News: UPDATE 1-Australia's Origin Energy to spin off oil and gas assets in IPO

(Adds Origin Energy CEO quote, details of new entity and background)

SYDNEY, Dec 6 (Reuters) - Australia's top power and gas retailer Origin Energy (ORG) will spin off its interests in conventional oil and gas fields in an initial public offering the company said on Tuesday, a reversal from September when it said a such spin-off was not a priority.

The new entity "will be a mid-cap geographically diversified upstream exploration and production company," Origin said in a statement, listing assets in Australia and New Zealand but not disclosing the entity's expected value.

Proceeds from the sale will be spent on debt reduction, the statement said, which is a turnaround from September, when Origin chairman Gordon Cairns told Reuter "You can't demerge when you have A$9 billion in debt."

Since then Origin has appointed a new CEO, Frank Calabria, formerly its energy markets boss.

"The divestment of Origin’s conventional upstream business will be a major step towards restoring the company’s financial flexibility and is expected to improve Origin’s return on capital," Calabria said in the company's Tuesday statement.

The company will retain its energy markets businesses and its Australia Pacific LNG business, Origin said.

The proposed IPO will not require Origin shareholder approval and is set to list next year, the company said.