Australia's Beach Energy Shares Tumble on Waitsia Gas Project Delay

(Reuters) — Shares of Beach Energy Ltd. fell nearly 8% on Thursday after the Australian oil and gas explorer said it was no longer prudent to maintain capital expenditure and timing estimates for its A$768 million ($520.93 million) Waitsia Stage 2 gas project.

The gas project, a joint venture with a unit of Japanese firm Mitsui & Co., was due to start producing gas for export through the North West Shelf LNG plant in late-2023.

"The tight labor market in Western Australia in particular has impacted construction progress at the Waitsia Gas Plant to create a range of uncertainty in outcomes," Beach Energy said in a statement.

In February, the company reached a deal with Italy's Webuild SpA to complete delivery of the project after former contractor Clough Ltd was placed in voluntary administration.

Beach Energy had also raised its total capital expenditure estimate for Waitsia to A$400 million–A$450 million from A$350 million–A$400 million.

The company said on Thursday the project remained strongly value-accretive and a key element to its future growth, adding that joint venture operator Mitsui E&P Australia and Webuild were reviewing cost and schedule to find ways to mitigate impacts on the project.

Shares of Beach dropped as much as 7.8% to A$1.300, posting their biggest intraday percentage fall since Dec. 7, 2022. The stock was also the top loser in the ASX 200 benchmark index, which rose 0.6% by 0049 GMT.

"Mitsui E&P Australia and Beach Energy are working collaboratively to deliver the Waitsia Gas Project Stage 2 together with our construction partner WeBuild," the joint venture operator said in a separate statement.

Woodside Energy, the operator of North West Shelf LNG plant, did not immediately respond to a Reuters request for comment.

($1 = 1.4743 Australian dollars)

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