New Beach Energy chief executive Matt Kay is hoping to wrap up an acquisition within the next six months as the oil and gas producer takes advantage of its relative strength in the depressed oil market and of the support of its largest shareholder, Seven Group Holdings.
Beach, enlarged by its $384 million takeover of Drillsearch Energy earlier this year, is now able to target larger, "more transformational" acquisition opportunities and is being more proactive on deals than in the past, Mr Kay said.
It could act alone on deals but is also in talks that could result in a partnership approach, he signalled, adding that onshore and offshore Australia or similar nearby markets were the focus.
"I would hope that if not completed, we'd be very close down the path on some of these opportunities within the next six months," said Mr Kay, a former senior executive at Oil Search, who took up the top job at Beach on May 2.
Beach had cash reserves of $199 million at the end of June, and undrawn debt of $350 million. It is 22.89 per cent owned by Seven Group, whose chief executive Ryan Stokes has just joined the board.
"We're very happy with the support we've got from Seven; they support our strategy, they support our growth plans, we are fully aligned," Mr Kay said.
He is not counting on any major revival in commodity prices to help the company out in the near term, given ample global stockpiles and the prospect of higher US production if prices rose north of $US50 a barrel. That has kept spending plans on the conservative side.
"I don't think we are necessarily fully out of the woods yet, so that's why we are a little bit cautious on the way we manage our capital," Mr Kay said.
Capital expenditure for 2016-17 should be between $180 million and $200 million, compared with the $184 million spent in 2015-16, with the focus on "value accretive" investment, Beach said in its first guidance for the coming year. Spending is being cut back on the Cooper Basin gas ventures, but increased in the low-cost and oily Western Flank of the basin, where drilling will be increased.
The guidance came as Beach reported record quarterly production and sales volumes after completing the Drillsearch takeover.
Production is expected to increase this coming year to 9.7 million-10.3 million barrels of oil equivalent, up from 9.66 million in 2015-16.
Output in the June quarter reached 2.7 million boe, up 13 per cent from the March quarter thanks to the contribution from Drillsearch ventures. It came within guidance but fell slightly short of estimates by RBC Capital Markets and JPMorgan.
JPMorgan analyst Mark Busuttil described the overall performance in the quarter as "reasonable", while pointing out that production guidance for 2016-17 was slightly below his expectation.
Beach shares shed 3.3 per cent to 58.5c, under-performing the energy sector.
Sales revenues for the June quarter were $166.6 million, taking full-year sales to $558 million, down 23.3 per cent due to lower prices.
New Beach Energy chief executive Matt Kay is hoping to wrap up an acquisition within the next six months as the oil and gas producer takes advantage of its relative strength in the depressed oil market and of the support of its largest shareholder, Seven Group Holdings.
Beach, enlarged by its $384 million takeover of Drillsearch Energy earlier this year, is now able to target larger, "more transformational" acquisition opportunities and is being more proactive on deals than in the past, Mr Kay said.
It could act alone on deals but is also in talks that could result in a partnership approach, he signalled, adding that onshore and offshore Australia or similar nearby markets were the focus.
"I would hope that if not completed, we'd be very close down the path on some of these opportunities within the next six months," said Mr Kay, a former senior executive at Oil Search, who took up the top job at Beach on May 2.
Beach had cash reserves of $199 million at the end of June, and undrawn debt of $350 million. It is 22.89 per cent owned by Seven Group, whose chief executive Ryan Stokes has just joined the board.
"We're very happy with the support we've got from Seven; they support our strategy, they support our growth plans, we are fully aligned," Mr Kay said.
He is not counting on any major revival in commodity prices to help the company out in the near term, given ample global stockpiles and the prospect of higher US production if prices rose north of $US50 a barrel. That has kept spending plans on the conservative side.
"I don't think we are necessarily fully out of the woods yet, so that's why we are a little bit cautious on the way we manage our capital," Mr Kay said.
Capital expenditure for 2016-17 should be between $180 million and $200 million, compared with the $184 million spent in 2015-16, with the focus on "value accretive" investment, Beach said in its first guidance for the coming year. Spending is being cut back on the Cooper Basin gas ventures, but increased in the low-cost and oily Western Flank of the basin, where drilling will be increased.
The guidance came as Beach reported record quarterly production and sales volumes after completing the Drillsearch takeover.
Production is expected to increase this coming year to 9.7 million-10.3 million barrels of oil equivalent, up from 9.66 million in 2015-16.
Output in the June quarter reached 2.7 million boe, up 13 per cent from the March quarter thanks to the contribution from Drillsearch ventures. It came within guidance but fell slightly short of estimates by RBC Capital Markets and JPMorgan.
JPMorgan analyst Mark Busuttil described the overall performance in the quarter as "reasonable", while pointing out that production guidance for 2016-17 was slightly below his expectation.
Beach shares shed 3.3 per cent to 58.5c, under-performing the energy sector.
Sales revenues for the June quarter were $166.6 million, taking full-year sales to $558 million, down 23.3 per cent due to lower prices.
STX Price at posting:
11.5¢ Sentiment: Hold Disclosure: Held
(20min delay)