Breakout?, page-112

Beach Energy is shaping up to become one of the most active participants in the oil and gas sector sell-off this year, with the $3.3bn Australian-listed producer and explorer said to be looking at all of the assets on offer in the months ahead.The company, headed by former Oil Search and Woodside Petroleum executive Matt Kay, is understood to have plans to take an information memorandum for the sale of Chevron’s 16.67 per cent stake in the North West Shelf, worth about $5.8bn, the $US2bn-plus sale of Exxon’s stake in the Gippsland Basin joint venture and ENI’s sale of its Australian energy assets, currently up for sale through Citi for up to $1bn. Global industry giants are looking to divest Australian oil and gas assets at a time the oil price has plummeted to about $40 a barrel, creating a busy few months ahead for Beach.READ NEXTCRIMEDrink-driver’s green light failJACK PAYNTERUBS is about to launch the sales process for Chevron’s North West Shelf stake and Exxon is set to fire the starting gun on the Gippsland joint venture project through adviser JPMorgan around September.It will be interesting to see if the Gippsland process winds up being a sale involving the entire project, as BHP has hired Goldman Sachs to assess options for the other half it owns.That could mean $US4bn of assets are on offer in that part of the country for an oil and gas buyer (or $US5bn if the Kipper Field as well as the Gippsland Basin joint venture is included, as expected).Some believe it would be logical for BHP and Exxon to find a buyer for the entire project.Exxon holds the operating stake in the asset and no buyer would acquire a passive interest without knowing the operator.Beach may embark on a joint acquisition due to possible concerns from the Australian Competition & Consumer Commission.Meanwhile, Chevron’s stake in the North West Shelf off the coast of Western Australia is a non-operating interest, which has some doubting the level of interest from Beach.But on the other hand, it owns the Waitsia Gas Field project with Mitsui in the region and hopes to take its gas from that project through the North West Shelf, the country’s largest gas export facility. A stake would offer it leverage in negotiations.One line of thought is that it may only take sales documents to collect information for its own gas negotiations rather than to strongly pursue the business.The theory suggested by a number of participants in the oil and gas industry is that other owners of the North West Shelf, including BP, BHP and Shell, are keen sellers, along with Chevron.By placing its stake on the market, Chevron gets ahead of the curve, yet it is said to have had UBS working on the project for some time.It has supposedly received two approaches, but many think Chevron’s real hope is that the stake is purchased by the project’s current operator, Woodside Petroleum.While infrastructure investors have been mooted, some believe that they would be gun-shy without a third-party gas deal in place, unless a transaction could be structured when much of the payment is delivered for the asset once this is locked in.As a result, groups such as IFM, Queensland Investment Corporation, APA and CKI could line up.Beach Energy is likely to come up against Macquarie Group and its backers throughout the contests, including the battle for the Eni assets. Former Origin Energy boss Grant King is supposedly offering assistance to the group headed by the Australian listed financial powerhouse.Eni’s offer includes a 10.99 per cent stake in Darwin LNG and the Blacktip gas field project.Infrastructure investors are potentially in the mix for some components.Earlier, the thinking was that Beach would not be a contender for the Eni business, because it has no other assets in the region.However, should limited interest exist for the operation, the attraction to Beach is that it could pick up the portfolio at an opportunistic price, given that it remains one of the few parties that could operate the assets.It would make it a larger and more diversified industry player.The challenge for any party vying for the Eni assets is extracting earnings growth. It has a 15-year government contract that is not expected to have much upside.The latest interest in M&A for Beach Energy comes after it purchased the Lattice Energy portfolio from Origin Energy in 2017 for $1.59bn, in a move that took the company from a junior explorer to a $4bn business.