Beach Energy Limited (ASX:BPT) is an Australian oil and gas producer with operations across the Perth, Cooper, Otway, Bass and Taranaki basins. FY26 marked an important transition for the company as the Waitsia Gas Project reached nameplate capacity, while production from some mature Assets declined and the group's proved and Probable Reserves moved lower. Beach is entering FY27 with greater emphasis on extracting value from Waitsia and pursuing lower-cost Onshore Drilling to support future production and reserve replacement.

FY26 Earnings decline as production mix changes

Beach reported FY26 sales Revenue of A$1.801 billion.

Underlying EBITDA was A$1.040 billion, while underlying net profit after tax reached A$355 million.

Statutory net profit after tax was A$281 million.

Operating cash flow was A$890 million during the year.

Production totalled 19.4 million barrels of oil equivalent, reflecting lower output from some mature fields and operational interruptions across parts of the portfolio.

Sales volumes were higher than production at 22.9 million barrels of oil equivalent because they included third-party gas and other purchased volumes alongside Beach's own production.

The average realised gas price increased to A$11.5 per gigajoule, partly offsetting the impact of lower production volumes.

Waitsia reaches nameplate capacity

The most important growth development during FY26 was the ramp-up of the Waitsia Gas Project in Western Australia.

Waitsia reached its 250 terajoule-per-day nameplate processing capacity in April 2026 after first gas production began earlier in the financial year.

The project gives Beach access to both domestic gas markets and LNG export opportunities through its existing commercial arrangements.

During FY26, Waitsia contributed materially to Beach's Perth Basin production and revenue.

The Perth Basin produced approximately 3.3 million barrels of oil equivalent during the year.

A full financial year of Waitsia operating at or near its designed capacity would change the contribution of the Perth Basin compared with FY26, when the project was still moving through commissioning and ramp-up.

Plant reliability and reservoir performance will therefore be important indicators during FY27.

Waitsia changes Beach's production mix

Beach has historically relied heavily on the Cooper Basin and its offshore southern Australian assets.

Waitsia introduces a larger Western Australian gas contribution and gives the group another substantial source of production outside those mature areas.

The project also broadens Beach's exposure across domestic and LNG-linked gas sales.

This Diversification matters because production from older fields naturally declines unless drilling and development activity replaces depleted reserves.

A larger contribution from Waitsia can help offset part of that decline, but it does not remove the need for ongoing exploration and development across the wider portfolio.

The long-term value of the project will therefore depend on sustained plant utilisation, gas availability and disciplined management of the underlying reservoirs.

Reserve base declines during FY26

Beach ended FY26 with proved and probable, or 2P, reserves of 156.2 million barrels of oil equivalent.

The decline in reserves highlights the continuing challenge of replacing Hydrocarbons produced during the year.

Developed reserves represented a larger proportion of the remaining 2P base, meaning a greater share of reserves was already associated with existing producing assets and infrastructure.

Contingent resources remained another potential source of future reserves, but those resources require further technical, commercial or development work before they can be classified as reserves.

Reserve replacement remains important because production ultimately reduces the remaining resource base unless new discoveries, project approvals or revisions add additional volumes.

For Beach, drilling performance across its onshore basins is therefore central to extending the life of the portfolio.

Cooper Basin drilling remains a major focus

The Cooper Basin continued to be one of Beach's largest production areas during FY26.

Production from the basin was affected by weather-related disruptions, but drilling activity remained significant.

Beach participated in dozens of wells during the year and maintained a high overall drilling success rate.

The company is focusing on lower-cost, repeatable drilling opportunities that can be developed using existing infrastructure.

This type of program differs from large offshore developments because individual wells generally require less Capital and can often be connected more quickly.

The economic value, however, still depends on well productivity, development costs and the amount of gas or liquids ultimately recovered.

Sustaining a high drilling success rate will be important if the Cooper Basin is to offset natural field decline.

