Origin Energy Limited (ORG) has entered a conditional agreement to acquire a coal seam gas exploration permit in Queensland’s Undulla Nose CSG province. The company said it is acquiring the interest from the Pangaea group for $660 million.

Origin said it expected to book proved, probable and possible reserves of CSG of around 1,150 PJ in respect of the area at 30 June 2009, with further contingent resources of approximately 500 PJ.

The oil and gas producer said the acquisition metrics equate to 57c per GJ of 3P reserves.

Managing director Grant King said the project was ideally located next to proven CSG fields, which will be part of the Australia Pacific LNG planned CSG to LNG project.

"It is near gas transmission infrastructure that services existing gas markets and is close to Origin’s Darling Downs Power Station development and the Braemar 1 and 2 peaking power stations with which Origin has contractual arrangements for gas supply and electricity off-take," Mr King said.

"We see many opportunities to create value from this acquisition either in domestic or export markets."

Origin said the acquisition would be completed after certain conditions have been satisfied, including government approvals.

At 1433 AEST, origin shares were up 38c to $15.77.