)
It will allow the Sydney-based company (ASX: ORG) to focus on its energy markets business and a simplified integrated gas business.
The new business, NewCo, will include Origin's interests in a number of gas and oil projects, including:
- Otway Gas Project,
- BassGas Project,
- Kupe Gas Project,
- and the Perth, Cooper, Bonaparte and Canterbury basins.
NewCo will have assets including 2P reserves of 948 PJe1 and FY16 production of 75 PJe.
Origin will retain ownership of the Australia Pacific LNG project at Gladstone's Curtis Island, and the Browse and Beetaloo basins.
The funds raised in the IPO, which is expected to be complete by June 2017, will be used to pay off some of Origin's debt.
The company says the long-term value of the upstream oil and gas assets will be better supported by being part of NewCo, while Origin will be left as a more flexible company with an improved return on capital.
Origin CEO Frank Calabria (pictured) says the energy markets business will focus on improving earnings, and it will lead Australia's transition to less carbon intensive energy through accelerated renewables development and a flexible gas supply and transmission fleet.
Contracts will be put in place between Origin and NewCo to retain the benefits of integration on the east coats gas market, while giving NewCo guaranteed revenue.
"As the upstream operator for Australia Pacific LNG, Origin's integrated gas business is the largest onshore unconventional gas developer in Australia," says Calabria.
"Origin has clear scale and capability in this area with onshore unconventional resources available to supply both the growing LNG demand and the east coast domestic gas market.
"Both LNG trains in the Australia Pacific LNG project are now in operation and the integrated gas business is continuing to focus on reducing costs and improving well productivity."
The move will not require shareholder approval and is NewCo is expected to list by June next year.
Origin had been in the process of selling its Perth Basin assets, but will now include them in NewCo's portfolio.
The proposal is subject to market conditions and final Orign board approval.
Macquarie Capital and UBS AG, Australia Branch, will act as joint financial advisors and joint lead managers in respect of the proposed IPO.
Origin Energy is trading up 3.43 per cent this morning, at $6.64 per share.
Get our daily business news
Sign up to our free email news updates.
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support
)
)
)
)
)
