Origin Energy has announced the sale of its conventional upstream oil and gas business, Lattice Energy, to Beach Energy for an agreed $1.585bn fee.
The move comes shortly after the Australian government agreed with major suppliers to provide more domestic energy to the eastern regions, and will see Beach Energy increase its reserves by around 200%.
Origin says it will continue to access parts of Lattice’s production in order to carry on supplying domestic customers.
Frank Calabria, Origin CEO, explained that part of the reasoning behind the sale was to reduce company debt to below $7bn by the middle of 2018.
“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,” he said.
Some may point to the Origin exit as a sign of the times for the Eastern Australian market. Recent research has shown how Eastern Australia is heading into an energy supply crisis, with analysts pointing to a potential energy deficit equivalent to powering 100 residential cities the size of Wollongong.
However, Prime Minister Malcolm Turnbull has claimed to have fended off the threat after securing agreement from the major oil and gas companies to channel more production into domestic markets.