Ann: MOU signed with Jemena for Mahalo North pipeline connection, page-14

COI and Jemena have executed an MoU and a pre-FEED agreement to build a new pipeline connection for COI’s Mahalo North Project into the domestic market. Jemena’s pedigree is arguably unrivalled in the industry, having developed Senex’s Atlas project in a little over one year. This agreement highlights Jemena’s desire to invest further in the east coast gas sector. The Jemena pipeline, expected to cater for more than 25 TJ/d, will be complementary to COI’s existing plans to feed an early 10 TJ/d of Mahalo North gas through Denison’s facilities. This Jemena pipeline could ultimately act as a vacuum for all gas in our base case 90TJ/d development, to be further connected into Jemena’s QGP or STO’s Gladstone pipeline. Maintain BUY, PT $0.42/sh (unchanged). Jemena enters the fold at MahaloCOI and Jemena have executed an MoU to facilitate a new gas pipeline from Mahalo North into the domestic market.Pipeline will be capable of transporting at least 25 TJ/d.Focus initially will be on supporting Mahalo North volumes, but the pipeline could provide for all fields in the Mahalo region. Pre-FEED will commence immediately.Environmental approvals and Petroleum Licence (PL) award is expected in Jun.Q ’24.First gas into the Jemena pipeline in Dec.Q ’25. First gas (10TJ/d) delivered into Denison plant will be approximately 12 months earlier.Positive industry developments for small capsIn Dec.Q ’22 the Federal Government introduced a price cap of A$12/GJ and a “reasonable pricing” provision.More recently, the Government confirmed that small developers/producers (i.e. COI) that supply the domestic market would be exempt.With Mahalo North set to supply the domestic market, we do not foresee any issues in COI contracting volumes.We think COI may look towards a prepayment from a major industry player to help fund early gas from Mahalo North.Competition from gas buyers is beginning to accelerate. Key Dates AheadOngoing – Gas contractingSep.Q’ 23 – FEED work on Denison tie-in2025 – Mahalo North first gas