Tuesday, 21 August 2018

Announcement

TRANSACT: CEN: Contact Energy to sell AGS to Gas Services New Zealand

21 Dec 2017 08:30NZX
21 December 2017

Contact Energy to sell AGS to Gas Services New Zealand (GSNZ)

Contact Energy Limited (Contact) has announced the sale of its Ahuroa Gas
Storage facility (AGS) to Gas Services New Zealand (GSNZ) for NZ$200 million,
while retaining the rights to use the facility to meet its future needs.

Situated in Taranaki, the AGS facility was opened by Contact in 2010 to store
gas for use at its nearby Stratford Power Station. GSNZ is a provider of
operational services to First Gas and other customers. GSNZ operates one of
New Zealand''s largest gas networks, with 2,500 kilometres of high pressure
gas transmission pipelines and around 4,800 kilometres of gas distribution
pipelines in the North Island.

New Zealand''s share of renewable electricity generation is among the highest
in the world, and growing, however the high level of hydro-electric
generation means the system needs flexible fuel to cope with dry periods and
peak demand during winter.

"Gas-fired thermal plant plays a key role supporting renewable generation in
New Zealand when hydro generation is below average or during peak demand, and
AGS helps us to store gas for use at those times," said Dennis Barnes, CEO
Contact Energy.
"By selling AGS to GSNZ we maintain access to a flexible and cost effective
fuel supply.  The deal has the additional advantage of seeing AGS operated by
a dedicated gas infrastructure company, letting us focus on the generation
and customer sides of our business."

"I believe with GSNZ as the owner, AGS is more likely to get new customers
and we''ve committed to an initial expansion of AGS to facilitate this. We
will receive a reduction on our payments to GSNZ as more customers use AGS,"
said Barnes.

GSNZ''s, Paul Goodeve sees AGS as an important part of New Zealand''s gas
infrastructure. "Flexibility is one of the major attractions of using natural
gas. By expanding the services offered at AGS, we see an opportunity to
provide gas producers, shippers and end-users with more flexibility to manage
their energy needs."

The proceeds of the sale will be put towards repaying debt and the tax paid
on the sale could allow Contact to fully impute the FY2018 target dividend of
32 cents per share.

Until there are additional long term customers of the facility, S&P will
capitalise the storage services payments. The S&P net debt / EBITDAF ratio
remains substantially unchanged post transaction. Contact expects the
transaction to have no impact on its BBB credit rating from S&P.

Completion of the sale of the AGS is subject to the fulfilment of certain
conditions set out in the transaction agreements, including receipt of
certain regulatory approvals as described in the investor briefing materials.

Webcast and audio conference

Contact Energy''s Chief Executive, Dennis Barnes, and Chief Financial Officer,
Graham Cockroft, will make a presentation for investors outlining the
transaction at 11.00am NZT, Thursday 21 December 2017. An archived replay
will be available following the briefing on our website.

If you would like to join the Conference Call.
o You will need to register in advance of the conference using the link
provided below. Upon registering, you will be provided with participant
dial-in numbers, Direct Event passcode and unique registrant ID.
o In the 10 minutes prior to call start time, you will need to use the
conference access information provided in the email received at the point of
registering.
o Note: Due to regional restrictions some participants may receive
operator assistance when joining this conference call and will not be
automatically connected.

Direct Event online registration:
Conference ID 7178357
http://apac.directeventreg.com/registration/event/7178357

For further information please contact:

Investor enquiries:
Matthew Forbes
Investor Relations Manager
+64 21 072 8578

Media enquiries:
Jason Krupp
Communications Advisor
+64 21 701 898

(ENDS)
End CA:00312253 For:CEN    Type:TRANSACT   Time:2017-12-21 08:30:15
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