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UPDATE 1-Australia's Origin buys Karoon's offshore gas interest for $800 mln
June 2, 2014 / 1:10 AM / in 3 years

UPDATE 1-Australia's Origin buys Karoon's offshore gas interest for $800 mln

3 Min Read

* Origin gets stake in major gas discoveries

* Positions Origin for major LNG sales

* Karoon shares jump 65 pct (Adds share price move, deal detail, Origin quote)

SYDNEY, June 2 (Reuters) - Australian energy giant Origin Energy Ltd will buy explorer Karoon Gas Ltd's 40 percent stake in Poseidon Browse Basin assets for up to $800 million, giving it access to one of the country's biggest gas-field discoveries.

The deal gives Origin, an energy explorer, generator and retailer with 4.3 million Australian customers, exposure to potentially massive liquefied natural gas sales domestically and abroad. It also frees up Karoon's balance sheet so it can advance its other oil exploration programs.

Karoon shares jumped as much as 65 percent following the announcement of the sale on Monday and were trading up 41.87 percent at 00.33 GMT, their highest since Jan. 29. Shares in Origin slid 2.35 percent.

Origin said it plans initially to fund the deal through debt facilities, but raise about A$1 billion ($930 million) in equity after it announces full-year financial results in August.

Origin hopes to position itself to benefit when Poseidon begins transporting natural gas to liquefied natural gas production facilities in Darwin or through a standalone floating LNG facility for export.

"Poseidon is located in one of Australia's most significant hydrocarbon regions and various options exist to monetise the gas through LNG export opportunities linked to growing demand in the Asian region," Origin's managing director, Grant King, said in a statement.

"It is important that we act now to invest in Origin's continued development and growth through the latter part of this decade.

ConocoPhillips, the project's operator, and PetroChina, hold stakes of 40 percent and 20 percent respectively, Origin added. PetroChina had bid for the stake that ultimately went to Origin, as had rival Australian explorer Santos Ltd, local media reported.

Karoon said the sale gives it balance sheet flexibility that will allow it to pursue oil appraisal and exploration programmes in the Santos, Carnarvon and Tumbes basins.

Citigroup Inc advised Karoon on the transaction.

$1 = 1.0745 Australian dollars Reporting by Byron Kaye; Editing by Richard Pullin and Matt Driskill

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