Senex Energy Limited reported Thursday that the company and GLNG have entered into a series of major agreements for the development of the Western Surat Gas Project in Queensland, Australia.
Commenting on the transaction, Senex Managing Director Ian Davies said the execution of the long-term agreements with GLNG’s participants, industry majors Santos, Total, PETRONAS and KOGAS, delivers a clear commercialization and financing pathway to enable Senex to proceed towards a Final Investment Decision (FID) for the Western Surat Gas Project. In addition, the bankable nature of the gas sales agreement (GSA) will enable project financing at FID.
“These transactions will deliver significant value to Senex through enabling an accelerated monetization of our material resource base. This is a natural relationship given our acreage sits adjacent to GLNG’s Roma fields. The provision of production and subsurface information from these operating fields together with close collaboration with GLNG will be hugely valuable to the efficient development of both projects,” he said.
Senex’s Western Surat Gas Project represents a near term opportunity to develop a major new revenue stream for Senex from a large 2P reserve base in a strategically located gas producing region.
“Even at current oil prices and exchange rates we expect the project to be economic, although there is further work to do to proceed to FID. This is a transformational deal for Senex and aligns with our strategy to capitalize on the strength of Australia’s East Coast gas market whilst maintaining our financial strength,” Davies said.
The following table summarizes the transactions, which are conditional on certain government approvals and GLNG participant approval. Completion of the transactions is expected by the end of 2015, pending government approvals.
- Sale of Maisey block and funding
- GLNG to acquire the Maisey block for $29.4 million (AUD 42 million) in cash
- GLNG to provide a suite of technical and operating data in respect of the Roma field of material value to Senex as it progresses to FID
- Cash to be deployed on Western Surat Gas Project expenditure
- Binding Heads of Agreement for GSA
- GSA for gas from the Western Surat Gas Project area over a 20-year contract term
- GSA provides for the staged ramp up in sales volumes to a maximum of 50 terajoules per day (TJ/day) following FID
- USD market pricing based on a JCC oil-linked formula
- Delivery of sales gas into the GLNG Comet Ridge to Wallumbilla Pipeline at a point on Senex’s permits, with the potential for shared use of existing GLNG infrastructure
- Ability to include Don Juan equity gas volumes at Senex’s option
- Ability to sell up to 15 percent of gas volumes to domestic gas customers
- Commercialization of pilot
- Raw gas sales and raw water disposal from Glenora Pilot agreed in principle to enable early gas sales
- GLNG to provide production data to Senex to de-risk accelerated project development
- Collaboration between GLNG and Senex on data and standards
- Potential shared use of existing GLNG water treatment and gas processing infrastructure
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