The Comet Ridge Ltd. (ASX: COI) share price is rocketing, up 22% in afternoon trade.
Below, we take a look at the ASX resource explorer's acquisition announcement.
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What acquisition announcement did Comet report?
The Comet Ridge share price is soaring after the company reported it has entered into binding agreements to acquire Australia Pacific LNG's (APLNG) 30% interest in the Mahalo Gas Project.
Once the deal is complete, Comet Ridge's 40% interest in Mahalo will increase to 70%.
The company also reported it has executed a funding and option agreement with its joint venture (JV) partner on the project, Santos Ltd (ASX: STO).
Located in Queensland, the Mahalo Gas Project "encompasses the 'Shallows' strata from surface down to the base of the Lower Mantuan Coal". According to the release, interest in the "Deeps" will remain unchanged, with Santos and APLNG each holding 50%. Mahalo Deeps was last drilled in 1991.
On completion of the acquisition Comet Ridge will pay APLNG a cash consideration of $12 million, with an additional $8 million post-completion payment in deferred tranches.
Santos has provided the company with access to $13.15 million of debt funding, covering the cost of the upfront acquisition as well as $1.15 million in stamp duty costs.
In exchange for the loan funding, Santos has several rights to acquire interests in the project. That includes the right to acquire a 12.86% interest in from Comet Ridge at a proportional acquisition value, within 6 months of completion.
Commenting on the transactions, Comet Ridge's managing director, Tor McCaul said:
These transactions are transformational for Comet Ridge. Built on compelling acquisition metrics, they establish a streamlined joint venture with Santos to not only progress development plans for the Mahalo Gas Project, but the whole Mahalo Gas Hub area.
The terms we have been able to agree with APLNG and Santos unlocks the potential of the entire Mahalo Gas Hub area to become a significant supplier of gas to the east coast market where industry dynamics have strengthened considerably as we continue to see a tightening of gas supply.
The Comet Ridge share price could also be getting a lift from a separate announcement released this morning. In that release, Comet reported it has entered into a binding agreement with PURE Asset Management to access a term loan facility for up to $10 million.
Comet Ridge's chief financial officer, Phil Hicks said, "The Pure facility complements the funding arrangements that Comet Ridge has put in place with its joint venture partner, Santos Ltd, to support the company's Mahalo Gas Hub project development strategy."
Comet Ridge share price snapshot
Comet Ridge's share price is up 57% over the past 12 months. By comparison the All Ordinaries Index (ASX: XAO) is up 28% over that same time.
Year-to-date the Comet Ridge share price is also up 57%.
