Beach Energy to produce first gas in WA by late 2023 as Webuild absorbs Clough assets

Beach Energy (ASX:BPT) expects to see its Perth Basin Waitsia project produce natural gas for Australia by late 2023 as a national gas shortage continues to make itself felt and energy security concerns remain dominant. 

Waitsia’s Stage 2 development now appears locked in following Webuild’s purchase of Perth-based construction giant Clough’s assets. 

Beach Energy and Webuild have executed an agreement to progress Stage 2 with an upwardly revised capex commitment for Beach. 

The company now expects to pay between $400m and $450m to get the project live and off the ground, up from an earlier forecast of $350m - $400m. 

Still, shareholders have mostly shrugged off the higher cost forecast, with Beach shares up 3% to $1.53 in the second hour of afternoon trade. 

How does this involve Beach Energy? 

Stage 2 of Waitsia was originally expected to go live earlier than late 2023, but after the collapse of Clough (which was also managing the Snowy 2.0 project), uncertainty reigned over Christmas. 

Japanese engineering giant Mitsui E&P, also a partner on the Waitsia project, advertised the Waitsia Perth Basin gas field as one of the largest onshore discoveries in Australia. 

Webuild will now be a key partner instrumental to the development of the Waitsia gasfield, with the lion’s share of gas-to-sales infrastructure included in Stage 2 works. 

Once complete, Beach Energy intends to provide gas to the Australian domestic market, as well as export Liquefied Natural Gas (LNG) from the North West Shelf (NWS). 

Should that go ahead, Beach will become the newest player working in WA’s flagship LNG province. 

Wewho? 

Late last week, Italian construction giant Webuild paid $36m to acquire a large chunk of Clough’s assets in a process encouraged and overseen by Deloitte. 

Clough, a Perth-based construction giant which had numerous ASX-listed companies’ projects on its books, went into administration in December.

The companies were already in cahoots, before Clough’s collapse. 

Webuild first rejected an offer to buy out Clough in December of 2022, but that situation has since reversed. 

Part of that could be due to Webuild’s successful re-negotiating of Clough contract values to reflect higher input costs, with an increased capex forecast posted by Beach on Monday for Waitsia underscoring that process. 

Construction remains under pressure 

Construction bankruptcy is nothing new in Australia post-COVID, but many were surprised to see a relative outperformer, Clough, sink under the surface. 

The same fundamental circumstances that have seen dozens of construction companies in Australia go into bankruptcy were to blame for Clough’s failure, just at a larger scale.

 Beach's three month charts as at 1330 AEST Monday 6 February 2023