Beach Energy CEO Morne Engelbrecht to make M&A mark
Named as the new chief executive of Beach Energy on Thursday, Morne Engelbrecht has his eye on M&A opportunities as he looks to grow the South Australian oil and gas producer.
The Kerry Stokes-backed Beach Energy will be on the hunt for deals, with its newly appointed chief executive Morne Engelbrecht saying he will look to grow its footprint through merger and acquisition activity.
Mr Engelbrecht, acting CEO for the past six months since the abrupt exit of his predecessor Matt Kay, was named on Thursday as permanent boss of the South Australian company that counts Mr Stokes’s Seven Group as its biggest shareholder.
Booming oil and gas prices make the current market an unlikely source of bargains, but Beach said it would comb through opportunities.
“We’ve got a great balance sheet, so M&A is not off the table. Obviously we can’t see our way through to value in the current market but we definitely want to keep growing and we’ve got the balance sheet to do that on all fronts,” Mr Engelbrecht told The Australian.
“So whether that will be investing more in our own assets, doing M&A and looking at our capital management framework going forward as well. So they’re not mutually exclusive so we think we can do all three.”
Beach’s $1.6bn deal to buy Origin Energy’s Lattice assets in 2017 dwarfed its entire market capitalisation at the time, with the equity raising backed by Seven.
From its single Cooper Basin focus, Beach was catapulted into being a major player with production in five basins including in Western Australia and New Zealand from its SA roots.
Mr Engelbrecht said he was likely to look for targets in Australia rather than embarking offshore. “We are very much Australia-focused in terms of our approach,” he said.
“It needs to make sense from a value perspective. We’re not focused on any specific asset in terms of maturity or operated or non-operated status.”
Beach is an emerging LNG exporter through its Waitsia project in WA, with a heads of agreement signed up with BP for supplies from the second half of 2023.
The Adelaide producer has set a target for 28 million barrels of oil equivalent by 2024 and looked on track to reach its goal, analysts said, with its campaigns in the Otway Basin and Western Flank expected to deliver.
It’s also a partner with Santos in the $220m Moomba carbon capture and storage project in SA that is targeting start-up in 2024.
Santos says it can store 100 million tonnes of carbon dioxide in depleted oil and gas fields at Moomba in SA’s Far North, and is claiming a world first by “booking” the figure as part of its assets.
Beach said it was a critical project to help cut emissions and help both companies and other polluters meet climate goals.
“We feel it’s an important next step in terms of energy security and playing our part in further energy supply,” Mr Engelbrecht said. “So by 2024, we are looking at about a third of our net equity emissions from the one project.”
Beach said it would look at carbon capture opportunities in Victoria’s Otway Basin and WA’s Perth Basin where it operates.
Chevron’s Gorgon, which started in 2019, is the largest carbon capture facility in the world but has been hit by technical setbacks and delays, underlining the huge task ahead for oil and gas producers pinning their hopes in the nascent technology helping solve pollution concerns.
Santos has criticised negativity around the technology and said it would be an important method for helping the energy industry decarbonise.
Shares in Beach, with a $3.76bn market capitalisation, fell 2.65 per cent on Thursday to $1.66.