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smh:qgc might be the problem

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    Qld Gas Company downgrades sales
    Email Print Normal font Large font March 5, 2008 - 3:33PM

    Queensland Gas Company Ltd (QGC) has downgraded its gas sales forecasts amid plans to focus on increasing its gas reserves for a liquefied natural gas (LNG) project with BG Group.

    It comes after 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.

    The result included a $14.8 million income tax benefit and was also boosted by a ramp up in production and sales of coal seam gas by the group.

    QGC, however, has downgraded its fiscal 2008 sales target from 30 petajoules (PJ) to 23 PJ as part of its reallocation of drill rigs and personnel for an exploration program to prove up additional reserves for the LNG project.

    "We will continue to meet our domestic contracts for the supply of gas while focusing on a longer lasting and more valuable benefit - the supply of LNG to overseas markets at twice the domestic price," QGC managing director Richard Cottee said in a statement.

    QGC formed an $870 million alliance with UK energy giant BG Group last month for the development of a liquefied natural gas (LNG) plant on the Queensland coast using coal seam gas as the feedstock.

    The project partners are aiming to have the 3 million to 4 million tonne plant exporting LNG by 2013.

    "Time is of the essence and that's why we are reallocating resources," Mr Cottee said.

    QGC, however, is competing against three other parties led by rivals Santos Ltd, Arrow Energy Ltd and Liquefied Natural Gas Ltd, which are all proposing separate LNG projects.

    Mr Cottee said it was unlikely that four LNG projects would go ahead and consolidation was inevitable.

    "We've always anticipated there will be a degree of consolidation," he said.

    "I think FID (final investment decision) is going to be one of the triggers (of consolidation) and clearly I think people will be watching very, very closely on how our reserves upgrade goes."

    QGC is aiming to make FID by the second quarter of 2010.

    The company delivered a gain in earnings before interest, taxes, depreciation and amortisation (EBITDA) to $13.2 million, compared to $800,000 in the previous corresponding period.

    Revenue climbed 230 per cent higher to $35 million, compared to $10.6 million in the previous corresponding half.

    QGC sold 10.6 PJ of gas during the half, compared to 4 PJ in the previous corresponding period.

    Shares in the company, which is 27.5 per cent owned by AGL Energy Ltd, dipped nine cents to $4.16 by 1511 AEDT Wednesday.

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