Origin set to review future of $8bn in upstream assets

Origin Energy’s Frank Calabria and Greg Jarvis inspect the Bendeela power station

Origin Energy is believed to be embarking on a strategic review of upstream assets worth over $8 billion as it contemplates a future solely as an electricity retailer and generator.

The company has strongly denied that a review is underway.

However, it is understood that banks were invited to pitch to undertake the strategic review to be completed by Christmas of all of the company’s oil and gas assets, with the possible opportunity of becoming a joint defence adviser to the company with Macquarie Capital.

Macquarie is close to Origin (ORG), advising the company on the sale of its Lattice Energy offshoot to Beach Energy last year for $1.585 billion, but it is understood that an additional bank or boutique is being sought.

Sources say that up for review is Origin’s interest in APLNG, which is said to be worth at least $8 billion, its Beetaloo Basin exploration project in the Northern Territory and its Ironbark coal seam gas project in the Surat Basin in Queensland.

The Ironbark project is already known to be for sale through the Royal Bank of Canada.

Sources in the market say that Origin sent out a request for proposals to appoint an adviser for the strategic review in the past two months.

APLNG makes up the vast majority of the value of Origin’s upstream assets, with analysts pegging its equity value at $8 billion.

Beetaloo is said to have strong prospects, but it remains in the stage of appraisal and is expected to cost more than $100m.

The value of Ironbark is said to be about $300m, with the project yet to be prove it can produce gas at a profitable level.

It was purchased by Origin from Paul Fudge’s Panage Oil and Gas in 2009 for $660m.

UBS, Bank of America Merrill Lynch and Luminis Partners have previously worked with Origin.