Oz Beach Sells 40% of Otway assets
Australian oil and gas company Beach Energy has agreed to sell 40% of its Victorian Otway interests and has adjusted its guidance accordingly, the company said October 5.
The deal is with O.G. Energy, a division of Ofer Global, which is a private portfolio of international businesses, and comes at a price of A$344 million ($243mn) in cash. Beach will remain operator of the assets.
“This transaction introduces a fully-aligned partner to support the rapid exploration and development of our offshore Victorian acreage,” Beach CEO Matt Kay said.
“Securing an excellent development partner for the Otway gas fields is a pivotal step towards creating new supply to Australia’s East Coast gas market,” he added.
Ofer Global chairman Eyal Ofer said: “Throughout Ofer Global’s history, we have sought out strong partners as we’ve entered new markets. We are therefore delighted to build a strategic partnership with Beach, a major player in one of the key regions we are focusing on”.
“With this acquisition, we have acquired a cornerstone producing asset around which we intend to continue to build the portfolio and grow our presence in Australia and the region,” he said.
Kay said the move aligns with their previously stated intentions for the assets and that the sales proceeds will be used to reduce debt and fund a portion of the company’s future capital expenditure program.
Beach’s plans for the Victorian Otway are unchanged and its work program will be unaffected in the lead up to the completion of the deal, he said.
“We will commence our investment program with the drilling of the Black Watch gas development well in late FY19, followed by the Enterprise-1 exploration well in FY20,” he said.
“Our plan is to bring more gas supplies into the east coast gas market, achieved by keeping the 205 TJ/d Otway Gas Plant as full as possible,” he said.
As a result of the proposed sale of the 40% interest, Beach has lowered its fiscal 2018-2019 (July-June) production guidance from 26-28mn barrels of oil equivalent to 25-27mn boe and capital expenditure from A$460-A$540mn to A$440-A$520mn.
Upon completion of the deal four new joint ventures will be formed, called the Otway, HBWS, Enterprise and Artisan. In each joint venture Beach or its wholly owned subsidiaries will hold a 60% interest and remain as operator.
The sale is to be effective from July 1 2018 and completion is subject to customary conditions.