Origin Energy has agreed to sell Lattice Energy to mid-cap company Beach Energy for $1.585bn.
The move, announced shortly after the government agreed with major suppliers to provide more domestic energy to Eastern Australia, will see Beach Energy increase its reserves by around 200%.
Origin says it will continue to access parts of Lattice’s production in order to carry on supplying domestic customers.
Frank Calabria, Origin CEO, explained that part of the reasoning behind the sale was to reduce company debt to below $7bn by the middle of 2018. He said: “In signing these agreements today, we have delivered on our commitment to divest Lattice Energy consistent with our plan to simplify the Origin business, reduce debt and improve returns to shareholders.”
Some may point to Origin exiting what is becoming a difficult market to operate in. Recent research has shown how Eastern Australia is heading into an energy supply crisis, with some analysts pointing to a potential energy deficit equivalent to powering 100 residential cities the size of Wollongong.
However, Prime Minister Malcolm Turnbull has claimed to have fended off the threat after securing agreement from the major oil and gas companies to channel more production into domestic markets.