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AWE, KKR exit competition for Lattice Energy

• Bridget Carter, Scott Murdoch
• The Australian
• 12:00AM June 14, 2017
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• Bridget Carter
  
  Mergers & Acquisitions Editor
  Sydney
  @BridgetCarterb
  
  Scott Murdoch
  
  Journalist
  Sydney
  @murdochsj
  

AWE and its private equity backers Kohlberg Kravis Roberts are believed to have left the contest to buy Origin Energy’s Lattice Energy.
The pair were believed to have been taking advice from JPMorgan but are now thought to be watching the action from the sidelines.
AWE has exploration, production and development assets in Australia, New Zealand and Indonesia. It listed on the ASX 20 years ago.
It remains based in Sydney with a project office in Perth. Projects include BassGas in Victoria, which it jointly owns with Lattice Energy, Casino in Victoria’s Otway Basin, of which it owns 25 per cent, and two projects in the Perth Basin.
The contest for Lattice Energy is shaping as a shootout between Beach Energy and listed rival Senex, according to sources, who are betting that the sale will reap owner Origin Energy about $1 billion.
Bids are thought to be due this week, and judging by recent presentations to equity investors of Lattice, the feeling is that the business will most likely be offloaded to a trade buyer rather than floated.
Beach counts Seven Group Holdings as its 20 per cent shareholder. It is said to have been very involved in discussions about a potential acquisition of the business.
The expectation is that Beach will embark on a $400 million capital raising through adviser Credit Suisse, which may be fully underwritten by Seven.
Senex has private equity firm EIG as a shareholder and it too will no doubt look to raise funds for the deal as it calls on the help of other prospective partners to buy the portfolio of gas assets that Origin Energy has packaged up for sale in an attempt to reduce its debt levels.
The original price expectations were said to be about $1.5bn for the portfolio, which includes Origin’s Cooper Basin assets, Kupe gas project in New Zealand and its BassGas and Otway projects in Victoria and Tasmania.
But the thinking now is that Origin will sell it for between $1bn and $1.2bn so it can lock in favourable terms for energy supply from the new owners in a five-year contract set at market prices.
Beach is known to have been acquisitive for some time and even cast its eye over rival AWE as a takeover target in recent months.
The oil and gas sector remains under the spotlight, with the federal government this month releasing its draft policy regarding LNG export limits.
The policy is set until 2023. A shortfall is at the Resource Minister’s discretion and is meant to be in force next month.


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