Daily Stock Market Reports

Why is the Origin share price sliding on Monday?

A Santos oil and gas worker wearing a hard hat stands in a yellow field looking at blueprints with an oil rig and blue sky in the background

Image source: Getty Images

The Origin Energy Ltd (ASX: ORG) share price is in the red this morning. Its slip comes after the company announced it is exiting the Beetaloo Basin.

IOrigint also intends to exit all its upstream exploration permits as it leans into the clean energy transition.

The divestment of its Beetaloo Basin interests will bring in $60 million upfront and future royalties. Origin expects to recognise a non-cash post-tax loss of between $70 million and $90 million in relation to the transaction.

The Origin share price is trading at $5.80 at the time of writing, 0.26% lower than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is lifting 0.14% right now. Meanwhile, the S&P/ASX 200 Utilities Index (ASX: XUJ) is down 0.31%.

Let’s take a closer look at the major news from the ASX 200 energy producer and retailer.

Origin announces Beetaloo Basin exit

The Origin share price is lower on news the company’s backing out of its 77.5% interest in three permits in the Northern Territory’s Beetaloo Basin.

The energy giant has entered an agreement with Tamboran Resources Ltd (ASX: TBN) and Tamboran’s major shareholder Bryan Sheffield to divest its interests for $60 million upfront.

It will also receive a 5.5% royalty based on wellhead revenues produced from the permits.

The company has also committed to undertake a strategic revenue of all its remaining exploration permits, excluding its Australia Pacific LNG interest, with a view to exiting all permits over time.

Management commentary

Origin CEO Frank Calabria commented on the company’s latest move, saying:

The decision[s] … will enable greater flexibility to allocate capital towards our strategic priorities to grow cleaner energy and customer solutions and deliver reliable energy through the transition.

Calabria said progressing projects like Beetaloo could be expensive and uncertain, adding:

Ultimately, we believe Origin is better placed prioritising capital towards other opportunities that are aligned to our refreshed strategy.

The suite of agreements executed with Tamboran allow Origin to realise value created by our investment and exploration activities to date and ensures another operator present in the area and committed to developing its resources can continue to take the venture forward.

Origin has also entered a gas sale agreement for up to 36.5 petajoules each year over 10 years, conditional on terms including Tamboran’s final investment decision to develop the project.

Perhaps unsurprisingly then, the company clarified it was not planning to exit the gas business. Calabria said:

Gas will continue to have an important role in our business … and in the broader energy mix as we look to underpin reliable energy supply to customers and accelerate our investment into the energy transition.

Origin share price snapshot

The Origin share price has been outperforming lately.

It has gained 8% since the start of this year. It’s also currently 35% higher than it was this time last year.

For comparison, the ASX 200 has dumped 11% year to date and 10% over the last 12 months.

Read More: Why is the Origin share price sliding on Monday?

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