Directors said the number of shares on issue would initially be lowered by the issue of one new Beach Petroleum share for every seven shares held in the current issued capital.

The company then proposes the issue of a bonus option, providing shareholders with the opportunity to take up one new share for every four held after the share capital restructuring.

If all the bonus options were taken up, the number of shares on issue would grow to around 220 million.

Beach Petroleum's chairman, Mr Bob Kennedy, said shareholders would be entitled to the proposed one-for-four options offer 45 days after the initial share capital restructuring had been completed.

"We believe that the new capital structure will better reflect the company's emergence as an Australian oil and gas company of stature," Mr Kennedy said. "The large number of shares on issue appears to be a distraction from a rational assessment of the solid achievements of the company."

He said that, based on the current ASX price of around 4.8 cents, a notional post-consolidation share price would be around 34 cents.

The proposed share consolidation would be put to an extraordinary general meeting of shareholders in Adelaide on 24 May 2002, Beach told the Australian Stock Exchange.