Under the terms of the HoA, the two companies have agreed to exclusively negotiate APA’s acquisition, upgrade and operation of the Orbost Gas Processing Plant in Victoria in conjunction with Cooper’s development of the offshore Sole Gas Field.
The transaction basis to be finalised will include the following elements:
- APA will acquire the Orbost Gas Processing Plant from Cooper Energy for an amount reflecting Cooper’s expenditure on the Plant in respect of the Sole Gas Project;
- APA will fund all capital expenditure associated with the expansion and upgrade of the plant to process natural gas from the Sole Gas Project. Capital expenditure for the upgrade will be approximately $250 million.
- Cooper will fund all capital expenditure associated with the offshore development of the Sole Gas Project, including all drilling activities, subsea infrastructure, offshore pipeline and the associated shore crossing, anticipated to be approximately $335 million.
- APA and Cooper will enter into a Gas Processing Agreement for the processing of gas and delivery of gas to market; and,
- A series of associated agreements will facilitate cooperation between the parties during the construction and development of the Orbost Plant and the Sole Gas Project and their ongoing operation.
The HoA has been welcomed by the leadership teams of both companies, who are excited to develop more gas resources for the east coast market.
“APA has been seeking opportunities to fund and develop new projects in the midstream infrastructure sector,” said APA Group Managing Director and CEO Mick McCormack.
“Acquisition and development of the Orbost Gas Processing Plant represents a significant opportunity for APA to expand this aspect of its business.”
Cooper Energy Managing Director David Maxwell said “We are delighted to join with APA in the Heads of Agreement, which adds further momentum to the Sole Gas Project and its passage to Final Investment Decision.”
The HoA provides for Cooper to work exclusively with APA until the end of April 2017 to finalise and execute binding documentation to implement the transaction.
During this period, Cooper will seek to finalise its funding arrangements for the development of the Sole Gas Field.