The Tipton West project already has a gas customer lined up with a 15-year base contract for 6 PJ a year.
Comet plans to use its proceeds from the sale to accelerate its North American interests and drill the Mahalo coalbed methane discovery in western Queensland.
Under the deal Arrow is offering $2.25 million cash when the transaction is completed; another $2.25 million in cash or the equivalent in Arrow shares at a 10% discount to the volume weighted average share price for the preceding 10 trading days by December 31; the issue of two million unlisted Arrow options exercisable at 60c within three years of the transaction’s completion; and a 1.5% royalty, capped at $8 million, on production from the Dalby, Dalby South and Millmerran blocks of ATP 683, ATP 689 and PL 198.
In its announcement of the sale to the Australian Stock Exchange, Comet Ridge says the transaction is worth more than $12.5 million over the life of the royalty payment.
The Tipton West field is in the Surat Basin about 20 kilometres south of Dalby town and contains certified gas reserves in the 1P, 2P and 3P categories of 61 PJ, 143 PJ and 2028 PJ respectively.
Arrow has entered into a binding gas supply agreement to supply gas from the Tipton West field for the Babcock Brown-ERM Power 450 megawatt gas-fired Braemer Power Project subject to certain conditions.
Financial close on the Tipton West project is targeted for October or November with first gas scheduled for delivery 12 months later.
Comet has a 40% stake in the Santos-operated Mahalo project, which also counts Origin Energy as a partner.
Santos has calculated an in-place contingent gas resource of up to 990 PJ. Drilling is planned for the December quarter and is designed to confirm and increase the contingent gas resource and flow-test the inferred free gas cap encountered in the Mahalo-1 hole.
