East coast demand drives billion-dollar sale

A $1.5 billion agreement between Beach Energy and Origin Energy will see the sale if up to 139 petajoules of Cooper Basin gas across an eight-year period.
Conducted through Beach subsidiary Delhi Petroleum, the agreement will begin in July 2014 and has the potential to be extended for a further two years, resulting in a sales total of 173PJ of gas to Origin.
The gas will be sourced from the South Australian Cooper Basin joint venture (SACB JV), in which Beach holds a 20.21 per cent interest; the Patchawarra East joint venture (Beach 17 per cent) and the South West Queensland Unite joint venture (SWQ JV), in which Beach holds a 23.2 per cent interest.
Origin also has interests in the South Australian Cooper Basin and the South West Queensland Unite joint ventures and an equity share of production.
Beach managing director Reg Nelson said the agreement had the potential to bring in significant revenue for the company.
“This is a significant contract for Beach which, based on the proposed SACB and SWQ JV development plan and the prevailing oil price, has the potential to deliver significant gas revenue over the life of the contract at attractive prices,” he said.
“It is also the first separately marketed gas contract that Beach has undertaken out of the SACB JV and SWQ JV.
“We are pleased to have finalised terms with Origin, a key player in the Australian domestic gas industry.”
Mr Nelson said the contract validated Beach’s long-term strategy of positioning itself around the Cooper Basin gas supply, and was part of a plan to unlock the next phase of the Cooper Basin through the company’s existing asset base.
Origin markets chief executive Frank Calabria said the purchase was prompted by an anticipated rise in demand for gas on the east coast.
“The gas purchase agreement announced today enables Origin to bolster its east coast gas portfolio given the expected tripling in demand for natural gas,” he said.
“Origin’s integrated position, coupled with its existing gas transport capabilities, made this an attractive opportunity to add to the company’s gas portfolio and to secure gas to support our domestic energy markets business.
“At the same time, Origin will continue to review the timing of development of medium-term gas production growth opportunities, including the Ironbark CSG project in Queensland and the Halladale Black Watch gas project in Victoria.”

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