Beach Energy sells 40% of its Otway basin interests

Oct. 16, 2018
Beach Energy Ltd., Adelaide, has sold 40% of its Victorian-Tasmanian Otway basin interests to Monaco-based Israeli businessman Eyal Ofer’s OG Energy Holdings Ltd. for $344 million (Aus.) in cash.

Beach Energy Ltd., Adelaide, has sold 40% of its Victorian-Tasmanian Otway basin interests to Monaco-based Israeli businessman Eyal Ofer’s OG Energy Holdings Ltd. for $344 million (Aus.) in cash.

The sales and purchase agreement is for an interest in a parcel of Beach’s nearshore and offshore permits in the basin. Beach will retain operatorship.

The Otway parcel includes the onshore Otway gas plant, existing gas-condensate fields Geographe, Thylacine, Halladale, Speculant, and the yet-to-be-developed Black Watch. It also contains exploration prospects at Enterprise and Artisan.

The deal involves:

• The Otway gas plant and all its associated infrastructure and pipelines.

• Permit Vic/L1 (V) covering Halladale, Speculant, and Black Watch fields.

• Permit T/L2 and T/L3 covering Thylacine gas-condensate field.

• Permit Vic/L23 covering Geographe gas-condensate field.

• Permit Vic/P42 (V) covering the nearshore Enterprise prospect.

• Permit Vic/P43 covering the Artisan prospect.

• Assignment of interests in Beach’s gas and liquids sale agreements, where possible.

Beach CEO Matt Kay said OG Energy is a fully aligned partner that will support the rapid exploration and development of Beach’s offshore acreage. Beach will use the sales proceeds to reduce debt and fund a portion of the company’s future capital expenditure program as well as reduce Beach’s share of the cost of future Otway work.

Kay said Beach’s plans for the Otway remain unchanged.

“We will commence our investment program with the drilling of Black Watch gas development well in late financial year 2019, followed by the Enterprise-1 wildcat in financial year 2020. Both wells will be drilled from an onshore location using extended reach drilling technology,” he said.

The focus will then turn to offshore drilling with plans to drill 7 wells, including the Artisal-1 wildcat, he said.

“Our plan is to bring more gas supplies into the Australian east coast market and will be achieved by keeping the 205 terajoules a day Otway gas Plant as full as possible, prioritizing development of the lowest unit technical cost gas first.”

Eyal Ofer, chairman of Ofer Global, said the acquisition will be a cornerstone around which his company intends to build a presence in Australia and the region.

The sale is subject to customary conditions, including approval from the Australian Foreign Investment Review Board. Completion is expected by the end of March 2019.

Upon completion, four new joint ventures will be formed and called the Otway, HBWS, Enterprise, and Artisan joint ventures. Beach will hold 60% in each and be operator, while OG Energy will have the remaining 40% interest.