Why is Origin Energy (ASX:ORG) in news today?

Highlights: 

• Origin Energy has executed an agreement with Tamboran Pty Limited to divest its interest in the Northern Territory-based Beetaloo Basin. 
• Origin also intends to terminate its upstream exploration permits to focus on lead energy transition. 

Australian energy business Origin Energy Limited (ASX:ORG) announced today that it would divest 100% of its Beetaloo Basin interest. The company has also revealed its intention to exit its upstream exploration permits as Origin is now focused on energy transition. 

Meanwhile, the shares of Origin Energy began today’s trading session 0.516% lower on ASX at AU$5.780 per share as of 10:21 AM AEST. 

In a year’s time, Origin’s share price has appreciated almost by 35% on ASX. On the other hand, on a YTD-basis, Origin’s share price gained over 8% (as of 10:52 AM AEST on ASX today).

Details of the divestment: 

Origin Energy has already executed agreements with Tamboran (B1) Pty Limited to divest its interest in the Beetaloo Basin for an upfront consideration of AU$60 million and a royalty on future production over the life of the field across the Origin interest being acquired.

Tamboran (B1) is an entity 50/50 owned by Tamboran Resources Limited and its substantial shareholder, Bryan Sheffield. Furthermore, Origin has also executed a gas sale agreement for the offtake of future gas production.

In addition to that, Origin mentioned that it would undertake a strategic review of all its remaining exploration permits with an intention to exit those permits over time. However, the company will continue to comply with its obligations and commitments under existing joint venture agreements and work with its joint venture partners as it considers its exit.

Details of Origin’s agreement with Tamboran (B1): 

As per the terms of the divestment agreement with Tamboran (B1), Origin will divest the entity which holds 77.5% interest in the Beetaloo Basin joint venture. On the other hand, Tamboran will also be assuming operatorship of the Beetaloo Basin joint venture, which is 22.5% owned by Falcon Oil & Gas Australia.

Origin’s update also revealed that 1 July 2022 was the economic effective date of this agreement. Therefore, Tamboran (B1) is supposed to provide compensation to Origin Energy for any expenses incurred by the company in the Beetaloo project at present, until the completion of the divestment.