Private company Coogee Chemicals is close to finalising its biggest deal, the $250 million development of the Montara oil field in the Timor Sea.
Private company Coogee Chemicals is close to finalising its biggest deal, the $250 million development of the Montara oil field in the Timor Sea.
Coogee is best known for its interests in the chemical manufacturing industry but has substantially expanded its oil and gas interests over the past year.
Its chairman and major shareholder, Gordon Martin, said the company was in the process of selling a 50 per cent interest in the Montara project to spread the risk and lighten the financial load of the development.
Speaking at a joint CEDA-University of Western Australia business lunch last week, he said Coogee had invited six companies to lodge final bids by the end of September.
To prepare for the Montara development Coogee has already purchased a 175,000 tonne oil tanker that will be converted to a floating production, storage and offtake (FPSO) vessel.
In the medium to long-term, Coogee also aims to commercialise an innovative floating ‘gas-to-liquids’ technology first developed by BHP Billiton.
The planned Montara development follows last year’s purchase of the Australian oil and gas assets of US company Newfield Exploration.
These assets included 50 per cent of Montara, which was already half-owned by Coogee.
Mr Martin said the field had estimated reserves of 25 million barrels of oil.
Coogee also purchased 50 per cent of the producing Jabiru and Challis oil fields. Mr Martin said Jabiru and Challis, which were operated by group subsidiary Coogee Resources, had paid off in spades.
“At these oil prices, they are great fields, they are fantastic,” he said.
Jabiru and Challis are both described as “late life” fields but Mr Martin said that, with Coogee’s low cost base, they would still be producing in five years.
He said the main value in the Newfield acquisition was getting “a low cost operating team” of about 130 experts.
Mr Martin said there were plenty of opportunities in the oil and gas sector for smaller players able to operate on a low cost base.
“Most of the players are majors and their costs are considerably above ours,” he said.
The long-term plan to develop a floating ‘gas to liquids’ production facility would use technology acquired by Coogee and its minority partner, Melbourne company Mogal Marine, in 2000.
The technology involves a compact floating methanol plant that could be used to develop ‘stranded’ gas resources, which are either too small or too far from shore to justify building a pipeline.
BHP Billiton invested approximately $80 million in the technology before deciding to sell it.
Coogee Resources’ executive manager oil and gas Andy Jacob confirmed that the group would try to commercialise the gas remaining after extraction of Montara’s oil.
“There will be gas left and we will be looking to monetise that gas resource,” Mr Jacob said.
“The methanol technology is one of the options.”
He said the selection of a preferred development partner for Montara would be based on both financial and cultural factors.
He said the amount of equity to be sold could be greater than 50 per cent, depending on the value placed on the project by the short-listed bidders.
The Coogee group is one of Western Australia’s leading private companies, with total assets of $160 million and turnover of approximately $200 million.
It manufactures inorganic chemicals at 10 sites in Australia and Malaysia and owns and operates tank terminals at Kwinana, Port Hedland and Townsville.
• Next week: Coogee chairman Gordon Martin talks about his business lessons.
