In August 2020, the oil production company projected FY2021 oil and gas production of between 26 and 28.5 million barrels of oil equivalent (MMboe) and estimated that it had 352 MMboe of oil and gas reserves in the ground at the end of FY2020.

But, according to Shine Lawyers, the company faced a “crude awakening” in April this year when it downgraded its forecast oil and gas production to between 25.2 and 25.7 MMboe. Beach Energy also downgraded its estimate of oil and gas reserves by 18.4 MMboe and withdrew its five-year outlook.

The class action concerns the company’s announcements to the market about the performance and potential of their Western Flank oil assets in South Australia. Slater and Gordon announced a similar class action investigation in July and filed in the Victoria Supreme Court last week. 

Slater and Gordon class actions lawyer Eleanor Toohey said Beach Energy knew or ought to  have been aware that it had failed to consider factors that would affect its performance. This included the largely unsuccessful FY20 exploration and appraisal drilling results in the Western Flank, the declining reserves position on the Western Flank, and the reliability of the modelling  system used to assess reserves on the Western Flank. 

“As a result of our investigation following Beach Energy’s profit downgrades in the 2021  financial year, we concluded that there was a strong basis to allege that the company provided  misleading guidance and was obliged to correct the market’s understanding of its financial  position at a much earlier time,” she said. 

“Investors are entitled to assume that when they purchase shares in a listed company all of the  material information relevant to its financial position has been disclosed. The downgrades by  Beach Energy during the August 2020 to April 2021 claim period caught the market by surprise  and revealed that this had not been the case.” 

The lead plaintiffs in the Slater and Gordon class action, which has been issued on a no win-no fee basis, John and Gail Nelson, bought 3,000 shares in Beach Energy on 28 April 2021. Just two days later, their investment had plummeted by a quarter. 

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Class Actions practice leader at Shine Lawyers, Craig Allsopp, said that the firm's investigation would explore whether Beach Energy engaged in misleading and deceptive conduct as well as potential breaches of its disclosure obligations.

“The company saw more than a 40 per cent drop in its market capitalisation, shocking investors who put their faith in Beach Energy’s statements about its production and reserves,” he said.

“Shine Lawyers has alleged that the company was brash and inaccurate in its statements to the market, leaving shareholders millions of dollars out of pocket.”

This follows the news that there were a “record” number of class action lawsuits filed in the last financial year, before class actions were launched against cryptocurrency token Qoin, tech company Nuix and Queensland superfund QSuper this month, as well as a2 milk being hit with two class actions in October and the announcement of a landmark climate change class action against the Australian government after a new report showed that climate and cyber class actions would continue to rise.