Shares in Altona Energy (AIM: ANR) spiked higher after the company announced plans to enter a joint venture with a subsidiary of China National Offshore Oil Corporation (CNOOC) (NYSE: CEO). CNOOC is one of the largest state-owned oil & gas companies in China.
The joint venture deal will see CNOOC assigned a 51% interest in the Altona Energy’s three coal exploration licences in return for funding all of the costs of a bankable feasibility study (BFS) for an integrated 10 million barrel per year Coal to Liquid ('CTL') plant with a 560 MW co-generation power facility at Arckaringa in South Australia.
Altona currently holds a 100% interest in three exploration licences covering 2,500 sq. kilometres in the northern portion of the Permian Arckaringa Basin in South Australia, which includes three coal deposits, Westfield, Wintinna, and Murloocoppie. The three deposits contain a combined 7.5 billion tonnes of coal (of which 1.287 billion tonnes at the Wintinna Deposit have been brought up to current JORC standards) which will be used to feed the massive coal to liquids and power generation development.
In the event that CNOOC withdraws from the venture prior to completion of the BFS, it is agreed in principle that Altona would have the right to buy back CNOOC-NEI's interest.
“This is an exciting period for Altona. The signing of the Terms Sheet with CNOOC-NEI and the commencement of the EJV negotiations is a further significant achievement for the Company. We are delighted to be working with CNOOC-NEI,” said Chris Lambert of Altona Resources. “This signing follows a period of extensive due diligence by CNOOC-NEI, which commenced immediately after entering into an initial MOU with Altona in August 2008. Throughout this process we have received a great deal of positive support and assistance from the South Australian government, for which the Company remains extremely grateful.”