Senex Holds Talks on Potential Queensland Coal-Seam Gas DealJames Paton
Senex Energy Ltd., an explorer developing coal-seam gas resources in Australia’s Queensland state, said it is in talks with companies interested in buying the assets, becoming a partner or reaching a supply deal.
“We have been in discussions with a number of parties around those things and continue to be,” Ian Davies, managing director of Brisbane-based Senex, said yesterday in a phone interview without disclosing any of the companies. “As far as a time frame, when the right deal comes along that’s best for our shareholders, we’ll execute.”
The Australian explorer holds stakes in four coal-seam gas permits in Queensland, where BG Group Plc, Santos Ltd. and a ConocoPhillips-Origin Energy Ltd. venture are building three liquefied natural gas projects for more than $60 billion to meet Asian demand. The Senex assets were valued at A$206 million ($211 million) in a Jan. 23 report from JPMorgan Chase & Co.
Those LNG projects, scheduled to begin production in 2014 and 2015, will need more gas to feed the processing plants on the Queensland coast, said Davies, former chief financial officer of Queensland Gas Co., which was acquired by BG in 2008.
While Royal Dutch Shell Plc and PetroChina Co., through their Arrow Energy venture, propose a fourth LNG development in Queensland, Shell said on Jan. 31 that it has slowed the pace of developing projects in the country amid rising costs.
Senex’s coal-seam gas campaign, in addition to boosting reserves, “will enhance BG/QGC and Shell/Arrow’s interest levels,” Daniel Butcher and Benjamin Wilson, Sydney-based analysts at JPMorgan, wrote in the Jan. 23 report.
The explorer will “seek to monetize” the Queensland business at the right time, it said in November. Senex’s partners in those permits include BG and Bow Energy Ltd., purchased in 2011 by Shell’s Arrow Energy, its website shows.
The company is also among shale gas explorers in the Cooper Basin, the outback region straddling the border of Queensland and South Australia states, and started a 12-well drilling campaign in December. Senex may bring in a partner to help develop those prospects, Davies reiterated.
Senex is a potential takeover target for companies including Shell, Santos or Exxon Mobil Corp., according to a December report from Citigroup Inc.’s hedge fund sales desk. The oil and gas explorer, added to Australia’s S&P/ASX 200 Index in April 2012, is valued in Sydney at A$730 million.
“When you look at the position we have in the Cooper, which is clearly a prolific oil- and gas-producing region, it makes perfect sense from a strategic point of view to consolidate assets one can bring to the market,” Davies said.