Delays and cost blowouts at Beach Energy

Beach Energy now expects first gas from its Waitsia expansion to be at least six months later than previously anticipated, while the project is likely to cost at least 33 per cent more, as the company majorityowned by billionaire Kerry Stokes endures fresh issues.

The delay and cost blowouts, which Beach said was due to quality issues in development, will further stain the company’s standing with investors after a series of missteps with management upheaval and shares in the company falling almost 20 per cent.

Beach earmarked Waitsia stage 2 project for much-needed production growth, allowing it to capitalise on an expected East Coast gas shortfall, and it has expected first supplies by mid-2024.

But Beach said on Monday production was not expected until early-2025, and costs would be $600m-$650m. It previously forecast the Waitsia stage 2 project to cost $400m-$450m.

“It is extremely disappointing to be continually encountering quality and execution issues given the late stage of the project. Having to redirect existing onsite labour to remedial works is slowing the progress of pre-commissioning activities, resulting in further delay and cost increases,” newly installed chief executive Brett Woods said.

“Beach is committed to driving the construction of Waitsia Gas Plant to its conclusion and will work closely with the operator and contractor to deliver this strategically important project.”

It said last month it would cut 30 per cent of its 200 workforce. In 2022, it slashed the estimated gas reserves at its LNG export basin near Perth by 11 per cent.