Origin Buys Out Karoon at Browse Basin

Origin Energy Limited (Origin) has entered into a conditional Sale and Purchase Agreement with Karoon Gas (Karoon) to acquire its entire 40 per cent interest in two exploration permits (WA-315-P and WA-398-P) in Western Australia’s Browse Basin (Poseidon permits).

These permits contain large and prospective offshore gas fields, such as the Poseidon discovery.

ConocoPhillips, the project operator, and PetroChina hold 40 per cent and 20 per cent interests in the permits respectively, and also retain pre-emption rights for a limited period relating to the sale of Karoon’s 40 per cent interest in the Poseidon permits.

Following satisfaction of all conditions precedent and appropriate regulatory approvals, Origin will pay $600 million cash consideration, with additional payments of $75 million payable upon a project Final Investment Decision (FID), and $75 million payable on first production.

A further payment of up to $50 million will be payable on first production if 2P reserves at the time of FID reach certain thresholds.

Origin will participate in the ongoing exploration and appraisal program – including the Pharos well which is currently being drilled by the joint venture – on a proportional basis to augment Poseidon’s existing resource position.

Options to monetise the Poseidon field’s resources may include transporting natural gas to LNG production facilities in Darwin or through a standalone floating LNG facility.

Origin Managing Director, Grant King said: “Origin’s acquisition of a 40 per cent interest in the Greater Poseidon area will allow the company to establish a strategic position in one of Australia’s largest recent offshore gas discoveries at a competitive entry price when compared to recent transactions in the Browse/Bonaparte region.”

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June 2, 2014