26/10/2007 - 13:43

LNG to spin out Gas Link Global

26/10/2007 - 13:43

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West Perth-based Liquefied Natural Gas Ltd has announced plans to spin out subsidiary Gas Link Global Ltd after completing a capital restructure on the company and raising $7.5 million.

West Perth-based Liquefied Natural Gas Ltd has announced plans to spin out subsidiary Gas Link Global Ltd after completing a capital restructure on the company and raising $7.5 million.

 

The full text of a company announcement is pasted below

The Company's directors are pleased to announce that the Company has undertaken a restructure of it's formerly 100% owned subsidiary Gas Link Global Limited (GLG), comprising:

1. conversion of the Company's shareholder loan of ~$2.4 million to GLG, to 47 million shares in GLG;
2. capital injection of $2.5 million by the Company for the issues of 33 million shares in GLG; and
3. third party capital injection of $5 million for the issue of 50 million shares in GLG.

Following the restructure the Company will hold 100 million shares in GLG, representing 66.7% of the issued capital. GLG remains a strategic part of the Company's objective to secure direct influence or control over gas resources as potential feedstock for the development of liquefied natural gas (LNG) projects by the Company.

However, it is the Company's intention that GLG become self funding and hence, aside from the above capital raising, it is proposed for GLG to undertake an initial public offering of its shares on the Australian Stock Exchange in 2008, subject to equity market conditions at the time.

GLG's primary business activities include the identification, and selected investment in, existing gas discoveries and prospective gas acreage where the fundamentals support the potential commercialisation of the gas through
sale to markets accessible by existing or proposed gas pipelines and/or LNG production.

In addition, in the current energy environment, any oil or condensate commercial discoveries within the gas focused acreage should be able to be quickly brought to market and generate early cash flows.
GLG's activities have to date been focusing on Papua New Guinea (PNG) which contains a reported 17.3 trillion cubic feet (tcf) of gas resources; 660 million barrels (bbl) of oil and some 3.7 tcf in un-committed gas resources. GLG has secured three key assets:

  • Petroleum Retention Licence No. 10 "PRL 10" (GLG: 10% interest) offshore PNG. This licence contains the Uramu gas field with an estimated recoverable gas resource of 370 billion cubic feet (bcf). Oil Search Limited holds a 49.55% interest and Merrill Lynch Commodities (MLC) recently acquired a 40.45% interest from Woodside Petroleum Limited. GLG is evaluating plans to commercialise the Uramu gas through the proposed gas supply to a mid-scale LNG project in PNG. Liquefied Natural Gas Limited is evaluating both onshore and offshore LNG plant/vessel options, based on an aggregation of uncommitted gas reserves in PNG, including Uramu.
  • Petroleum Prospecting Licence No. 240 "PPL 240" (GLG: 10% interest) onshore PNG which includes the Korobosea-1 exploration well, with drilling having commenced on 22 Ocotber 2007. In the event of a gas discovery the estimated P50 recoverable gas resource of the Korobosea prospect is 414 bcf and in the event of an oil discovery the prospect has an estimated P50 oil potential of 96.5 million bbls. GLG proposes that any commercial gas discovery be aggregated with other gas discoveries in PNG for supply by gas pipeline, using the existing oil pipeline right of way to the coast, to Liquefied Natural Gas Limited's proposed PNG mid scale LNG project.The PRL 10 and PPL 240 interests are held through GLG's 100% acquisition of Gedd (PNG) Limited, in relation to which a Share Sale and Purchase Agreement has been signed and is awaiting relevant PNG Government approvals. Pending the obtaining of such approvals GLG has been funding the PRL 10 and PPL 240 joint venture cash calls via a loan to Gedd (PNG) limited.
  • 20% Shareholding in Papua Petroleum Limited (PPU) which holds a 100% interest in 4 Petroleum Prospecting Licences in PNG. PPU is well advanced in its negotiations with a major party to fund a seismic and drilling program via a farm-in to the 4 licences (Farm-In). Full details of the Farm-In will be made available on the signing of a definitive agreement. In addition, PPU is progressing a potential capital raising, through an initial public offering (IPO) of its shares on the Australian Stock Exchange (proposed ASX Code: "PPU"), to also assist fund the licences' work programs.
  • The 4 adjoining/contiguous PPU licenses are located in the Western Province/Foreland area of PNG and cover a total area of around 38,000 sq kilometres. The Western Province/Foreland area is relatively under explored, despite a relatively high discovery success rate of ~1 in 3.

    Pursuant to a Heads of Agreement with PPU, Liquefied Natural Gas Limited has the right to purchase gas from any commercial discovery made by PPU in relation to its 4 licences, delivered to the PNG coastline near Umuda Island, for either the development of a floating LNG production vessel or an on-shore LNG plant, which onshore plant would be likely to replicate Liquefied Natural Gas limited's proposed LNG plant at Gladstone, in Queensland, Australia.

    Refer to the attach map for the location of Gedd (PNG) Limited and PPU's licence interests and LNG plant, onshore and floating LNG production vessel, sites under consideration.

    Funds from GLG's $7.5 million capital injection will be applied to:

  • GLG's contribution towards the drilling of the Korobosea-1 exploration well - GLG's share ~A$ 3 million;
  • Retention of a strategic 20% shareholding in PPU via a contribution of up to A$3 million to PPU's proposed initial public offering on the Australian Stock Exchange, to raise at least A$15 million; and
  • Funding GLG's ongoing general working capital requirements, potential initial public offering costs and ongoing identification and investment in prospective gas exploration and production opportunities.
  • The $5m third party capital raising was managed by Western Australian based Australian Heritage Group.

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