Beach En­ergy to buy Ori­gin’s gas as­sets for $1.25 bil­lion

The Gulf Today - Business - - 4international -

SYD­NEY: Aus­tralia’s Beach En­ergy has agreed to buy gas as­sets from Ori­gin En­ergy for $1.25 bil­lion in a deal that will more than dou­ble the oil and gas pro­ducer’s out­put and step up its ex­po­sure to a tight en­ergy mar­ket in eastern Aus­tralia.

The deal will triple Beach’s oil and gas re­serves, trans­form­ing a com­pany val­ued at A$1.5 bil­lion ($1.2 bil­lion) that has long been fo­cused on one basin in cen­tral Aus­tralia to give it a foothold across Aus­tralia and New Zealand, on­shore and off­shore.

At the same time, it has locked in gas sales to Ori­gin from the Lat­tice En­ergy busi­ness it is ac­quir­ing at higher prices than it av­er­aged in the year to June 2017, serv­ing a mar­ket that is likely to see gas de­mand soar for power plants.

Ori­gin, Aus­tralia’s top en­ergy re­tailer, spun off the gas as­sets into a sep­a­rate arm last year, aim­ing to sell or float the busi­ness to help it cut debt which it had taken on to build the Aus­tralia Pa­cific LNG project.

Beach Chief Ex­ec­u­tive Matt Kay said that be­sides ex­pand­ing the com­pany’s out­put and re­serves, the deal of­fered cer­tainty of cash­flow from the gas sales agree­ments, which stretch out to 2033.

“The com­bined busi­ness is a cash cow which is ro­bust to the down­side,” Kay told in­vestors on a con­fer­ence call.

Beach plans to fund the ac­qui­si­tion through a A$301 mil­lion en­ti­tle­ment of­fer to share­hold­ers and new debt fa­cil­i­ties, which it ex­pects to be able to pay down within three years.

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