Beach Energy has revealed ambitions plans to join the ranks of the top 50 ASX companies, telling investors it has the right mix of organic and inorganic opportunities, which will include future M&A activity, to deliver long-term shareholder growth.
Releasing its strategy review to the market today as part of its whole-of-organisational review, Beach said it had a refreshed vision and purpose to build the company into “Australia’s premier multi‐basin upstream oil and gas producer.”
Beach, which now counts former Woodside Petroleum executive Rob Cole as its managing director, said the strategy review had allowed management to confirm its core business, identify non‐strategic and marginal assets for further action and had helped pinpoint areas where sustainable growth could be achieved.
Over the long-term, Beach said it would continue to leverage its competitive advantage in the Cooper Basin through organic and inorganic opportunities. The company is also committed to establishing a “major gas business in east coast basins to extract value from the increasing east coast gas demand profile”.
Beach Energy, which currently has a market cap of $1.16 billion, wants to execute growth opportunities beyond the Cooper Basin, mainly in New Zealand and in the Otway and Gippsland Basins, which would be achieved through future partnership deals.
Beach also revealed on an investor call that it may make a move into resource-rich Papua New Guinea, however the company admitted it was early days and wouldn’t be drawn on the type of deal it would like to pursue in the country.
“PNG is very early days, and it’s partly because there are several opportunities that are coming our way that are from there,” the company revealed on an investor call.
As part of Beach’s drive to maintain financial strength, Beach said it would undertake regular reviews of its assets. For now, Beach is searching for buyers for assets in Australia’s offshore Browse and Carnarvon Basins and part of its interests in a Tanzanian exploration permit.
“Whatever we do, maintaining our financial strength is critical,” Beach said.
“We need this to support exploration and inorganic growth options.”
On the activity side of the business, Beach’s core is in the Cooper Basin and the company said it remained committed to further development in the area.
“We have a strong belief in the organic and inorganic opportunity set to be pursued,” Beach said.
“By way of example, we have over 100 prospects and leads within our existing permits, of which the majority relate to our operated oil fields.”
Beach outlined plans to reinvigorate exploration in the Cooper Basin which will involve allocating “best in class resources to review and identify further Cooper Basin potential.”
The company will form a dedicated exploration team to initiate basin analysis across South Australia and Queensland.
“And in terms of inorganic growth, there is the chance to access under‐explored acreage via gazettal, acquisition and farm‐in opportunities,” Beach said.
Beach acknowledged the wave of consolidation talk surrounding the Cooper Basin and said it would continue to assess Cooper Basin consolidation opportunities. A potential deal, the company stressed, would have to create value for shareholders.
On the M&A front, the company has established a dedicated corporate development team to “enhance our acquisition capabilities.”
“The team is actively screening and pursuing a wide array of opportunities,” the company said.
Beach also plans to realise value from its oil and gas related infrastructure. While a range of options have been assessed and discussions held with its joint venture partners, Beach said any infrastructure deal was dependent on support from its partners.
Beach told investors that there was a good opportunity for value creation via a potential deal around its infrastructure assets, which include its stake in the Moomba natural gas processing facility.
“Everything is potentially on the table,” Beach added.
Beach’s three phase whole‐of‐organisation review is continuing, with the third stage, dubbed organisational model and capability, currently underway.
This stage is set to determine the appropriate structure, capabilities and processes required to most effectively deliver on its strategic objectives.
Beach said progress had already been made, with the identification of corporate cost savings in the order of 15 per cent for FY16, with review of costs ongoing.
Shares in Beach fell 1.4 per cent to 88.2 cents.
Lauren Barrett can be reached at lbarrett@hartenergy.com
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