AGL Energy’s move to buy explorer Mosaic Oil NL for around $130 million for a big hole in Queensland will succeed.
AGL wants Mosaic not for its exploration interests (which could be sold off), but for its exhausted Silver Springs gas field in Queensland which will be prepared as an underground gas storage for AGL next year.
AGL starts taking delivery of increasing quantities of gas from central Queensland coal seam gas producers, especially Queensland Gas.
According to reports at the start of this month, when AGL first bid for Mosaic, AGL has also struck a gas storage deal with BG Group (which controls Qld Gas), conditional on acquiring Mosaic.
Under the storage deal, AGL will pay for the development of a storage facility at the Silver Springs gas fields in the Surat Basin of Queensland.
BG will store coal seam gas at the facility for its proposed LNG project at Gladstone. The coal seam gas will mix with other gas in the storage facility, and AGL will access the stored gas and provide BG with replacement coal seam gas from its Berwyndale field when needed.
Mosaic’s board yesterday said it is recommending the AGL offer unanimously.
Under a scheme of arrangement, AGL is offering 15c per share or 1.01 AGL shares for every 100 fully paid Mosaic shares.
Mosaic shares were trading at 14.5c, up one cent; AGL shares were 2c lower at $14.84.
Under the agreement, Mosaic can hold talks and consider competing proposals until August 4, after which customary exclusivity provisions will apply.
Mosaic chairman, David Herlihy, said the AGL offer adequately reflected the value of the portfolio of oil and gas assets Mosaic has put together over several years.
"Further, Mosaic shareholders may be eligible for capital gains tax rollover relief if they choose the AGL scrip alternative," he said.
Mr Herlihy said all Mosaic directors would vote in favour of the scheme, in the absence of a superior proposal and subject to independent expert approval.
An information booklet will be sent to Mosaic shareholders in early September, with a shareholder meeting expected to take place in October.
And still in the Queensland coal and gas industries, Linc Energy shares jumped yesterday when it updated the market on its long and sometimes tortuous sale of its marginal coal interest in Queensland.
Linc told the market that it is in detailed talks with several parties about buying the coal tenements in Queensland.
Linc Energy shares were up 33c, or more than 31%, at $1.38 at the close yesterday.
The stock earlier hit a day’s high of $1.415.
Linc said in the statement that it was in detailed negotiations with potential buyers of its assets following an article in The Economic Times of India, which claimed Linc Energy was about to sell one of the assets.
"These negotiations remain commercial in confidence," Linc Energy said.
"Linc Energy confirms at this stage it has not concluded any binding contract or finalised any material terms with any party.
"Linc Energy will immediately advise the market should this position change."
