AGL Energy Limited announced that it will sell its gas exploration and production assets in Queensland and NSW due to “the volatility of commodity prices and long development lead times”.
AGL said that it has impaired its Queensland natural gas assets in Moranbah, Silver Springs and Spring Gully to facilitate a sale, but expects that this “may take some time” to materialise due to difficult market conditions.
The company – which plans to concentrate its efforts on commercial and retail gas activities – also announced that it will not proceed with the Gloucester Gas Project due to inadequate “economic returns”, and that it will cease production at the Cadmden Gas Project in NSW in 2023 – twelve years earlier than previously proposed.
Managing Director and CEO, Andy Vesey, said AGL expects to recognise an impairment charge of $640 million after tax against the carrying value of its gas exploration in production assets including an increase in rehabilitation provisions for its well sites and other infrastructure in the Gloucester region.
He said the company will establish a $2 million Independent Trust Fund and will work with the Gloucester community to identify investment options to deliver ongoing economic benefit to the region and its communities.
“Exiting our gas assets in New South Wales has been a difficult decision for the company. AGL has invested significantly in these projects and communities over the past seven years for the Gloucester Gas Project, and ten years in the case of the Camden Gas Project,” Mr Vesey said.
“We are proud of the dedication and professionalism of our employees and contractors in their efforts to get to this point and our work to bring benefits to the communities in which we operate. We remain committed to leaving a positive legacy in these regions.”
