Beach Energy: Waitsia ramp-up and gas policy risk divide fund managers

As the Waitsia Gas Plant ramps toward full production, fund managers are weighing Beach Energy's cheap valuation and LNG exposure against a federal gas reservation policy and a share price that has more than halved through 2026.

30 Jun 2026 · 5 min read

Fund managers covering Beach Energy Ltd (ASX: BPT) have spent 2026 weighing a genuinely cheap valuation and a maturing Waitsia gas project against a deteriorating policy backdrop and a share price that has fallen from around $1.30 in March to under $0.90 by June. Collins St Asset Management put the deep-value case plainly in January, arguing the company's operational issues were largely behind it and that Waitsia was "up and running" with a strong balance sheet.

We're not buying them for what they have done. We're buying them for what they will do moving forward. And we feel there's some exciting opportunities there for the company to make good use of a strong balance sheet.

Collins St Asset Management, Presentation, January 2026

Waitsia and LNG exposure anchor the bull case

The Waitsia Gas Plant in Western Australia has been the centrepiece of the constructive view. Datt Capital called Beach a buy in April 2026, saying the plant's ramp-up "appears to be ramping up fine" and highlighting the company's exposure to elevated spot LNG prices, noting Beach retains more than 60% exposure to spot pricing even after pre-selling a portion of its LNG cargoes as a hedge. Longwave Capital added detail on the revenue mix in June, noting around half of Beach's sales revenue is tied to export or global commodity pricing through LNG, oil and gas liquids, with the remainder sold domestically, meaning the company's growth profile is increasingly influenced by global gas and oil pricing rather than Australia's economic cycle alone.

Exploration risk and a paused dividend temper enthusiasm

Not every manager has been comfortable with the risk profile. Acorn Capital rated the stock a hold in April, flagging drilling activity off Bass Strait for the Otway project and pointing to a cautionary tale from peer Amplitude, which had drilled two wells with disappointing results. Acorn also noted Beach had stopped its dividend in preparation for a potential acquisition, adding a layer of uncertainty given that "acquisitions can be accretive, and sometimes they can be value-destructive."

Gas reservation policy becomes the key overhang

The clearest headwind emerging through 2026 has been federal gas policy. Pendal Group reported in May that the government's 20% gas reservation policy, due to start on 1 July 2027 with existing contracted volumes grandfathered, is likely to weigh on domestic gas prices, and specifically named Beach Energy as among the most exposed companies. That policy risk, combined with sector-wide volatility from US-Iran tensions, has driven at least two managers to reduce their exposure. Equity Trustees Asset Management exited its Beach position in March, rotating into Santos, Woodside and Worley, and explained its preference for Santos given its post-Barossa cash-harvesting phase, a roughly 9.6x 2026E earnings multiple, and a committed 60% free cashflow payout to shareholders.

We switched some of our Energy exposure from BPT into Santos, Woodside and Worley. Our preferred exposure in the energy sector is STO... the company has committed to returning at least 60% of all-in free cashflow to shareholders.

Equity Trustees Asset Management, Quarterly Report, March 2026

What managers are watching next

Collins St Asset Management itself trimmed its Beach Energy position in June 2026, citing broader efforts to reduce oil and gas exposure amid heightened volatility, redeploying proceeds into CSL at what it called a highly attractive inflection point, while still describing itself as constructive on the sector's long-term fundamentals. With Waitsia now largely ramped and the Otway drilling program underway, the near-term catalysts fund managers are tracking are the pace of exploration success, any signal on capital management once the balance sheet allows for a dividend restart, and how the 2027 gas reservation policy is ultimately implemented.