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Beach Energy buys Origin assets for $1.6bn

Prashant Mehra  |  28 Sep 2017Text size  Decrease  Increase  |  
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SYDNEY - [AAP] Kerry Stokes-backed Beach Energy (ASX: BPT) has agreed to buy Origin Energy's (ASX: ORG) conventional oil and gas exploration business Lattice Energy for $1.585 billion.

The acquisition will triple Beach's energy reserves to 232 million barrels of oil equivalent (mmboe), with 2018 full-year production now expected to more than double to between 25 to 27 mmboe.

Beach Energy chief executive Matt Kay called the acquisition "transformational", saying it would significantly enhance the company's scale and create the leading ASX-listed oil and gas mid-cap with diverse production and growth options.

"It establishes Beach as a major supplier of gas to domestic markets, and provides a step-change in production, operating capabilities and geographic exposure," he said in a statement on Thursday.

Beach, whose biggest shareholder is the Kerry Stokes-owned Seven Group Holdings (ASX: SVW), had been rumoured to be a suitor for the assets since Origin hived them into the Lattice business in December 2016.

Lattice includes oil & gas projects in the Otway, Cooper, Bass and Bonaparte basins, as well as interest in the Perth Basin.

It also includes stakes in the Kupe gas project and the Canterbury basin in New Zealand.

The Cooper Basin-focused Beach in 2016 completed an all-stock takeover of smaller rival Drillsearch Energy, amid an extended downturn in oil prices.

Beach Energy on Thursday announced a three-for-14 rights share offer to raise $301 million, with the balance to be funded through syndicated debt facilities.

Seven Group will subscribe to $68 million of the capital raising, taking its stake in Beach to 25.73 per cent, from 22.73 per cent now.

The Lattice sale settles efforts by Origin Energy to streamline its business and reduce debt as part of efforts to bolster its balance sheet that has been stretched by development of the $26 billion Australia Pacific liquefied natural gas project in Queensland.

Origin will now retain its stake in APLNG, along with Ironbark and the Browse and Beetaloo basins.

It said the proceeds from the sale will be used to pay down debt, putting it on track to cut net debt to below $7 billion by June 30, 2018.

Origin has secured access to a significant portion of Lattice's future east coast gas production through long-term gas supply agreements, it said.


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