The deal that sees Beach Energy purchase Origin Energy’s non-core upstream oil and gas division, Lattice Energy, has financially closed.
A completion payment of $1.498 billion was paid yesterday, comprising a purchase price of $1.585 million less adjustments of $87 million.
Beach has received the economic benefit of Lattice since 1 July 2017, which is reflected in these adjustments and acquired cash, and includes free cash generation of approximately $155 million in the first half of FY18.
Payment was funded by existing cash reserves of $503 million and drawdown of new debt facilities of $995 million.
Following payment, Beach has estimated cash reserves of $135 million, drawn debt of $995 million and undrawn debt facilities of $405 million.
Net gearing upon financial close yesterday was less than 33 per cent, below the original guidance of 35 per cent at 31 March 2018 due to strong operating performance and cash generation by Lattice since 1 July 2017.
Beach is therefore tracking ahead of previous gearing reduction estimates.
Lattice Energy assets comprise:
- A 67 per cent interest in the Otway Gas Project, as well as interests in various adjacent exploration permits
- A 100 per cent interest in the Halladale, Speculant and Black Watch gas fields
- A 42.5 per cent interest in the Bass Gas Project, as well as interests in discoveries located in nearby exploration permits
- Various interests in the Cooper Basin, including the Cooper Basin Joint Venture operated by Santos and in the Cooper Basin Origin Senex exploration joint venture operated by Senex
- Various interests in the Perth Basin, including a 50 per cent interest in the Waitsia Gas Project and a 67 per cent interest in the Beharra Springs Project
- Various interests in exploration permits in the Bonaparte Basin, including a 5 per cent interest in the Petrel field
- Interests in New Zealand, including a 50 per cent interest in the Kupe Gas Project and an exploration permit located in the Canterbury Basin.