Meet the frackers: Beach Energy ASX:BPT

Beach Energy Limited (ASX code: BPT) is engaged in oil and gas exploration, development and production and investment in the resources industry.

Beach holds interests in five producing basins across Australia and New Zealand, including the Cooper Basin, Bass Basin, Otway Basin, Perth Basin and Taranaki Basin.

By 2014, Beach Energy was the largest onshore oil producer in Australia. Subsidiaries include Beach Petroleum (NZ) Pty Ltd, Beach Oil and Gas Pty Ltd, Beach Production Services Pty Ltd, Beach Petroleum Pty Ltd and Beach Petroleum (Cooper Basin) Pty Ltd.

Seven Group Holdings Limited (ASX:SGH) owns 30% of the shares of Beach Energy. Western Australian multi-billionaire Kerry Stokes owns 57.1% of Seven Group Holdings, which in turn owns Seven West Media, the Caterpillar franchisee Westrac, etc.

In September 2017, Beach Energy acquired Lattice Energy from Origin Energy for $1.585 billion, significantly increasing the company’s gas portfolio while diluting the value of small retail investors in Beach Energy.

Our Index of Gas Explorers in Australia

Beach Energy in the news …

Victoria’s Offshore Gas Drilling Approval Condemned: 7 June 2024, In a move that has sparked widespread outrage, the Victorian government has approved Beach Energy‘s new offshore gas drilling project near Port Campbell, close to the iconic Twelve Apostles. The decision has been met with strong opposition from environmental groups who argue it contradicts efforts to combat climate change and protect marine ecosystems.

Shareholder class action against Beach Energy

25 Nov 2021 – Slater and Gordon Lawyers has filed a class action against oil and gas company Beach Energy on behalf of investors who bought shares over an eight-month period during which there was a significant decline in the company’s projected earnings from its Western Flank oil and gas reserves in South Australia’s Cooper Basin.

The claim, filed in the Victorian Supreme Court, is being brought on behalf of shareholders who incurred losses after acquiring Beach Energy shares between 17 August 2020 and 29 April 2021.

The class action alleges the energy company engaged in misleading or deceptive conduct and breached its continuous disclosure obligations under the Corporations Act.

Perth Basin – Waitsia gas field

Beach Energy’s Perth Basin operations consist of the Waitsia project and Beharra Springs projects.

The Waitsia gas field in the Perth Basin is one of the largest onshore gas fields discovered in Australia. Waitsia gas project is located within production licence PL1 in the northern Perth Basin on rural farm land, 340km north of Perth and 16km south of east Dongara. Waitsia is a joint venture between Beach Energy and Japanese conglomerate Mitsui & Co.

Beach Energy exempt from WA gas reservation policy

Waitsia is the only Western Australian gas project exempt from the state’s gas reservation policy, which bans the export of onshore gas extracted in WA to overseas or eastern states to ensure local supply and ease energy prices.

Even gas industry group APPEA raised questions about the gas reservation policy exemption for Beach Energy.

Environmental Protection Authority “concerns most pollution from the project has been overlooked”.

Kerry Stokes is used to getting exemptions from government red tape – in 2020 Stokes and his wife were allowed to self-isolate at home instead of a hotel after returning from a skiing holiday in the USA during the Covid19 pandemic.

Waitsia Gas Project contractor Clough Group declares bankrupt

On 14 December 2022 Ken Yamamura, CEOs of Mitsui E&P Australia (MEPAU) & Morné Engelbrecht, CEO of Beach Energy wrote an open letter regarding the collapse of Clough Group who were building the Waitsia Gas Project Stage 2.

“You may have seen in the news that our contractor for the Waitsia Project, Clough, was placed into voluntary administration on 5 December 2022. Deloitte Australia has been appointed to manage the administration and we have been working closely with them to ensure the Waitsia Project continues,” Ken Yamamura & Morné Engelbrecht wrote.

“We have heard the stories about how some local businesses supporting this project have either been paid late, or have not yet been paid at all by Clough for their work. Let us say that this is simply not good enough.”

“That is why we are taking appropriate steps to ensure businesses who are owed money receive payment. If you are providing services in the future, you have our assurances that you can do so with the confidence that you will be paid for your work.”

“The same is said for the hard-working team on the Waitsia site. We have reached an agreement with the administrators to ensure you continue to be paid. … Please keep working with us on this important project and celebrate together as milestones are reached. There’s a place for you on the project, and we will be with you every step of the way.”

“We remain grateful for your continued support.”

Further information on Waitsia Gas Project is on the Frack Free WA website

Hancock Energy enters Perth Basin gas field

9 December 2022 – Beach Energy walked away from the takeover battle for Warrego Energy, a Perth Basin gas explorer (ASX code: WGO), allowing Gina Rinehart’s Hancock Energy to acquire Warrego’s gas assets.

Warrego Energy has two Perth Basin licenses EP469 & EPA-0127, plus an indirect interest in El Romeral, an integrated gas production and power station operation located to the east of Seville in Southern Spain, and an 85% stake in Tesorillo via it’s shareholding in Tarba Energia S.L. which owns the Tesorillo Project in Cadiz Province in Southern Spain.

