Queensland Gas Company (QGC) announced today it has downgraded its gas sales forecasts amid plans to focus on increasing its reserves for a liquefied natural gas (LNG) project with BG Group.
The news comes after the integrated energy company reported an interim net profit of $22.1 million for the six months to December 31, up from $1.7 million in the previous corresponding half.
The coal seam gas producer on Wednesday posted an interim profit of $22.1 million for the six months to December 31, 2007, compared to $1.7 million in the previous corresponding period.
QGC said this profit included an income tax benefit of $14.8 million.
Earnings before interest, tax, depreciation and amortisation rose sharply to $13.2 million as revenue grew to $35 million from $10.6 million.
"QGC’s published gas sales target for 2008 has been revised from 30 petajoules to 23 petajoules as part of the company’s reallocation of resources for the accelerated expansion," said the QGC in a statement.
The energy company said it would dramatically increase its commercial gas reserves of its Australian Onshore liquefied natural gas (LNG) project with partner BG Group.
"The alliance with BG Group will achieve LNG sales at double the price at which QGC currently sells its natural gas into the domestic market," QGC said.
QGC Managing director Richard Cottee said the company’s exploration program would be ramped up to meet its proven and probable gas reserve goals for the Australian Onshore project, which is set to ship LNG in 2013 from a terminal to be built in Queensland.
"We are committing ourselves to exploration goals which will see us realise significantly more value from our world-class acreage in the Surat Basin," said Mr Cottee.
"Our strategy will involve a record increase in the number of exploration wells drilled over the next two years as we prove up our contingent resources.”
"From recent experience we know that on average our wells have Australia’s best flow rates for coal seam gas."
According to Mr Cottee, QGC will continue to meet its domestic contracts for the supply of gas while focusing on its goal to enhance LNG production.
Personnel will also be boosted by hiring more geologists, geophysicists and reservoir engineers.
Mr Cottee said he expected QGC would drill more than 200 exploration wells over the next three years.
During the first half, QGC’s proved and probable gas reserves in the Surat Basin in Queensland increased to 1,317 PJ, up from 695 PJ.
In December 2007, the company entered a $292 million partnership with AGL.
AGL acquired a 27.5% stake in QGC and entered into a 20 year gas supply agreement with the company.
Shares in QGC fell by 0.94% or 4 cents to close at $4.21.
