Beach Energy shares plummet on gas plant issues
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The news: Beach energy shares have plummeted after the company identified more issues at its Waitsia gas plant that have increased capital expenditure costs.
The numbers: The plant’s capital expenditure has increased to $600 million to $650 million from $450 million to $500 million.
Beach shares were down 15.57% to $1.60 at 12:49pm AEDT following the announcement.
The context: The Waitsai joint venture with Mitsui E&P Australia has already substantially fixed issues relating to rebuilding compressors and replacing valves and flanges, Beach said in a statement.
However, it noted that further quality issues have emerged and the joint venture was working through an updated schedule and cost estimate.
The Waitsia plant's first gas is now expected by early 2025, a delay from mid-2024, with a planned three-month ramp-up of production.
Beach said there would be unavoidable processing costs based on the first gas target which would be incurred in FY25.
What they said: Beach Energy managing director and CEO Brett Woods said: “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,” he said.
The source: ASX announcement
