At a time when eastern Australia faces the prospect of a gas supply shortage, Cooper Energy’s commitment to deliver new gas into the domestic market by mid-2019 makes for good news.

The gas will come from the Australian company’s Sole gas field off the coast of Victoria. It’s currently being developed as part of a $605 million project being undertaken by Cooper Energy together with Australia’s APA Group – the onshore works of $250 million to be undertaken by APA and the $355 million of offshore works to be undertaken by Cooper Energy.

“Every day you pick up the newspaper at the moment and see an article about the gas industry in eastern Australia and how supply is tight,” CEO of Cooper Energy David Maxwell says. “The Sole Gas Project is part of the solution.”

Set to produce 24 petajoules (PJ) a year, Sole will supply about 12 per cent of Victoria’s gas demand. In addition, it will contribute 800 jobs to the Australian economy, mainly in Victoria. Take into account the multiplier effect across the economy, Maxwell says, and that’s “reasonably significant”.

Thinking big

Funding the offshore component of the project took more than nine months in the planning. Ultimately, Cooper Energy raised about $135 million in equity. The remaining $250 million, however, was secured by way of a reserved-base lending (RBL) facility provided by a syndicate of five domestic and international banks, including NAB. According to NAB Commodities & Export Finance Director Con Michaelidis, the senior secured facility offered a number of advantages including competitive loan pricing and a flexible revolving financing structure.

As Michaelidis notes, this allows Cooper Energy to adapt to changes in oil and gas prices as well as changes in their hydrocarbon reserves in the ground. “It means they’re able to upsize their facility, which is great for a company like Cooper, which has ambitions to be a supplier to the east coast gas market.”

Cooper Energy’s CFO, Virginia Suttell, also points to the relationships it provides. The company hadn’t had a working relationship with NAB or a number of the other banks prior to this deal. “Everybody is engaged with Cooper Energy, invested in the growth of Cooper Energy, so we consider that to be a good outcome,” Suttell says. “We’ve achieved what we wanted to achieve, which was the funding, but we’ve also set ourselves up for future growth with the relationships we’ve established.”

A win-win for Australia

Critical to the financing were the Sole gas offtake contracts Cooper Energy managed to negotiate with four investment grade customers: AGL, EnergyAustralia, Alinta Energy and O-I Glass – Australia’s largest glass packaging manufacturer.

In fact the contracts represent a win-win all round. For Cooper Energy, they allowed them to secure their much-needed funding. For the four manufacturers and electricity generators – all of them domestic – they will help them meet their medium and long-term gas supply needs, and in turn the energy needs of communities around Australia.

The future looks bright

It’s understandable that Cooper Energy is focused on future opportunities. “With Cooper Energy coming towards the end of delivering the Sole project, we’re now looking to add additional projects for gas supply into eastern Australia, consistent with our strategy,” Maxwell says.

Not only does the company have assets and opportunities to grow beyond Sole in the offshore Gippsland Basin, the same is true of the offshore Otway Basin at Port Campbell. “So we’ve got a lot of opportunities to grow from assets within the existing portfolio.”

On track for mid-2019

In the meantime, it’s a matter of focusing on getting the current job done. Already, the Sole project is more than three-quarters of the way there. However, Cooper Energy isn’t celebrating just yet.

“The project as of end of October was 81 per cent complete, on schedule and within budget, which is a rare feat for an offshore project,” Maxwell says, “but we’re not congratulating ourselves until we’re finished.”