Beach Energy Talks to Natural Gas Customers as Prices ClimbJames Paton
Beach Energy Ltd., Chevron Corp.’s exploration partner in central Australia, expects to sign new gas-supply agreements to tap rising east coast prices.
“We’re certainly talking to a lot of new customers,” said Reg Nelson, managing director of Adelaide-based Beach, which signed a supply deal last year with Origin Energy Ltd. “The demand is clearly there, and we see plenty of opportunities for gas sales.”
Beach is developing natural gas fields in the Cooper Basin in central Australia and aims to supply a range of potential buyers, including liquefied natural gas plant developers in Queensland state, Nelson said. Domestic gas costs are surging as higher prices in Asia spur LNG exports.
Prices in eastern Australia historically averaged A$3 ($2.69) to A$4 a gigajoule, according to a report last year from the government’s Bureau of Resources and Energy Economics. In the current market, a price in “the A$7 to A$9 range is quite realistic and certainly fits our expectations,” Nelson said today in a phone interview.
Beach shares today rose 8.9 percent to A$1.66 in Sydney trading, the most since September 2012, after the company reported that first-half underlying profit more than doubled to A$158 million. The benchmark index was little changed.
Beach signed an agreement to supply as much as 139 petajoules of gas to Sydney-based Origin at oil-linked prices over eight years, the company said in April.
Origin, Santos Ltd. and BG Group Plc are building three LNG ventures in Queensland at a cost of more than $60 billion.
Beach increased its stake in Cooper Energy Ltd., an explorer in the region, to 18.4 percent in the first half of the year, to strengthen ties to its partner in one of its ventures, Nelson said. Drillsearch Energy Ltd. disclosed last year that Beach, another partner in the Cooper Basin, had become a “strategic shareholder” with a 4.9 percent stake.
“We have no present intentions in terms of takeovers,” Nelson said. “History has shown we’ve taken an equity position to assist a joint venture move forward.”