Exoma Energy Was Forced Into a Rethink After CNOOC Share Subscription Falters

Exoma Energy has been forced into a rethink after a subsidiary of Chinese state-owned offshore company CNOOC failed to receive Beijing's approval for a planned subscription to a parcel of shares in the Australian coalseam gas junior. 

Exoma announced on September 10 last year that it had struck a A$23.4 million ($24.5 million) agreement under which CNOOC Galilee Gas Company would take at least a 13% stake in the company and an additional 10% of its Australian permits, taking its total interest in the acreage to 60%. The deal followed on from CNOOC's December 2010 agreement to contribute A$50 million in exploration and appraisal funding to earn a 50% stake in Exoma's exploration permits in the Galilee and Eromanga basins in the eastern Australian state of Queensland. 

Both the share subscription and the increase in acreage ownership were conditional on receipt of Chinese government approvals by December 31, 2012. 

"The board is considering the impact of the CNOOC investment in the company not proceeding as planned and envisages further discussions with CNOOC about ways of working together on new ventures, as well as on Exoma's current permit areas, in which CNOOC retains a significant interest," Exoma Chief Executive Officer Rob Crook said in a statement Wednesday. 

CNOOC has been increasing its interests in eastern Australia recently. In October 2012, the company paid $1.93 billion for an additional stake in BG Group's coalseam gas-based Queensland Curtis LNG project in Gladstone, which is expected to start up in 2014. 

That transaction boosted the Chinese company's stake in the 4.25 million mt/year number one production train at the Queensland Curtis LNG project from 10% to 50% and also gave it an option over 25% of any expansion trains that might be built at the project. In addition, CNOOC raised its share of BG's tenements in the Walloons Fairway region of Queensland's Surat Basin from 5% to 25%. 

On Australia's west coast, CNOOC holds a 5.3% interest in the North West Shelf gas reserves. 

Exoma's shares were hammered 30% lower by the news, closing Wednesday at A$0.035, down from A$0.05 on December 31.