1. Most Discussed
  2. Gainers & Losers
  1. Members, Techs apologise for the loss of thread titles, and are currently working on restoring them. They will be back asap. Thank you
BPT $1.98

Seven seizes more Beach

  1. melinvest

    1,184 Posts.
    Seven Group seizes more of Beach Energy
    Matt Chambers

    Resources Reporter
    Bridget Carter

    Mergers & Acquisitions Editor

    Beach Energy. Source: TheAustralian

    THE Kerry Stokes-controlled Seven Group Holdings has made another big purchase of Beach Energy shares in a move that will make it one of the energy company’s biggest holders.
    But it is understood Seven Group has eyes for Beach only as a passive investment, rather than to be making purchases ahead of a planned takeover.
    Seven Group was behind a big block trade in the shares yesterday at well above the market price.
    Seven Group had already taken a position of up to 5 per cent position in Beach this week before the block trade, meaning a substantial shareholder notice confirming the purchase is expected early next week.
    At 4pm yesterday, a block of 30 million shares, or 2.3 per cent of the company’s equity, changed hands for $1 a share.
    That was well above both the 95c price the shares were trading at when the trade was made and the 96c the shares settled at yesterday.
    Seven Group has gone to ground on its intentions for Beach after it was outed on Thursday evening as having purchased up to 5 per cent of the stock.
    But it is understood the company is focused on bedding down its recent $200m acquisition of Nexus Energy before making any other major energy acquisitions.
    Seven Group has a $900 million investment portfolio, so for it to buy big stakes in a company is not unusual.
    Shares in Beach, which has a market value of $1.25bn, rose 7 per cent yesterday after the initial Seven Group purchases were revealed. Consolidation of the Cooper Basin, where Adelaide-based Beach is the main player after Santos, has been flagged for some time.
    The impact of the sliding oil price on share prices has increased talk of a takeover, although it will also reduce the ability of potential acquirers to conduct a takeover.
    Beach shares have fallen nearly 50 per cent in the past six months, in line with the decline in oil prices, meaning it is one of the most exposed larger stocks to an oil price rebound.
    Even the $1 price the block trade went through at is a lot cheaper than the average analyst target price of $1.19, indicating the leverage the stock has if oil prices rebound like most forecasters expect.
    Beach is in a good position to supply a looming east coast gas supply shortage as $70bn of LNG plants ramp up at Gladstone over the next two years but has a large amount of its gas linked to oil prices. “Similar to Santos, the leverage makes it very interesting when oil turns, but without the balance sheet and operational issues caused by GLNG,” Credit Suisse analyst Martin Kronborg said in a note to clients yesterday.
    He estimated the company’s oil-linked gas contracts made its total break-even oil price worth about $50 a barrel.

Before making any financial decisions based on what you read, always consult an advisor or expert.

The HotCopper website is operated by Report Card Pty Ltd. Any information posted on the website has been prepared without taking into account your objectives, financial situation or needs and as such, you should before acting on the information or advice, consider the appropriateness of the information or advice in relation to your objectives, financial situation or needs. Please be aware that any information posted on this site should not be considered to be financial product advice.

From time to time comments aimed at manipulating other investors may appear on these forums. Posters may post overly optimistic or pessimistic comments on particular stocks, in an attempt to influence other investors. It is not possible for management to moderate all posts so some misleading and inaccurate posts may still appear on these forums. If you do have serious concerns with a post or posts you should report a Terms of Use Violation (TOU) on the link above. Unless specifically stated persons posting on this site are NOT investment advisors and do NOT hold the necessary licence, or have any formal training, to give investment advice.


Thank you for visiting HotCopper

We have detected that you are running ad blocking software.

HotCopper relies on revenue generated from advertisers. Kindly disable your ad blocking software to return to the HotCopper website.

I understand, I have disabled my ad blocker. Let me in!

Need help? Click here for support.