Cooper Energy’s board of directors has given a nod for the Sole offshore gas project in Australia to proceed. The company said that finalization of financing has started with a fully underwritten equity raising some $151 million.
The project will develop the Sole gas field located in VIC/ L32 in the Gippsland Basin offshore Victoria to supply 25 PJ per year to gas users in south-east Australia. Cooper Energy is the 100% interest holder in the Sole gas field.
Gas produced from the field will be piped to the Orbost Gas Plant, from where the gas will be supplied to customers through the Eastern Gas Pipeline. Cooper Energy has secured long term gas sales contracts with a portfolio of customers (including AGL, EnergyAustralia, Alinta Energy and O-I Australia) to support development of the field whilst retaining a significant share of annual output for availability to supply shorter term sales, the company said.
According to Cooper Energy, the Final Investment Decision (“FID”) is now only subject to securing satisfactory funding for the project. APA Group is expected to acquire and undertake all capital expenditure associated with the Orbost Gas Plant.
Following on from APA Group and Cooper Energy executing a non-binding Heads of Agreement on 27 February 2017, the Company and APA Group are in advanced negotiations to conclude the arrangements under which APA Group will acquire, upgrade and operate the Orbost Gas Plant.
Cooper Energy will solely undertake the upstream development, which has an expected capital cost of $355 million.
The fully underwritten equity raising of approximately $151 million will substantially cover the expected equity funding requirement for the Sole gas project. Cooper Energy is highly confident of securing debt finance for the remaining funding requirement of the Sole gas project during the June quarter 2017. First gas from the Sole gas project is planned to be delivered to the Orbost Gas Plant in the March quarter of 2019, which is unchanged from previous indications.
David Maxwell, Managing Director, Cooper Energy said:”Our technical, commercial and development plans for the Sole gas field have been subjected to independent and Board review and the project has cleared all hurdles necessary for final financing to be instigated.
“We have made substantial progress in finalising our arrangements with APA and, based on feedback from a range of financiers, we have firm conviction that attractive debt financing is available for the project. “Our progress to this point is, to a large part, attributable to the support provided by our shareholders. The underwritten equity raising announced today will provide the opportunity for their participation in what will be a transformational event for their company.”
Finalisation of funding and FID of the Sole gas project will trigger a 43 million barrel of oil equivalent (boe) uplift to Cooper Energy 2P reserves, which represents an increment of nearly 400% to proved and probable reserves as at 1 January 2017 of 11.6 million boe. Based on current ownership levels, the first full year of operation from the Sole gas project is expected to lift Cooper Energy’s annual production to more than 6 million boe, which compares to guidance for FY17 of 1 million boe.