It told the ASX this morning that its year’s gas sales totalled 3.35 petajoules, about 7.5% ahead of forecast. This was driven by a stronger-than-forecast production build-up, with gas sales consistently above nominated quantities.
CH4 also reported an increase in 1P reserves - from 5 PJ to over 69 PJ, including 35 PJ of Proved, Developed and Producing reserves. (All estimates are based on CH4’s 505 share of the Moranbah Gas Project. The other partner is BHP.)
Chief executive Louis Rozman said the maiden profit was a pleasing result that exceeded expectations for CH4 and the company was now set for growth.
“We are well positioned to service the Townsville and Gladstone markets, the two fastest growing industrial regions in Australia, and continue to see opportunities for further growth," Rozman said.
The 400MW base-load Townsville South power station project had been upgraded to Significant Project Status by the Queensland government and a station this size would use about 20 PJ a year.
The Moranbah-Gladstone pipeline had also been granted Significant Project Status by the Queensland government.
“The reserve upgrade ensures we have a solid reserve base in which our customers can have great confidence, which is critical to our strategy of securing new markets for our gas.
CH4 recently signed an agreement with Alinta Ltd to work together on power generation projects in the Bowen Basin.
Rozman said the alliance could see on-site power generation plants become a significant market for CH4's gas.
CH4 will be responsible for developing required gas reserves and for supply of gas to be tolled through a power generation facility to be built, owned, and operated by the Alinta group. CH4 will have the sole ownership and marketing rights to all electricity generated.
CH4’s gas production for the year totalled 3.620 PJ, exceeding February’s forecasts, with steady production, of 40 TJ/day, and sales, of 37 TJ/day, maintained during the June quarter - the first full quarter of production.
Sales were expected to equal or exceed the nominated 12 PJ for this calendar year and to exceed 15PJ for 2005-06, and 20PJ for 2006-07.
CH4 is exploring and developing coal seam gas (predominantly methane) in the Bowen Basin region of central Queensland and operates the Moranbah Gas Project in conjunction with joint partner BHP Coal.
Due to the increased gas sales nominated by Enertrade for 2006, expansion of the initial facilities had started, with additional wells and infrastructure to accommodate a 23% increase in sales for 2006. The second phase of development was expected to cost approximately A$20 million and consist of 20-30 additional wells and associated infrastructure.
In addition to drilling new regions, a re-appraisal of existing reserves in and about the current area of operation had resulted in the significant increase in proved reserves, with total 1P reserves now estimated at 139 PJ, 2P at 382 PJ and 3P reserves at 1540 PJ.
Fifty per cent of the company's proved reserves (1P) was in the highest category of reserve using the industry’s Society of Petroleum Engineers (SPE) Code - Proved, Developed and Producing . All reserves quoted had been verified by independent experts Netherland Sewell & Associates, of Texas.
