Origin Energy (ASX: ORG) is an integrated energy company that engages in production of natural gas, electricity generation, wholesale and retail sale of electricity and gas, and sale of liquefied natural gas. Origin Energy operates through Energy Markets and Integrated Gas business segments.
The Energy Markets segment includes energy retailing, power generation and liquid petroleum gas operations. The Integrated Gas segment engages in growth assets business and management of LNG price risk through hedging and trading activities.
This morning, Origin Energy share price (ASX: ORG) surge following the new business deal announcement. The company announced the sale of 10% interest in Australia Pacific LNG for $2.12 billion. Origin will retain its existing seats on the Australia Pacific LNG board. EIG will have one board seat, with voting rights commensurate with its 10% shareholding. The divestment will not change Origin’s role as upstream operator, responsible for the upstream exploration, development, and production activities.
Based on an estimated completion timing of 31 December 2021, the net proceeds of the sale is expected to be approximately $2.0 billion after adjustments and transaction costs. Following the sale, Origin’s guidance for cash flow from Australia Pacific LNG for the 2022 financial year remains unchanged at greater than $1 billion. The bullish commodity price outlook for Origin Energy share price for the rest of the year will offset the 10% sale.
Origin (ASX: ORG) CEO Frank Calabria also commented on the announcement. He said “Divesting a 10% interest allows Origin to crystallize some of the significant value we have created in Australia Pacific LNG and retain upside to further value creation through a continuing substantial shareholding. Origin will continue our important role as upstream operator of the world class Australia Pacific LNG asset.
This announcement has resulted in Origin Energy share price (ASX: ORG) surging today by 3.86%. Origin Energy shares closed at $5.38 a share – a new 52 week high.