Queensland Pacific Metals Ltd (ASX:QPM) today announced that its subsidiary, QPM Energy, has completed its acquisition of the Moranbah Project in the Northern Bowen Basin, which comprises 100% of the assets of the Moranbah Gas Project and the North Queensland Energy Joint Venture.
The acquisition of the project, which has been in production since 2004, transforms QPM into the sixth largest domestic gas producer on the ASX. It also provides a pathway to create a significant positive cash flow business that’s forecast to deliver positive earnings within the next 12 months.
Settlement proceeds of $30 million from the project vendors, Arrow Energy, marks the completion of the acquisition and allows for QPM’s transition to full operatorship of the gas production assets and electricity generation.
The settlement proceeds involve a QPM Energy payment of $5 million to Arrow Energy as consideration for the Moranbah Project assets; and QPM Energy receiving $35 million as consideration for assuming obligations to supply gas under the Moranbah Project contracts.
All key operating agreements and contracts have now been novated to QPM Energy, allowing for:
- the transfer of petroleum leases and associated gas reserves and resources to QPM Energy
- the transfer of ownership of the gas production assets to QPM Energy
- QPM Energy to receive gas sales revenue from Dyno Nobel and Copper Refineries Limited and electricity sales revenue from the Townsville Power Station
- QPM Energy to transport and store gas in the North Queensland Gas Pipeline; and
- QPM Energy to dispatch electricity produced by the Townsville Power Station directly into the National Electricity Market to earn electricity revenue.
- QPM also notes that the Dyno Nobel development funding facility, of up to an initial $80 million, can be drawn on to fund new production wells and grow gas production.
Importantly for QPM, the acquisition significantly de-risks its gas supply requirements for the Townsville Energy Chemicals Hub (TECH) Project, which will be a modern and sustainable battery materials refinery, boasting global-leading sustainability credentials for mineral processing, with negative carbon emissions, no tailings dam and no process liquids discharge.
The QPM Energy team, led by its CEO David Wrench who was involved with the original development of this project almost two decades ago, has developed detailed plans to enhance and re-invigorate the asset to create a pathway to generating positive earnings.
“We have been working hard during the period leading up to today’s completion to identify initiatives designed to improve the performance of the asset. Together with [contract operator, GR Production Services] and other stakeholders, we are now ready to implement them as quickly as possible,” Wrench said.
“Furthermore, the tailwinds we have received from Safeguard Mechanism reforms and the state of the Queensland electricity market, position QPM Energy well to significantly grow as a standalone business, whilst still meeting the needs of the TECH Project.”