Beach Energy has agreed to divest its 60% operated stake in the VIC/L35 production licence in Australia’s offshore Otway Basin to Amplitude Energy and O.G. Otway.
VIC/L35 contains the Artisan gas discovery, which was announced in March 2021. The discovery is located nearly 30km offshore Victoria.
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Under the terms of the deal, Beach Energy will receive A$70m ($50.18m) in cash upon completion. The company will also be entitled to a production royalty of A$3.75 per gigajoule (GJ) on 60% of all gas produced up to a total of 62 petajoules (PJ) or until June 2036.
These payments are expected to total approximately A$140m over the field’s lifetime based on current resource assessments.
Amplitude Energy will acquire a 50% interest in VIC/L35, while O.G. Otway will take an additional 10% stake, both under the same commercial terms. O.G. Otway already holds a 40% stake in the concession.
The share of Amplitude Energy of the upfront payment amounts to A$58.3m, which will be funded through existing resources.
The transaction collectively values Beach Energy’s divested share at about A$130m after tax, equating to roughly A$3.50/GJ of 2C contingent resources.
Completion of the deal remains subject to regulatory approvals and is expected in the first quarter of Beach Energy’s 2027 financial year.
The Artisan gas field, situated 17km south-east of Amplitude Energy’s current offshore pipeline, was formally granted production licence status in September 2024.
All gas production from Artisan will be processed through the Amplitude Energy-operated Athena Gas Plant.
Initial gas from the field is anticipated in calendar year 2028.
Beach Energy will continue with the drilling and completion of the Artisan development well as part of the current Transocean Equinox rig campaign. It will maintain operatorship until the well is completed and required regulatory conditions are met.
Amplitude Energy and O.G. Otway then plan to progress the field’s integration with their existing infrastructure.
The drilling schedule for the campaign has been adjusted to bring forward the Artisan well, followed by further exploration and development work on the Juliet and Annie fields.
As a result of this transaction, Beach Energy has cancelled the planned drilling of the La Bella 2 well and its associated connection to the Otway Gas Plant.
This will allow the redeployment of over A$500m in estimated capital expenditure to other opportunities within Beach Energy’s portfolio.
The agreement enables Beach Energy to generate value from the Artisan discovery by allowing its development for the East Coast domestic gas market using current regional facilities.
The company also keeps flexibility for future use of the Otway Gas Plant, with options to pursue nearshore projects or longer-term offshore prospects within its operated licences.
It may also consider potential collaborations involving third-party gas processing.
Beach Energy managing director and CEO Brett Woods said: “This transaction demonstrates Beach’s capital discipline, monetising Artisan while preserving exposure to future development through the production royalty.
“It is also a positive outcome for Otway participants and domestic customers, with the gas still expected to be developed into the East Coast market through the Athena Gas Plant.”
