Mighty River shuffles geothermal assets

Last updated 12:54 15/02/2013

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Mighty River Power has entered into a deal with GeoGlobal Energy (GGE) to take control of its Chilean geothermal assets and a minority stake a US business as part of an asset swap.

GGE is the manager of the GGE Fund, in which Mighty River power is a cornerstone investor.

Under the terms of the deal, the state-owned energy company will pay GGE US$24.8 million (NZ$ 29.1m) to acquire all of the fund's geothermal interests in Chile, as well a minority stake in EnergySource, a geothermal development and operating company based in the US.

In exchange GGE will take direct owner and control of the fund's interest in Germany, and other non-EnergySource related assets in the US.

Mighty River Power will retain an option for an economic interest in the German assets, but has ceded management control.

Chief executive Doug Heffernan said the deal freed the firm to explore overseas geothermal opportunities, which are becoming increasingly important given the flat outlook for geothermal development in New Zealand over the next three to five years.

"We see this agreement as a natural evolution and transition from the GGE relationship which successfully provided an entry point for us into international geothermal in 2008 through the GGE Fund," Heffernan said.

He added that the firm would take "measured and prudent" approach to development opportunities and any related capital commitments.

The energy firm said the immediate priority was to integrate the Chilean business as a subsidiary on Mighty River Power's balance sheet, reporting to general manager of development Mark Trigg.

In the US, Trigg is also expected to be appointed in a governance role at EnergySource.

The firm operates the 49.9MW John L Featherstone power station, which was commissioned in 2012, and is currently developing the similar sized Hudson Ranch Power II project.

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- BusinessDay.co.nz

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