Tipperary signs deal to sell coalbed methane gas in Australia

Oct. 10, 2001

Australian company Queensland Fertilizer Assets Ltd. has contracted with a unit of Tipperary Corp., Denver, to purchase up to 260 bcf of gas over 20 years, beginning in 2004

By the OGJ Online Staff

HOUSTON, Oct. 10 -- Australian company Queensland Fertilizer Assets Ltd. has contracted with a unit of Tipperary Corp., Denver, to purchase up to 260 bcf of gas over 20 years, beginning in 2004.

At current exchange rates, said Tipperary, the deal is worth at least $300 million. The price of the gas may increase after the second year of the contract, depending on urea price increases, boosting the worth of the contract by as much as $7 million/year.

Previously, Queensland Fertilizer Assets had signed a nonbinding memorandum of understanding to purchase 210 bcf over 20 years (OGJ Online, Mar. 21, 2001).

The fertilizer company will use the gas at a plant it plans to build in southeastern Queensland. Construction should begin 6 months after QFAL obtains regulatory approval and financing, and should take 2 years.

Tipperary's 90%-owned Tipperary Oil & Gas (Australia) Pty. Ltd. subsidiary owns a 65% interest in the Comet Ridge coalbed methane project. It will offer each participant in the project a pro-rata portion of sales under the new contract.