Santos QNT Pty Ltd has informed Comet Ridge Limited that it wishes to acquire Comet Ridge’s 12.86 per cent option stake in the Mahalo Gas Project.
In a statement, Comet Ridge said Santos exercised the option before it expired on 28 December 2022. With the completion of Comet Ridge’s purchase of Australia Pacific LNG Pty Ltd’s (APLNG) 30 per cent share of the Mahalo Gas Project on 28 June 2022, loan-option agreements were established between Comet Ridge and Santos.
The parties must sign the Sale Agreement within the next two business days to put the transfer of the 12.86 per cent option interest into effect, Comet Ridge added.
The following describes the impact of the option exercise on Comet Ridge:
- The $13.15 million loan owing to Santos is reduced to $8.01 million. Comet Ridge will then repay the $8.01 million to Santos;
- Comet Ridge owes Santos no interest on the $5.14 million part of the loan;
- Santos takes liable for its $3.43 million pro-rata share of the $8 million deferred consideration payable to APLNG. The first $2 million tranche of deferred consideration is due to APLNG on 28 June 2023, with Comet Ridge’s share lowered to $1.14 million;
- Comet Ridge’s stake in the Mahalo Gas Project will be reduced from 70 per cent to 57.14 per cent, with a corresponding drop in value. Comet Ridge’s net share of independently certified Gas Reserves and Contingent Resources has decreased; and
- Comet Ridge holds a significant net interest in the Mahalo Gas Project, with 332 Petajoules of 2P Gas Reserves + 2C Contingent Gas Resources. Similarly, there is no effect on Comet Ridge’s 100 per cent owned northern Mahalo Hub blocks, where the Company expects to book initial reserves following a successful pilot testing program at Mahalo North.
Comet Ridge Managing Director Tor McCaul said the company is pleased to note that Santos has already exercised its option to expand its stake in the Mahalo Gas Project and to settle the financing arrangements.
According to McCaul, Comet Ridge and Santos can now focus on moving the Mahalo Gas Project into production, producing a new material supply source for both domestic and export gas markets.
“Discussions are also continuing with Santos to determine if a mutually beneficial arrangement can be agreed to consolidate the Mahalo Gas Hub area to a 50/50 joint venture. However, any such arrangements need to be accretive to shareholder value compared to alternatives being considered for Comet Ridge’s 100 per cent owned northern Mahalo Hub blocks, including an early development scheme expanding on the highly successful pilot at Mahalo North to capture upside from strong has market dynamics,” McCaul stated.
Comet Ridge will use the funds from the recently finished placement to repay Santos for the remaining $8.11 million balance of the loan on 28 September 2022, together with accumulated interest of $0.10 million.
