Beach secures $1.585bn deal to acquire Origin business

Otway gas plant, Victoria

Origin Energy has agreed to sell upstream oil and gas business, Lattice Energy, to Beach Energy for $1.585 billion.

As part of the sale, Origin has secured access to a portion of Lattice’s future east coast gas production under long-term agreements to support its domestic gas business.

Lattice’s assets include a 67 per cent stake in the Otway gas project, a 100 per cent interest in the Halladale, Speculant and Black Watch gas fields, and a 42.5 per cent share in the Bass gas project.

Origin chief executive officer Frank Calabria said the company delivered on a commitment to divest Lattice, consistent with a plan to simplify the 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,” Calabria said.

“Origin and Beach have a long history of working together through joint ventures and 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.”

Beach described the acquisition as transformational for the company, with the buy enhancing its scale and creating a leading oil and gas mid cap with diversity of production and growth options.

Matt Kay, Beach CEO, said the deal executed a strategy to become a premier upstream oil and gas company.

“It establishes Beach as a major supplier of gas to domestic markets, and provides a step-change in production, operating capabilities and geographic exposure,” Kay said.

“It also provides attractive long-term gas contracts with Origin Energy and other high quality counterparties which underpins returns, cash flow generation and a rapid deleveraging profile.”

Beach plans to raise around $301 million through a three-for-14 pro-rata accelerated non-renounceable entitlement offer to help fund the acquisition.

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