Australia: Energy sector update: September 2013 edition

Recent announcements

On 22 August 2013, ASX-listed Dart Energy announced an update to its ongoing business restructuring. Dart Energy has announced that its main focus will be to progress Scottish CSG projects to development, as well as to continue exploration activities in relation to shale gas in the rest of the United Kingdom. Dart Energy intends to exit, relinquish, sell or farm-out of assets which do not align with the company's new focus, and that it will only retain several high prospect projects which entail low operating costs. In relation to Dart Energy's Australian assets, the company has noted that due to the current New South Wales Government policy, the near term prospects for CSG development of the licences it holds have been materially adversely affected. Dart Energy intends to retain its Australian assets but on a care and maintenance basis without any field activities planned. Dart has also announced that it is continuing discussions with unnamed parties regarding potential sales or farm-outs of its non-core assets in countries including Australia.

ASX-listed Senex Energy announced on 19 August 2013 that it has reached agreement with the South Australian Government for a 15 year petroleum retention licence scheme covering approximately 10,000 square kilometres of its oil exploration permits located in South Australia's Cooper-Eromanga Basin. Under the scheme, Senex will be able to convert its petroleum exploration licences to more secure petroleum retention leases, replacing expenditure obligations specific to each tenure with a combined, portfolio-wide exploration and appraisal expenditure target of approximately A$30 million annually, net to Senex. Petroleum retention leases granted under the scheme will be for an initial term of five years, with the opportunity of two additional terms of five years each.

On 6 August 2013, ASX-listed Blue Energy announced it has entered into a binding term sheet with Australian Oil and Gas in relation to nine large exploration blocks in the Northern Territory's Wiso Basin, located northeast of Alice Springs. The nine contiguous blocks cover a combined 111,887 square kilometres in area, with conventional and unconventional oil and gas potential. Under the proposed three-stage farm-in agreement, Blue Energy will earn a 50% equity interest in each of the nine permits by making an undisclosed upfront cash payment to cover costs already incurred by Australian Oil and Gas, in addition to funding work programs across the three stages. At the commencement of the farm-in, Blue Energy will become operator of the permits.

ASX-listed Ambassador Oil and Gas announced on 5 August 2013 that it has entered into a binding heads of agreement with Outback Energy Hunter to negotiate a farm-out of a 70% interest in PEL 570, located in South Australia's Cooper Basin. Under the agreement, Outback Energy Hunter will cover all exploration-associated costs for the first five year term of PEL 570, capped at A$50 million. The work program includes the acquisition of 500 square kilometres of 3D seismic and the drilling of three wells. The farm-out will be conditional on Outback Energy Hunter subscribing for a number of shares in Ambassador equal to the number of Ambassador's listed options that have not been exercised by their expiry date in October 2013 (capped at 36.5 million shares or A$9.1 million). PEL 570 has an identified gas in place potential of up to 20 Tcf in coal seams, tight rocks and shale.

On 22 July 2013, ASX-listed MEO Australia announced that its wholly owned subsidiary Drysdale Offshore Exploration has executed a binding farm-out agreement with Origin Energy's wholly owned subsidiary Origin Energy Resources in relation to WA-454-P. Under the agreement, Origin Energy will acquire a 50% interest in WA-454-P and become operator by reimbursing Drysdale A$5.6 million for costs already expended, as well as funding 80% of the drilling costs for an exploration well on the Breakwater-1 prospect. These drilling costs have been capped at A$35 million, with any expenses over this amount to be borne equally by both parties. The agreement is conditional on Australian regulatory approval being obtained, as well as the finalisation of a joint operating agreement.

On 16 August 2013, Finder Exploration announced it has entered into a farmout agreement with Shell Development (Australia) for AC/P 52 located in the Northern Browse Basin. Under the agreement, Shell Development will earn a 50% interest in AC/P 52 by making an undisclosed cash payment in addition to funding part of the drilling costs for the Cronus-1 exploration well, capped at an agreed cost. Following the receipt of required government approval, the remaining interest in AC/P 52 will be held by Finder Exploration (with a 20% interest) and Sasol Australia Petroleum (with a 30% interest).

