Comet Ridge (ASX: COI) Takes 100% Control of Mahalo Gas Hub: Why This Gas Stock Is a Buy

Comet Ridge (ASX: COI) just made a move that changes everything for this small-cap gas developer. The company is acquiring Santos’s 42.86% stake in the Mahalo Gas Project for AUD 40 million upfront, plus up to AUD 20 million in production milestone payments. This gives Comet Ridge 100% ownership of the entire Mahalo Gas Hub, consolidating 677 petajoules of 2P reserves and 2C resources under one roof.

For investors watching the East Coast gas market, this simplified ownership structure arrives at a critical time. Australia’s East Coast is heading towards a gas supply crunch, and Comet Ridge now controls a project that could help fill the gap. We believe the next twelve months could prove pivotal, with a final investment decision expected in early 2026 that could unlock significant value.

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Why Mahalo’s Location Gives COI a Real Edge

The Mahalo Gas Hub sits in Queensland’s Bowen Basin, just 240 kilometres from the gas demand centre of Gladstone. This location matters because it puts the project close to both LNG export facilities and domestic pipeline infrastructure, reducing transport costs and simplifying the path to market.

What makes the gas itself attractive is its low CO₂ content, meaning it requires minimal processing before sale. For a domestic market where gas quality standards are tightening, this is a genuine competitive advantage.

Here’s the thing about Santos’s exit: it reflects capital discipline rather than project problems. The energy giant is focusing on Barossa and Pikka, monetising pre-development assets that were not near-term priorities. This suggests Santos sees Mahalo as a quality asset, not just one that fits its current strategy.

East Coast Gas Shortage Creates an Opportunity

Here is where the investment case gets interesting. The Australian Competition and Consumer Commission has been warning for years about looming gas shortfalls on the east coast. The regulator projects structural deficits from 2027 unless new supply comes online.

Southern states like Victoria, New South Wales, and South Australia already rely on Queensland gas during winter. As local reserves in the Gippsland and Otway basins decline, that dependence will only grow. Mahalo sits right in the supply corridor that will feed this demand.

Infrastructure partner Jemena is already working on pipeline plans alongside Comet Ridge’s upstream development. This coordination reduces execution risk and suggests the project has the support it needs to reach production.

The Investor’s Takeaway

Morgans maintains a Buy rating with a $0.23 target, nearly double the current share price of around 12 cents, while the wider analyst consensus sits at approximately $0.21. The stock jumped over 13% yesterday on the acquisition news, suggesting the market likes this deal.

In our view, the bull case is straightforward: 100% control of 677 PJ in a supply-constrained market, advancing towards FID with infrastructure partner Jemena, and a market cap around AUD 143 million that appears modest relative to the resource base.

However, investors should recognise the risks. Comet Ridge remains pre-revenue, meaning the AUD 40 million firm consideration, payable at FID or by mid-2026, requires successful execution of ongoing debt funding discussions. Energy prices have weakened recently, with oil near five-year lows, which can dampen sentiment across the sector. The FID itself is not guaranteed, and any delays or cost blowouts could pressure the stock.

For investors willing to accept development risk, Comet Ridge offers meaningful exposure to Australia’s gas supply challenge. The FID decision in early 2026 is the next major catalyst to watch.