transition to free cash flow generation, creating a virtuous cycle where declining capital intensity and improving operational performance support further deleveraging. The 50% increase in interim dividend to 3.0 cents per share signals management's confidence in the company's financial outlook.
Strategic Energy Transition Positioning: Beach is strategically positioning itself for the energy transition while maintaining focus on near-term value creation from its conventional hydrocarbon assets. The company has established a target to reduce Scope 1 and 2 equity emissions intensity by 35% by 2030 from a 2018 baseline, demonstrating commitment to improving environmental performance. The Moomba carbon capture and storage project, in which Beach participates through its Cooper Basin Joint Venture interest, successfully commenced CO₂ injection in September 2024, representing a concrete step toward emissions reduction. Beach's increasing focus on natural gas production aligns with Australia's energy transition strategy, which positions gas as a lower-carbon alternative to coal.
Key Headwinds
Project Execution Risk: Beach Energy's near-term growth trajectory is heavily dependent on successful commissioning and ramp-up of the Waitsia Gas Plant, targeted for Q4 FY25. This critical project has experienced timeline extensions, necessitating management intervention with 20 senior personnel seconded to streamline commissioning. While technical challenges could further delay first gas, Beach has implemented intensive contractor management to mitigate this risk. The financial implications of delays would be significant – postponing production growth, LNG revenue generation, and potentially resetting market expectations regarding execution capability. The concentration of growth expectations on this single project creates asymmetric risk to near-term earnings forecasts.
Reservoir Performance Uncertainty: The recent revelation of Enterprise field's smaller-than-expected reservoir size highlights Beach's exposure to geological uncertainties. This fundamental risk affects production profiles, reserves valuations, and capital allocation efficiency. While enhanced technical assessment can improve prediction accuracy, geological characteristics remain inherently unpredictable. The near-term impact is manifested in production ramp rates and plateau durations, while medium-term implications include potential reserves downgrades and reduced field economics. The company's mature Cooper Basin assets, particularly the Western Flank oil operations, are experiencing natural production decline, creating pressure to maintain reserves replacement through successful exploration.
Production Decline in Mature Assets: Beach's portfolio includes several mature producing assets, particularly in the Cooper Basin, which are experiencing natural production decline. Total production has steadily decreased from 26.7 MMboe in FY20 to 18.2 MMboe in FY24, representing a 32% reduction over this period, primarily reflecting depletion in these legacy fields. While the H1 FY25 results show production recovery to 10.2 MMboe (up 15% year-on-year), this improvement is driven by new project contributions rather than stabilization of mature assets. The ongoing decline in core Western Flank oil assets creates pressure to maintain overall production levels through either successful exploration or acquisitions.
Energy Transition Challenges: While currently benefiting from gas' position as a transition fuel and supply shortages, Beach faces long-term challenges from accelerating energy transition trends. Renewable penetration, electrification, and decarbonization policies could erode natural gas demand beyond the medium-term horizon, potentially leading to both volume and price pressure. Beach has responded with a 35% emissions intensity reduction target by 2030 and investments in carbon capture and storage, with the Moomba CCS project now operational. However, the pace of transition remains a significant strategic uncertainty. Increasing investor focus on climate risk could impact Beach's cost of capital over time, while carbon pricing mechanisms or regulatory changes could affect operating costs and project economics.
Commodity Price Volatility: While current domestic gas prices are favorable, Beach remains exposed to commodity price volatility, particularly in oil markets. Average realized oil prices declined 6.1% year-on-year to A$80.24/boe in H1 FY25, highlighting the potential for price fluctuations to impact revenue and margins despite operational improvements. Beach's increasing gas weighting provides some insulation through longer-term contracts with more stable pricing, but a significant portion of production remains exposed to market pricing. The company's cost reduction initiatives are enhancing its resilience to price volatility, with free cash flow breakeven oil price trending toward the US$30/bbl target. However, sustained commodity price weakness could still materially impact financial performance and capital allocation flexibility.
