Australia's Beach Energy is buying Origin Energy's subsidiary, Lattice Energy, for A$1,585 million (US$1,250 million). It is Beach's largest acquisition to date, and will be transformational for the company. It will increase Beach's production by over 150%, and Beach's gas production will jump from 45% to 66% of output. As part of the deal, 80% of Lattice's current gas production has been contracted back to Origin Energy at fixed prices, giving a firm foundation to Beach's future cashflows. The deal will be positive for the eastern Australian gas market. Beach is a domestic-focused player, and without LNG to distract it, we expect to see increased investment in exploration, development and production in these assets. Although Lattice has a declining production profile, we see this investment leading to additional gas becoming available from the Otway and Cooper basins. This should help to meet some of the expected domestic gas supply shortfall Wood Mackenzie has identified post-2020.