BG Group goes for Origin, CSM assets

In what could be the biggest takeover in Australian resources history, UK-based BG Group has made a $13 billion (Aus.) bid for major oil, gas, and electric power group Origin Energy Ltd., Sydney.

Rick Wilkinson
OGJ Correspondent

MELBOURNE, May 1 -- In what could be the biggest takeover in Australian resources history, UK-based BG Group has made a $13 billion (Aus.) bid for major oil, gas, and electric power group Origin Energy Ltd., Sydney.

BG offered to acquire all shares in Origin at a cash price of $14.70/share, which is a 40% premium on the previous closing price of $10.47/share. The offer values the Australian integrated energy entity at just under $13 billion. Just prior to the bid Origin had a market capitalization of $9.2 billion.

Origin acknowledged the bid, but said further discussions must take place that may or may not lead to an agreed transaction. The bid also is subject to approvals from shareholders, Australia's ACCC, and Foreign Investment Review Board.

The BG bid is second in the energy resources industry only to Shell's ultimately failed attempt to take over Woodside Petroleum in 2001 for $10 billion.

Origin is Australia's second largest energy retailer, with an extensive portfolio of gas-fired and renewable electric power plants, gas transmission pipelines, and shares in onshore and offshore gas production—notably Bass basin in Tasmania and Otway basin in Victoria. It also has some 2,570 petajoules of 2P coal seam methane (CSM) reserves in southeast Queensland.

In New Zealand, Origin controls electricity retailer Contact Energy, which supplies 27% of New Zealand's electricity needs.

Other CSM acquisitions
Supporting its interest in Australian CSM, BG Group also is securing a 9.9% share in Brisbane-based Queensland Gas Co. (QGC) and a 20% stake in QGC's CSM acreage in the Surat-Bowen basin of southeast Queensland.

BG and QGC plan to jointly develop a 3-4 million tonne/year LNG plant on Curtis Island near Gladstone based on CSM reserves. The plan is to bring gas into Gladstone via a 380 km pipeline to feed the $8 billion plant initially flagged at having one train, but with potential to expand to three trains.

BG may also invest in Santos' proposed CSM-fed LNG plant in Gladstone. It is touted as a potential predator for Santos once the 15% shareholding cap is removed later this year. However, if BG acquires Origin, the Australian Competition and Consumer Commission (ACCC) won't allow it to move on Santos as well.

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