Origin Snaps Up Stake in Otway Gas Project
Origin has entered into an agreement to acquire Woodside's 51.55% interest in the Otway Gas Project for $712.5 million.
Origin's Managing Director, Grant King said, "The transaction includes production licenses which contain the Thylacine and Geographe fields and adjacent exploration permits, together with associated offshore production facilities, pipelines and onshore gas processing plant.
"As an existing joint venture party with a 30.75% interest in the Otway Gas Project, we have undertaken the purchase with detailed knowledge of the asset, reserves, infrastructure and potential of the surrounding acreage.
"The Otway Gas Project is a premier asset with established production. Increasing our interest in the project provides additional earnings from natural gas sold under existing long term contracts to TRUenergy as well as from LPG and condensate sold from the liquids-rich gas stream.
"Importantly, it also provides greater access to the growth potential and exploration upside of the area.
"It is expected that the transaction will be earnings accretive from the first full financial year following completion. The acquisition will be funded from existing corporate capacity, which at September 30, 2009 included $4.4 billion of cash reserves and undrawn bank facilities," King said.
The transaction, which is effective from July 1, 2009, will be completed after certain conditions precedent have been satisfied including assignment of third party contracts. It is expected that completion will occur by the end of 2009. Origin will book earnings from the time of completion, and the purchase price will be adjusted for the net impact of costs and earnings between the effective date and completion.
Woodside will continue as operator until the transfer to Origin, which will be subject to certain regulatory and joint venture approvals.
Origin and Woodside are aiming for a handover of operatorship by the second quarter calendar 2010. In this interim period Origin and Woodside will work cooperatively to effect a safe, smooth and efficient handover.
The transaction is subject to certain pre-emptive rights held by the joint venture parties. In the event that these rights are exercised, the parties may elect to proportionally increase their interest in the joint venture on terms equivalent to that agreed in this transaction. The other two joint venture parties are Benaris International N.V. and CalEnergy Gas (Australia) Ltd.
King said, "Origin has existing offshore operating expertise in southern Australia as operator of BassGas. As operator of both projects we will create a number of benefits by adding scale and capability to these operations and place Origin in a strong position to optimise exploration and development activities in the region."
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