The company said it would cut costs by reducing senior management packages, cutting back on “excessive corporate costs,” make tighter controls on discretionary expenditure and “attack wastage and inefficiency.”
Knight and Purcell said Sydney Gas would also change its name to reflect a new era and outlook following the retirement of three directors and the search for new candidates.
Sydney Gas has abandoned its contentious Central Coast, NSW exploration program, which had attracted widespread community opposition and led to the formation of pressure group, the Australian Gas Alliance.
But its Camden program continues, and the Financial Review reported that the company would not give up its fight against Camden farmer Alan Gatenby, who does not want Sydney Gas wells on his property.
The newspaper said Australian Gas Alliance and other concerned landowners south-west of Sydney would help fund Gatenby in his objection to the company’s plans for a further 100 wells.
In the presentation, Sydney Gas said it had a renewed focus on increasing production and gas sales to 14.5PJ per year in its Camden asset.
Under the restructuring, it said new wells were to be drilled earlier than planned, with AGL to act as production operator and Sydney Gas to operate exploration, as part of their joint venture announced on September 14.
To offset its huge $30 million debt, AGL will pay Sydney Gas $42.25 million on contract settlement and a further $51 million by the end of 2008 if additional CBM reserves are proved up at Camden.
Camden now has more than 80 wells drilled, with 65 of these online to the gas plant, said the company. The area’s second seam is now being completed, with an improved flow rate potential.
The company is also moving more quickly to develop a long-term business plan in the Hunter Exploration, which it said had a large CBM resource of about 600 billion cubic feet.
Under the joint venture arrangement, AGL will contribute 50% of all future capital expenditure across all of the licences, ensuring an orderly and more cost-effective continuation of the development program, Knight said.
All operational costs associated with the joint venture would also be shared 50/50.
A new 10-year gas sales contract would be drawn up, giving AGL a five-year extension option for the Camden project. This would enable a ramp up to a total annual contract quantity of 14.5PJ per annum, with potential aggregate sales of more than $600 million over the life of the contract.
