Origin Energy (ASX:ORG) is set to sell a 10% share of its Australia Pacific LNG export project to global energy investor EIG in a deal worth $2.12 billion.
Following EIG’s purchase of the 10% stake, ConocoPhillips (NYSE:COP) will hold the largest shareholding of 37.5%, Origin will retain a 27.5% share, and China’s Sinopec will hold 25% of the Australia Pacific LNG (APLNG) joint venture.
“The divestment will not change Origin’s role as upstream operator, responsible for the upstream exploration, development, and production activities,” Origin said today.
“Based on an estimated completion timing of 31 December 2021, the net proceeds of the sale are expected to be approximately $2.0 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, net of Origin oil hedging. The dilution of 10% in the second half is estimated to be broadly offset by the improved commodity price outlook,” Origin said in a statement.
“Divesting a 10% interest allows Origin to crystalise some of the significant value we have created in Australia Pacific LNG, while retaining upside to further value creation through a continuing substantial shareholding,” said Origin chief executive 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,” said Origin.
“Completion of the sale is subject to pre-emption rights in favour of ConocoPhillips and Sinopec and also ConocoPhillips being reasonably satisfied that EIG is capable of satisfying its obligations under the Australia Pacific LNG Shareholders’ Agreement with the benefit of Origin’s supporting guarantee,” added the company.