Already a subscriber?Beach Energy’s new boss Brett Woods intends to diversify the oil and gas producer into gas power generation and storage as part of a far-reaching turnaround strategy designed to leave five years of underperformance behind.
Mr Woods, who joined Beach in January from Santos, also expects to emulate the success he was part of driving at the larger rival in reducing costs and improving returns, setting strict new targets for costs and cash flows. MST Marquee analyst Saul Kavonic said that with the downgrades out of the way, Beach “presents amongst the best opportunity for alpha of any energy name over the next year”.
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. “The east coast market is going to be desperately short of electricity generation as we further phase out coal and bring more renewables in, and gas peaking is the critical support mechanism for renewables deployment,” he said.