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Beach Energy to slash 60 jobs

Business

Adelaide-based oil and gas company Beach Energy will cut more than 60 jobs and reduce costs by $40 million as it merges with Drillsearch Energy.

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In a statement to the ASX this morning, Beach announced 64 jobs would be cut by the end of May as it closed the Drillsearch office in Sydney.

Beach stated it would remove duplicated operational and corporate positions as a result from the merger.

“It is now expected that headcount will reduce to 213 by 30 June 2016.

“On a combined basis, this represents a 29 per cent reduction since 30 June 2015 and a 21 per cent reduction directly attributable to the merger.”

Beach stated it planned to complete the merger in the next financial year.

“The initial stages of integration identified recurring annual cost savings of approximately $28 million (pre‐tax).

“Due to a further reduction in headcount resulting from the merger, accelerated closure of the Sydney office, and associated savings in corporate administration costs, additional synergies have been confirmed.”

Beach outlined where the merger would save $40 million.

“These synergies include redundancy of the majority of Sydney‐based employment positions, cessation of Drillsearch board fees, termination of contractors and consultants, elimination of Sydney office administration costs, and redemption of convertible notes.

“Not included are field and travel related savings expected from cessation of [marine survey] joint venture management, and rent savings from closure of the Sydney office.

“The Sydney office will close by 30 April 2016 and negotiations are underway to surrender or sub‐lease existing arrangements.”

Acting chief executive officer Neil Gibbins said the merger was ahead of schedule.

“The results achieved to date make the combined business a leaner, more robust operation,” Gibbins said.

“The merger has strengthened our ability to weather current market volatility and better positions us to take advantage of a future improvement in conditions,” he said.

The energy producer also has increased its 2016 full-year production guidance to 9.5-9.8 million barrels of oil or equivalent (MMboe), up from 8.0-8.6 MMboe.

 

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