ORG Origin Energy Limited

   By Robb M. Stewart 
 

MELBOURNE, Australia--Origin Energy Ltd. (ORG.AU) has struck a 231 million Australian dollars (US$165 million) deal to sell a coal-seam gas development in eastern Australia to its flagship liquefied natural gas venture.

Origin said Tuesday it has entered an agreement to sell the Ironbark project in Queensland's Surat Basin to Australia Pacific LNG, a gas-export business it operates in partnership with ConocoPhillips (COP) and China Petroleum & Chemical Corp. (600028.SH).

The energy producer and retailer bought the project in 2009 for A$655 million, but a year ago warned it would book a A$360 million impairment for the gas field. Late last year, the company said it was looking at strategic options for the assets but had agreed to push ahead with basic engineering design for the first phase of development.

Based on the sale price, Origin said it expected to book a further impairment of A$34 million in its first-half financial statements, though the impact on profit would be offset by a A$68 million benefit to its tax expense.

As operator of Australia Pacific LNG, one of three multi-billion dollar liquefied natural gas producers sitting side-by-side on Queensland's coast, Origin will be responsible for developing Ironbark.

Chief Executive Frank Calabria said the LNG venture would be able to realize value on the asset by making use of existing nearby gas and water processing infrastructure to bring the natural gas to the market.

Ironbark has proven and probable reserves of 129 petajoules, a measure of volume based on energy content.

The sale remains subject to regulatory approval.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

February 18, 2019 23:01 ET (04:01 GMT)

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