$1.6b deal to transform Beach

Kerry Stokes-backed Beach Energy will double in size, become a major energy supplier to the east coast and a partner in Perth Basin gas production following a $1.6 billion deal.

Beach yesterday said the agreement to buy Lattice Energy from Origin Energy would make it a $3 billion company with Australia-wide and New Zealand oil and gas assets, in both onshore and offshore fields.

The company’s production this year will increase by 150 per cent and its oil and gas reserves by 200 per cent immediately.

This would bring its production to levels about the same as peers such as Oil Search and just less than half of Santos’ production based on last financial year’s numbers.

The Lattice assets include two Perth Basin gas projects — a 50 per cent stake in AWE-operated Waitsia and a 67 per cent operating interest in Beharra Springs.

Chief executive Matt Kay said the company had been working on the deal for 15 months.

“Beach has made a stepchange in terms of size and scale but it’s also created a broader portfolio, a lot more exploration and development opportunities so it makes it a much more sustainable business for the longterm,” he said.

“Our intention is basically to look at how we integrate the two companies and continue to grow and deliver shareholder value.

The deal means Beach will become a “material supplier of gas to east coast markets” which have been struggling with high gas prices and supply constraints.

Beach will fund the acquisition by raising $1.575 billion in funding including the refinancing of existing debt, plus a $301 million capital raising.

Mr Kay said the company’s debt levels would remain relatively low at just less than 35 per cent and the modelling showed it could be debt free by 2020-21.

The move by Beach came as Mr Stokes’ Seven Group Holdings sold its stake in Prime Media, owner of WA television station Golden West Network, to media mogul Bruce Gordon.

Seven Group sold more than 42 million shares on market at 40¢ a share, yielding $16.7 million.

Prime Media is a regional affiliate for the Stokes-chaired Seven West Media, publisher of The West Australian.

Mr Gordon, who owns WIN Corporation, now has just less than 15 per cent of Prime.