Tuesday 29 August 2017

COOPER Energy will build a $355 million gas project off the Victorian coast and increase its production fivefold by 2020 after signing off on its Sole gas project.

The Adelaide company said five years of patient work had come to fruition with the deal, which involves raising $250 million in debt, $15 million in working capital and a $135 million capital raising offered to existing investors.

The $400 million in debt and equity to be raised equals the company’s current market capitalisation.

The final investment decision on the Sole project will lift the company’s proved and probable gas reserves by 362 per cent to 54 million barrels of oil equivalent.

Cooper has already contracted about 75 per cent of the gas to AGL Energy, EnergyAustralia, Alinta Energy and O-I Australia.

It has also preciously struck an agreement with APA Group which will acquire the onshore Orbost gas plant and undertake a $250 million upgrade to process the gas from Sole and other fields.

“Today’s FID declaration is the culmination of 5 years’ effort under our gas strategy to identify,

secure and develop gas resources best placed to supply southeast Australia with a new source of gas supply,’’ Cooper managing director David Maxwell said.

“We now have a fully funded gas project that is proceeding on schedule to deliver a new gas supply to southeast Australia in 2019.”

Sole is expected to deliver gas sales of 24 PJ, or four million barrels of oil equivalent, annually

to Cooper Energy — roughly four times the company’s production in FY17.

“The package announced today allows FID for Sole and the pursuit of other near term gas opportunities at a time of great market need,’’ Mr Maxwell said.

“Our reserves have increased nearly four times and the development of Sole sets the company on a growth trajectory offering a fivefold increase in production in the years to 2020.

“The fully underwritten debt facility from major banks, ANZ and Natixis, underscores the quality of the Sole project and of the other opportunities in our portfolio which includes 112 PJ of uncontracted gas, as well as the Manta opportunity, in southeast Australia.

“Gas prices have consolidated in recent months and this, together with the ongoing inquiry levels for our uncontracted gas, provides high confidence in the business case for incremental development of our existing gas operations.”

Cooper will conduct a bookbuild among institutional investors which will close tomorrow, while retail shareholders will be offered shares on a two for five basis with that offer opening on September 5 and closing a fortnight later.

Both offers are underwritten and will be at 29.5c, compared to the current share price of 35c.

Cooper shares remain in a trading halt while the institutional offer is finalised.

Cooper Energy acquired a 50 per cent interest in the Sole gas project and the Orbost gas plant from previous owner Santos in May 2015.

This interest was increased to 100 per cent with the acquisition of Santos’ remaining interest effective from January 1, 2017.

Cooper also announced a net loss of $12.3 million and an underlying net loss of $8.7 million.

Production increased 109 per cent to 0.97 million mmboe.