Last month Dart Energy Ltd, the company spearheading coal seam gas drilling in NSW, announced that it would list its Asian and European assets as Dart Energy International on the Singapore stock exchange. Why? Chairman Nick Davies told New Matilda the decision came about because the company did not think Australian investors were interested in its overseas assets.
"80 per cent of our assets are outside of Australia, yet 80 per cent of questions are on the assets in Australia."
"[Australian assets] are only less than 20 per cent of our investments in other countries. The majority of value is in countries like Indonesia, China and Singapore. It’s really because we think our assets will be valued more on a foreign exchange. In a way the industry is in earlier days in these other countries," he says.
The coal seam gas industry has moved rapidly in Australia and Dart Energy leads the charge with several licences for drilling across NSW. The company is making headlines as it undertakes exploratory drilling in and around Sydney. Its representatives have fronted up to various community meetings over the past month and met with considerable local opposition.
UNSW Finance Professor, Peter Swan, thinks it is very unusual for the company to list in Singapore.
"It’s very difficult for an Australian company to list on foreign stock exchanges like Singapore because they have strong home biases. People invest in companies they are familiar with," he says.
"It’s certainly possible for foreign investors who want to invest in companies listed on the ASX to buy shares directly on the ASX through their international brokers. It’s not necessary to list it on the Singapore Stock Exchange."
Davies says the proposed listing was on the cards before Arrow Energy’s international and NSW assets were acquired by Dart Energy in 2010.
Davies was CEO and managing director of Arrow before the merger. The company is now owned by Shell and PetroChina, and currently under fire for contaminated aquifers around some of their
drilled bore holes in Queensland.
"It’s been on the table for two years, long before the landowner issues in Australia," he says.
And there has been no shortage of those. In Swan’s view, considerable community opposition to coal seam gas drilling and protests may be linked to the Singapore’s Stock Exchange listings.
"The company could be hoping to attract some ill informed Singaporean investors; that is a likely scenario," he says.
"Foreign shareholders might not be aware of the likely political ramifications of community protests and therefore the high risks."
"There is political pressure on federal and state governments to either limit or ban the use of some kinds of technologies to explore or extract coal seam gas in urban areas."
Davies doesn’t agree. He says the community protests didn’t really affect Dart’s decision to list overseas. "It won’t affect shares they are purchasing," he says with regard to overseas investors.
"Australian investors have been very focused on that because it is on their doorstep, but to us it is not very critical because it’s only 20 per cent of our assets."
Davies is confident that it’s only a matter of engagement in the community before the opposition to coal seam gas drilling is reduced. He points to the US for examples. "In the resource industry in general, dealing with community and landowners is a difficult issue. It’s always one of the key issues of the business and investors understand this."
To Putty resident Kathy McKenzie, the matter is not as simple as community engagement. She does not believe that the ire against coal seam gas exploration and mining will die down anytime soon.
"They cannot guarantee that the aquifers won’t be contaminated in the area," she says of Dart’s coal exploration drilling in her area.
"No exploration should go on until we know that coal seam gas mining is done safely."
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