COI (ASX) Definitely In Play

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APLNG poised to buy Origin Energy’s Ironbark gas project

BRIDGET CARTER
MERGERS & ACQUISITIONS EDITOR
@BridgetCarterb

SCOTT MURDOCH
JOURNALIST
@murdochsj

11:00PM DECEMBER 11, 2018

1 COMMENT

Australia Pacific LNG is believed to be on the cusp of buying Origin Energy’s Ironbark project in Queensland’s Surat Basin.
An announcement on the sale is expected any day, with the price expected to be between $230 million and $240m.
APLNG is Australia’s largest producer of coal-seam gas, supplying Queensland’s domestic gas market and processing CSG into liquefied natural gas.
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It is 37.5 per cent owned by Origin, 37.5 per cent by ConocoPhillips and 25 per cent by Sinopec.
The sale is happening as major industry players are soon expected to swoop on smaller operators in the market that are on the brink of proving up major discoveries in the coming months and as speculation persists about Origin’s future plans for its upstream energy business that largely comprises APLNG.

Santos was earlier believed to be in the box seat to acquire Ironbark as it remains eager to secure more supply from its Gladstone LNG operation, but it is now perhaps more likely to purchase a smaller Queensland oil and gas company such as Comet Ridge, Galilee Energy or State Gas.
However, a fall in the oil price of about 30 per cent in the past month may put a damper on any merger and acquisition activity because of the volatility.

Origin has been running a sale process through the Royal Bank of Canada for Ironbark, an asset 150km west of Toowoomba that was brought from prospector Paul Fudge in 2009 for $660m.
It was recently valued at $296m on Origin’s books and has 192 petajoules of proven, probable and possible reserves (3P) after its gas reserves were downgraded in February. No gas has yet been produced, with that expected to happen in 2020-21.
Santos purchased Quadrant Energy this year for $2.15 billion, which increased its oil and gas exposure in Western Australia, yet acquisitions remain on its agenda as it searches for more gas supply.
Galilee, Comet Ridge and State Gas are all on the verge of discovering major reserves that will prove highly lucrative, and for that reason they remain attractive to a major player.
Comet Ridge has a market value of $237m and it jointly owns the Mahalo project in Queensland with Santos and APLNG. State Gas is worth $98m and Galilee Energy $96m.
Possible acquisitions would go a long way to shoring up supply for Gladstone LNG, which is one of the largest assets owned by Santos and is in need of gas supply for shipment to customers offshore.
GLNG has been supplying two long-term Asian customers since the first shipment in October 2015, and Santos is a 30 per cent shareholder.
Apart from Santos, possible buyers of the small companies could be Beach Energy, APLNG or Origin Energy, while Senex Energy could potentially stage a merger with Comet Ridge or in fact be a buyer, although some believe it is more likely to be a takeover target.

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Can anyone comment on what price COI might expect on like for like valuation with Ironbark?

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Last 16.0¢		Change 0.000(0.00%)		Mkt cap ! $188.3M

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16.5¢	16.5¢	15.8¢	$154.3K	963.1K

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