Beach Energy's Matt Kay is thought to be again looking at potential acquisitions.
Beach Energy's rapid progress on paying down debt since its $1.585 billion takeover of Lattice Energyhas been welcomed by the market and looks set to fuel expectations the oil and gas producer will soon be back in the hunt for acquisitions.
The June quarter report saw Beach generate $149 million of free cash flow, contributing to debt being reduced by a quarter since the completion of the Lattice deal with Origin Energy on January 31.
Revenues jumped 20 per cent from the March quarter to $471 million on production that was 10 per cent higher at 7.23 million barrels of oil equivalent. A 11 per cent increase in average realised oil prices contributed to the sales growth.
JPMorgan analyst Mark Busuttil said the results were "strong", with production and sales volumes above estimates, while most realised prices were also higher.
Beach shares, which have surged 169 per cent in the past 12 months on Lattice and the climbing oil price, finished up 1.7 per cent to $1.84.
The early success of the Lattice deal has meant that Beach, whose biggest shareholder is Seven Group Holdings, has reduced gearing faster than anticipated, to less than 26 per cent at the end of 2017-18, from about 33 per cent when the acquisition was made. It was originally targeting gearing falling to less than 25 per cent by the end of 2018-19.
Beach is thought to already have an eye on the Quadrant Energy gas supply business in Western Australia.
But chief executive Matt Kay said Beach would be "measured" about further external growth.
"It certainly helps from a capital perspective being in good shape, it helps that our integration process has gone extremely well to date, but at the moment we are still completing that work," Mr Kay said.
"We won't be in any rush. It's not priority number one for us at the moment to do any scale acquisitions but we'd be doing a disservice to our shareholders if we weren't at least looking at what was out there."
Full-year production was 18.8 million boe, at the upper end of guidance of 18.1 million-19.1 million boe. Beach said it would only provide guidance for 2018-19 production at its full-year results on August 20, with a fuller outlook to be presented on medium-term prospects at an investor briefing on September 27.
RBC Capital Markets analyst Ben Wilson, who has an 'Underperform' call on Beach, said the 2018-19 guidance would be "critical".
"The release of FY19 capex and production guidance will be a much anticipated event, particularly the capex estimate as we feel near term free cash flow generation is one of the drivers of Beach's strong share price performance," Mr Wilson told clients. He has a price target on the stock of $1.40, well below current trading.
Mr Kay said Beach would continue to reinvest in projects within its business, pointing to opportunities at the Waitsia gas field in Western Australia's Perth Basin with Mitsui, and in the Otway and Cooper Basins.
"We see a lot of opportunities to continue to invest in those core assets," he said.
Beach last month reported a 320 per cent increase in proven and probable oil and gas reserves, to 313 million boe. The Lattice assets accounted for about two-thirds of the increase.
