Origin Planning exit of most upstream assets, but retaining stake in Australia Pacific LNG

Sydney-based Origin Energy Ltd. plans to divest its stake in Australia’s Beetaloo Basin and end its participation in a joint venture (JV) to develop unconventional natural gas resources in the area as it continues to focus on energy transition initiatives.

Origin – which also owns power generation assets and utility companies in Australia, Papua New Guinea and the South Pacific – announced on Monday that it would sell its 77.5% stake in Beetaloo to a subsidiary of Tamboran Resources Ltd. Tamboran’s largest shareholder is former Parsley Energy Inc. CEO Bryan Sheffield, the son of Pioneer Natural Resources Inc. CEO Scott Sheffield.

Tamboran has agreed to pay $60 million for the Beetaloo Basin assets located in the Northern Territory. It would also pay a 5.5% royalty on future wellhead revenues generated over the life of the field.

Origin also said it would begin a strategic review of its remaining exploration licenses in Australia, “with a view to exiting these licenses over time”. The review would exclude its interests in Australia Pacific LNG (APLNG), which is supplied by coal gas from the Bowen and Surat basins in Queensland.

“The decision to divest our stake in the Beetaloo and exit other upstream exploration licenses over time, will allow greater flexibility to allocate capital to our strategic priorities to develop cleaner energy and customer solutions. , and provide reliable power throughout the transition,” said Origin’s CEO. Franck Calabria.

He said Origin still believed natural gas would continue to play an important role in the region’s energy mix, but cited uncertainty and high exploration and appraisal costs for the company’s decision to leave the shale zone.

Origin holds a 27.5% stake in APLNG, a 10 million metric ton/year export terminal in Queensland. The company sold a 10% stake in the facility, believed to be the largest of its kind on Australia’s east coast, to majority owner ConocoPhillips late last year. Origin executives said at the time that the sale would free up funds to invest in the transition to low-carbon energy.

Origin explored the Betaloo for eight years with Falcon Oil & Gas Ltd., which owns a 22.5% stake in the JV. Tamboran would become the operator of the project if it obtains regulatory approval and the deal closes.

The largely untapped basin contains average undiscovered and technically recoverable resources estimated at 429 million barrels of continuous oil and 8 Tcf of continuous gas, according to a 2018 assessment by the US Geological Survey. The Beetaloo is located in a vast, remote region the size of Texas that would also need infrastructure to move supplies to domestic markets and export facilities.

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Origin has also signed a gas sales agreement with Tamboran to secure supply from the Beetaloo in the event of development in the basin.

Australia’s Department of Industry, Science and Resources has said production must begin in-game by 2025 to meet the expected window of peak gas demand and potential production declines in southern states. . The department expects exploration to be finalized by 2023, followed by four years of evaluation.

The government aims to accelerate development and present a final investment decision on the ground by 2025 or earlier.

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