Beach seals $1.6bn Lat­tice deal

The Australian Energy Review - - NEWS - Cameron Drum­mond

KERRY Stokes-backed Beach En­ergy will pur­chase Ori­gin En­ergy’s Lat­tice En­ergy busi­ness for al­most $1.6 bil­lion.

Lat­tice is Ori­gin’s oil and gas ex­plo­ration arm with as­sets in the Ot­way, Bass, Cooper, Perth and Bon­a­parte basins, as well as stakes in New Zealand projects.

Beach said it would raise $301m for the ac­qui­si­tion in a rights of­fer, with the re­main­ing amount funded through debt fa­cil­i­ties.

Stokes’ Seven Group Hold­ings will pro­vide $68m of the cap­i­tal, rais­ing its stake in Beach to 25.73 per cent.

Beach chief ex­ec­u­tive Matt Kay said the ac­qui­si­tion would be “trans­for­ma­tional” and rep­re­sented a key mile­stone in its goal to be­come a premier up­stream oil and gas com­pany.

“The trans­ac­tion greatly en­hances our plat­form for con­tin­ued growth, de­liv­ers a di­verse as­set port­fo­lio with sig­nif­i­cant up­side and pro­vides ma­te­rial value ac­cre­tion for Beach share­hold­ers,” he said.

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

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

The ac­qui­si­tion in­creases Beach’s east coast gas sales and eth­ane pro­duc­tion by more than 300 per cent from three core gas pro­cess­ing hubs, with a com­bined FY17 pro­duc­tion equiv­a­lent of about 15 per cent of east coast gas de­mand last year.

Im­age: Beach En­ergy.

More mega projects need to come on­line to avoid sup­ply side pres­sures and re­sul­tant price spikes.

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