Beach Energy (BPT) shares jumped solidly yesterday on the rise in world oil prices and news that it is considering asset sales to protect its balance sheet from the weak outlook for oil prices and demand.
The shares rose more than 6% yesterday to $1.14 after it said in an investor day presentation that it was looking at selling infrastructure assets, much in the same way that BG Group sold off its Queensland coal seam LNG distribution assets late last year.
Beach also said it would attempt to find a new partner to develop its shale-gas prospects in the Australian Outback after Chevron Corp announced last week that it was walking away from the shale gas drilling project in the Cooper Basin with Beach and Icon Energy.
The company said it is considering the “monetisation potential” of its strategic Australian infrastructure assets.
Assets that could be considered for sale include the company’s 20.2% stake in the Moomba natural gas processing facility operated bySantosin the Cooper Basin in central Australia, as well as pipelines running from Moomba-to-Port Bonython near Adelaide, and gas-storage capacity.
Beach has already cut its capital spending in the current half year by 20%, meaning capex guidance for the 2014-15 year is now $430 to $470 million, down from $450 to $500 million originally.
BPT 1Y – Beach eyes asset sales
Beach also confirmed that it has started a review of the company’s entire structure and organisation (which means cost and job cuts lie ahead).
The investor presentation was part of a national roadshow introducing Beach’s new CEO Rob Cole to investors.
Analysts said yesterday they expect Mr Cole, a former Woodside executive, to focus more on Beach’s conventional oil and gas assets in the Cooper Basin and less on the shale gas prospects.
Beach said yesterday it’s still trying to sell its Egyptian oil assets, while noting that acquisition opportunities exist “close to home”.
As for its shale-gas prospects, Beach said it would conduct a technical review of previous drilling results later in the year before planning a potential second phase of drilling next year.
Beach said it would “seek to re-partner” once this scoping study was complete. That’s also when world oil prices might be higher and chances of a deal could have improved.
