The transaction is conditioned upon approval from Australia’s Foreign Investment Review Board and, if required, as a result of an outstanding offer from the BG Group to purchase all outstanding shares of Origin Energy stock, the approval of Origin shareholders.
Under the plan, ConocoPhillips would initially contribute $5 billion to the joint venture (JV) and would carry Origin Energy for their first A$1.15 billion in JV expenses. ConocoPhillips would make up to four additional payments of $500 million to the JV based on project milestones, for a total possible cash acquisition investment of approximately $8 billion at current exchange rates.
As a result of these investments, ConocoPhillips will receive 50% equity in Origin Energy CSG, which holds Origin Energy’s coal bed methane assets in Queensland, Australia.
The joint venture would be comprised of coal bed methane development, operated by Origin Energy, and a liquefied natural gas (LNG) project, operated by ConocoPhillips. As planned, the JV would market the LNG, primarily targeted to Asian markets for the first 10 years.
The JV would be managed by a board of directors composed evenly of ConocoPhillips and Origin Energy representatives. The project director would be provided by ConocoPhillips.
Jim Mulva, chairman and CEO of ConocoPhillips, said: With this investment, ConocoPhillips has gained access to the leading coal bed methane resource in Australia, comprising 8.1 million net acres. Moreover, the company has enhanced its LNG position with the creation of an additional Australian LNG hub serving Asia Pacific markets.
