Jemena Gas Pipelines Holdings Pty Ltd has entered into an agreement with Origin Energy Limited to acquire the Darling Downs Pipeline Network for $392 million.
Located in Queensland, Darling Downs Pipeline Network is responsible for the transportation of gas to Origin’s Darling Downs Power Station, Australia Pacific LNG and the domestic market. Under the terms of the sale agreement, Origin has secured gas transportation services on the pipeline network for periods ranging from 10 to around 30 years.
“The sale of Darling Downs Pipeline Network, which represents a 16.9x FY2018 EBITDA multiple1 to Origin, is scheduled to be completed by 30 June 2017,” Origin CEO Frank Calabria said. “The sale culminates our announced asset divestment program, the net proceeds of which will be used to reduce debt. We’re on track to achieve our target of adjusted net debt of well below $9 billion by 30 June 2017. In addition, we continue to make good progress on the divestment of Origin’s conventional upstream business, Lattice Energy, during calendar 2017.”
Jemena Managing Director, Paul Adams, said that the acquisition is a crucial next step in delivering on Jemena’s Northern Growth Strategy, which seeks to build an interconnected supply chain of energy delivery assets in northern Australia through targeted acquisitions and greenfield developments.
“This is a strategic investment for Jemena which leverages the DDPN’s connection with our Queensland Gas Pipeline to allow us to grow scale in this key market at a crucial time for the Australian energy sector,” said Adams.