old article but worth reading AGL Energy says it will use funds...

old article but worth reading

AGL Energy says it will use funds from the sale of its stake in the ExxonMobil-led liquefied natural gas project in Papua New Guinea for a number of Babcock & Brown Power’s assets.

Speaking to reporters after the company’s annual general meeting yesterday, managing director Michael Fraser said proceeds of the sale would be directed towards the company’s core strategy, and in terms of its retail business several Babcock assets were desirable, Australian Associated Press reported.

“With respect to Babcock & Brown we don’t have an interest in all of their portfolio but there is certainly some assets that sit in that portfolio that would be of interest to us,” he said.

Fraser also said negotiations were continuing for the sale of the company’s 3.6% stake in the PNG LNG project and denied the sale process had been delayed.

He said the financial crisis had made negotiations more complex.

“We are in negotiations for the sale, and we will provide a further update to the market once that sale process is at a conclusion.”

Back in June, Dow Jones Newswires reported that JPMorgan analysts estimated AGL’s PNG assets were worth $975 million, with its oil and gas fields fetching $521 million and the 3.6% PNG LNG stake going for $454 million.

The sale is expected to be completed before December 31.

Yesterday the company maintained its guidance of achieving an underlying net profit of $360-390 million for the 12 months to June 30 and reported a solid fiscal 2009 first quarter.

The ExxonMobil-lead PNG LNG joint venture aims to build a two-train 6.3 million tonne per annum liquefaction plant near Port Moresby, with gas sourced from various Oil Search gas and oil fields in PNG.

Oil Search holds 34.1% of the project while other stakeholders in PNG LNG include Santos at 17.7%, AGL Energy 3.6% and Nippon Oil 1.8%. Landowner interests hold the remaining 1.2%.

These interests are subject to change once the PNG government steps on board the project (around 19.4%) and the gas interests have been fully calculated.

The final investment decision for the project is scheduled for late 2009.

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