Beach Energy says the 10,876sq km acreage and associated infrastructure increase will make it the sole operator in the Cooper Basin’s Western Flank region in the state’s far north-east.

The acquisition includes 6.8 million barrels of oil equivalent (MMboe) of probable reserves and forecast production this financial year of about 0.6 MMboe.

The probable (2P) reserves are made up of 4.6 MMboe of oil and 2.2MMboe gas and liquids.

Beach managing director Matt Kay said he was pleased to make the acquisition as it would enable the company to apply its exploration, appraisal and development expertise across a broader footprint.

“From a Beach perspective this was a logical acquisition given our proven track record of extracting value from permits we operate, combined with the fact we are building on our extensive position in the Western Flank across the South Australian Cooper Basin,” Kay said.

“The transaction is immediately earnings accretive for shareholders, with initial estimates pointing to approximately $5 million in annual operating cost savings, expected to be realised in the first year post acquisition.”

“Pleasingly, the new acreage contains more than 10 drill-ready oil and gas prospects, providing additional upside potential. These prospects will be integrated into our growth portfolio as drilling candidates from FY22.”

The transaction remains subject to a number of conditions, including relevant regulatory approvals with settlement expected to occur in the March 2021 quarter.

Beach will fund the deal through existing cash and debt facilities.

The publicly-listed company’s share price has slumped in recent weeks from $1.42 on October 9 to $1.15 at yesterday’s close. It is also less than half of its 2020 high of $2.87 reached on January 20 before the coronavirus pandemic, which has seen world oil prices slump to record lows.

In its September quarter update released on October 23, Beach reported steady production and sales volumes but a 17 per cent decline in sales revenue compared to the September quarter last year as a result of lower but rising oil prices.

Beach Energy was ranked third in InDaily‘s SA Business Index of South Australia’s top 100 companies last year.