By Nick Toscano
Kerry Stokes-backed Beach Energy will lay off 30 per cent of its workforce and overhaul its executive leadership team in a major cost-cutting drive aimed at turning around the oil and gas producer’s performance amid heavy losses.
The cuts follow the first stage of a comprehensive review into Beach Energy’s strategic direction to “reset the base business” as it seeks to increase profit margins and lower costs, the company said in a statement to the ASX on Thursday.
Beach Energy is using the Ocean Onyx drill rig to develop new natural gas wells off the coast of Victoria.
The company on Thursday confirmed that the management overhaul will see “several of the current executive team” leave the company over the coming months.
“New executive leadership appointments are underway and will be announced once all positions have been confirmed.”
“Further outcomes from the strategic review will be announced over the coming months,” Beach said in a statement.
Billionaire Stokes’ Seven Group Holdings, the biggest shareholder in Adelaide-based Beach Energy, has been unimpressed with the company’s recent performance, which has included production target shortfalls.
In February, Beach posted a first-half loss of $345 million on the back of heavy writedowns on its oil and gas fields in the Cooper Basin and exploration assets.
Sales revenue for the period came in at $941 million, 16 per cent higher year-on-year, buoyed by gas shipments from its fields in West Australia. However, a $721 million impairment charge for the half - largely associated with Beach’s operations in the Copper Basin.
Chief executive Brett Woods on Thursday said it was “imperative” for Beach Energy to regain its status as a safe, efficient and low-cost operator by cutting costs and staff numbers.
“Decisions about headcount reductions are not made lightly as we are highly cognisant of the personal impact organisational change can have on individuals and their families,” Woods said.
“To minimise the personal impact, we are committed to implementing the new structure as soon as possible.”
The new organisational structure would be effective from April 8, the company said.
Investors reacted positively to the news on Thursday, sending Beach Energy’s share price to its highest level in more than 18 months.
Woods, formerly a senior executive at Australian gas giant Santos, became Beach Energy’s third CEO in just over three years in February 2022 after the board announced the immediate departure of Morne Engelbrecht, who had been in the job for 15 months.
Beach Energy produces oil and gas from five basins in Australia and New Zealand. All of its gas on the Australian east coast is delivered domestically.
The company’s flagship growth project, the Waitsia Stage 2 joint venture with Japan’s Mitsui in the Perth Basin, had been originally due to start producing gas to convert into liquefied natural gas (LNG) and ship overseas via the North West Shelf plant last year.
However, progress on the project’s construction slowed following the collapse of engineering contractor Clough.
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