Offshore

Sydney-based Origin Energy has agreed to acquire Karoon Gas’ 40% stake in two Browse Basin exploration permits in Western Australia for $800m.

Origin Energy said the permits, WA-315-P and WA-398-P, contain large and prospective offshore gas fields, such as the Poseidon discovery.

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US-based ConocoPhillips is the operator with 40% stake in the acreage while PetroChina holds the remaining 20% interest.

ConocoPhillips and PetroChina retain pre-emption rights for a limited period relating to Karoon’s 40% interest divestment in the Poseidon permits.

Origin has agreed to pay $600m upfront with a $75m payment due if a final investment decision is made and another $75m after achieving first production.

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Another $50m will be paid if reserves reach an unspecified level before an investment decision is made.

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The transaction, which is subject to regulatory approval, is expected to be completed during the third quarter of 2014.

"The transaction, which is subject to regulatory approval, is expected to be completed during the third quarter of 2014."

Karoon said the sale gives it balance sheet flexibility that will allow it to undertake oil appraisal and exploration programmes in the Santos, Carnarvon and Tumbes basins.

Origin Energy managing director Grant King said: "Poseidon is located in one of Australia’s most significant hydrocarbon regions and various options exist to monetise the gas through LNG export opportunities linked to growing demand in the Asian region.

"Origin’s acquisition of a 40% interest in the Greater Poseidon area will allow the company to establish a strategic position in one of Australia’s largest recent offshore gas discoveries at a competitive entry price, when compared with recent transactions in the Browse/Bonaparte region."

Image: Location of WA-315-P and WA-398-P. Photo: courtesy of Origin Energy.

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