Beach Energy has pulled out of Romania in line with its strategy of focusing its E&P efforts closer to home.
The Cooper Basin producer’s subsidiary Beach Petroleum has transferred its 30% interest in Block 28 to the operator Petroceltic Romania for nominal consideration.
The transaction was approved by the National Agency for Mineral Resources of Romania and leaves Beach with no further commitments in Romania.
Beach farmed in to the Romanian joint venture in 2012, under former boss Reg Nelson. The deal gave Beach a holding in the Est Cobalcescu block in the Black Sea which covers an area of 1,000 sq km.
The block was attractive for Beach from a location perspective as it was adjacent to an ExxonMobil-held deepwater block where a large discovery was made that year.
At the time of the farm in, Beach said the move was consistent with its focus on “growing the business through partnerships that offer the potential for significant oil and gas discoveries, whether in Australia or overseas.”
Beach told shareholders in an ASX announcement on Wednesday that Romania did not fit the bill of the company’s current direction.
“Beach’s exit from Romania is consistent with the company’s strategy to focus closer to home, where its core expertise can be leveraged to drive sustainable, value accretive growth,” the company said.
While Beach has forecast a major reduction in capital expenditure for FY16, which could result in streamlined operations, the company will continue to drive revenue growth from its assets in the Cooper Basin, in particular from low cost production in the Western Flank.
The company has had a recent spate of bad luck on the exploration front after Woodside Petroleum decided against pursuing the second stage of the pairs’ Tanzanian joint venture.
In March, Chevron advised it would not proceed with the next phase of Beach’s Nappamerri Trough Natural Gas project in the Cooper Basin, despite the US oil and gas major spending about US $190 million on the first stage.
Beach, under new boss Rob Cole, is in the process of an organisational review in relation to the company’s “strategy, capability, effectiveness and efficiency.”
Results of the organisational review are expected to be announced early next financial year.
Shares in Beach were 1.6% higher to $1.04.
Contact the author, Lauren Barrett, at lbarrett@hartenergy.com.
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