MacquarieCooper Energy paid a high price to buy Orbost gas plant...

Macquarie

Cooper Energy paid a high price to buy Orbost gas plant off APA Group, but its new debt leaves it in a better position for growth, according to Macquarie’s sell-side analysts.

In a note sent to clients on Thursday, Macquarie’s analysts said they were “negatively surprised” by Orbost’s $270 million to $330 million price tag, which they reckon was a high multiple on the average or normalised toll rate.

But owning Orbost would remove the tolls Cooper paid to APA and enable the Sole Gas project to earn $130 million to $150 million integrated EBITDA and improve free cash flow, they said.

The recap, which includes $200 million of new debt, would help Cooper pay for decommissioning BMG petroleum projects in Gippsland Basin and to work on Athena gas plant in Victoria’s Otway basin.

Capex guidance for both projects has increased: BMG to $150 million to $180 million and OP3D development at Athena to $165 million to $215 million. Macquarie also increased the likely gas contract price to $12 per gigajoule.

Macquarie added $200 million from exploration upside at Athena and Orbost, saying Athena had a high probability of success.

The Orbost plant was owned by APA Group and charged Cooper a fee to process its gas.

It has been undershooting its targeted gas processing rates of 68 TJs a day, and APA wrote down its book value by $249.3 million last year.Cooper’s set to shell out $270 million to $330 million cash for Orbost financed via a $244 million equity raise this week via Canaccord Genuity, Euroz Hartleys and RBC Capital Markets.