Beach Energy appoints Matthew Kay as new chief executive

Beach Energy's board has underlined the importance of strategic M&A for the future of the company in selecting Oil Search's head of strategy and commercial, Matthew Kay, as the new chief executive.

Mr Kay, who was closely involved in Oil Search's defence of the $11.6 billion takeover approach from Woodside Petroleum last year, is set to take up the role by mid-July by which time Beach will have wrapped up its friendly $380 million takeover of fellow Cooper Basin player Drillsearch Energy.

Beach Energy has selected Oil Search's Matthew Kay as its new CEO.
Beach Energy has selected Oil Search's Matthew Kay as its new CEO. Photo: Supplied

The appointment of Mr Kay, whose roles at Woodside and Santos include strategy and planning, M&A and business improvement, means acting CEO and well-regarded chief operating officer Neil Gibbins has now been twice passed over for the top job.

Beach's takeover of Drillsearch, which will be voted on by the target's shareholders on January 27, is expected to spur further consolidation among players in the Cooper Basin, which are racing to cut costs amid a dive in crude oil prices to 12-year lows.

Mr Kay's skill set looks to be a good match for Beach's growth ambitions, said UBS analyst Nik Burns.

"A primary focus for Beach is growing the business beyond the Cooper Basin, and we see Mr Kay's commercial/M&A background as a good fit with the company's stated objectives," Mr Burns said.


Beach has signalled it could enter nearby areas, sparking speculation it could target Papua New Guinea, where Oil Search is based. But chairman Glenn Davis dismissed any suggestion Mr Kay's experience in PNG was a driver for his appointment.

He pointed instead to Mr Kay's track record in growth and corporate development, his familiarity with the Cooper Basin through his years at Santos, as well as his experience in pipeline infrastructure.

"His skill set in terms of inorganic growth is obviously very important, but that doesn't mean we are not going to focus on organic growth at the same time," Mr Davis said.

Mr Davis said support from investors for the appointment had been "extraordinarily good", belying the dive in Beach's share price on Tuesday.

Beach shares lost 10.5 per cent to 38.5c, the second-worst performer in the energy index which dropped 3.6 per cent as oil prices hit fresh 12-year lows. Drillsearch shares also fell. Mr Davis pointed to a "bit of an overhang" as a result of the merger, and said the stock performance should improve after the deal completes.

Beach owns 4.55 per cent of Drillsearch, while Seven Group Holdings owns 19.9 per cent of both.

Mr Kay, who will relocate from Sydney to his home town of Adelaide with his family, will receive a salary of $900,000 a year, plus longer-term incentive payments.

An Oil Search spokesperson said it was "always disappointing when someone good leaves but this is clearly a great career opportunity" for Mr Kay.

"From our perspective it's a recognition that we've got some pretty high quality people in the company," the spokesperson said.

Mr Kay is on scheduled annual leave, but said in a statement he was "delighted" to secure the role.

"I endorse Beach's current strategy and look forward to the opportunities it presents for shareholders, even in this current oil price environment," he said.

Mr Kay, who joined Port Moresby-based Oil Search in 2014 after 12 years at Woodside, was viewed among potential internal candidates to replace Oil Search chief executive Peter Botten when he stepped down. However Mr Botten has more recently signalled he expects to remain to lock in the next phase of growth for Oil Search.

Any CEO of Oil Search would also need to have a strong track record in Papua New Guinea, but Mr Kay is understood to have declined an opportunity to relocate to Port Moresby with Oil Search.

Beach's board signalled at the last CEO appointment that it was looking for a leader with more of a commercial focus after long-time CEO Reg Nelson retired. But Rob Cole, who was executive vice president, commercial, at Woodside, resigned for personal reasons only a few months into the role.