Coal Seam Gas Prospects Ignite Qgc's Interest In Roma

The Age

Wednesday June 11, 2008

Barry FitzGerald

ROMA Petroleum has been swept up in the coal seam gas boom in Queensland, with Queensland Gas Company landing a friendly cash and scrip offer that values Roma at 18.7? a share, or $47.6 million.

Directors of Roma were unanimous in their recommendation of the bid, which is all about QGC increasing its hold on coal seam gas acreage.

QGC has also secured a pre-bid acceptance agreement with Oil Drilling & Exploration covering its 19.16% Roma stake.

But not everyone is happy. Melbourne-based Lakes Oil holds 26.5 million shares, or 10.4%, of Roma, an investment it has quietly built up in recent years at prices as low as 3? a share. Lakes made the investment because Roma holds a 5% royalty in the licence area in Gippsland that is home to Lakes' potentially large Wombat "tight" gas project.

Lakes chairman Rob Annells said yesterday the offer from QGC looked to be on the "light side" when other recent coal bed methane deals were taken into account.

He said Lakes had had no discussions with Roma and would now be sitting back to see what happened.

Lakes is not in a position to frustrate the bid because there is no minimum acceptance condition. But its early call that the offer was on the light side could rally other shareholders to press for a better deal.

The offer is 10? in cash for each share in Roma, as well as a QGC scrip component of 0.0177 QGC shares for every Roma share. Its imputed value yesterday for Roma of 18.7? a share compared with Roma's unchanged closing price of 19? a share - more than double its level of six weeks ago when the market mania for coal seam gas stocks was beginning to form.

QGC managing director Richard Cottee said Roma held a significant interest in a petroleum lease, PL 171. The acreage covered in the north-east Surat Basin is prospective for coal seam gas.

It is close to QGC's ATP 651P and next to QGCs ATP 574P, as well as being near the proposed pipeline for the Gladstone liquefied natural gas export project of QGC and Britain's BG Group.

© 2008 The Age

Back to News Index | Back to Home