(EnergyAsia, June 6 2014, Friday) — Australia’s Origin Energy has agreed to pay up to US$800 million for a 40% stake in two major gas reserves in the Browse Basin located off the coast of Western Australia state.
Origin said it will acquire Karoon Gas Ltd’s WA-315-P and WA-398-P exploration permits in the Poseidon area to support its plans to develop liquefied natural gas (LNG) for export to Asia.
ConocoPhillips, Poseidon’s operator, and state-owned PetroChina hold 40% and 20% interests in the permits respectively, and also retain pre-emption rights for a limited period relating to the sale of Karoon’s 40% interest.
Origin said it will make an initial cash payment of US$600 million to be followed by US$75 million upon the project given Final Investment Decision (FID) clearance and another US$75 million on production start-up. It will make another payment of up to US$50 million on production start-up if certain reserves are proved at the time of FID.
Origin’s managing director, Grant King, said the acquisition will enable it to establish a strategic position in one of Australia’s largest recent offshore gas discoveries at a competitive entry price in comparison to recent transactions in the Browse and Bonaparte region.
“Poseidon is located in one of Australia’s most significant hydrocarbon regions and various options exist to monetise the gas through LNG export opportunities linked to growing demand in the Asian region,” he said.
“We welcome the opportunity to enter the joint venture alongside two significant global oil and gas companies, ConocoPhillips and PetroChina.”
Origin is partnering ConocoPhillips and Sinopec in Australia Pacific LNG to develop one of Australia’s largest coal seam gas reserves CSG into LNG.
Mr Grant said: “The acquisition of these permits complements recent farm-ins in South Australia’s Cooper Basin and the Northern Territory’s Beetaloo Basin, thereby increasing Origin’s exposure to growing demand for natural gas both in Australia and overseas.
“We are mindful that the Australia Pacific LNG project begins production in mid 2015 and over the next two years there will be a significant increase in Origin’s long-term cash flow and earnings.
“It is important that we act now to invest in Origin’s continued development and growth through the latter part of this decade. We believe that acquiring these resources, when compared with greenfield exploration, substantially reduces the risk of securing opportunities to drive the long-term growth of Origin.”