Origin Energy is to sell off its Otway Basin gas wells and processing plant as part of a national float of much of its “upstream” oil and gas assets.
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The Otway Basin assets to be sold through a float on the stock exchange will include its Otway gas plant at Port Campbell, the Halladale, Speculant, Geographe and Thylacine gas wells offshore from Victoria and Tasmania and various exploration permits.
It will also include the new 33-kilometre Halladale/Speculant pipeline connecting the well site in Nirranda South to the Otway Gas Plant. The pipeline only became operational in August.
Apart from the Otway Basin assets, the float will include Origin’s interests in the BassGas Project, Kupe Gas Project, and the Perth, Cooper, Bonaparte and Canterbury basins.
Origin will retain its interests in Australia Pacific LNG, Ironbark and the Browse and Beetaloo basins.
The assets to be floated will be packaged into a yet to be named company (NewCo) formed through an initial public offering.
Origin Energy said it was selling off the assets to speed up the reduction of its debt, currently about $9 billion, and to reduce its spending requirements.
Origin said it had decided to divest its oil and gas assets to focus on its energy markets business, the leading energy retailer in Australia, and its simplified integrated gas business, Australia’s largest on-shore unconventional gas developer.
It said contracts would be put in place with the new company to provide Origin with access to existing resources and rights over undeveloped resources in support of its east coast gas portfolio.
Origin chief executive Frank Calabria said the decision to sell off the assets followed through on the clear priorities he set at the time of his appointment in October to reduce debt and improve performance and returns.
“Given Origin’s ability to invest capital in the NewCo assets is constrained, their long term value will be better supported by them being an independent business,” Mr Calabria said.
He also said he believed the energy market was heading into “more large scale renewables”.
“The (energy) network role will change over time,” he said.
The float of the new company is targeted for 2017 and does not require Origin shareholder approval.
