Santos Ltd. exercised an option to increase its interest in the Mahalo coal seam gas project in Denison Trough of central eastern Queensland north of Rolleston by acquiring an additional 12.86% from joint venture partner Comet Ridge Ltd., Brisbane.
Comet Ridge will hold 57.14% and Santos will hold 42.86%.
The acquisition is part of the loan-option arrangements put in place between the two companies concurrent with Comet Ridge’s purchase of Australia Pacific LNG(APLNG) Pty Ltd.’s 30% share of the project completed earlier this year.
The option will reduce Comet Ridge’s loan from Santos by $5.14 million (Aus.) to $8.01 million (Aus.).
Santos will assume liability for its $3.43 million (Aus.) share of the $8.01 million (Aus.) deferred consideration payable to APLNG. The first $2 million tranche of deferred consideration is payable to APLNG in June 2023 with Comet Ridge’s share of that tranche now reducing to $1.14 million (Aus.).
There will be no change to Comet Ridge’s 100% ownership of the northern Mahalo Hub blocks.
Both parties can now focus on moving the gas project into production, said Comet Ridge managing director Tor McCaul.
Comet Ridge is continuing discussions with Santos about an arrangement to consolidate the Mahalo Gas Hub area to a 50/50 joint venture.
Initial concentration of the Mahalo gas project lies in production licenses 1082 and 1083, about 65 km from the Gladstone LNG and Jemena gas pipelines to Gladstone. Environmental approvals have been obtained.
The target coal seams are at shallow depths of 180-400 m. Mahalo-7 and Mira-6 short lateral pilot wells flowed 1,200-1,500 cu ft of gas per meter of coal intersected. The gas is of high-quality pipeline specifications with a low CO2 content of 0.05%