Comet Renegotiates Oz Mahalo GSA Terms
Australia-listed Comet Ridge has extended the sunset date for final investment decision (FID) for its Mahalo block in Central Queensland and renegotiated the terms of its gas sales agreement (GSA) with state-owned electricity generator Stanwell Corporation, the company said September 4.
The FID sunset date has been extended from October 20 this year to September 30 next year and the new GSA is to be finalised on July 15, it said.
“Under the 2014 Agreement, Stanwell has the right to purchase up to one third of Comet Ridge’s Mahalo gas up to a maximum of 40 petajoules. This volume of gas will not change under the new GSA. Comet Ridge will be marketing the remainder of its Mahalo gas volume into the east coast market, with buyer(s) and terms for this volume yet to be finalised,” it said.
RBC Capital Markets analyst Ben Wilson said: “We see the revision to the Stanwell Corporation as wholly positive for Comet Ridge and a further indication of the tightness in East Coast gas markets. It appears to us that Stanwell Corporation remains very keen to secure the Mahalo output even if it means negotiating a market-based pricing level rather than a discounted rate”.
“Importantly also, if a market-based GSA is successfully concluded, it would put Comet Ridge on broadly equivalent footing to its Mahalo JV partners Santos (30%) and APLNG (30%) in terms of project economics,” he added.
Comet Ridge managing director Tor McCaul said that the move provides the company the time to continue to progress the project and allows Stanwell the ability to further optimise its gas requirements. “The Deed also allows the parties to move to a simpler gas pricing model and to a more familiar GSA structure that better reflects current market pricing and practices,” he said.
The project is located about 240 kilometres west of Gladstone, which is home to the Australia Pacific LNG terminal and Santos’ Gladstone LNG facility, along with Shell’s Queensland Curtis LNG export project.
Comet announced on June 26 that the Mahalo Mira 6/2 well exceeded previous production expectations of around 1.2mn ft3 per day to 1.3mn ft3 per day by registering a flow reach breaching 1.4mn ft3 per day.
Comet said at the time the performance could be improved.