Australia-based Beach Energy has signed a $1.58bn agreement to acquire Origin Energy’s conventional upstream oil and gas business Lattice Energy.
Under the deal, Beach has agreed to offer Origin access to a portion of Lattice’s future east coast gas production as part of long-term gas supply agreements.
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Access to the gas production is expected to allow Origin to support its domestic business.
Origin Energy CEO Frank Calabria said: “In signing these agreements, we have delivered on our commitment to divest Lattice Energy consistent with our plan to simplify the Origin business, reduce debt and improve returns to shareholders.
“Importantly, Origin retains access to future Lattice Energy east coast gas production and liquefied petroleum gas (LPG), to help us continue to meet the energy needs of our domestic customers.
“The sale to Beach represents the best overall value to Origin shareholders, through the combination of the upfront sale proceeds and ongoing supply of gas and LPG, which allows Origin to retain the benefits of our integrated business model.”
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By GlobalDataSale proceeds will be used by Origin to reduce its debt, with a target to bring down adjusted net debt to less than $7bn by 30 June next year.
Origin has secured certain rights to contract for gas produced from exploration permits in the Otway basin.
In addition, the company signed agreements for supply of LPG production from BassGas and Otway.
Closure of the transaction is based on meeting customary conditions, including approvals from the New Zealand Minister of Energy and Resources and the New Zealand Overseas Investment Office.
