BG in $5 billion bid to take over Queensland Gas

24 October 2008

British energy major BG Group is planning to take over its Australian partner Queensland Gas for around $5 billion, to tap Australia's vast coal seam gas reserves.

BG already owns 9 per cent of QGC and AGL Energy, the largest shareholder in Queensland Gas, has pledged its 25 per cent stake to BG, at a sale price of $5.10 a share or more.

Queenslad Gas itself had in August agreed to pay 82 cents a gigajoule for Sunshine Gas's proved, probable and possible reserves. If QGC accepted the same for its 5,683 petajoules of reserves, it would value the company at $4.67 billion, or $5.10 a share.

Queensland Gas said its board will recommend the BG bid, which is at a premium of nearly 60 per cent to the last traded share price of $3.20, to shareholders early next week.

Considering that Conoco paid $1.88 a gigajule for half of Origin's proven reserves and a 50 per cent stake in a planned LNG plant, in a deal worth up to $9.6 billion, the BG deal would be worth around $10 billion if it agrees to pay that much for Queensland Gas's reserves.

BG already has a 70 per cent interest in a joint LNG project with QGC, from which it hopes to export up to 12 million tonnes of LNG a year.