ASX-listed Buru Energy announced on 8 August 2013 that it has secured a funding package in excess of A$100 million. This funding will be used to progress the development of the Ungani Oilfield to production, to complete an appraisal program of the Laurel Wet Gas Project, and to recommence active seismic and drilling exploration programs for conventional oil prospects. Mitsubishi Corporation will contribute up to A$27.5 million of this funding package towards drilling of the Ungani Oilfield, while Alcoa will contribute A$20 million for the Laurel Wet Gas appraisal from the release of funds held on escrow. Buru Energy also announced that it has secured a state-ofthe-art Huisman LOC 400 drilling rig to support its long term drilling program in the Canning Basin, which is expected to become available by the end of 2013.

Recently completed deals

ASX-listed Planet Gas announced on 19 July 2013 that is has obtained all required regulatory and government approvals in relation to its agreement with ASX-listed Senex Energy for future exploration of PEL 514 located in South Australia's Cooper Basin. Under the agreement, Senex has acquired a further 10% interest in PEL 514 North and a further 30% interest in PEL 514 South by paying A$5 million to Planet Gas, as well as committing to fund Planet Gas' A$9 million share of oil exploration. Senex will also pay Planet Gas a 2% royalty on oil produced from PEL 514, capped at A$7.5 million, as well as additional cash payments of up to A$10 million if 12 million barrels of 2P oil reserves in PEL 514 are certified. Following the completion of this transaction, Senex's total interest in PEL 514 will increase to 80%.

On 25 July 2013, EnergyAustralia announced it has entered into a sale and purchase agreement with the State of New South Wales and Delta Electricity to acquire the Mt Piper Power Station (1,400 MW) and the Wallerawang Power Station (1,000 MW) for a net cash consideration of A$160 million. In 2011, EnergyAustralia entered into GenTrader Agreements with Delta Electricity under which it pays high, fixed costs for the right to trade the power stations' output. EnergyAustralia's Managing Director Richard McIndoe said the purchase of the power stations will relieve the company of the current high, fixed costs and with unrestricted access to the full combined capacity of the power stations, will enable EnergyAustralia to operate the stations more flexibly. The total purchase price of the power stations includes an additional A$315 million, representing the balance of prepaid charges on deposit with the New South Wales Government as part of the GenTrader Agreements.

Market rumours and opportunities

According to the Australian Financial Review, ASX-listed AGL Energy and ASXlisted ERM Power Limited are the frontrunners in the sale of the New South Wales state-owned electricity generator Macquarie Generation. Further to our story in the August 2013 edition of the Australian Energy Sector Update, New South Wales Treasurer Mike Baird called for expressions of interest for two of Macquarie Generation's coal-fired power stations, Liddell and Bayswater. Reportedly, RATCH-Australia, GDF SUEZ Australian Energy and Alinta are also among the potential bidders, while Origin Energy and EnergyAustralia are reportedly unlikely to take part in the sale process. According to The Australian, the New South Wales Government is anticipating to receive in excess of A$2 billion from the sale.

Following the proposal put forward in mid July 2013 by ASX-listed APA Group to acquire all of ASX-listed Envestra Limited's shares by scheme of arrangement, the Australian Financial Review has reported that APA Group is likely to hold off on any further proposals until after announcing its fullyear results. APA Group already owns 33% of Envestra's shares and operates Envestra's gas distribution networks and pipelines under a long term operating and management agreement. On 5 August 2013, Envestra announced it would not proceed with APA Group's proposal for several reasons, including that it undervalued Envestra's shares.

Following an investor update on 2 August 2013 by UIL Energy, the Australian Financial Review has reported that the company is intending to list on the ASX in November 2013 with a A$20 million float. UIL Energy has announced Bell Potter and Ord Minnett as joint lead managers, while BizzellCapital Partners has been appointed as corporate advisor. Reportedly, a prospectus is due to be lodged by October 2013.

According to The Australian, ASX-listed Beach Energy is reportedly believed to be considering a takeover after recently securing a A$320 million debt facility. Mergermarket has reported that ASX-listed companies including Senex Energy, Icon Energy, Drillsearch and Cooper Energy all represent logical choices for takeover targets.

