M&A in Australasia - 2023 Q4

It had been a relatively quiet Q4 in Australasia until early December when two big pieces of news dropped.

• The first saw Origin Energy shareholders vote to reject a takeover offer from a consortium led by Brookfield asset partners and EIG. Together with a linked deal involving ConocoPhillips, this wiped nearly US $13 billion from the announced transactions for the year.
• The second came in the form of confirmation that Woodside Energy and Santos were in preliminary discussions about a potential merger. Clearly massive news for the industry and one we will be talking about coming into 2024.

In terms of newly announced deals, Q4 saw five deals, four in Australia and one in Timor-Leste. A transaction value was announced for all of these deals, with a total deal value for these deals of almost US $19 million.

The annual deal count for 2023 is now 18 transactions, with a total deal value of just over US $2.5 billion.

Deals announced in Q4

Q4 saw a mix of exploration acreage, discovered resource and mature assets change hands. The deals announced this quarter are:

• The first deal came in mid-October, with an agreement for Greenvale Gold to acquire a 75% interest in EP 145 from Mosman Oil and Gas Ltd. There is an initial payment of AU $160,000 as well as carrying up to AU $5.5 million of future exploration costs (seismic + well).
• The second deal came about a week later and saw Cooper Energy announce deal to acquire 25.1% stake in PEP 169 from Lakes Blue Energy. The deal is for an initial AU $1.2 million with Cooper then carrying Lakes Blue for the planned Enterprise North exploration well, to a maximum cost of AU $1.25. Completion of the farmout is subject to completion of due diligence, finalisation of transaction agreements and receipt of requisite consents and approvals, as well as Armour Energy approval and waiving their pre-emption rights.
• The third deal came in mid-November, with Senex Energy (owned by POSCO and Hancock) announcing a deal to acquire Central Petroleum's 50% stake in the Range gas project (ATP 2031) for AU $12.5 million (~US $8 million). Completion of the deal was announced at the end of November.
• The fourth deal came the next day, with Jadestone Energy announcing a deal to acquire a further 1/6 stake in CWLH, this time from the Japanese partnership MiMi (Mitsui and Mitsubishi). The deal is for US $9 million, with Jadestone also required to pay up to $102 million in future decommissioning payments in three installments. Completion of the deal is expected Q1 2024.
• The final deal came in mid-December, with Baron Oil / SundaGas and TIMOR GAP announcing an MOU for the latter to acquire a further 15% in the TL-SO-19-16 PSC (Chuditch) in Timor-Leste. The deal will see about US $1 million in back costs paid to Baron Oil. Approvals from TIMOR GAP directors and Timor-Leste's National Petroleum Authority are needed before completion.

Deals cancelled in Q4

As mentioned above, we saw a big announcement in early December, with the direct cancellation of one deal and the follow-on cancellation of a second.

• In early-December, Origin Energy shareholders voted to reject a takeover offer from a consortium led by Brookfield asset partners and EIG. In order to approve the takeover, 75% of shareholders needed to approve the deal but only 68.92% voted in favour of the deal. As a reminder, this deal was first discussed in December 2022, with a binding deal finally signed between the partied in late-March. The agreed price was AU $8.91 per share, giving an enterprise value of AU $ 18.7 billion (~US $12.4 billion).
• In parallel with the above deal, it was announced that ConocoPhillips would acquire a further 2.49% of the APLNG assets from MidOcean for US $500 million, with completion to take place with the above deal. However, given the above shareholder vote, we can now consider this deal cancelled.

I can see plenty of potential for these deals to be revisited in 2024, but for now I have removed this from my analysis, taking almost US $13 billion off the value of deals in Q1.

Deals that closed in Q4

In addition to the Senex / Central deal above, four further deals closed in Q4:

• In early-November, we saw completion of Origin Energy's?withdrawal from a number of permits in the Canning basin, including EP 428 that holds the Rafael discovery. Buru Energy will take on the majoritstry of Origin's interest, with Rey Resources also taking on some of the interest in a couple of permits. The deal was announced in early-February.
• In late-November, completion was announced for BP's deal to acquire Shell's 27% interest in the Browse project. BP now hold a 44.33% stake in the project. This deal was announced in late-April.
• In mid-December, Strike Energy's deal for them to acquire Talon Energy became effective. The deal was announced in mid-August.
• In late-December, we saw completion of a deal that saw INPEX and TotalEnergies acquire PTTEP's 100% interest in the AC/RL7 permit that contains the undeveloped Cash-Maple gas field. INPEX have acquired 74% and TotalEnergies 26%. The deal was announced in mid-August.

Deals still pending completion

In addition to the new deals announced this quarter, there are a number of previously announced deals that are yet-to-close.

• The first of these is EIG's?(through MidOcean Energy) deal to acquire Tokyo Gas’ stake in four major integrated gas-to-LNG projects, namely Pluto (+ Pluto LNG T1), Gorgon LNG, QC LNG, and Ichthys. When the deal was announced, it was stated that it was expected to close in the first half of 2023 but there has yet to be any further news on completion. It is not clear if the Origin Energy vote will have any impact on this deal but it is certainly looking riskier.
• The next is JX Nippon's acquisition of a 2.58% stake in the Papua LNG project from TotalEnergies that was announced in early-June.?There has been little further news, but the deal could already be complete or be pending approvals.
• The next is from early-August, when we saw Woodside Energy announcing an SPA to divest a 10% stake in the Scarborough project to LNG Japan, a 50:50 JV between Sumitomo Corporation and Sojitz Corporation. Despite some challenges with the Scarborough development, I expect this deal to complete in the first half of next year.
• The next deal also came in late-August, with Roc Oil agreeing to withdraw from the L20 and L21 production licences that contain the Ungani oil field, with their 50% stake being assigned to Buru Energy who now hold 100% interest in the licences. The deal looks to be approved and just needs its final registration.
• The next deal came at the start of September, when Santos and Kumul announced that a binding agreement had been signed for for Kumul to acquire a 2.6% stake in the PNG project from Santos, with an option to acquire a further 2.4%. The approval for the initial stake is the approval of the ICCC in PNG, which was granted in mid-December. So I expect to hear that the initial stake sale is complete soon.

Assets on the market

I have been keeping track of the assets on the market, with these summarised in the table below.

The main changes from Q3 are:

• I have split the OMV New Zealand opportunity between the OMV NZ ownership and the SapuraOMV ownership.
• I have added the opportunity with Buru Energy, who are looking for a strategic partner in the Canning basin, particularly with regards to bringing the Rafael discovery to development,

Questions and feedback

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