Beach Energy (ASX:BPT) signs massive LNG deal with BP for 2023

Stuart Roberts Stuart Roberts, August 8, 2022

Beach Energy (ASX: BPT) has secured a binding offtake agreement for its 50% share of the LNG to be produced from the massive Waitsia Gas Field in Western Australia. Waitsia LNG is expected to start shipping from the second half of calendar 2023 and BP will now take all of Beach’s share for about the first five years of the project’s life. 

 

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The world is running out of gas

The agreement allows for Beach Energy, which is a Stocks Down Under Concierge stock, to benefit from the currently strong prices for LNG being enjoyed in Asia, but also limits the downside through a price protection mechanism.

Although no price numbers were given, we believe that the company has done well out of the BP deal, with BP likely to be concerned about realisable LNG supply in a world rapidly running short of gas.

 

Beach Energy (ASX:BPT) share price chart, log scale (Source: Tradingview)

 

Beach Energy to benefit from sellers market conditions

Selling Waitsia wasn’t going to be hard given the market fundamentals post the start of the war in Ukraine, but the market will like the fact that a single customer took so much of BPT’s product. We believe it is further proof that 2022 is a seller’s market for LNG.

Beach Energy itself noted that it now has exposure to multiple oil and gas prices, which provides a certain hedge against the vagaries of individual product and region exposure.

 

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