S&P/ASX 300 Index (ASX: XKO) energy stock Amplitude Energy Ltd (ASX: AEL) is slipping today.
Amplitude Energy shares closed on Friday trading for $1.675. In early morning trade on Monday, shares are changing hands for $1.66 apiece, down 0.90%.
For some context, the ASX 300 is up 0.1% at this same time, while the S&P/ASX 200 Energy Index (ASX: XEJ) is down 2.1% following a retrace in oil prices over the weekend.
Amplitude Energy shares are outpacing the broader energy sector stocks today following news of a major gas field acquisition from Beach Energy Ltd (ASX: BPT).
Here's what's happening.
Image source: Getty Images
ASX 300 energy stock growing its offshore gas footprint
Amplitude Energy shares are getting plenty of attention today after the company announced that it has entered into a binding agreement to acquire a 50% interest in Beach Energy's VIC/L35 permit.
The permit area contains the Artisan gas field in the Offshore Otway Basin, situated off Australia's southern coast.
As part of the agreement, O.G. Energy will purchase a 10% interest in Artisan on the same terms. That will see O.G Energy and Amplitude Energy each holding a 50% interest in the gas field.
The ASX 300 energy stock noted that the field is located just 17 kilometres from the existing Offshore Otway Basin pipeline.
Amplitude Energy will pay $58.3 million cash for the asset, which it said will be fully funded through existing sources.
The agreement will also see Beach Energy receive a future production royalty of $3.75 per gigajoule (GJ) for 60% of all gas produced before 30 June 2036, up to 62 petajoules (PJ).
The total implied transaction value of the agreement was reported to be approximately $130 million after tax.
Amplitude said it expects the acquisition to be net asset value (NAV) accretive and earnings accretive from the commencement of production from Artisan. The ASX 300 energy stock is accelerating targeted gas production to 2028.
The agreement remains subject to certain conditions precedent.
What did Amplitude and Beach Energy management say?
Commenting on the acquisition that's yet to lift the ASX 300 energy stock today, Amplitude CEO Jane Norman said, "Producing Artisan through Amplitude Energy's existing infrastructure allows faster and lower-cost development of this gas for the east coast domestic market."
Norman continued:
Artisan development costs will significantly benefit from leveraging the existing ECSP program and our readily-available infrastructure. This is a win-win for Amplitude, O.G. Energy and Beach with respect to optimising our respective Otway Basin positions.
Beach Energy CEO Brett Woods added:
This transaction demonstrates Beach's capital discipline, monetising Artisan while preserving exposure to future development through the production royalty.
It is also a positive outcome for Otway participants and domestic customers, with the gas still expected to be developed into the East Coast market through the Athena Gas Plant.
