WestSide Corporation (ASX: WCL) has interests in coal seam gas projects, including the producing Meridian SeamGs project, in Queensland.
Shares in WestSide Corporation (ASX:WCL) jumped 8.5c after the company entered a conditional agreement to acquire Anglo American’s stake in the Dawson Seamgas coal seam gas assets, with a view to also stake claim in Mitsui Moura Investment’s interest in those assets.
Following this morning's announcement, the WestSide share price shot up 17.7% to 56.5c.
The proposed acquisition would result in WestSide acquiring a stake of up to 100% in the producing Dawson Seamgas CSG fields and up to 50% in two adjoining tenements.
The ultimate interests acquired will be determined following resolution of pre-emptive and other rights of participation held by the existing joint venture partners.
The producing Dawson Seamgas fields comprise a range of CSG assets including a petroleum lease, gas rights in mining leases and gas pipeline infrastructure connecting to the main Queensland commercial network.
These fields currently produce approximately 12 Terajoules of gas per day. The producing Dawson Seamgas field is currently owned by joint venture partners Anglo (51%) and Mitsui (49%).
The assets are located near Moura in central Queensland’s Bowen Basin and are adjacent to WestSide’s existing Paranui CSG project (ATP 769P).
WestSide chairman Angus Karoll said the transaction presented the company with a significant opportunity for further value creation through consolidation with the adjoining WestSide tenement. T
he Dawson Seamgas pipeline infrastructure has spare capacity to accommodate gas from both the Dawson Seamgas fields and from WestSide’s adjacent and highly prospective Paranui field (ATP 769P). Located adjacent to the Dawson Seamgas field, WestSide’s existing Paranui CSG project (ATP 769P) booked initial gas reserves of 135 PJ (3P) in June 2009 and an aggressive campaign is now underway to upgrade these reserves as a precursor to a
Mr Kroll said if successful, the transaction was expected to transform WestSide into the second largest ASX listed dedicated CSG producer in Queensland.
“The proposed investment has the potential to transform WestSide from an explorer only business to a significant CSG producer, with sales contracts in place and a portfolio of exploration projects in various stages of development," Mr Kroll said.
"Furthermore, access to Dawson Seamgas’ existing infrastructure has the potential to provide an accelerated route to market for our existing Paranui CSG project, reducing the need for construction of capital-intensive export compression and pipeline facilities.
“This transaction fits logically with our existing strategy of commercialising known gas assets, identifying and proving up new reserves and seeking new CSG opportunities.”
WestSide proposes to invest in the field to increase current production rates to meet the AGL contract rate. WestSide also believe there are significant resources yet to be certified which have the potential to increase the 2P and 3P reserves and also to convert 3P into 2P.
Co-development agreements with the coal mining lease holders will enable WestSide to extract and sell CSG from within the mining and petroleum areas. If coal mining activities impact on WestSide’s gas activities.