Regulatory updates


The Energy Efficiency Opportunities Amendment (Assessments and Reporting) Regulation 2013 (Cth) commenced on 7 August 2013 and amends the Energy Efficiency Opportunities Regulations 2006 (Cth). The Regulation was implemented following an independent evaluation of the Energy Efficiency Opportunities program, which requires organisations that use over 0.5 PJ of energy annually to identify, evaluate and implement costeffective energy saving opportunities. Specifically, the Regulation allows more use of an organisation's existing systems and processes that achieve the same outcomes as the assessment framework. Further, the Regulation also reduces the information required in public and government reports, allowing organisations to use data already reported through the national greenhouse energy reporting scheme.


Commencing on 9 August 2013, the Carbon Credits (Carbon Farming Initiative) Amendment (Additionality Test and Other Measures) Regulation 2013 (Cth) amends the Carbon Credits (Carbon Farming Initiative) Regulations 2011 (Cth) to facilitate the implementation and administration of the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth). The Regulation inserts additional projects that can generate Kyoto Australian carbon credit units, such as grazing land management, cropland management, and revegetation. Further, the Regulation also includes new abatement activities that are eligible to earn carbon credits under the Carbon Farming Initiative.


The National Gas (South Australia) (Gas Trading Exchanges) Amendment Bill 2013 (SA) proposes to amend the National Gas (South Australia) Act 2008 (SA) by inserting a new gas trading exchange provision detailing the Australian Energy Market Operator's gas trading exchange functions. The proposed functions include establishing, operating and administering gas trading exchanges in accordance with rules made by the South Australian Minister. The Bill provides that a gas trading exchange is not a regulated gas market.

Other news


On 31 July 2013, the Australian Resources and Energy Minister and the Climate Change Minister announced that construction of a A$450 million, 155 MW solar project in New South Wales is to commence in January 2014, after the Australian Renewable Energy Agency executed a funding agreement with ASXlisted AGL Energy Limited. AGL and solar developer First Solar will construct a solar power plant near Nyngan (102MW) and another near Broken Hill (53MW). The Australian Renewable Energy Agency will invest A$166.7 million in the projects, as well as a further A$40.7 million into the Education Investment Fund to enable the University of Queensland and the University of New South Wales to undertake research on solar power. The New South Wales Government has also committed A$64.9 million to the projects.


The Queensland Department of Natural Resources and Mines has released for public comment a discussion paper summarising the legislation governing strategic cropping land and the issues raised during the legislation's implementation. The Queensland Government is reviewing the legislation to evaluate and improve the effectiveness of the strategic cropping land framework, align it with regional planning processes and to protect priority agricultural land. The Government is seeking feedback from key stakeholders in the agriculture and resources sectors, local councils and the development industry, with comments on the discussion paper due by 9 September 2013. A copy of the discussion paper can be viewed here.


On 2 August 2013, Federal Resources Minister Gary Gray announced that conditions on five Browse retention leases held by the Browse Joint Venture will be varied to allow for timely development and commercialisation of the gas resources. The Browse Joint Venture has previously indicated that it did not consider development of James Price Point to be commercially viable and with the variation to its retention leases, the JV participants can now evaluate alternative development concepts and progress related design and engineering work. Minister Gray noted that the variation decision restored the Browse retention leases to ones consistent with other Commonwealth leases and that the revised conditions do not specify any particular development concept in line with the Government's policy that this should be a commercial decision.


The Western Australian Legislative Council Standing Committee on Environment and Public Affairs has announced that it will commence an inquiry into hydraulic fracturing for unconventional gas, which will be the first inquiry of its kind in Australia. The Committee will report on how fraccing may impact land uses, the regulation of fraccing chemicals, the use of ground water during fraccing, and the rehabilitation of land that has been used for fraccing. With potential development of shale reserves in the Perth and Canning Basins, the outcome of the inquiry will be significant for Western Australia. The Committee's Chairman has stated that the inquiry could take up to two years to complete. Comments on the inquiry are due by 20 September 2013.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Most awarded firm and Australian deal of the year
Australasian Legal Business Awards
Employer of Choice for Women
Equal Opportunity for Women
in the Workplace (EOWA)

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions