28 September 2017
Origin agrees to sell Lattice Energy for $1,585 million
Origin Energy Limited (Origin) has entered into an agreement to sell its conventional upstream oil and gas business, Lattice Energy, to Beach Energy (Beach) for $1,585 million.
As part of the sale, Origin has secured access to a significant portion of Lattice Energy’s future east coast gas production under long-term gas supply agreements to support its domestic gas business.
Under the terms of the sale, the transaction will have an effective date of 1 July 2017. Completion is subject to satisfaction of customary conditions, including approvals from the New Zealand Minister of Energy and Resources and the New Zealand Overseas Investment Office.
Origin CEO, Frank Calabria said, “In signing these agreements today, 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 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.
“Origin and Beach have a long history of working together through joint ventures and existing gas supply arrangements, and we look forward to continuing that relationship as Beach will remain a major supplier of gas to Origin into the future,” Mr Calabria said.
Proceeds from the sale will be used to pay down debt, putting Origin on track to reduce adjusted net debt to below $7 billion by 30 June 2018. Net proceeds will also reflect the acquisition of Benaris’ interests in the Otway basin, transaction costs and the closing out of two oil forward sale agreements that Origin signed in FY2013, estimated to be $270 million depending on oil price at the time of completion.
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