What: Integrated energy player Origin Energy Limited (ASX: ORG) has moved to further shore-up natural gas supplies by announcing the acquisition of a 40% interest in two exploration permits in the Browse Basin region which is located off the Western Australian and Northern Territory coasts.
So what: The acquisition involves the purchase of two permits for approximately US$800 million from oil and gas explorer Karoon Gas Australia Limited (ASX: KAR). In contrast to the fall in Origin's share price, Karoon's shares have soared 38% to $3.40 per share.
Management cited the rationale for purchasing the permits by stating that, "this acquisition, when compared to greenfield exploration, substantially reduces the risk of securing opportunities to drive the long-term growth of Origin."
Now what: To fund the acquisition Origin has announced a pro-rata equity raising of approximately $1 billion which will occur after the release of the company's full year results in late August. The market appears to have discounted the stock for the effect of the capital raising, but pleasingly shareholders will have the opportunity to not be diluted as the capital raising is structured on a pro-rata basis.
With some analysts recently questioning whether Origin's APLNG and Santos Ltd's (ASX: STO) GLNG projects would run into gas supply issues, this acquisition should be reassuring for Origin's shareholders.
