Origin says deal justifies BG snub

Origin Energy Ltd, Australia's biggest producer of natural gas from coal seams, said an $8 billion transaction with ConocoPhillips "more than justifies" its rejection of a hostile takeover offer from BG Group Plc.

The agreement to sell 50 percent of its coal-seam gas unit to Houston-based ConocoPhillips forms part of an independent valuation of Origin that is about double the A$15.37 a share offered by BG, Origin Chairman Kevin McCann said yesterday. Origin surged 13 percent to a record in Sydney trading.

ConocoPhillips, the second-biggest US oil refiner, will make an initial $5 billion payment to Sydney-based Origin to buy into the venture, which will process coal-seam gas into liquefied natural gas for export to Asia. Origin last month urged shareholders to reject BG's A$13.5 billion offer, saying the gas partnership would yield more value.