It cited strength in the balance sheet that would enable it to seek out “strategic acquisitions”, and signalled it may expand into gas peaking power generation, gas storage and other “strategic adjacencies”.
Mr Woods, who joined Beach in January from larger rival Santos, is under pressure from Seven to turn around the performance of the producer, which has suffered reserve downgrades and slumped to a big loss in the first half.
He immediately put some exploration drilling on ice when he joined and dropped a carbon capture project in a precursor to the strategy review.
Mr Woods told investors on Tuesday that the refreshed strategy would help Beach “rebuild trust with the market” and “earn that right to grow”.
Commenting ahead of the investor briefing, MST Marquee analyst Saul Kavonic foreshadowed a likely short-term sell-off after the results of the review were announced. Beyond that, he said, Beach “presents amongst the best opportunity for alpha of any energy name over the next year”.
Shares in Beach were down 2.2 per cent at $1.53 by mid-morning after earlier dropping as low as $1.46. The stock is down from over $1.90 in early April and north of $2.60 in early 2020.
“After five years of disappointments, downgrades and CEO dismissals, the BPT turnaround story is finally gaining momentum,” Mr Kavonic told clients. “New CEO Brett Woods and a new outlook may present a compelling turnaround proposition, as growth ramps up into supportive macro.”
Mr Kavonic said he expected Mr Woods, who he said is well-regarded in the industry, to pursue a similar turnaround playbook as was seen at Santos between 2015 and 2018. “This could entail an initial focus on cost cuts, alongside a strategic and market reset, to be followed by exploration and bolt on M&A opportunities to add portfolio length,” he added.
Beach is targeting a 20 per cent cut in capital expenditure on its existing business to less than $450 million, and a 30 per cent drop in field operating costs to less than $11 per barrel of oil equivalent. It wants to break even on a free cash flow basis at an oil price of less than $US30 per barrel.
Minimum rates of return have been set at 12 per cent for gas projects and 15 per cent for oil projects. Headcount at the company has already been reduced by 23 per cent, delivering a reduction in costs of about $50 million, Beach said in an investor presentation.