The Beach Energy Ltd (ASX: BPT) share price has dropped 3% after the ASX energy share reported a big drop of earnings in the FY26 half-year result.
Beach Energy is an oil and gas business headquartered in Adelaide. Its activities include gas exploration and production of gas, oil and natural gas liquids from five basins across Australia and New Zealand. It has a strategic focus on the core hubs of East Coast Australia and West Coast Australia.
HY26 result
Here are some of the financial highlights for the business in the first six months of FY26:
- Production declined 7% to 9.5 million barrels of oil equivalent (MMboe)
- Sales revenue fell 1% to $982 million
- Underlying EBITDA (EBITDA explained) dropped 5% to $558 million
- Underlying net profit (NPAT) declined 8% to $219 million
- Statutory net profit fell 32% to $150 million
- Operating cashflow dropped 33% to $442 million
- Free cashflow sank 75% to $61 million
- Interim dividend of $0.01 per share declared
What happened?
The company noted that while the production was down, sales volumes increased by 3% to 12.7 MMboe, which helped offset the drop in the oil price during the period.
Beach reported that the average realised oil price declined 12% to $112 per barrel, while the average realised gas price increased by 13% to $11.8 per GJ.
Earnings were hit by $61 million of exploration costs being written off.
While it was previously expecting $24 million of one-off expenses for the year, that has risen to $41 million, which includes $33 million of “unavoidable costs for transportation, processing and sale of LNG prior to completion of the Waitsia Stage 2 project and $8 million for the Cooper Basin flood remediation costs.”
The company described this period as an active one of major project delivery.
On the West Coast, first sales gas export was achieved from the Waitsia Gas Plant following a transition from construction and commissioning activities to production operations.
On the East Coast, it completed phase 1 of the offshore Equinox rig campaign with three offshore wells safely plugged and abandoned and the Hercules gas exploration well drilled.
Onshore in the Cooper Basin, flood recovery efforts have significantly progressed, with 97% of affected production now back online. Drilling continued in the Cooper Basin joint venture, with Beach participating in 44 wells and achieving an overall success rate of 84%, including three gas recoveries and one oil discovery.
The Moomba CCS (carbon capture and storage) continued to “perform well” with more than 556kt of CO2e injected in the period and more than 1.5mt injected in just over a year of operations.
Management comments
The Beach Energy Managing Director and CEO Brett Woods said:
We supplied more than 18% of East Coast gas demand in the first half from our operated assets and nonoperated equity interests, delivering 100% of our Cooper Basin and Victorian offshore gas production to East Coast customers. This highlights the critical role of domestic-only producers in the Australian economy as the Federal Government undertakes its East Coast Gas Market Review.
While we are broadly supportive of a prospective domestic gas reservation policy, it is essential that it is complemented with regulatory reform and incentives to encourage investment by domestic only producers in supplying much needed gas to support Australian jobs and local manufacturing. This supports a long-term functioning market and bolsters the economy by providing balance to northern supply and reduce the ongoing need for market intervention.
With a solid first half performance, we are well placed to deliver on what will be an active second half of FY26 across our core East and West Coast hubs. We are executing on our vision of becoming Australia’s leading domestic energy company.
Outlook for the Beach Energy share price
The shorter-term success of ASX energy shares like Beach is usually heavily influenced by what happens with energy prices, which is challenging to forecast, even for full-time analysts who monitor the sector. Changes in supply and demand this year, such as what happens with Venezuela, Iran and Russia, could be influential.
What Beach Energy can control is its production and costs at its projects, as well as its exploration efforts.
The company noted that its FY26 production is expected to be between 19.7 MMboe and 22 MMboe, so the second half is expected to see stronger production than the first half of the year (which was 9.5 MMboe).
Capital expenditure is expected to be between $675 million to $775 million.
Overall, if I were a shareholder, while I wouldn’t want to see earnings drop, the project progress is good to see and it can shift towards generating profit and cashflow. However, this isn’t one of the ASX dividend shares or ASX growth shares I’d personally buy today.
