East Coast gas players set to join forces
By Industry Queensland
Vintage Energy and Galilee Energy are planning a merger with the aim of creating a stronger, leaner player with more gas and cash to tap East Coast market demand.
The companies have signed a Heads of Agreement with key terms for a merger, to be executed by Vintage acquiring 100 per cent of Galilee via an all-scrip deal.
The combined group’s assets would include existing gas production, 2P reserves of about 50 PJ and long-term sales contracts plus the large unconventional Glenaras gas resource.
“There is a huge opportunity emerging in Australia’s east coast gas market,” Galilee executive chairman Ray Shorrocks said.
“This merger is aimed at enabling the combined companies and their shareholders to take full advantage of this looming gas shortfall and the impact that will have on gas prices, margins and free cashflow generation.
“It will also provide long-term growth potential and access to funding.”
Vintage’s Odin and Vali gas projects, already supplying gas under long-term contracts, will be advanced as a priority.
Related: Gas flow starts from Vali field
Vintage chairman Reg Nelson said the merger would create a company with much greater exposure to East Coast gas supply in the near and long term and a stronger balance sheet.
“For Vintage shareholders, it means their company will be better equipped to grow production and revenue from the appraisal of the Odin and Vali gas fields,” he said.
“In addition, our long-term prospects will be enhanced through addition of Galilee’s substantial gas resources.
“There is clear complementarity in the Vintage and Galilee acreage holdings. Their combination will result in a portfolio encompassing nearly all of the onshore sedimentary basins currently supplying, or expected to supply, gas to eastern Australia such as the Cooper, Bowen, Surat, Otway and Bonaparte Basins.
“We are looking forward to working with the Galilee team to take the Heads of Agreement to a scheme of arrangement for shareholder action at the earliest opportunity.”
Under the HoA, the merger conditions include Galilee completing a $2.5 million capital raising.
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