Highlights

• Beach Energy delivered June quarter production of 4.9 MMboe, taking FY26 production to 19.4 MMboe, at the lower end of its revised guidance range.

• The company achieved a 100% success rate across three Western Flank oil wells, while the broader Cooper Basin drilling campaign delivered a 94% success rate across 18 wells.

• Quarterly sales revenue declined to $400 million despite stronger realised oil pricing, highlighting continued challenges from production mix and project ramp-up timing.

• Waitsia gas production remained below demonstrated peak capacity, averaging 121 TJ/day gross compared with a previously achieved peak of 250 TJ/day.

• Beach Energy shares traded at A$0.90, rising 3.45% (+A$0.030), as investors continued assessing operational improvements and future growth potential.

Beach Energy Limited (ASX: BPT) ended FY26 with improved operational momentum, supported by successful Western Flank drilling results, stronger production stability and progress across its portfolio. However, the company continues to face questions around whether these operational improvements can translate into a sustained earnings recovery.

The June quarter activities update highlighted progress across the Cooper Basin, while also showing that the company’s major growth project, Waitsia Stage 2, has yet to reach its full potential. Investors are now focused on whether improved execution and disciplined capital allocation can drive a broader turnaround.

Operational Performance Improves as Western Flank Delivers

Beach Energy recorded production of 4.9 MMboe for the three months ended 30 June 2026, representing a 1% improvement compared with the previous quarter. Full-year FY26 production reached 19.4 MMboe, placing the company at the bottom end of its revised guidance range of 19.4 MMboe to 20.3 MMboe.

Quarterly sales volumes were 4.8 MMboe, while sales revenue reached $400 million. Revenue declined from the previous quarter despite a stronger oil pricing environment, reflecting lower production contributions from certain assets and ongoing project ramp-up challenges.

The company achieved a significant milestone through its Western Flank drilling campaign, delivering three successful wells from three attempts. The results reinforced the productivity potential of the Cooper Basin assets and highlighted improvements in drilling efficiency.

The Bauer 70 DW1-4 well was a key success, using a quad-lateral design that intersected 3,204 metres of reservoir. Beach indicated that the well design reduced development costs compared with drilling multiple conventional lateral wells while maintaining production potential.

The broader Cooper Basin program also delivered strong results, with 18 wells achieving a 94% success rate, including successful exploration outcomes at Chinstrap 1 and Kwagga 1.

Waitsia Remains Central to the Recovery Story

The Perth Basin remains the key growth area for Beach Energy, with Waitsia Stage 2 representing the company’s largest recent investment.

The project achieved ready-for-start-up in November 2025 and delivered first sales gas in December 2025. However, production levels during the June quarter remained below expectations, with the Waitsia gas plant averaging 121 TJ/day gross compared with a demonstrated peak capacity of 250 TJ/day.

The company has highlighted that the project remains in an early operating phase, with performance expected to improve as operational challenges are addressed. A scheduled shutdown in September 2026 will temporarily affect production, making the following quarters important for assessing the project’s long-term contribution.

Alongside Waitsia, Beach continues operating smaller Perth Basin facilities, including Xyris and Beharra Springs, which contributed additional production during the quarter.

Portfolio Optimisation and Capital Discipline Continue

Beach Energy has continued reshaping its asset portfolio to improve capital efficiency.

The company agreed to divest its 60% operated interest in Otway Basin permit VIC/L35, which includes the Artisan discovery. The transaction provides upfront proceeds and future royalty exposure while reducing future capital requirements.

Management indicated that the divestment could release more than $500 million of capital previously associated with developing the Artisan project. The company plans to redirect capital towards opportunities offering stronger returns, including the Otway nearshore development prospects.

The company is also preparing for future Western Flank activity, with the Ventia 101 rig expected to return during the second quarter of FY27.

Financial Position Provides Flexibility

Beach Energy ended FY26 with $213 million of cash and net debt of $387 million. Total liquidity stood at $983 million, including available undrawn facilities.

Net debt remained broadly stable during the quarter despite elevated capital expenditure. June quarter capital expenditure was $241 million, representing the highest quarterly spending period during FY26.

The company’s financial position provides flexibility to support future development activities while maintaining focus on debt management and shareholder returns.

A key upcoming event will be the FY26 results announcement, where Beach is expected to provide FY27 production guidance, capital expenditure plans and an update on its capital management strategy.

Why the Western Flank Success Matters

The Western Flank drilling results represent an important improvement in Beach Energy’s operational execution.

The success of the quad-lateral drilling approach demonstrates the company’s ability to improve returns from mature assets by reducing development costs and increasing efficiency.

For an oil and gas producer managing a mature portfolio, improving capital productivity is critical. If Beach can replicate these drilling outcomes across future campaigns, the Western Flank could provide a more reliable production base while reducing the pressure on larger growth projects.

The company’s shift towards disciplined investment decisions also marks a change from previous periods where cost overruns and project delays affected investor confidence.

Growth Catalysts to Watch

Beach Energy has several potential catalysts that could influence its future outlook:

• FY26 financial results, FY27 guidance and capital management update expected on 6 August 2026.

• Improved Waitsia production rates following commissioning improvements and the planned September 2026 shutdown.

• Further Western Flank drilling activity after the Ventia 101 rig returns in FY27.

• Progress on Otway nearshore development opportunities and potential future investment decisions.

• Continued reduction in net debt through stronger operating cash flow.

Risks and Challenges

Waitsia remains the largest execution risk for Beach Energy. The project was a major component of the company’s growth strategy, but production remains below its demonstrated peak capacity. Until output improves consistently, the project’s expected earnings contribution may remain below initial expectations.

The company also remains exposed to commodity price movements, particularly oil and gas pricing volatility. Stronger realised oil prices supported recent performance, but these gains can reverse quickly depending on global market conditions.

Legacy assets also present ongoing challenges. Mature fields such as BassGas require continued maintenance and decommissioning spending, which can affect cash generation without providing corresponding production growth.

Additionally, achieving a successful turnaround depends on maintaining operational discipline, controlling capital expenditure and converting drilling success into sustainable production growth.

What Investors Should Monitor Next

The upcoming FY26 results will provide important insight into Beach Energy’s next phase.

Key areas to watch include:

• FY27 production and capital expenditure guidance.

• Waitsia production growth and progress towards higher utilisation rates.

• Future Western Flank drilling results and production contribution.

• Net debt movement following completion of major projects.

• Capital allocation decisions, including dividends and growth investment priorities.

Conclusion

Beach Energy’s June quarter represented a meaningful operational improvement, particularly through its Western Flank drilling success and improved execution across the Cooper Basin.

The company has demonstrated better capital discipline and operational efficiency, but the turnaround remains dependent on successfully unlocking the value of Waitsia and maintaining production momentum across its portfolio.

With shares trading at A$0.90, up 3.45% (+A$0.030), investor attention remains focused on whether improving operational performance can translate into stronger financial outcomes and renewed market confidence.