Comet Ridge has completed the acquisition of Australia Pacific LNG Pty Ltd’s (APLNG) 30% interest in the Mahalo Gas Project. The company’s net interest in the Mahalo Gas Project (Mahalo) has increased from 40% to 70%.

Key points:

• Comet Ridge’s interest in the Mahalo Gas Project has increased from 40% to 70%.
• Consideration paid to APLNG, funded via a loan from Santos Limited.
• Substantial increase in Comet Ridge’s Mahalo gas reserves – 80 PJ increase in 2P reserves (to 186 PJ) and 138 PJ increase in 3P reserves (to 321 PJ).
• Provision for reserves growth from large additions to contingent resources.
• Aligned JV now in a position to take the Mahalo project forward to meet strong demand for gas.

Comet Ridge Managing Director, Tor McCaul said, 
“The Mahalo Gas Project is a key opportunity to bring an additional source of gas to the Queensland market at a time when global and Australian energy markets are in need of new sources of reliable gas supply for retail consumers, manufacturing and gas fired power generation.

Comet Ridge has significantly increased its share of Mahalo gas reserves at a critical time. We note very strong interest from gas users for our equity share of Mahalo gas and we can now look to the future with Santos to take Mahalo through development and move into producing reliable, competitive gas into a tight east coast market.

For our shareholders, we now have access to a substantially increased gas reserve base, and a simpler, aligned JV, which creates the opportunity for us to move Mahalo forward into production.”

Strategic rationale for the Acquisition

The strategic rationale for Comet Ridge increasing its equity interest in Mahalo is summarised below:

• Substantial increase in Comet Ridge gas reserves – 80 PJ increase in 2P reserves (to 186 PJ) and 138 PJ increase in 3P reserves (to 321 PJ).
• Additional project upside provided from large contingent resource base – 134 PJ of 1C contingent resources, 221 PJ of 2C contingent resources and 360 PJ of 3C contingent resources net to Comet Ridge.
• Creation of a streamlined JV between Comet Ridge and Santos Limited (Santos), with a common focus on finalising development plans for Mahalo, and the broader expanded Mahalo Gas Hub to achieve significant scale.
• Maintain continuity of Mahalo Operator - Santos has been Exploration Operator to this point and will continue as Development Operator (assuming exercise of the option to acquire an additional 12.86% interest from Comet Ridge). Santos has the capability to support Mahalo moving into production, with operations just to the south
• around the significant Arcadia and Fairview fields where they are operator.
• Enables Mahalo to be developed using a similar low cost “modular” plant design that Santos has successfully implemented at the nearby Arcadia Project, currently producing in excess of 100 TJ/day.

Settlement details

Payment of the remaining $11 million of the total $12 million upfront consideration to APLNG occurred on 28 June 2022, funded via a $13.15 million loan from Santos, the remaining Mahalo joint venture participant, which holds a 30% interest.

Santos has a six-month option (from the settlement date) to acquire an additional 12.86% interest in Mahalo from Comet Ridge. If Santos exercises this option (for proportional acquisition value), Comet Ridge’s interest in Mahalo will drop to 57.14% and the loan repayable to Santos will decrease to $8.0 million. If it elects to exercise the option, Santos’ interest in Mahalo will increase from 30% to 42.86%.

KeyFacts Energy: Comet Ridge Australia country profile