Wa Explosion Halts Babcock & Brown Power

The Age

Wednesday June 11, 2008

Mathew Murphy, energy reporter

A GAS explosion in Western Australia has prompted Babcock & Brown Power to call a trading halt on its shares, saying it expects the incident to reduce earnings for a short time.

The explosion on June 3 at Apache Energy's Varanus Island plant off the north-west coast of WA, ripped apart a pipeline transporting oil and gas from offshore fields. Distribution of natural gas is expected to be halted for at least two months.

BBP, owner of WA's largest natural gas retailer, Alinta, said it did not expect the incident to interrupt the supply of gas to its residential customers.

"BBP is in the process of assessing the impact of the explosion . . . and at this stage expects there to be some short-term reduction in earnings through the period of gas supply disruption," the company said in a statement.

"The explosion and subsequent gas supply disruption is not expected to affect the long-term earnings of the Alinta retail business, post restoration of normal levels of supply."

The effect on the industry and on BBP in particular would depend on a range of factors including alternative supplies, management of statewide energy demand, the duration of gas supply disruption and insurance recoveries, the statement said.

Twenty energy and mining leaders met in Perth on Monday to discuss ways to deal with the 30% cut in the state's energy supply.

The WA Government is asking industry and business to consider switching from gas to alternative fuels.

Last week BBP announced it had refinanced $2.7 billion of debt and had started a program to sell assets not secured under the facility.

BBP chief executive Paul Simshauser said the company would now look towards finalising a corporate debt facility of up to $360 million, which was expected to be completed by August 31.

The shares last traded at $1.305 before the trading halt.

LINK

? www.bbpower.com.au

© 2008 The Age

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