Origin Exits Gas for Clean Energy

ESG Focus | Sep 21 2022

With divestment of its Beetaloo asset stake, Origin Energy continues its transition away from gas exploration. While largely received positively by analysts, some raise concern as to the pathway towards energy transition exposure.

-Origin Energy has confirmed the sale of its Beetaloo Basin interest
-The sales comes amid the company’s strategy shift to improve exposure to the clean energy transition
-Reducing capital expenditure requirements and ESG-risk, the sale was largely regarded as positive by analysts

By Danielle Austin

Continuing its shift towards the clean energy transition, and away from gas exploration, Origin Energy ((ORG)) has announced the impending sale of its 77.5% Beetaloo Basin interest  to Tamboran Resources ((TBN)) for $60m.

The Beetaloo Basin asset is held by a joint venture between both Origin Energy and Falcon Oil and Gas, with the sale following an eight year exploration campaign by Origin Energy in the region.

As per conditions of the sale, Origin has retained a gas sale agreement for offtake of future gas production at Beetaloo. This will see Origin receive a 5.5% royalty on future production from the asset, should Tamboran Resources make a final decision to proceed to development. The agreement covers up to 36.5 petajoules over ten years, with analysts expecting production at Beetaloo won’t occur for several years.

Origin Energy will retain its Cooper-Eromanga and Canning exploration assets, although is expected to divest the remainder of its non-APLNG assets over time in continuation of its energy transition.

Reducing ESG risk and valuing Beetaloo

The ongoing move towards assets providing exposure to the energy transition reduces Origin Energy’s gas development ESG risk, and associated increasing capital costs.

Outside of FNArena's daily coverage, Jarden (Neutral, target price $5.65) reported on Origin’s announcement. The sale of the Beetaloo interest for $60m represents a -$195m miss to Jarden’s valuation of $255m for the asset.

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