Santos increases strategic coal seam gas position in Gunnedah Basin
Australian oil and gas exploration and production company Santos has announced the next major step in its Australian coal seam gas (CSG) strategy with the acquisition of significant additional acreage in the Gunnedah Basin in northern New South Wales and an investment in leading local CSG company, Eastern Star Gas Limited (ESG).
Key elements of the $476M transaction include:
the acquisition by Santos of Gastar Exploration Limited’s 35% interest in various Gunnedah Basin exploration permits and production areas operated by ESG for $300M;
the acquisition by Santos of a 19.99% interest in ESG from Hillgrove Resources Limited for $176M.
Santos and ESG’s combination of operated CSG permits in the Gunnedah Basin will cover a total area of around 63,000 square kilometres. The resource potential of this area is estimated to exceed 50 trillion cubic feet. The combination will consolidate the leadership position of both Santos and ESG among the 15 companies active in CSG acreage in NSW.
Santos chief executive David Knox said: “This is a significant step in our Gunnedah Basin strategy. Combining the proven CSG expertise of Santos and Eastern Star with the ability of Santos to deliver major projects and develop various channels to market will advance the region’s potential as Australia’s next major CSG province – bringing jobs and investment to the area.”
Mr Knox said the development of NSW’s abundant coal seam gas resources presented an exciting opportunity to deliver “carbon light” gas fired power generation.
ESG’s chief executive David Casey said: “We are excited to welcome one of Australia’s largest CSG players as a joint venture partner and strategic shareholder in what is a major milestone for ESG.
"We have said before that ESG is market constrained rather than resource constrained – we expect that this transaction will play a key part in removing that constraint and unlocking value for both parties.”
