BPH Energy raises funds to develop hydrogen strategy while it fights PEP-11 lawsuit in court

BPH Energy (ASX:BPH) has shaken the tin, pulling in several new sophisticated investors, as it raises just short of $2m to proceed with two main activities: development of its carbon capture and storage (CCS) strategy, and, development of its hydrogen strategy. 

Perhaps of more interest to investors is that the company continues its court case against the Federal Australian Government. 

The two go hand in hand, and neither can be discussed without discussing NSW offshore gas licence PEP 11; given that its CCS plans are attached to that licence.

What is PEP-11? 

PEP-11 is a 4,500km² gas exploration licence covering an offshore block near the coast of NSW. 

In the lead-up to the Federal Election earlier this year, the Federal government, then under Scott Morrison, rejected BPH’s application to extend the licence for two years, effectively culling the project. 

That application had been sitting in something of a limbo, with BPH first making applications to the regulator and relevant departments in early 2020. 

Worth noting is that Anthony Albanese had promised the same. Environmental concerns encouraged strong community opposition to the project, and the licence became the subject of much media speculation. 

However, it later became apparent former Prime Minister Scott Morison appointed himself as a co-minister to the Federal resources portfolio, along with several others, at the time he made the decision to quash PEP 11. 

That decision, BPH believes, gives it a chance to win back its licence through a court dispute. 

What is happening in court? 

BPH Energy has Advent Energy as an investee alongside it in regards to the PEP 11 licence. Advent Energy, in turn, owns a subsidiary called Asset Energy. Asset Energy is the party currently progressing the PEP 11 dispute through the courts. 

That court case is ultimately a judicial review applicaiton lodged in the Federal Court of Australia, regarding a possible illegality of Scott Morrison’s decision to quash PEP 11 while having secretly appointed himself a co-minister in the Resources portfolio. 

The partnership may have strong legal ground to stand on, though, they may be hampered by findings from the Solicitor General’s office earlier this year which called Morrison’s actions “valid.” Validity, however, does not mean legality. 

The SG also made the point of highlighting Morrison’s actions had defied convention. 

Asset Energy is asking the Federal Court to consider two main arguments: 

• Scott Morrison’s bias may have led to the unfair cancellation of PEP 11

• Asset Energy was denied procedural fairness when its first court application was submitted

Asset also states it has come into receipt of “a bundle of documents from the Commonwealth relating to the decision,” which may have been discovered alongside a legal team, or acquired via FOI. The documents in question are not disclosed. 

What is sure is that the outcome of Asset’s Federal Court case will likely inform the actions of other parties affected by the LNP’s decision making process in the months Morrison was known to have been acting as a minister for multiple ministerial divisions within Canberra. 

Asset has also lodged a submission with an ongoing Parliamentary inquiry into Scott Morrison’s self-appointments, an inquiry launched under the new ALP government. 

Okay. What about the raising? 

BPH Energy will issue 52.09m placement shares at 1.8c to raise $1.196m. Everblu capital was tapped during the placement and this entity is where BPH states to have picked up several new sophisticated or high-net-worth investors. Everblu will take 6%, a well as Broker options. 

A remaining 14.3m placement shares remain subject to shareholder approval at an AGM tipped to occur in mid-late November. 

Broken down, funds will be used as follows: 

• $0.65m to invest in hydrogen and CCS tech 

• $0.35m to fund exploration and development of oil and gas investments 

• $0.1m to cover working capital and costs of the offer 

Worth noting is that its CCS plans are attached to the PEP 11 offshore licence, and so any development it makes in this area will first need to see court applications successfully concluded in a fashion desirable to BPH and Advent. 

Despite chaos, BPH plugging away with PEP 

“Advent has received a copy of the draft environmental plan which is being reviews prior to release to enable the environmental consultation process for PEP 11,” BPH Energy executive director David Breeze said. 

“We have received strong interest in the placement through Everblu and will see several new sophisticated investors join our register.” 

“The funding allows BPH to accelerate exploration programs to unlock potential on both hydrogen and gas projects especially following the recent gas crisis and focus on hydrogen.” 

A look at BPH's three month charts. Curiously, that large spike in mid-late August is when the company announced it would sue the government. Today's slight sell off is likely due to dilution by way of issuing new shares.

Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. BPH was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.