3rd UPDATE: Westside To Spend Up To A$80 Million In Coal Seam Gas Deal
30 Décembre 2009 - 6:22AM
Dow Jones News
Little known Westside Corp. Ltd. (WCL.AU) on Wednesday signaled
its intention to become a more serious player in Queensland state's
booming coal seam gas sector by announcing it has agreed to spend
up to A$80 million buying acreage from Anglo American PLC (AAUKY)
and Mitsui & Co. Ltd. (MITSY).
The Brisbane-based company, which already explores for CSG in
several permits in Queensland's Bowen Basin, said the proposed deal
could make it the state's second biggest listed pure-play CSG
company behind Arrow Energy Ltd. (AOE.AU).
Over A$20 billion has been spent on mergers and acquisitions
over the past two years in Queensland's CSG sector as
multinationals turn to alternative sources of fuel as traditional
supply declines.
Gas demand in Asia is projected to increase sharply, especially
in densely populated China and India, and Queensland is ideally
positioned to serve the regional market through liquefied natural
gas, or LNG, plants built on its northern coast.
Westside said it has signed a conditional agreement to acquire
Anglo American's stake in the Dawson Seamgas CSG assets and may
also buy Mitsui's stake subject to the consideration of preemptive
rights.
The deal would see Westside taking up to 100% of the producing
fields, near Moura in Queensland's Bowen Basin, and up to 50% of
two adjoining permits, boosting its proven and probable reserves by
up to 212 petajoules.
"Westside's total acquisition cost is expected to be between
A$55 million and A$80 million, depending on the ultimate ownership
interest acquired, with a proportional reduction of Westside's
investment if Westside seeks to work with a joint venture partner,"
the company said in a statement.
The size of the acquisition is surprising considering that even
the bottom end of the expected price tag is higher than Westside's
market capitalization before the deal was announced.
Westside intends to issue new shares to existing shareholders to
help fund the transaction but won't provide more details until
there's further certainty on how much it will need to raise.
The resolution of various preemptive rights could take up to 90
days, it said.
Shareholders wanting more exposure to Queensland CSG initially
pushed Westside's shares higher but late in the trading session
they were flat at 48 Australian cents after rising as high as 56.5
cents.
The assets Westside has agreed to buy are adjacent to its
existing Paranui CSG project and currently produce about 12
terajoules of gas per day for the domestic market through a supply
contract with AGL Energy Ltd. (AGK.AU).
They are also adjacent to the proposed route for the Surat to
Gladstone pipeline. The port city of Gladstone is the proposed home
of up to five LNG projects.
"Only a small percentage of the gas is contracted today to AGL
of the total reserves," Westside Chairman and Chief Executive Angus
Karoll told Dow Jones Newswires.
BG Group PLC (BG.LN) already has a 50% interest in some of
Westside's existing exploration acreage and is building one of the
five LNG plants.
"We're already having discussions with them on what we're going
to do with our gas and we think they're a very logical potential
market for us," Karoll said.
Karoll said Westside expects to announce an upgrade of its
proven and probable reserves at its existing acreage in the first
quarter of 2010.
Anglo American said in a statement that its coal assets at the
Dawson Mine won't be affected by the sale of the CSG business.
"The business is relatively small in scale, representing less
than 2% of the coal seam gas reserves in Queensland," it said.
-By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692;
ross.kelly@dowjones.com
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