Energy giant Origin Energy (ASX:ORG) has executed an agreement with EIG to sell a 10 per cent stake in the Australia Pacific liquefied natural gas (LNG) project in Queensland for $2.12 billion.
The sale to US-based energy investor EIG will leave Origin a remaining 27.5 per cent stake in the business, and Origin will retain seats on the company’s board. Australia Pacific LNG joint venture shareholders will now comprise Origin’s remaining stake, ConocoPhillips’ 37.5 per cent, Sinopec’s 25 per cent and EIG’s 10 per cent.
“Divesting a 10 per cent interest allows Origin to crystallise some of the significant value we have created in Australia Pacific LNG, while retaining upside to further value creation through a continuing substantial shareholding. Origin will continue our important role as upstream operator of the world class Australia Pacific LNG asset,” said Origin CEO Frank Calabria.
“A diverse asset portfolio, combined with strategic investments over the past 18 months, have put Origin in a strong position to lead the energy transition. The material cash injection from this divestment provides further flexibility to deliver returns to shareholders and pay down debt, while allowing Origin to accelerate investment in growth opportunities.”
According to Origin, based on the estimated completion at December 31, the net proceeds of the sale are expected to be approximately $2 billion after adjustments and transaction costs. Following the sale, Origin’s guidance for cash flow from Australia Pacific LNG for the 2022 financial year is unchanged at greater than $1 billion. The dilution of 10 per cent in the second half is estimated to be broadly offset by the improved commodity price outlook.
“We are very proud of what we have helped build alongside our partners, and the performance of Australia Pacific LNG continues to go from strength to strength. The quality of its assets and resource base, and the hard work over recent years to materially reduce the cost base, have rightly made Australia Pacific LNG an attractive proposition for investors.”
Completion of the sale is subject to pre-emption rights in favour of ConocoPhillips and Sinopec.
Shares in Origin Energy (ASX:ORG) are trading 3.5 per cent higher at $5.36.