Comet Ridge Raises $40 Million to Secure Mahalo Gas Project Ownership
Comet Ridge has raised $40 million through a placement and $875,750 via a share purchase plan to fund the acquisition of Santos’ remaining stake in the Mahalo Gas Project and progress development activities.
- Placement and SPP raise $40.9 million before costs
- Acquisition terms with Santos restructured to reduce upfront cash
- FEED work advances for upstream and pipeline infrastructure
- Gas supply agreements signed with Highview and revised with CleanCo
- New Non-Executive Director appointed with extensive gas sector experience
Capital Raise Fuels Mahalo Gas Project Takeover
Comet Ridge (ASX:COI) secured firm commitments for a $40 million placement priced at 10.25 cents per share, alongside a Share Purchase Plan (SPP) that raised an additional $875,750. These funds are earmarked for settling costs related to acquiring Santos’ remaining 42.86% interest in the Mahalo Gas Project and advancing the project towards a final investment decision (FID). Participants in the placement and SPP will receive unlisted options exercisable at 15 cents, expiring in June 2028, subject to shareholder approval.
The placement and SPP follow a restructured acquisition agreement with Santos, reducing the upfront cash component to $18 million and supplementing it with $10 million in Comet Ridge shares. Contingent payments of up to $30 million are linked to gas sales milestones, extending the acquisition completion deadline to September 2026. Shareholder approval for the issue of consideration shares is also pending.
Engineering Progress and Infrastructure Advances
Front End Engineering Design (FEED) for upstream facilities has transitioned from Santos to Comet Ridge, with Equinox Engineering engaged to perform value improvement reviews and cost estimates. Meanwhile, Jemena has completed FEED for a 10-inch high-pressure pipeline connecting the Mahalo Gas Hub to major transmission pipelines, having secured a 30-year petroleum pipeline licence from the Queensland Government.
Strategic Gas Supply Agreements Bolster Market Position
Comet Ridge inked a non-binding Memorandum of Understanding with Highview Power Pty Ltd to supply up to 3.6 PJ annually of natural gas for a large-scale electricity project near Gladstone, Queensland. This partnership underscores the role of domestic gas in supporting energy transition initiatives.
Additionally, CleanCo reaffirmed its commitment to purchase 21 to 25 PJ of gas from the Mahalo Gas Hub, with revised terms pushing the supply commencement to January 2030 and adjusting take-or-pay obligations. Conditions precedent timelines were extended to March 2027, reflecting a more measured ramp-up aligned with project development.
Board Changes and Financial Position
Non-Executive Director Shaun Scott retired after seven years, replaced by Mark McCabe, a Chartered Accountant with extensive gas industry experience spanning LNG and domestic markets. McCabe’s expertise is expected to aid in gas marketing and financing strategies as Comet Ridge pushes towards FID.
At quarter-end, Comet Ridge held $27.7 million in cash, supported by a $9.5 million secured loan facility from PURE Asset Management Resources Fund. The company is actively engaging with debt providers to secure funding for its share of the Mahalo development capex, with discussions ongoing.
Consolidating a Strategic Gas Hub in Queensland
Upon completion of the acquisition, Comet Ridge will hold 100% ownership of the Mahalo Gas Hub, consolidating 2P reserves and 2C contingent resources of 676 PJ. This consolidation enables optimisation of development sequencing and capital efficiency, leveraging scale to reduce infrastructure duplication and enhance flexibility in gas delivery to Queensland’s major demand centres such as Gladstone and Wallumbilla.
The Mahalo Gas Project sits near existing pipeline infrastructure, with Jemena expected to own and operate the new pipeline connecting the gas hub to broader markets. This infrastructure integration is critical for delivering gas into both domestic and LNG export markets.
Bottom Line?
Comet Ridge’s capital raise and acquisition restructuring position it to control a significant east coast gas resource, but shareholder approvals and financing remain key upcoming hurdles.
Questions in the middle?
- Will Comet Ridge secure shareholder approval for the placement options and consideration shares by September?
- How will financing discussions evolve to cover the development capex for the Mahalo Gas Project?
- What impact will the delayed gas supply commencement with CleanCo have on project cash flows and timelines?
