Comet Ridge Amends Terms for Mahalo Gas Project Acquisition, Reducing Cash to $18M

Why It Matters

The amendment reduces immediate cash strain while preserving upside, positioning Comet Ridge to navigate policy risk and potentially deliver a larger, fully‑controlled gas asset that could enhance Australian energy security.

Key Takeaways

• Cash outlay cut to $12 M USD, easing Comet Ridge’s liquidity
• Funding deadline pushed to Aug 2026, with conditions precedent to Sep 2026
• Up to $20 M USD contingent on 10‑30 PJ gas sales milestones
• Acquisition targets full control of Mahalo Gas Hub, boosting 2P/2C resources

Pulse Analysis

The revised Mahalo acquisition reflects a pragmatic response to the Australian government’s tentative gas reservation policy, which has introduced financing uncertainty for junior developers. By lowering the cash component to about $12 million USD and substituting a $6.6 million USD share issuance, Comet Ridge conserves cash while still offering Santos a meaningful equity stake. The added contingent payments, linked to incremental gas‑sales milestones, align the seller’s upside with project performance, a structure increasingly common in capital‑intensive upstream deals.

From a financial perspective, the extended funding timeline to August 2026 and the new September 2026 deadline for all conditions precedent give Comet Ridge a broader window to arrange debt or equity financing under more favorable market conditions. This flexibility is crucial in a period where interest rates remain elevated and investors are cautious about exposure to policy‑driven risk. The reduced upfront outlay also improves the company’s balance sheet, potentially lowering leverage ratios and preserving shareholder value ahead of the final policy announcement.

Strategically, securing 100% ownership of the Mahalo Gas Hub—comprising the Mahalo, Mahalo North, and Mahalo East assets—will substantially increase Comet Ridge’s 2P (proved) and 2C (contingent) reserves, reinforcing its position in Australia’s emerging gas supply chain. Full control enables the junior to streamline development, negotiate downstream contracts directly, and capitalize on any future government incentives aimed at boosting domestic gas production. In a market where large producers are divesting non‑core assets, Comet Ridge’s disciplined acquisition could serve as a template for other juniors seeking growth amid regulatory uncertainty.

Deal Summary

Comet Ridge (ASX: COI) amended its agreement to acquire a 42.86% stake in the Mahalo Gas Project from Santos QNT, cutting upfront cash to $18 million, adding $10 million in shares and up to $30 million contingent on gas‑sales milestones, and extending funding and condition deadlines to August and September 2026. The amendment aims to mitigate policy uncertainty and preserve shareholder value, with the transaction still pending shareholder approval and funding.