PERTH (miningweekly.com) – Oil and gas producer Beach Energy has seen production and net profit fall for the 2021 financial year.

Beach told shareholders that production in the full year reached 25.6-million, down 4% from the 26.7-million barrels of oil equivalent delivered in the 2020 financial year, primarily owing to lower oil volumes at the Western Flank operations. 

Net profit after tax for the full year reached A$317-million, down from the A$501-million reported last year, with profit impacted by a A$117-million non-cash, pre-tax impairment.

Underlying net profits for the full year reached A$363-million, while underlying earnings before taxes, depreciation and amortisation reached A$953-million.

MD Matt Kay said that while 2021 was a challenging year for Beach on the Western Flank, the company remained in a strong position as it delivered on its gas growth projects, primarily in the Perth and Victorian Otway basins.

“Beach had two exploration successes in the Victorian Otway: we delivered two value accretive bolt-on acquisitions to grow existing production hubs, and we reached a final investment decision on the Waitsia gas project Stage 2, bringing Beach closer to supplying gas into the global liquefied natural gas (LNG) market for the first time.”

Beach and joint venture (JV) partner Mitsuie E&P Australia in December committed to the initial funding for the 250 TJ/d Waitsia Stage 2 development, subject to regulatory approvals, assisting Beach in reaching its yearly production targets of more than 37-million barrels of oil equivalent by 2025.

The development involves the drilling of up to six wells, construction of a new 250 TJ/d  gas processing facility, planned with preferred contractor Clough, and associated gas gathering infrastructure. Total capital expenditure (capex) to first production is expected to be within the range of A$700–million to A$800-million.

A gas processing agreement and related agreements signed with the North West Shelf project participants would enable up to about 1.5-million tonnes a year of LNG of Waitsia gas to be tolled and processed into LNG through the North West Shelf facilities in Karratha between the second half of 2023 and the end of 2028.

Meanwhile, Kay said on Monday that in Beach’s 60-year history, there had never been a bigger project than the company’s Otway Offshore campaign, which saw the successful drilling of Geographe 4 and Xmas trees placed on top-hole locations at Geographe 4 and 5.

“We also doubled the production deliverability at our Perth basin facilities, and we are in the final stages of commissioning at the Kupe compression project, extending the life of this important asset in New Zealand.”

Commenting on 2022 guidance, Kay said that Beach expected production to be further impacted by the declining Western Flank fields, ahead of the ramp-up of production in the Perth basin and Victorian Otway basin development projects.

Production targets of between 21-million and 23-million barrels of oil equivalent have been set for 2022, with capex to reach between A$900-million and A$1.1-billion.

“The Offshore Otway campaign will progress throughout the year with first gas from the new Geographe development wells on track for mid-2022 and all six development wells expected to be drilled by the end of 2022, pending stable weather conditions.

“These wells, once connected to the Otway gas plant, will help to supply the constrained East Coast gas market, which is facing supply shortfalls in the coming years. We are also excited to see construction commence at the Waitsia 250 TJ/day gas processing facility.”