Beach Energy looks at selling Egyptian assets to focus on Australia
Beach Energy looks at selling Egyptian assets to focus on Australia
JAMES PATON
SYDNEY (Bloomberg) -- Beach Energy Ltd. is considering selling its holdings in Egypt as the company focuses on Australia, where it’s exploring with Chevron Corp.
The decision on what to do with the assets, which include a gas project that’s forecast to begin output in the first quarter of 2015, will likely be made in the first half of next year, Managing Director Reg Nelson said Nov. 25 in an interview.
“Good gas production and sales would make it a much more attractive proposition for interested buyers,” Nelson said in Sydney. “We’re doing a review of our portfolio to look to rebalance it, and that’s one of the things we’d look at.”
Beach, which owns stakes in projects in Egypt, Tanzania, Romania and New Zealand, said in August it was reviewing all of its overseas assets. The company is developing gas fields in Australia’s Cooper basin with Chevron, seeking to take advantage of rising prices on the east coast.
The Adelaide-based company reached a deal last year, attracting an investment of as much as $349 million from Chevron to develop the shale gas project.
Beach slumped 5.8% to close at A$1.05 in Sydney trading, the most in four weeks, while Australia’s benchmark S&P/ASX 200 Index dropped 0.5%. The company’s shares have declined about 27% this year.
The Cooper basin program is on track to meet its targets, with the company recording a flow rate of 0.87 MMcfd, mainly from a single stage in the Daralingie Formation, Beach said Nov. 25 in a statement.
Chevron Risk
That compares with typical flow rates of 0.15 to 0.3 MMcfd in the region, Nik Burns, a Melbourne-based analyst at UBS AG, wrote Nov. 25 in an email.
Beach is looking to go ahead with a pilot production testing program in the Cooper basin, after “very encouraging” results in the initial phase, Nelson said in the interview.
There’s a “genuine risk” Chevron will exit if production tests disappoint investors, considering the majors are putting returns ahead of spending on projects that won’t deliver for some time, Citigroup Inc. said Nov. 24 in a report.
“They have been good for us, and we’re very glad to have them on board,” Nelson said. “Hopefully they’ll continue, but we have a program that we will continue with.”
A decision from Chevron on whether to move to the second phase of the program in central Australia will be made by the end of March, according to Beach.
