The Beach Energy Ltd (ASX: BPT) share price is up slightly in morning trade, after the company announced yesterday that its joint venture with Mitsui & Co. has made a final investment decision (FID) for the Waitsia Gas Project stage 2 development in Western Australia.
This decision reportedly comes after two years of the Beach Energy and Mitsui & Co. teams working to deliver this outcome.
At the time of writing, Beach Energy share price is up 1.75% to $1.86 per share.
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What are the details of the decision?
The Waitsia gas field is ranked as one of the top 5 largest onshore gas fields ever discovered in Australia. The proposed new production facility in stage 2 will lift output to 250 terajoules of natural gas each day.
The second stage of the project has an expected cost of $700 million to $800 million. Beach Energy's contribution will be $350 million to $400 million net. Funding for the contribution will be derived from the company's existing cash flows and facilities.
Full funding is anticipated to be delivered in the third quarter of 2021, pending regulatory approvals and commercial conditions.
If all goes to plan, Beach will commence production of the stage 2 development in the second half of 2023.
All a part of the plan
Beach Energy managing director Matt Kay revealed that the approval of this project is core to the company's 5-year growth strategy. Annual production of more than 37 MMboe (million barrels of oil equivalent) is being targeted by 2025.
Mr. Matt Kay spoke to the value this project could bring to shareholders:
We believe the project offers material value to Beach's shareholders and, through the agreement to export through the North West Shelf facilities, makes Beach an LNG player for the first time in the Company's 60-year history.
This development comes after the Western Australia premier, Mark McGowan, delivered an exemption to the state's strict gas reservation policy for the onshore gas project.
Next steps?
Beach Energy isn't the only company making progress on expansion plans. Its bigger brother Santos Ltd (ASX: STO) announced back in November that it was pursuing FID for the next phase of its Narrabri Gas Project.
It seems that these Aussie energy stocks aren't turning off the gas anytime soon. The next step for Beach will be to get all the regulatory checkboxes ticked, such as approval from the state's Environmental Protection Authority, before any works are started.
