From the Australian:SGH’s declaration this week that it was shifting from “gatherers to hunters” as one of its sales priorities has heightened expectations that the business backed by the billionaire Stokes family is in the market for acquisitions.
Speaking on the sidelines of the UBS Australasia Investment Banking Conference in Sydney this week, SGH chief executive Ryan Stokes said the company was open to supporting further acquisitions for its Seven West Media after merging with Southern Cross Media, as well as opportunities for Beach Energy.
Beach Energy is listed with a $2.9bn market value. SGH owns 30 per cent of the business.
The comments once again throw the spotlight on what potential acquisitions Beach Energy chases this financial year.
The energy producer, led by former Santos boss Brett Woods, is believed to be on the hunt for assets, but finding the right one is the greatest challenge.
Possible options include Santos assets, such as its interest in holds in the Macedon gas plant in Western Australia, its Cooper Bains joint venture, and its Narrabri and Dorado assets. However, they are not thought to be on the market.
It could buy Mitsui’s share of the Waitsia gas project in WA, and if it was interested in an all-of-company takeover, Strike Energy or Carnarvon Energy could be options.
Another option is farming into Amplitude Energy’s East Coast Supply Project.
In the Taroom Trough in Queensland, Tri-Star, Omega Oil and Gas, and Beach Energy are three energy companies that have formed an “Area of Mutual Interest” agreement to collaborate on oil and gas exploration.
Should Beach Energy win more acreage and receive a promising well result, it could move on Omega or Elixr Energy, which operate there.
The pressure is believed to be building on Taroom to embark on a deal next year – otherwise, its portfolio goes into decline.
MST Marquee analyst Saul Kavonic said in a recent research note that Beach Energy needed to carry out mergers and acquisitions to avert a decline, with its Waitsia project in decline from next year.
Beach Energy has a balance sheet to deploy up to about $1.3bn for producing assets, based on 35 per cent gearing, which was where it was at when it bought Origin Energy’s Lattice Energy in 2017 for $1.6bn. If gearing stayed at a more modest 25 per cent, it would have about $700m.
“M&A opportunities will come up when they come up,” Mr Kavonic said in the research note.
“Any Santos asset shake-out could be one possible avenue.”
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