BG Group is set to buy Australian coalbed methane leader Queensland Gas Company (QGC) in a friendly offer worth A$5 billion (US$3.1 billion), according to reports.
The deal, the latest in the rapid consolidation of Australia’s booming CBM sector, could be announced as early as today, the Australian Financial Review (AFR) reported.
Energy retailer AGL, QGC’s biggest single shareholder, is reported to have sold its 24.9% stake in the Brisbane-based producer to BG. The stake will be added to BG’s existing 9.9% stake in QGC, acquired as part of a partnership struck earlier this year to co-operate on a liquefied natural gas project in Queensland.
The combined stakes in QGC would trigger a mandatory takeover bid by BG for the company, a report in London’s Financial Times said.
The deal was expected to include an offer of A$5.45 per share in cash for QGC, the AFR reported, valuing the offer at about A$5 billion. QGC was reported to be trading at A$3.20 before trading was halted in the share on Friday, valuing the company at about A$3 billion.
According to the paper, the agreement includes a commitment by QGC to supply CBM gas to boost AGL’s domestic supplies.
BG and QGC have already agreed to develop a CBM-fuelled LNG plant at Gladstone on the Queensland coast, with BG taking a stake in QGC’s CBM reserves.
Last month BG abandoned a bid for Australian integrated group Origin after that company struck a deal with US supermajor ConocoPhillips to develop and even larger LNG plant at Gladstone.
QGC has also recently snapped up Queensland rival Roma Petroleum and is seeking to buy Sunshine Gas, another local player.
Meanwhile, Santos in partnership with Malaysian state giant Petronas, as well as Arrow Energy and LNG Ltd, are both pursuing their own LNG projects, all targeting Gladstone and all to be fed by the emerging Quieensland CBM plays.
The deal will be scrutinised by Australia’s Foreign Investment Review Board. There has already been talk that BG’s original deal with QGC may need to be rejigged to keep regulators happy.