Origin Energy on Sept. 19 agreed to sell its stake in an early stage but potentially high-producing shale gas basin in Australia's Northern Territory and said it would exit some other gas exploration permits as it focuses more on renewable energy.

The Beetaloo Basin is a shale sub-basin in Australia’s Northern Territory considered comparable to the prolific Marcellus Shale, the biggest U.S. gas field, but needs billions of dollars of spending on roads and pipelines before it can be developed.

Origin, Australia’s no.2 power producer, said it would sell its 77.5% stake in the Beetaloo Basin joint venture to Tamboran Resources Ltd. and its top shareholder for A$60 million (US$40 million), looking to beef up investment in renewable energy and its retail arm instead.

But it will still benefit from any development of the project, as Tamboran has agreed to pay Origin a 5.5% royalty on future production from the permit and to sell Origin 36.5 petajoules of gas a year for 10 years.

“We felt given ... these are long-dated, they’re in exploration phase, they’ll be more capital intensive over time, that this was a good way forward for us in terms of getting the benefits of it without that capital intensity over time,” Origin CEO Frank Calabria told Reuters.

“It doesn't change our view on gas. Gas is still going to play a critical role.”

Origin also said it will review its exploration permits in the Canning Basin in Western Australia and the Cooper-Eromanga Basin in Queensland with a view to exiting those over time.

However, it remains committed to its lucrative Australia Pacific LNG (APLNG) stake and the coal seam gas production it operates to supply APLNG.

Origin said it expects to record a non-cash post-tax loss of A$70 million to A$90 million on the sale of Beetaloo interests.

Its shares slipped 0.3% in a flat broader market, while shares in its Canning Basin partner, Buru Energy, fell 4% as Origin's pending exit is holding up plans for the explorer's key prospect.

Tamboran’s shares were on a trading halt, pending an announcement on a capital raising to help pay for the Beetaloo acquisition. (US$1 = 1.4861 Australian dollars)

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