A SMALL Sydney company has become the unlikely home for two well-known faces from the Perth business scene.
A SMALL Sydney company has become the unlikely home for two well-known faces from the Perth business scene.
Former Deloitte Touche Tohmatsu chief executive Domenic Martino and former ASIC executive Bruce Butcher are now running Sydney Gas, a small company with enormous growth prospects.
Mr Martino initially joined the company as part-time chairman but, since resigning from Deloitte early this year amid controversy over his role in failed telco New Tel, has worked full time for Sydney Gas.
For Dr Butcher, joining Sydney Gas provided an opportunity to put into practice the regulatory and corporate governance knowledge he built up at ASIC.
As chief executive, Dr Butcher was back in Perth this month promoting a $15 million capital raising, which he hopes will add to Sydney Gas’ already large WA shareholder base.
The company has come a long way since being established by Perth entrepreneur John Towner, who attracted many ‘day traders’ to the stock in its early years.
Mr Towner’s masterstroke was to buy leases over the extensive coal seam methane deposits surrounding Sydney.
Dr Butcher came on board to help the company exploit that opportunity in a commercially sustainable manner.
Sydney Gas has made substantial progress over the past two years, going from an exploration stock to being the first commercial gas producer in NSW.
The company has won strong backing from the NSW Government, which is keen to reduce NSW’s reliance on interstate gas from South Australia and Bass Strait.
Sydney Gas also has strengthened its board and management, with the latest addition being the appointment of former Woodside chief financial officer Robert Carroll as a non-executive director.
Having run a pilot plant at Camden, south of Sydney, for the past two years, the company is now moving to full commercial production.
“Our aim is to get 100 wells in place and in production by Christmas,” Dr Butcher said.
The company is also building a second gas plant and a high-pressure pipeline to connect the plant to AGL’s main transmission line, just 500 metres away.
Over the next seven years the company aims to be producing about 30 petajoules per annum from 300 wells in Camden and up to 40 petajoules per annum from wells in the Hunter region, north of Sydney.
The minimal transport costs between the gas reserves and the Sydney market is one of the company’s competitive strengths.
It already has two 10-year gas sales contracts to sell up to 14.5 petajoules of gas to AGL, delivering annual revenue of between $40 million and $45 million.
These contracts represent almost eight per cent of the NSW gas market and Dr Butcher expects the market to expand as extra supplies come on stream.
“There are lots of industries that aren’t in NSW because they don’t have large enough supplies of gas,” he said.
In the longer term, Dr Butcher expects the company will be able to sell direct to electricity producers and industrial customers. He is also confident the company has overcome the technical risks surrounding coal seam methane production.
“We have addressed the reasons for previous failures around the world,” Dr Butcher said.
Westpac’s decision to provide a $28 million funding facility was an important milestone in the company’s improving market recognition, he said.
