Why is Clough’s collapse wreaking havoc on the Beach Energy share price?

The collapse of century-old builder Clough has hit headlines this week, and the news appears to be weighing on the Beach Energy Ltd (ASX: BPT) share price.

The oil and gas stock plummeted 4% yesterday and it’s down another 7.28% today, trading at $1.68 at the time of writing.

For comparison, the S&P/ASX 200 Index (ASX: XJO) slumped 0.5% yesterday and is down 0.77% right now.

But why is the Beach Energy share price among the dominos hit by the Perth-based builder’s collapse? Let’s take a look.

Clough’s collapse dints Beach Energy share price

It’s been a rough few years for the Aussie building industry. Much of it was shut down during the worst of the pandemic, only to be hit with supply chain issues and supply shortages on a return to ‘normal’.

Clough was just the latest building company to announce it’s entering voluntary administration on Monday. Its collapse came amid the termination of Webuild’s agreement to acquire the embattled company.

It has appointed Deloitte as administrator, responsible for its planned restructure and recapitalisation.

But where does the tumbling Beach Energy share price come into play? Well, Clough was contracted for engineering and construction work at the ASX 200 energy company’s Waitsia Stage 2 project.

Commenting on Clough’s voluntary administration yesterday, Beach Energy said:

Beach and [Mitsui], its joint venture partner and Waitsia operator, will work closely with the administrator, contractors, and stakeholders to ensure continued progress of the … Waitsia Stage 2 gas plant.

The remit of the project is to further develop the Waitsia gas field in the Perth Basin. It will create more wells and a new production facility capable of producing 250 terajoules each day.

Mitsui said it’s still too early to determine the impact the company’s collapse could have on the project, Reuters reports.

Such uncertainty has likely been weighing on the Beach Energy share price this week.

The stock might also be feeling the impact of earlier news from takeover target Warrego Energy Ltd (ASX: WGO). Warrego found a competing offer from Gina Rinehart’s Hancock Energy superior on Monday.

Beach Energy has five business days to put forward a higher bid. If it doesn’t, Warrego’s board will likely recommend Hancock’s offer to shareholders.

The post Why is Clough’s collapse wreaking havoc on the Beach Energy share price? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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