PERTH (miningweekly.com) – Energy major Origin Energy on Monday flagged plans to divest of its interest in the Beetaloo basin, in the Northern Territory for A$60-million and royalties, saying it intends to exit upstream exploration permits and to focus on renewable energy.

The ASX-listed company struck an agreement with Tamboran B1, which is jointly owned by Tamboran Resources and shareholder Bryan Sheffield to divest of its Beetaloo assets, which include a 77.5% participating interest in a shale gas exploration project with Falcon Oil and Gas Australia.

The Beetaloo basin sale was done for an up-front consideration of A$60-million and a royalty on future production over the life of field across the Origin interest being acquired. Origin has also executed a gas sale agreement for offtake of future gas production.

Origin will undertake a strategic review of all remaining exploration permits, excluding its interests in Australia Pacific LNG, with a view to exiting those permits over time, the company said, adding that it would continue to comply with its obligations under existing joint venture (JV) agreements and work with its JV partners as it considers its exit.

“The decision to divest our interest in the Beetaloo and exit other upstream exploration permits over time, will enable greater flexibility to allocate capital towards our strategic priorities to grow cleaner energy and customer solutions, and deliver reliable energy through the transition,” Origin CEO Frank Calabria said on Monday.

“We believe gas will continue to play an important role in the energy mix and it remains a core part of our business.

“Notwithstanding the prospectivity of any of these permits, typically the experience in progressing these types of projects is that the exploration and appraisal phase can be uncertain, and it can be capital intensive to bring projects into production. Ultimately, we believe Origin is better placed prioritising capital towards other opportunities that are aligned to our refreshed strategy.

“The suite of agreements executed with Tamboran (B1), allow Origin to realise value created by our investment and exploration activities to date, and ensures another operator present in the area and committed to developing its resources, can continue to take the venture forward.

“We have also signed a gas sales agreement that will deliver competitively priced gas supply to Origin if development ultimately occurs from the Beetaloo.

“We’ve been exploring in the Beetaloo basin alongside our partner Falcon for eight years, and we’re grateful for the strong support we have received from the local community, including Native Title holders and contractors, as well as the Northern Territory and federal governments.

“Gas will continue to have an important role in our business, particularly through our interest in Australia Pacific LNG and role as upstream operator in that venture, and in the broader energy mix as we look to underpin reliable energy supply to customers and accelerate our investment into the energy transition,” Calabria said.

Tamboran will assume operatorship of the Beetaloo Basin JV with Falcon Oil & Gas Australia.

The agreement has an economic effective date of July 1, and as a result, Tamboran (B1) will reimburse Origin for any costs incurred for the current Beetaloo workplan from the effective date until completion.

Origin will also receive a 5.5% royalty based on wellhead revenues produced from the three Beetaloo permits which are held by the entity being acquired by Tamboran (B1).

In addition, Origin has executed a gas sales agreement for up to 36.5 PJ/y over 10 years, conditional on Tamboran taking a final investment decision on developing the project and associated infrastructure and obtaining regulatory approvals.

The transaction is subject to a number of conditions, including Northern Territory Ministerial consent. Origin told shareholders that it would work closely with Tamboran to facilitate a smooth transition to the new ownership, particularly for key stakeholders in the Northern Territory.

Falcon has a pre-emptive right to acquire Origin’s 77.5% interest in the Beetaloo Basin JV.

Meanwhile, Origin on Monday flagged that it expects to record a non-cash post-tax loss of A$70-million to A$90-million in relation to the transaction, subject to finalisation of Origin’s half-year 2023 financial statements.