Origin asset sale on the backburner
Origin Energy is unlikely to fire the starting gun on the sale of its gas assets in the Cooper Basin and the Perth Basin until February next year at the earliest, in a sign the company is hoping to ride out the latest resources rout.
Suitors have been circling the joint venture Cooper project, in which Origin holds a minority stake, with Senex Energy the majority, for the past few months.
However, sources close to one of the prospective bidders said an information memorandum will not be released until February or March, prompting speculation that the group is keen to avoid any perception it is offloading assets at fire sale prices.
Energy stocks are bearing the brunt of the deteriorating outlook in the oil and metals markets. While Santos has touched new lows in the past few days, Origin’s share falls have been the steepest with the stock shedding close to 60 per cent of its value over the past six months, despite a $2.5 billion raising that galvanised the balance sheet and averted any threat of a credit downgrade.
Investors continue to fret about the costs of the $24.7bn Australia Pacific LNG project amid expectations that liquid natural gas prices, which are tied to the oil price, will remain lower for a protracted period.
As part of its efforts to reduce its debt burden to less than $9bn by mid-2017, Origin, in addition to the raising, also vowed to cut costs and sell close to $800 million worth of non-core assets.
At the time of the announcement, chief executive Grant King stressed the proposed asset sales were not a fire sale.
It is understood that at least two parties have been circling the Cooper Basin for the past couple of months. While some have held up Beach Energy as a possible contender for the $330m-odd slice in the joint venture, which represents a 15 per cent holding, others claimed a number of private equity-style parties are hovering.
Origin is expected to run the processes for the Cooper stake at the same time as the Perth Basin, which has been valued by analysts at close to $100m.
And while natural gas assets are not subject to the same price swings as oil and LNG, the prospect of selling any energy investment in the current climate looks a tough prospect.
Last month, Origin appointed Bank of America Merrill Lynch to sell two pipeline assets while UBS is running the sale of the interests in the Cooper and Perth basins.
Elsewhere, there is speculation that an Oil Search board meeting on Monday was the event that prompted Woodside to abort any further takeover advances. Sources said the Perth-based energy giant failed to persuade the PNG government to sell its shares at a mutually acceptable price.
Many now believe Woodside was persuaded to jettison any further attempts to woo its smaller rival, partly on the basis of the board room discussion.
