Seven Group's move up Beach Energy's share register has lifted the stock price of the Cooper Basin oil and gas producer and fed expectations that the conglomerate is hatching a strategic play in the central
Australian energy province that will come to fruition under incoming chief executive Ryan Stokes.
Seven, led by former Woodside Petroleum chief executive Don Voelte, lifted its stake in Beach to 16.24 per cent, from 13.79 per cent, according to a regulatory filing lodged late Thursday. The stock purchases were made between March 11 and April 28 at price of between 93.5c and $1.03 a share.
On Friday, Beach shares gained as much as 4c, or 3.6 per cent, to $1.15.
Similarly, Seven has also increased its holding in smaller Cooper Basin player Drillsearch Energy to 18.86 per cent from 16.69 per cent, after raising it from about 8 per cent last month. The shares were bought at $1.28 each. On Friday, Drillsearch shares were trading 2c higher at $1.235.
Seven is in the process of building an oil and gas business, which includes last year's takeover target Nexus Energy, and oil and gas interests in the US. Its stakes in Beach and Drillsearch are held in an investment portfolio managed by Mr Stokes, who was last month named the new chief executive of Seven when Mr Voelte retires on August 31.
Mr Stokes, the son of 70 per cent Seven Group controller Kerry Stokes, has flagged plans to continue Mr Voelte's strategy of snapping up cheap energy assets at the bottom of the cycle.
The Beach and Drillsearch holdings have a combined market value of almost $350 million. Seven is comfortably the largest shareholder in both Beach and Drillsearch, in which Beach also has a stake of just under 5 per cent.
Drillsearch said on Thursday that it hadn't been contacted by, nor had it met with, Seven to discuss the group's stake in the company, amid queries from some analysts on whether the group had requested representation on the board.
Ord Minnett energy analyst John Young said Seven's position that it was buying shares because they represented a good investment had been convincing when the shares were at recent lows, but less so now after recent price gains.
He said the driver for a strategic play could be the access that both Beach and Drillsearch had to conventional gas resource that could be developed at relatively low cost to supply into the gas-short east coast market.
Some sort of combination of Cooper Basin players would also create a larger company that would be more attractive for institutional investors.
"If one were to be able to aggregate some of these and create a vehicle that had a greater market cap, further diversification of production, and those sorts of things, then perhaps that is appealing to a wider range of institutional investors and maybe that is a driver as well," Mr Young said.
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