The Oz 19Nov Seven Group chief executive Ryan Stokes yesterday...

The Oz 19Nov

Seven Group chief executive Ryan Stokes yesterday signalled that the mining and media conglomerate would continue to make bullish bets on the energy sector even though oil prices had fallen towards $US40 a barrel.
The group has spent more than $300 million buying 20 per cent of Drillsearch Energy and Beach Energy, each as part of a plan to exploit the launch of gas exports from Queensland.
Asked if he was brave enough to wager that the sector would bounce back amid slumping prices, Mr Stokes told The Australian: “We didn’t envisage $US40 a barrel — that’s fair — and that’s a challenge, but we still think the underlying position within the sector is sound.
“We’re very comfortable with the position we’ve got and we will be selectively looking at opportunities. I wouldn’t say that we see this as the right time necessarily to double down but we think the right assets will start to be priced at potentially compelling price points and that’s naturally an opportunity we tend to look for.”
Merger and acquisition activity is starting to pick up in the oil and gas sector as prices stabilise at low levels and buyers and sellers start to agree where assets should be priced. Mr Stokes welcomed Beach Energy’s proposed $1.2 billion scrip merger with Drillsearch Energy because of the synergies the pair could gain with their Cooper Basin assets.
“We see probably more through a merged Beach-Drillsearch structure as well,” he said.
“We think there are a lot of opportunities that they can take advantage of in that east coast oil and gas market.”
The newly appointed chief o Seven Group sounded a defiant note on China amid concerns about the health of the world’s second-largest economy, and called for additional stimulus packages.
“China is still slowing a little more than we anticipated,” he said “That’s something we’re watching and we’re taking action in China to address that, so from a China business perspective we’re doing what we can.”
Seven has more exposure to the world’s most populous nation than most Australian companies — since 1989, its WesTrac business which owns the right to distribute Caterpillar heavy equipment, has been operating in Western Australia and China.
Mr Stokes said there would be no quick turnaround in performance amid continued pressure from the mining downturn to slash costs at its WesTrac unit. Seven Group reiterated that it expected pre-tax profit in 2015-16 to decline 10 per cent. Shares gained 1.55 per cent, or 8c, to $5.23.