Origin said to call for bids on oil, gas assets alongside IPO

MELBOURNE and SYDNEY(Bloomberg) -- Origin Energy Ltd., Australia’s largest electricity company, will formally seek bids for its conventional oil and gas assets while continuing preparations for an initial public offering of the unit, according to people with knowledge of the matter.

Origin’s advisers will shortly send information on the Australia and New Zealand assets to a number of potential buyers, including Beach Energy Ltd., that had expressed interest in purchasing them after the company announced the listing plan in December, according to the people. The preferred option remains an IPO, which may be delayed until around September or October after the company announces earnings, the people said, asking not to be identified as the details are private. 

The conventional exploration and production business could be valued at A$1.8 billion ($1.4 billion) to A$1.9 billion including debt, analysts at RBC Capital Markets wrote in a Feb. 20 report. The spinoff plan, designed to help reduce Origin’s leverage, was the first major move announced by Frank Calabria after he took over as chief executive officer in October. 

The spun off company will include Origin’s gas assets in the Otway, Cooper, Bass, Perth and Bonaparte basins in Australia, as well as its New Zealand interests in the Kupe gas project and Canterbury Basin, according to its website. The Sydney-based company plans to retain its A$25.9 billion Australia Pacific LNG venture in Queensland state and its retail energy business. 

Calabria said early last month the company was still targeting an IPO around the middle of this year and that no formal trade sale process was underway. No final decisions have been made, and Origin will weigh which outcome delivers greater value to its investors, the people said. 

Origin has established a process to “assess any proposal that can enhance value for shareholders” for its conventional oil and gas assets, a spokesman for the company said in an emailed statement. Any offer from trade buyers would need to be “very attractive” to divert the company from its IPO plans, according to the statement. Origin hopes to divest the business by the end of 2017, it said. A representative for Beach Energy declined to comment.

Macquarie Group Ltd. and UBS Group AG are advising Origin.