Coal seam gas miner pulls the plug

Mr Fontaine
Mr Fontaine

Coal seam gas explorer Ormil Energy has shifted its attention from the Illawarra to Botswana, launching a takeover bid for a company with gas assets there.

Its target, Energy Botswana (EBL), is an unlisted Australian company that holds potentially lucrative coal seam gas licences in the African country.

The surprise move came after Ormil's controversial plans to drill 16 exploratory boreholes in the northern Illawarra ground to a halt.

The expiry of a key exploration licence earlier this year left the project in limbo.

Ormil blamed its joint venture partner Apex Energy for the "administrative oversight".

The company hopes its takeover bid will allow exploration in Botswana to begin quickly.

"Ormil is still confident in the potential of its New South Wales assets, but progress has been slowed by political conditions beyond our control," managing director Tom Fontaine said.

"With this merger, Ormil can use the strong existing EBL team combined with our CSG exploration experience to build value in EBL's Botswana assets while issues in NSW are resolved."

But Stop CSG Illawarra said it hoped the merger marked the end of Ormil's exploration activities here.

Mr Fontaine said the new entity would have to raise money for the projects to proceed simultaneously.

Under the offer, EBL shareholders would receive nine fully paid Ormil shares for every 10 EBL shares.

The Energy Botswana board has backed the deal, which also includes an option component.

If the offer is successful, Energy Botswana would hold a 49.3 per cent stake in the combined entity.

In another sign of its broader focus, Ormil's head office would relocate from Sydney to Perth.

Two Energy Botswana directors would also be appointed as Ormil directors.

Mr Fontaine has previously labelled the NSW permitting system a "thick bottomless quagmire".

He said the company expected quicker results in Africa.

"You never want to be a one-project company anyway, so we would have done this if things were moving slow or fast in NSW, but now the focus will be in Africa," he said.

Ormil was encouraged by progress made by other companies in Botswana.

Energy Botswana managing director Trent Wheeler said the merger would provide increased liquidity and participation in Australian projects.

Ormil and Apex's Illawarra exploration project is underpinned by two licences, covering the area from Helensburgh to Dapto, but the southern licence expired in February.

The joint venture has a third licence in the Burragorang region.