Beach to acquire Origin’s Lattice Energy offshoot
DowDuPont commissions Texas ethylene, PE plants
Beach Energy Ltd., Adelaide, has made a binding agreement
with Sydney-based Origin Energy Ltd. to buy all the shares
in Origin’s wholly owned subsidiary Lattice Energy Ltd. for
$1.585 billion (Aus.) on a cash and debt-free basis. Lattice is
Origin’s conventional oil and gas offshoot.
The move will double Beach’s size and establish it as a
major supplier of gas to domestic markets. It also will provide a step change in production, operating capabilities,
and geographic exposure as well as providing long-term
gas contracts with Origin Energy and other counterparts.
The Lattice acquisition will increase Beach’s 2P oil and gas
reserves by 200% to 232 million boe and increase the company’s production by 150%. Lattice’s portfolio includes interests in an oil and gas venture in the Cooper basin of South
Australia, gas operations in Western Australia, Victoria, and
New South Wales, and exploration projects in New Zealand.
Beach will receive the benefit of Lattice cash flows backdated to July 1.
In negotiating the agreement, Beach has beaten a private equity rival and Origin’s alternative option of an initial
public offering float for Lattice.
The deal will be partly funded by a $301-million eq-
Downstream Technology Editor
DowDuPont Materials Science, the business division of
newly formed DowDupont, has commissioned ethylene and
polyethylene (PE) units in Freeport, Tex., as part of Dow
Chemical Co.’s previously announced $6-billion US Gulf
Coast (USGC) investment program in Texas and Louisiana
on projects to utilize low-cost and advantaged US shale gas
feedstock (OGJ Online, June 7, 2017; Mar. 30, 2017).
The 1.5 million-tonne/year ethylene plant and 400,000-
tpy PE plant—which is based on Dow’s proprietary Solution
process technology for production of the company’s ELITE
brand enhanced PE resins—were both in operation as of
Sept. 21, DowDuPont said.
Due to continued ramping up through the third quarter,
both units are scheduled to reach full production rates during the fourth quarter, the operator said.
The company also confirmed plans to expand nameplate
capacity of the ethylene plant—a central component of its
current USGC investments—to 2 million tpy. Alongside
uity raising. This involves a 3-for- 14 nonrenounceable en-
titlement offer, about $233 million of which is fully under-
written. The remaining $68 million represents the share of
Beach’s largest shareholder, Seven Group Holdings, which
has committed to take up the securities in full as well as
subunderwrite the offer.
For Origin, the company’s commitment to divest Lattice is
consistent with its plan to simplify the Origin business, reduce
debt, and improve returns to shareholders.
The sale is the largest of its major asset sale program,
which has been pursued to pay off the company’s debt that
had blown out as a result of funding requirements for its
share of the Australia Pacific coal seam gas-LNG project on
Curtis Island, near Gladstone in Queensland, and through
the collapse of world oil prices.
Origin retains its 37.5% interest in APLNG as well as
other undeveloped unconventional gas assets such as Ironbark coal seam gas field in Queensland and the Beetaloo
unconventional gas project in the Northern Territory.
The acquisition is subject to approvals from the New
Zealand Overseas Investment Office and the New Zealand
Minister of Energy and Resources because economic exposure to Lattice for New Zealand permit programs transfers
to Beach from July.
supporting additional debottlenecking projects aimed at unlocking additional polyethylene capacity, the planned ethylene expansion also will support the proposed construction
of another grassroots polyethylene unit as part of the operator’s next $4-billion wave of comprehensive growth investments over the next 5 years to expand its US petrochemicals
manufacturing business (OGJ Online, May 12, 2017).
Further details regarding the proposed ethylene expansion and future PE unit, however, were not disclosed.
The first of four derivative investments to be completed at
Dow’s operations in Texas and Louisiana, the recently com-
missioned Freeport ELITE PE unit will be joined by startup
of the following projects by yearend 2018:
• A 350,000-tpy specialty low-density PE unit for indus-
trial and supply-chain packaging applications slated to come
online by yearend.
• A 200,000-tpy proprietary next-generation NORDEL
metallocene ethylene-propylene-diene-monomer unit slated
for startup in early 2018.
• A 125,000-tpy bimodal gas-phase debottleneck to
increase production of bimodal PE resins for high-perfor-