Western Flank adds exploration activity

Beach is also pursuing further drilling across the Western Flank of the Cooper Basin.

Recent activity delivered high drilling success, encouraging the company to continue exploration and development work.

An additional exploration campaign is planned during FY27.

The Western Flank has historically provided oil and gas opportunities that can be tied into established infrastructure.

However, exploration success cannot be assumed from previous drilling results.

Future wells will need to identify commercially recoverable volumes and demonstrate Economics that justify further development expenditure.

The program nevertheless provides Beach with another avenue for adding smaller, relatively quick-cycle resources alongside its larger gas projects.

Taroom Trough adds a new exploration area

During 2026, Beach also entered the Taroom Trough in Queensland.

The company is planning exploration activity aimed at assessing the potential of the acreage.

The Taroom Trough represents a longer-term opportunity rather than an immediate production contributor.

Exploration wells will be required to establish the geological characteristics, reservoir quality and potential resource size before development decisions can be considered.

This type of exploration carries greater uncertainty than drilling near existing producing fields.

However, new basins can become important if they establish resources large enough to support future development.

For Beach, the Taroom activity forms part of a broader effort to rebuild the exploration pipeline rather than relying solely on mature producing assets.

Otway Basin remains part of the Supply strategy

Beach continues to assess additional opportunities in the Otway Basin.

Existing offshore fields remain an important contributor to southern Australian gas supply, but mature production has been declining.

The company is progressing evaluation work on additional exploration opportunities in the basin.

Any new wells would need to demonstrate sufficient commercial volumes to support development and connection into existing infrastructure.

The advantage of drilling near established gas-processing assets is that discoveries may be able to use existing facilities.

However, offshore exploration involves higher costs and longer development timelines than many onshore opportunities.

This means Beach must balance the potential resource size against capital requirements and development risk.

Balance sheet retains capacity for investment

Beach ended FY26 with net Debt of approximately A$387 million.

Net gearing was 10.6%, while available Liquidity remained substantial.

The Balance Sheet provides capacity to fund drilling, development and infrastructure projects while maintaining financial flexibility.

Capital allocation will remain important as Beach balances spending across Waitsia, Cooper Basin drilling, offshore projects and emerging exploration opportunities.

The company also reduced its full-year Dividend to 3.0 cents per share.

Dividend decisions remain subject to earnings, cash flow, Investment requirements and board approval.

Beach's current project pipeline means a significant proportion of cash generation may continue to be directed toward sustaining and developing the asset base.

Carbon storage activity continues at Moomba

Beach also continued participation in the Moomba carbon capture and storage project during FY26.

The project injected approximately 1.3 million tonnes of carbon dioxide equivalent during the year.

Cumulative storage reached about 2.3 million tonnes.

The project operates alongside Beach's traditional oil and gas interests in the Cooper Basin.

While carbon storage does not replace the need to develop new gas resources, it adds another activity to Beach's broader energy portfolio and uses existing geological and infrastructure expertise in the basin.

Its contribution will depend on injection performance, commercial arrangements and the development of Demand for carbon-management services.

What could shape FY27 performance?

Waitsia will be central to Beach's FY27 operating performance now that the plant has reached nameplate capacity.

A full-year contribution should provide a clearer indication of its production, revenue and cash-flow potential.

At the same time, declining reserves mean the company must continue replacing volumes through drilling, appraisal and development.

The Cooper Basin and Western Flank provide nearer-term drilling opportunities, while the Taroom Trough and additional Otway exploration represent longer-term possibilities.

Gas pricing and domestic energy policy will also affect project economics and capital-allocation decisions.

Weather, drilling performance and plant reliability remain operational variables.

Beach therefore enters FY27 with more processing capacity but also with a clear reserve-replacement challenge. The next phase will depend on whether Waitsia performs consistently while the onshore drilling portfolio adds enough new resources to offset decline elsewhere in the group.