Origin Energy returns to profit as takeover talks roll on

0


Origin Energy has called on the federal government for greater clarity on how it plans to restrain domestic gas prices beyond this year as analysts warn policy changes could drive a revaluation of a proposed $18.4 billion takeover offer for the company.

The ASX-listed power and gas giant last year opened its books to Canadian asset manager Brookfield and US-based private equity firm EIG, which jointly lobbed a $9-a-share bid to buy Origin and divide its assets between them.

Australian power and gas supplier Origin Energy is facing an $18.4 billion takeover offer from a North American consortium.Credit:Joe Armao

Although the bidding consortium’s due diligence has lasted more than three months and its exclusivity period has expired, Origin chief executive Frank Calabria on Thursday said the company remained in “active engagement” with the consortium about the prospect of a binding takeover proposal.

Analysts on Thursday said they did not foresee “major roadblocks” to the non-binding offer proceeding to a formal bid. However, they flagged that the introduction of new east-coast gas market regulations could affect domestic and international gas sales from Origin Energy’s part-owned Queensland natural gas venture, Australia Pacific LNG (APLNG) and may need to be considered.

“This creates increased potential for a price revisit by the consortium, in our view,” Royal Bank of Canada analyst Gordon Ramsay said.

Loading

In a bid to tame soaring electricity and gas prices, the Albanese government introduced emergency laws in December capping the price of domestic gas at $12 a gigajoule for 12 months. It has also told the industry it intends to introduce a mandatory code of conduct that will contain a longer-term requirement that future gas contracts are struck at prices that reflect production costs plus a margin allowing for a “reasonable” rate of return.

Gas users, including large manufacturers, are supportive of the government’s efforts to tame what they say are “unreasonably and unsustainably” high prices that have risen disproportionately to exploration and production expenses. However, east-coast gas producers have warned the “reasonable” pricing controls ignore the sector’s considerable exploration risks and will deter vital investments in new projects needed to offset declining fields in the coming years.

Origin owns a 27.5 per cent stake in APLNG, one of the three Queensland exporters of LNG.



Source link

Denial of responsibility! Planetconcerns is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave a comment