Comet Ridge Mahalo Deal Restructured on Policy Ambiguity

Comet Ridge (ASX:COI) restructured its proposed acquisition of Santos' 42.86% stake in the Mahalo Gas Project (MGP) after the federal government's east coast gas reservation policy created a funding freeze. The company cut the upfront cash component and extended the completion date by three months.

Managing Director Tor McCaul said the revised terms give Comet Ridge time to execute a funding mechanism. The lack of operational detail around the reservation policy forced the restructuring.

The Policy Gap That Changed a Deal

Comet Ridge had received significant interest from potential funding backers after announcing the Santos acquisition in mid-December 2025. That positive momentum stopped when the government released its east coast gas reservation announcements without specifying how the policy would operate.

McCaul said the company hopes for more clarity around the policy's operation. The ambiguity directly affected the deal structure.

What Changed in the Terms

Upfront cash component: Significantly reduced.
Completion date: Extended by three months.
Funding mechanism: Comet Ridge now has a longer runway to secure financing.

McCaul thanked Santos for a collaborative approach. He noted that while Mahalo is not a priority asset for a large producer, Santos supported a junior company committed to bringing the project into production.

The Mahalo Gas Hub: What Comet Gets

Once completed, the acquisition gives Comet Ridge 100% ownership of the Mahalo Gas Hub, a large and strategic position in the east coast gas market.

Key Asset Metrics

McCaul said the consolidation unlocks several benefits:

Increasing 2P Reserves and 2C Resources to 677 PJ.
Enhancing the company's ability to optimise development sequencing.
Giving Comet Ridge full control over production timing and capital allocation.

Sector Read-Through: East Coast Gas Juniors

The Comet Ridge restructuring is a direct signal for every junior with an east coast gas development. The federal reservation policy creates a binary outcome for project financing.

How the Mechanism Works

Policy uncertainty raises the risk premium that lenders and equity partners demand.

Higher cost of capital forces deal restructuring: less cash upfront, longer timelines, more dilution.

Delayed completion pushes first production further out, which tightens the supply outlook and keeps domestic prices elevated.

Key insight: The policy is designed to lower domestic gas prices by reserving supply. The near-term effect is the opposite. It delays investment in new supply, which keeps the market tight.

Confirmed Peers and Supply Chain Links

The source does not name specific peers. The read-through applies to any ASX-listed junior with an east coast gas project that needs to close funding before first gas. The same policy ambiguity that hit Comet Ridge will hit any similar transaction until the government publishes operational rules.

Risk to watch: The three-month extension is a bet that policy clarity arrives before the new deadline. If it does not, Comet Ridge may need a second restructuring or face losing the deal entirely.

What Confirms or Weakens the Setup

Confirmation signals:

The government publishes specific reservation policy rules, including volume targets, pricing mechanisms, and enforcement.

Comet Ridge announces a binding funding agreement before the new completion date.

Santos confirms it will not seek further terms changes.

Weakening signals:

Policy detail is delayed past the new completion date.

Funding talks stall again, forcing a second restructuring or deal termination.

Another east coast gas junior announces a similar deal restructuring, confirming the pattern is systemic.

The Comet Ridge restructuring is not a company-specific issue. It is the first visible consequence of a policy that has not yet defined its own rules. Every junior with a gas project and a funding deadline is watching the same clock.

COI is up 23.8% to 13.0¢ on a market cap of $125.6 million. The stock is pricing the restructuring as a positive. The real test comes when the three-month extension runs out. If policy clarity arrives, the deal closes and the 100% ownership thesis is intact. If it does not, the funding gap reappears.

For more on the commodity dynamics behind this deal, see the commodities analysis section.