Sunshine signs deal on coal seam gas - Breaking News - Business - Breaking News

Junior oil and gas company Sunshine Gas Ltd has signed a farm-in agreement that will see a fertiliser company pay $11 million for a stake in four Queensland coal seam gas permits.
The deal will see WestSide Energy Ltd pay Sunshine Gas $1 million and spend another $10 million on a program to prove up reserves at the permits in return for a 50 per cent stake.
WestSide has plans to develop a 350,000 tonne a year fertiliser plant near Gladstone and the farm-in agreement would give it the right to purchase the first 250 billion cubic feet (bcf) of gas from the projects.
Gas is a key ingredient in the production of ammonia, which is in turn used to build nitrogenous fertilisers.
Sunshine Gas said it would have the right to independently sell its share of any gas produced after the initial contracted 250 bcf.
The company said the agreement would speed up the progress towards production at the Paraniu and Tilbrook permits and would allow Sunshine Gas to redirect extra resources towards its oil and gas projects both in Queensland and the UK.
WestSide is an unlisted public company that says it is focused on developing upstream gas reserves to support its ammonia operations in Australasia.
© 2006 AAP