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QGC managing director Richard Cottee says the friendly takeover is a very good fit for both sets of shareholders.
“Sunshine Gas and Queensland Gas are enormously synergistic companies, so it was an enormous cultural fit,” Mr Cottee said.
“In fact, when we were in discussions with them I said the fantastic thing is, you are where we were three years ago and really, the game has changed, we see the super-majors starting to come into the game and we need to get that critical mass to enable them to do what we did with our growth acceleration strategy in 2006.
“We think they’ve got a fantastic future but they need to have the combined entity for us to be able to compete against the new gas market and electricity market as it’s coming on.”
By acquiring Sunshine Gas, QGC will boost its proved, probable and possible, or 3P, gas reserves to almost seven thousand petajoules. This will build momentum for QGC’s key domestic strategy – the development of cleaner gas-fired power stations in Queensland and New South Wales.
Generating low-emission electricity by using abundant gas from the Sunshine takeover will boost domestic gas competition and benefit the environment, as well as QGC shareholders.
“Gas-fired electricity emits around about 40 per cent of the CO2 that coal-fired electricity does and that’s on average,” Mr Cottee said.
“And they use 40 per cent of the water for the same amount (of power generated). If you’ve got a scarcity of water plus you’ve got a demand for clean fuel as you try to get a transition into a cleaner environment, the idea that you can use gas-fired electricity that is going to have such a low footprint is just so important, we think, to our shareholders and is part of the vision.
“That’s why in the total life cycle’s point of view we’re going to be way ahead.
“It’s a method by which we can ensure the best environmental outcome, the best community outcomes will occur and our shareholders are enriched. But you need to play it in a manner that is seamless across the vertical integration.”
Sunshine Gas has about 30,000 square kilometres of acreage spanning Queensland’s premier gas basins, the Bowen and Surat Basins. The acreage offers QGC an excellent opportunity to potentially increase existing reserves.
“If you look at the 10,000km2 that QGC has, it has taken us some eight years to get to where we are and we think that we’ll have a finality of that position sometime around 2013,” Mr Cottee said.
“We have built up an enviable reputation for knowing how to go about getting gas out of coal seams. We think that we’ll be able to develop this acreage quicker, on a per square kilometre basis, than we have with the QGC.”
Sunshine Gas voting directors are unanimously recommending the Queensland Gas offer. Sunshine is also commissioning an independent expert's report.
The Offer is also supported by the largest Sunshine shareholder, which has entered into a Pre Bid Acceptance Agreement with QGC in respect of 15 per cent of Sunshine’s issued capital.
“We believe that we’re paying quite a substantive premium to the Sunshine Gas shareholders but we think this is a classic equation where the combination of the two is worth more than the integral parts,” Mr Cottee said.
“This is a takeover that has been done by consent and with the full support of the Sunshine Gas board and of some of the major shareholders.
“It was very important to us to be able to show that words are cheap, actions important and so therefore getting that pre-bid agreement on the 15% from their major shareholder was also essential to show that the bid is a very serious bid and is set on solid ground.”
“Sunshine Gas and Queensland Gas are enormously synergistic companies, so it was an enormous cultural fit,” Mr Cottee said.
“In fact, when we were in discussions with them I said the fantastic thing is, you are where we were three years ago and really, the game has changed, we see the super-majors starting to come into the game and we need to get that critical mass to enable them to do what we did with our growth acceleration strategy in 2006.
“We think they’ve got a fantastic future but they need to have the combined entity for us to be able to compete against the new gas market and electricity market as it’s coming on.”
By acquiring Sunshine Gas, QGC will boost its proved, probable and possible, or 3P, gas reserves to almost seven thousand petajoules. This will build momentum for QGC’s key domestic strategy – the development of cleaner gas-fired power stations in Queensland and New South Wales.
Generating low-emission electricity by using abundant gas from the Sunshine takeover will boost domestic gas competition and benefit the environment, as well as QGC shareholders.
“Gas-fired electricity emits around about 40 per cent of the CO2 that coal-fired electricity does and that’s on average,” Mr Cottee said.
“And they use 40 per cent of the water for the same amount (of power generated). If you’ve got a scarcity of water plus you’ve got a demand for clean fuel as you try to get a transition into a cleaner environment, the idea that you can use gas-fired electricity that is going to have such a low footprint is just so important, we think, to our shareholders and is part of the vision.
“That’s why in the total life cycle’s point of view we’re going to be way ahead.
“It’s a method by which we can ensure the best environmental outcome, the best community outcomes will occur and our shareholders are enriched. But you need to play it in a manner that is seamless across the vertical integration.”
Sunshine Gas has about 30,000 square kilometres of acreage spanning Queensland’s premier gas basins, the Bowen and Surat Basins. The acreage offers QGC an excellent opportunity to potentially increase existing reserves.
“If you look at the 10,000km2 that QGC has, it has taken us some eight years to get to where we are and we think that we’ll have a finality of that position sometime around 2013,” Mr Cottee said.
“We have built up an enviable reputation for knowing how to go about getting gas out of coal seams. We think that we’ll be able to develop this acreage quicker, on a per square kilometre basis, than we have with the QGC.”
Sunshine Gas voting directors are unanimously recommending the Queensland Gas offer. Sunshine is also commissioning an independent expert's report.
The Offer is also supported by the largest Sunshine shareholder, which has entered into a Pre Bid Acceptance Agreement with QGC in respect of 15 per cent of Sunshine’s issued capital.
“We believe that we’re paying quite a substantive premium to the Sunshine Gas shareholders but we think this is a classic equation where the combination of the two is worth more than the integral parts,” Mr Cottee said.
“This is a takeover that has been done by consent and with the full support of the Sunshine Gas board and of some of the major shareholders.
“It was very important to us to be able to show that words are cheap, actions important and so therefore getting that pre-bid agreement on the 15% from their major shareholder was also essential to show that the bid is a very serious bid and is set on solid ground.”