Competitor Analysis
| Competitor | Competitive Positioning |
|---|---|
| Santos | Larger scale operations; broader geographic diversity; LNG export exposure; vertical integration; higher gearing; greater regulatory scrutiny; integration challenges post-merger; strategic partner in Cooper Basin JV and Moomba CCS; competitor and collaborator |
| Woodside Energy | Largest Australian producer; global scale; significant LNG portfolio; strong balance sheet; less domestic gas focus; higher capital intensity; international political risks; less direct competition due to international/LNG focus; sets industry benchmark |
| Cooper Energy | Pure-play domestic gas producer; focused East Coast strategy; smaller scale; limited basin diversity; higher operational risk; direct competitor in East Coast gas market; similar transition to production phase |
| Origin Energy | Integrated energy company; retail customer base; generation assets; complex structure; exposed to multiple market segments; both competitor and customer as gas purchaser; significant influence on Beach's contracted sales |
| Strike Energy | Emerging Perth Basin player; high-growth focus; innovative approaches; exploration upside; limited production history; funding constraints; emerging competitor in Western Australia; pursuing similar basin opportunities |
Key Project Status
| Project | Status | Strategic Importance |
|---|---|---|
| Waitsia Gas Plant | Commissioning | Flagship gas development project; commissioning underway targeting first gas in Q4 FY25; 20 senior personnel seconded to streamline process; critical growth catalyst with significant revenue and EBITDA contribution potential |
| Enterprise Field Connection | Operational | Key Otway Basin development; connected June 2024; production contribution exceeding expectations; reservoir size smaller than initially estimated potentially impacting long-term plateau production |
| Thylacine West Connections | Operational | Important Otway Basin development; connections completed October 2024; stabilizing Otway production profile; contributing to significant segment performance improvement |
| Western Flank Development | Planned | 10-well oil development and appraisal campaign scheduled for Q4 FY25; essential for mitigating natural production decline in mature assets; important for maintaining overall production levels |
| Moomba Carbon Capture & Storage | Operational | Strategic energy transition initiative; CO₂ injection commenced September 2024; partnership with Santos through Cooper Basin JV; positions company favorably for emissions reduction and potential carbon credits |
| Hercules Gas Exploration | Planned | High-potential Otway Basin exploration well targeted for H2 FY25; important for reserves replacement; could provide follow-on development opportunities if successful |
Balance Sheet & Financial Position
| Balance Sheet ($M) | 31 Dec 2024 | YoY |
|---|---|---|
| Cash and cash equivalents | $250.7 | +46% |
| Total current assets | $714.3 | +4% |
| Petroleum assets | $4,415.3 | +5% |
| Exploration and evaluation assets | $394.9 | +6% |
| Total non-current assets | $5,017.8 | +4% |
| Total assets | $5,732.1 | +4% |
| Current interest-bearing liabilities | $320.0 | n/m |
| Total current liabilities | $846.5 | +122% |
| Non-current interest-bearing liabilities | $318.1 | -58% |
| Total non-current liabilities | $1,396.9 | -23% |
| Total liabilities | $2,243.4 | +3% |
| Net assets | $3,488.7 | +5% |
| Net debt | $389.3 | -33% |
| Net gearing ratio | 10% | -5pp |
| Cash Flow ($M) | H1 FY25 | YoY |
|---|---|---|
| Operating cash flow | $659.0 | +88% |
| Investing cash flow | ($413.3) | -31% |
| Financing cash flow | ($167.0) | n/m |
| Net increase/(decrease) in cash | $78.7 | +794% |
| Capital expenditure | $363.3 | -31% |
| Free cash flow (Operating - Capex) | $295.7 | n/m |
| Dividends paid | $45.6 | 0% |
| Available liquidity (cash + undrawn facilities) | $631 | n/a |
Beach Energy has significantly strengthened its financial position in H1 FY25, with the balance sheet reflecting both improved operational performance and disciplined capital allocation. Total assets increased 4% to $5,732.1 million, with petroleum assets growing 5% to $4,415.3 million as development activities progressed particularly in the Perth Basin Waitsia project. Cash and cash equivalents increased 46% to $250.7 million, driven by strong operating cash flow generation.
The most notable improvement in Beach's financial position is the substantial reduction in net debt, which declined 33% to $389.3 million compared to $580.1 million as of June 30, 2024. This deleveraging has reduced the net gearing ratio from 15% to 10%, creating additional financial flexibility. The company maintains strong liquidity with $631 million in available cash and undrawn facilities, providing capacity for both remaining capital commitments and potential increases in shareholder returns as the free cash flow profile continues to strengthen.
Cash flow metrics demonstrate Beach's financial transformation, with operating cash flow surging 88% to $659.0 million in H1 FY25 compared to $350.1 million in the prior corresponding period. This substantial improvement was driven by both increased EBITDA (up 20% to $587 million) and favorable working capital movements. The operating cash flow improvement was complemented by a 31% reduction in investing cash outflows to $413.3 million, primarily reflecting lower capital expenditure of $363.3 million as major development projects approach completion. The combination of higher operating cash inflows and reduced investing outflows resulted in free cash flow generation of $295.7 million, compared to negative $179.6 million in H1 FY24.
