Beach Energy Ltd (ASX:BPT) has made a transformational move to acquire Lattice Energy Ltd for $1,585 million, in an all scrip deal.
Beach has also launched a $301 million, 3 for 14, pro-rata entitlement offer.
Lattice Energy is an upstream oil and gas business, and is a subsidiary of Origin Energy (ASX:ORG).
As part of the sale, Origin has secured access to a significant portion of Lattice Energy’s future east coast gas production under long-term gas supply agreements to support its domestic gas business.
The acquisition delivers per share reserves, operating cash flow and value accretion.
Frank Calabria, chief operating officer for Origin, commented:
"In signing these agreements today, we have delivered on our commitment to divest Lattice Energy consistent with our plan to simplify the Origin business, reduce debt and improve returns to shareholders.
"Importantly, Origin retains access to future Lattice Energy east coast gas production and LPG, to help us continue to meet the energy needs of our domestic customers.
"The sale to Beach represents the best overall value to Origin shareholders, through the combination of the upfront sale proceeds and ongoing supply of gas and LPG, which allows Origin to retain the benefits of our integrated business model."
Outcome of the deal
The acquisition for Beach will increase 2P reserves by ~200% to 232 MMboe and FY18 production guidance by ~150% to 2527 MMboe.