Sydney Gas signs agreement with Lucas, appoints new...

Sydney Gas signs agreement with Lucas, appoints new CEO
14/01/2008 By: Daniel Bragg

Sydney Gas Limited (SGL) has signed a heads of agreement with the AJ Lucas Group Limited (AJL). The company also said it would appoint Andy Lukas as its new chief executive officer.

Under the heads of agreement, Lucas will provide $20 million upfront, and an additional $27.2 million over 3 years. In addition, it will make available drilling and technical resources as required by Sydney Gas to accelerate the development of its gas assets.

Dr John Saunders, the executive chairman of Sydney Gas said the transaction is structured to create an alignment of interests between Sydney Gas and Lucas by ensuring that Lucas will provide resources and share in the upside created through its shareholding and options.

“Today’s agreements are key steps in the development of Sydney Gas,” he said.

“We have potentially great resources in Camden and the Hunter and the involvement of Lucas, which has an outstanding record in coal seam gas, will provide the expertise and support that we need to make Sydney Gas the success that it deserves to be”.

Sydney Gas said that Lucas would subscribe for a placement of approximately 52.5 million Sydney Gas shares, equivalent to 15% of the SGL shares currently on issue, at a price of 38 cents per share.

In order to incentivise Lucas and further strengthen the alignment of interests between Lucas and Sydney Gas, Sydney Gas said it would grant options to issue 40.25 million shares to Lucas.

Allan Campbell, the executive chairman of Lucas, said the agreement would assist the commercialisation of its coal seam gas.

“We are already drilling at Camden where we have significantly increased gas production assets since we commenced our involvement,” said Mr Campbell.

“We believe that our participation in the Hunter Project can add further significant value. We look forward to working with Sydney Gas in the further exploration and development of the Sydney Basin.”

Sydney Gas also announced that Andy Lukas would resign from his technical director position with Lucas and take up the chief executive officer position of Sydney Gas.

At 1011 AEDT, shares in Sydney Gas were up 1c to 39c, whilst AJ Lucas shares fell 10c to $4.64.