Strategic Initiatives Status
| Initiative | Status | Strategic Importance |
|---|---|---|
| Low-Cost Operator Transformation | On Track | Field operating costs reduced to $12.5/boe against FY25 target of $14/boe; free cash flow breakeven oil price progressing toward $30/bbl; 30% headcount reduction exceeded; essential for maintaining competitiveness and enhancing returns |
| Waitsia Gas Plant | In Progress | Commissioning underway; targeting first sales gas in Q4 FY25; 20 senior personnel seconded to streamline process; critical growth catalyst with significant revenue and EBITDA contribution potential |
| Western Flank Oil Development | Planned | 10-well development and appraisal campaign scheduled for Q4 FY25; essential for mitigating natural production decline in mature assets; important for maintaining overall production levels |
| Otway Basin Development | Completed | Enterprise field connected June 2024; Thylacine West connections completed October 2024; transformed segment performance with production doubling year-on-year; provides stable production base and cash flow |
| Balance Sheet Optimization | Advancing | Net debt reduced 33% to $389.3 million; net gearing improved from 15% to 10%; creates financial flexibility for both organic investment and shareholder returns |
| Carbon Reduction Initiatives | In Progress | 35% emissions intensity reduction target by 2030; Moomba CCS project operational from September 2024; initiatives implemented reducing annual emissions by 18,000 tCO₂e; positions company advantageously for energy transition |
Beach Energy is making significant progress on its strategic initiatives following the comprehensive review implemented in FY2024. The low-cost operator transformation is delivering tangible results, with field operating costs reduced to $12.5/boe against the FY25 target of $14/boe, tracking favorably toward the longer-term target of below $11/boe. The company has exceeded its 30% headcount reduction target while improving production trends, demonstrating the effectiveness of its organizational restructuring. The free cash flow breakeven oil price is progressing toward the FY25 target of approximately US$30/bbl, substantially improved from the US$54/bbl baseline prior to the strategic review.
The Waitsia Gas Plant represents Beach's most significant remaining growth catalyst, with commissioning currently underway and first sales gas targeted for Q4 FY25. Management has taken proactive steps to ensure timely completion, including seconding 20 senior personnel to streamline the commissioning process. Beach and joint venture partner Mitsui have been working closely with contractor Clough to address potential challenges and maintain the project timeline. While execution risk remains, successful commissioning would significantly enhance Beach's production profile and cash flow generation.
Segment Performance
| Segment | H1 FY25 Production | H1 FY24 Production | YoY Change | H1 FY25 Revenue | H1 FY24 Revenue | H1 FY25 Gross Profit | H1 FY24 Gross Profit |
|---|---|---|---|---|---|---|---|
| Cooper Basin | 5.3 MMboe | 5.3 MMboe | 0% | $524.9m | $626.0m | $127.4m | $174.4m |
| Perth Basin | 0.8 MMboe | 0.8 MMboe | 0% | $157.2m | $185.7m | $51.4m | $46.5m |
| Otway Basin | 3.4 MMboe | 1.6 MMboe | +113% | $306.7m | $125.9m | $161.1m | $25.4m |
| Bass Basin | 0.7 MMboe | 0.4 MMboe | +75% | $54.8m | $44.4m | $23.0m | $18.2m |
| Total | 10.2 MMboe | 8.9 MMboe | +15% | $989.8m | $941.0m | $362.9m | $264.5m |
The Otway Basin has emerged as Beach Energy's standout performer with production more than doubling year-on-year to 3.4 MMboe. This remarkable growth was driven by the connection of the Enterprise gas field to the Otway Gas Plant in June 2024 and the Thylacine West 1 and 2 development wells in October 2024. These infrastructure additions, combined with a more than 50% increase in take-or-pay volumes under the renegotiated Base Gas Supply Agreement with Origin Energy and higher realized gas prices, transformed the segment's profitability with gross profit growing 534% to $161.1 million.
The Cooper Basin segment, comprising both Western Flank operations and the Cooper Basin JV, maintained steady production of 5.3 MMboe but experienced revenue and gross profit declines of 16% and 27% respectively. This performance decline was primarily driven by reduced oil pricing, weather-related production interruptions in early FY25, and natural field decline in Western Flank oil assets. The segment continues to be a substantial cash generator for Beach, still representing the largest revenue contributor at 53% of group sales.
Perth Basin production remained stable at 0.8 MMboe, maintaining the growth trajectory seen in FY24. While revenue declined 15% to $157.2 million due to timing differences in the Waitsia LNG swap cargo program, gross profit improved 11% to $51.4 million reflecting better cost management. The segment's near-term outlook is primarily defined by the Waitsia Gas Plant commissioning, which is currently underway with first sales gas targeted for Q4 FY25.
The Bass Basin segment delivered strong performance with a 75% production increase to 0.7 MMboe and 23% revenue growth to $54.8 million. This substantial improvement was primarily attributable to successful wellbore intervention activities completed in the latter part of FY24, which significantly enhanced field productivity. While representing the smallest segment by asset value and revenue contribution (5.5% of group sales), Bass Basin operations generate consistent gross margins with the 26% improvement in gross profit to $23.0 million reinforcing its value to the overall portfolio.
Discussion