STX 1.89% 26.0¢ strike energy limited

Beach on look out for deals

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    I saw this on another oil and gas thread. For interest as mentions Strike.

    Beach Energy explores options and waits for best deal

    Beach Energy could be plotting a takeover of another listed oil and gas explorer.

    It comes after chief executive Matt Kay yesterday signalled to investors that never before had there been so many acquisition opportunities in the space with so few buyers.

    Beach, which counts Seven Group Holdings as a major shareholder and has Ryan Stokes on the board, is known to be one of the suitors of Origin Energy’s upstream business Lattice Energy, but there are now questions as to whether other businesses are on its radar, as it works with adviser Credit Suisse.

    Mr Kay told investors yesterday that the cost of drilling in the Cooper Basin had fallen 30 per cent, which was believed to be linked to the sweeping job cuts enforced by Santos, adding that Beach Energy was positioned to meet its guidance.

    “This is the lowest buyer pool I have ever seen,” he told the Macquarie Australia conference.

    He said there are “still companies under pressure and there are a number of opportunities”.

    Some yesterday speculated that those opportunities may extend to Strike Energy, which has various coal-seam gas projects but not the money to see them developed, or West Australian oil and gas explorer Buru Energy, which is in a similar position.

    One thought is that Beach buys out Santos’s partner on its Darwin project and a more unlikely scenario is that it looks at Senex or AWE. But Mr Kay would not elaborate. “We are looking at doing the right deal at the right time, and that is a core focus for us,” he said.

    Also on the agenda were further exploration opportunities, and should the right acquisition opportunity fail to present itself, the company may embark on a buyback or return funds to investors.

    In the Cooper Basin, Mr Kay said Beach Energy was doing more work at the front end of the drilling process in conjunction with Santos and the pair were more aligned.

    He added that Beach Energy was finding the company was now having much more open dialogue with Santos with the new leadership and the pair were increasingly helping each other.

    Meanwhile, Santos’s major shareholder Hony Capital last night bought an additional 2.3 per cent interest in the company through investment bank Citi, taking its current holding from 12.8 per cent to 15.1 per cent.

    It comes after Hony Capital’s holding was last year diluted when Santos raised capital, and the latest acquisition will take its share back to what its holding was before the raise.

    Shares in Santos closed yesterday up 7c at $3.63.
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