The sale will simplify Origin's business, cut down on debt and boost returns to shareholders.

Proceeds from the transaction will reduce Origin’s adjusted net debt to below A$7bn ($5.47bn) by 30 June 2018.

For the Adelaide-based oil and gas firm Beach Energy, the acquisition of Lattice Energy will help it expand its oil and gas reserves by nearly 200% to 232 million barrels of oil equivalent while increasing its production in the current financial year by 150%.

Through the acquisition, Beach will be adding Lattice’s gas assets spread across the Australian basins of Otway, Perth, Cooper, Bonaparte and Bass. In New Zealand, Beach will gain Lattice’s stakes in Kupe gas project and Canterbury Basin.

Beach Energy CEO Matt Kay said: “The acquisition of Lattice is transformational for Beach and represents a significant milestone as we execute our strategy to become a premier upstream oil and gas company.

“The transaction greatly enhances our platform for continued growth, delivers a diverse asset portfolio with significant upside and provides material value accretion for Beach shareholders.”

As part of the agreement, Origin Energy has entered into long-term gas supply agreements to get access to a considerable portion of the future east coast gas production of Lattice Energy. The agreements are expected to help Origin Energy in meeting the energy needs of its domestic customers.

Origin CEO Frank Calabria said: “The sale to Beach represents the best overall value to Origin shareholders, through the combination of the upfront sale proceeds and ongoing supply of gas and LPG, which allows Origin to retain the benefits of our integrated business model.

“Origin and Beach have a long history of working together through joint ventures and existing gas supply arrangements, and we look forward to continuing that relationship as Beach will remain a major supplier of gas to Origin into the future.”

The transaction will be subject to clearance from the New Zealand Minister of Energy and Resources and the New Zealand Overseas Investment Office apart from satisfaction of other customary conditions.

Image: Origin will sell its conventional upstream oil and gas business to Beach. Photo: courtesy of Petroleum man1/Freedigitalphotos.net.