Beach Energy has announced the sale of its 40% stake in Victorian Otway assets to O.G. Energy Holdings Limited for all cash consideration of $344 million.
It has been informed that the sale and purchase agreement was affected through the wholly-owned subsidiaries of the Beach and O.G. Energy, i.e. Lattice Energy Limited (“Lattice”) and OGOG (Otway) Pty Ltd, respectively. However, the completion of sale remains subject to certain conditions and FIRB approval.
The divestment will include the sale of 40% of nearshore and offshore Victorian Otway Basin assets which covers the Otway Gas Plant, existing gas and liquid fields Geographe, Thylacine, Halladale, Speculant and Black Watch as well as exploration prospects Enterprise and Artisan.
Beach CEO Matt Kay stated that the sell down of Victorian Otway is in line with company’s strategy as it intends to apply the sale proceeds in the reduction of debt and support a portion of company’s future capital expenditure program.
This partnership with Eyal Ofer led O.G. Energy is expected to ramp up the exploration and development of offshore Victorian Otway gas fields, thereby formulating new supply to Australia’s East Coast gas market.
BPT’s management confirmed that the company remains on track to commence its investment program with the drilling of the Black Watch gas development well in late FY19, followed by the Enterprise-1 exploration well in FY20.
Following Victorian Otway sale proposal Beach Energy has provided an updated guidance for FY19. As per the previous FY19 guidance based on Beach’s 100% interest in Victorian Otway assets, production was estimated to range between 26-28 MMboe, but now it has been revised to 25-27 MMboe.
The updated guidance for FY19 is drawn on the basis that Beach has held 100% interest in Victorian Otway assets in first half of FY19 while in the second half it had just 60% of Victorian Otway stakes ahead of expected completion of sale transaction in H2FY19.
Guidance on Capital Expenditure for FY19 has been revised from $460 - 540 million to $440 - 520 million. EBITDA is anticipated to range between $1.05 – 1.15 billion, lower than previous expectation of $1.1 – 1.2 billion.
Looking into five years ahead post Victorian Otway transaction, Beach Energy expects production to lie between 30-36 MMboe in FY23, reduced from previous outlook of 34 – 40 MMboe. Whereas, capital expenditure is expected to decline by approximately $100 million per annum in the period FY20-23.
On the news of partial divestment in Victorian Otway assets, Beach Energy’s shares nosedived by 3.881% to $2.105 on 5 October 2018 (5:08 PM AEST). However, BPT has seen a tremendous performance growth of 159.17% over the past one year.
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