While Hancock Energy and Beach Energy were vying for control of Warrego, Strike Energy bought a controlling stake in Warrego, raising its shareholding and voting control in the company to 19.9% and increasing its direct and indirect ownership of the gas field to 60%.

Warrego and Strike each have a 50% stake in West Erregula onshore gas field north of Perth that

Beach meets resistance off Taranaki, New Zealand

16 December 2022 – Beach Energy lodged consent applications with the Environmental Protection Authority (EPA) related to offshore drilling in Taranaki. Climate Justice Taranaki and other climate activist groups are opposing the applications.

“Critically, we are in a climate emergency. Getting off fossil fuels is crucial. There is no excuse to drill for more oil or gas when the window for reducing emissions to minimise climate catastrophes is closing. We need to reduce our energy demand fast and transition onto sustainable renewable energy instead. It is ludicrous that the current EEZ regulations do not allow the consideration of impacts on the climate from proposed activities” says Urs Signer, a member of Climate Justice Taranaki.

Money for Nothing in South Australia

4 May 2018 – Senator Matt Canavan’s department gave Beach Energy $6 million towards the $22.6 million cost of “a new Katnook Gas Processing facility to process gas from the south east of South Australia in the Otway Basin” under the federal government’s Gas Acceleration Plan.

3 May 2021 – Beach Energy indefinitely suspended operations at the recently redeveloped $22m Katnook Gas Plant following declining gas volumes at its Limestone Coast wells.

21 December 2022 – Shares in Beach Energy jumped 6.8 per cent after Mr McGowan made the announcement and the company posted strong yearly results, which increased the value of Mr Stokes’ stake in the company by about $65 million.

At a press conference on Tuesday Mr McGowan refused to answer questions about whether he had discussed the exemption with Mr Stokes or his son Ryan, the chief executive of Seven Group Holdings.

“I’m not going into any private conversation I have about commercial matters,” the Premier said.

“I can’t control the share price. The majority of the [Waitsia] gas, at least half, is coming to Western Australia.”

The new policy requires all onshore producers to pump 100 per cent of their gas into the WA network, but under the Waitsia exemption, the joint venture will be able to send gas overseas via the Karratha Gas Plant after it made a non-binding deal with Woodside, also announced on Monday.

In an investor briefing on Monday, Beach Energy chief executive Mark Kay revealed the joint venture planned to export about 50 per cent of the Waitsia reserve overseas over a five-year period.

Beach Energy Top 10 shareholders (as at end 2022)

Kerry Stokes & Seven Group Holdings

The major shareholder of Beach Energy is multi-billionaire Kerry Stokes, who made his fortune as the franchisee of Caterpillar mining equipment during Australia’s mining boom. Seven Group Holdings Limited (formed after a merger with franchisee Westrac and

has equipment dealer franchises in Western Australia, New South Wales, the Australian Capital Territory and nine provinces across China.

Seven West Media (ASX:SWM), which operates the Seven TV network and The West Australian newspaper, received $47,028,000 in government Jobkeeper payments during FY2021 while posting a $318 million annual net profit.

To qualify for the corporate welfare Jobkeeper payment during the COVID-19 pandemic, companies with annual revenues exceeding $1 billion needed to prove a 50% revenue drop over one month.

The company refused to repay the JobKeeper payments while paying their CEO James Warburton $7.6 million and a total of $1.89 million in executive bonuses. Within two years, SWM purchased long-desired regional television stations Prime Media, acquired the television rights to AFL for $4.5 billion (with Foxtel), paid down hundreds of millions of dollars of their debt and began buying back their own shares on the stock market. Between 2020 and 2021, Kerry Stokes increased his personal wealth from $6.26 billion to $7.18 billion.

During the same period, more than 11,000 low income support recipients received debt notices from the Morrison Government totalling over $32 million in JobKeeper payments at an average of $2909 each.

Seven West Media ran “a brutal campaign against the EPA” in 2019 when it tried to introduce zero-emissions guidelines that would require big polluters to offset greenhouse gas emissions on new and expanded projects. The West ran editorials attacking individual members of the EPA next to full-page ads promoting the oil and gas industry. The EPA withdrew the guidelines.

This happened the same month that Beach Energy’s Waitsia project became the only onshore gas project to be exempt from WA’s domestic reservation policy.

Beach Energy donations to Australian political parties

Beach Energy Limited declared $110,000 of donations since 2010. Source

South Australia – Cooper-Eromanga basin

The Cooper-Eromanga basin is Australia’s most prolific oil and gas basin and continues to yield new discoveries. In 2022 Beach Energy acquired new leases in the Cooper Basin from Senex Energy.

In FY18, Beach drilled 95 wells in the Cooper Basin with a success rate of 82%. Beach’s Cooper Basin joint venture operations accounted for 31% of their production in 2018.

Beach does not undertake any fracture stimulation (fracking) activities in the Otway Basin where they operate the Katnook Gas Processing Facility, just south of Penola in the permit area of Petroleum Production License 62 (PPL62) in South Australia. On the Victorian side of the border in the Otway Basin, Beach Energy own the Otway Gas Plant.

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