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from: http://business.smh.com.au/business...ducers-fired-up-for-growth-20081221-72z3.html
THE NSW coal-seam gas industry - a minnow compared to its booming counterpart in Queensland - is finally entering the sights of big energy companies.
After AGL Energy last week paid the explorers AJ Lucas and Molopo Australia $370 million for acreage in the Gloucester Basin, expectations are growing that other hopefuls such as Eastern Star Gas, Metgasco and Sydney Gas could strike key deals.
AGL's purchase price of 74c to 94c a gigajoule of proved and probable reserves is at the high end of recent domestic deals, and gives the utility a quarter of the state's proven gas.
Coal-seam deposits in NSW have been explored far less than those in Queensland, which have attracted more than $15 billion from international players looking to export the gas, including Shell, ConocoPhillips, Petronas and BG Group. But AGL's purchase has moved the spotlight onto NSW.
"I think it's a natural progression on from Queensland and inevitably investors will be starting to look at NSW," said a CommSec analyst, Paul Johnson.
"Queensland moved very fast. They went from being upstarts with a lot of hope and bright futures to what we've got today, which is big companies like Origin selling half their gas for $US6.5 billion [$9.6 billion] to ConocoPhillips."
Exporting gas from NSW remains a long way off, as this requires far greater reserves and expensive liquefied natural gas facilities. The lower-quality resources of NSW coal and inadequate infrastructure have also deterred large-scale corporate interest.
But the AGL deal shows that may soon change for the small NSW gas companies, some of whom are starved of capital.
The managing director of Eastern Star Gas, David Casey, said the company had been approached by potential partners after TRUenergy purchased a 5 per cent stake last year for $15.75 million. But its main focus is upping its reserves to meet memoranda of understanding to supply Maquarie Generation and Babcock & Brown Power.
"The right offer obviously would make you think about it but that aside, we're moving forward to book our reserves and start development drilling."
Another hopeful, Metgasco, is also talking to companies with bigger balance sheets needed to back its exploration plans. Its managing director, David Johnson, said it was "a matter of time" until NSW explorers found much larger resources but the smaller companies needed hard-to-access capital to achieve this.
"If we can't tap equity capital markets then we have to tap the corporate sector," he said.
In a sign of growing market expectations, shares in Eastern Star, Metgasco and Sydney Gas rose by 9 per cent, 22 per cent and 8 per cent, respectively, after the Gloucester Basin deal.
The chief executive of the energy consultancy EnergyQuest, Graeme Bethune, said coal-seam methane could transform NSW. "It really has the potential to change the state from a position where it's not producing much gas on its own to one where it becomes a producer."
marcus padley also had a buy recommendation on it in the herald sun
THE NSW coal-seam gas industry - a minnow compared to its booming counterpart in Queensland - is finally entering the sights of big energy companies.
After AGL Energy last week paid the explorers AJ Lucas and Molopo Australia $370 million for acreage in the Gloucester Basin, expectations are growing that other hopefuls such as Eastern Star Gas, Metgasco and Sydney Gas could strike key deals.
AGL's purchase price of 74c to 94c a gigajoule of proved and probable reserves is at the high end of recent domestic deals, and gives the utility a quarter of the state's proven gas.
Coal-seam deposits in NSW have been explored far less than those in Queensland, which have attracted more than $15 billion from international players looking to export the gas, including Shell, ConocoPhillips, Petronas and BG Group. But AGL's purchase has moved the spotlight onto NSW.
"I think it's a natural progression on from Queensland and inevitably investors will be starting to look at NSW," said a CommSec analyst, Paul Johnson.
"Queensland moved very fast. They went from being upstarts with a lot of hope and bright futures to what we've got today, which is big companies like Origin selling half their gas for $US6.5 billion [$9.6 billion] to ConocoPhillips."
Exporting gas from NSW remains a long way off, as this requires far greater reserves and expensive liquefied natural gas facilities. The lower-quality resources of NSW coal and inadequate infrastructure have also deterred large-scale corporate interest.
But the AGL deal shows that may soon change for the small NSW gas companies, some of whom are starved of capital.
The managing director of Eastern Star Gas, David Casey, said the company had been approached by potential partners after TRUenergy purchased a 5 per cent stake last year for $15.75 million. But its main focus is upping its reserves to meet memoranda of understanding to supply Maquarie Generation and Babcock & Brown Power.
"The right offer obviously would make you think about it but that aside, we're moving forward to book our reserves and start development drilling."
Another hopeful, Metgasco, is also talking to companies with bigger balance sheets needed to back its exploration plans. Its managing director, David Johnson, said it was "a matter of time" until NSW explorers found much larger resources but the smaller companies needed hard-to-access capital to achieve this.
"If we can't tap equity capital markets then we have to tap the corporate sector," he said.
In a sign of growing market expectations, shares in Eastern Star, Metgasco and Sydney Gas rose by 9 per cent, 22 per cent and 8 per cent, respectively, after the Gloucester Basin deal.
The chief executive of the energy consultancy EnergyQuest, Graeme Bethune, said coal-seam methane could transform NSW. "It really has the potential to change the state from a position where it's not producing much gas on its own to one where it becomes a producer."
marcus padley also had a buy recommendation on it in the herald sun
