THE men behind the $535 million coal-seam gas success story Bow Energy are set to return to the market with a new play centred on Western Australia’s Perth Basin.
Former Bow managing director John de Stefani and entrepreneur Steve Bizzell — who helped establish Bow and its CSG stablemates Arrow Energy and Dart Energy — have reunited to form UIL Energy.
Bell Potter is the lead manager in UIL’s initial public offering, the company looking to raise between $4.2m and $6m.
UIL has assembled a number of licences in the Perth Basin, a region that Mr De Stefani says has the characteristics to emerge as the next unconventional energy hotspot in Australia.
The Perth Basin has been a source of conventional gas production for decades, but has more recently been identified for its potentially large volumes of unconventional sources such as shale gas and tight gas.
Mr De Stefani said other companies working in the basin had committed to drill six wells over the next 12 months, which would help improve the understanding of the basin’s potential.
He said the Perth Basin had big advantages compared to Queensland’s Bowen and Surat basins at the time that Bow and other CSG players were building their business there.
Domestic gas prices in WA sit around $8 a gigajoule and are forecast to head towards $12, compared to prices of $3 to $4 a gigajoule in Queensland during the early CSG days.
There are also established gas pipelines running through the Perth Basin and into the Perth market, allowing the opportunity for any discoveries to be brought to market quickly.
“The infrastructure is there, and it’s there for the taking,” Mr De Stefani said.
With only a small amount of equity being targeted by UIL to start, Mr De Stefani said, the company could look to bringing in a joint-venture partner depending on results from the drilling campaigns of its neighbours.
“We’ve got a number of targeted farm-in partners that we believe would be interested in our fields,” Mr De Stefani said.
Oil and gas producer AWE is among the companies exploring in the Perth Basin, and analysts at Citi last month valued AWE’s acreage at $250 an acre. UIL holds 600,000 acres in the Perth Basin. “Shale gas in the Perth Basin is relatively long-dated, but potentially very material, but tight gas plays will represent near-term lucrative development opportunities,” Citi analysts said in their AWE research.
Dutch companies Dyas and Mazarine Energy recently farmed in to acreage in the basin, while Alcoa has been exploring in the region as it hunts for gas to feed into its energy-intensive aluminium operations.
Mr De Stefani has been working on UIL in the three years since Bow was sold. He and his fellow directors will be among the largest shareholders in UIL upon listing. Assuming the company raises the minimum $4.2m sought, Mr De Stefani will own an 8.8 per cent interest.
Mr Bizzell will hold 6.9 per cent while US-based executive chairman Simon Hickey will hold 16.9 per cent.
Bow was bought by Arrow — which by that time itself had been acquired by Royal Dutch Shell and PetroChina — in 2011 in an offer that valued the company at $535m. The takeover crystallised a 900 per cent-plus uplift in Bow’s share price between late 2008 and 2011.