Ann: Change in substantial holding from SVW, page-69

Seven Group Holdings has again increased its holding in Cooper Basin oil and gas producer Beach Energy, further fuelling speculation it is seeking to drive a consolidation between players in the central Australian oil and gas province.

In a filing lodged late on Friday, Seven reported it had lifted its interest in Beach to 18.29 per cent, less than 2 per cent below the maximum it could hold without launching a takeover bid.

Seven, which is building an oil and gas business to sit alongside its existing interests in mining services and equipment hire, was revealed as a substantial shareholder in the $1.4 billion oil and gas producer in early February and has since made many on-market acquisitions of stock.

The latest filing showed it payed between $1.105 and $1.16 a share to increase its holding from the previously reported 16.24 per cent.

Beach shares closed on Friday at $1.115.

Over the past few months, Seven has also been regularly buying stock in smaller Cooper Basin player Drillsearch Energy, in which it now holds 18.86 per cent, according to an April 30 filing. Seven's combined interests in Beach and Drillsearch have a market value of about $365 million.

Analysts say that Beach and Drillsearch are the two Cooper Basin companies that make most sense to be merged, with overlapping permits and interests. Beach also owns a direct stake in Drillsearch, of just under 5 per cent.

RBC Capital Markets oil and gas analyst Andrew Williams told clients in a note last month: "We see Beach Energy as an attractive M&A play (providing scale, diversification, growth and infrastructure) in its own right and as part of a potential Cooper Basin consolidation in a tight east coast gas market.

"If we suggest Beach offers scale as a stand-alone opportunity then a merged Beach-Drillsearch entity could be more attractive."

Beach chief executive Rob Cole said last week that there had been no engagement with Seven on its holding in the company. On February 2 when Seven first revealed its holding in Beach, Seven CEO Don Voelte said Seven regarded Beach as well managed and with "strong assets that are well-placed for increasing future energy demand".

Beach and Drillsearch own small but profitable oil ventures in the Cooper Basin, as well as conventional gas resources that are well placed to supply the gas-short east coast market. They also hold interests in unconventional oil and gas exploration in the basin that offer longer-term potential.

Seven declined to comment on Sunday.

Mr Cole is a former right-hand man of outgoing Seven chief executive Mr Voelte, when the pair worked at Woodside Petroleum.

Seven holds interests in several oil and gas stocks in its investment portfolio. According to unconfirmed speculation in the market, another small Cooper Basin player, Senex Energy, is also among them.