Malcolm Turnbull’s focus on the domestic gas market has sparked speculation that a number of junior players in Australia could soon stir up some merger and acquisition activity.
Under the new plans, the Coalition will regulate gas exports from January 1, and put in place restrictions that will stop liquefied natural gas projects taking gas from the domestic market in order to meet long-term contract commitments. The measure is aimed squarely at Santos and its Gorgon LNG plant, which will be stopped from exporting the amount of gas that equates to any gas shortfall locally.
As part of the “Australia First” plan, the government will also move to scrap the limited merits review process, which Mr Turnbull said had been “taken advantage” of by energy companies and had cost consumers an extra $6.5 billion in electricity bills.
On the corporate front, three gas juniors are thought to be increasingly under the radar of an acquisition hungry buyer.
Comet Ridge and Blue Energy are expected to be front and centre, alongside Cooper Energy, because the trio of companies own uncontracted gas, which is hot property right now.
Comet Ridge owns coal-seam gas projects in Bowen and Galilee Basins in central Queensland as well as Gunnedah Basin in northern NSW.
Blue Energy, chaired by former Santos chief executive John Ellice-Flint, currently has gas projects in the Bowen, Maryborough and Surat basins.
Under the government’s plans, gas exporters cannot buy an existing gas producer to prevent it exporting more than it sells locally.
However, the Department of Industry and Resources has revealed exporters would be allowed to pick up companies with projects in the upstream development pipeline but are yet to come online.
Several potential buyers’ names are doing the rounds right now especially as the Lattice Energy transaction heads towards the final point.
Senex and Fosun are in the hunt for Lattice, advised by Rothschild, but could easily turn their attention to other gas players if they miss out.
BUL Price at posting:
6.6¢ Sentiment: Buy Disclosure: Held
