AGL Energy Limited (AGL) said it would not exercise either of the Lacerta/Polaris Coal Seam Gas or Condamine Power Station call options. The options were acquired last year, when AGL said it would sell all its shares in Queensland Gas Company Limited (QGC) to BG Group.

AGL said the decision meant it would not incur any interest charges associated with the options.

AGL explained that anticipated future reserve upgrades from its recently acquired interests coupled with gas purchases under long-term gas supply contracts would deliver a superior economic outcome than would be obtained from exercising the Lacerta/Polaris option.

The company was referring to recently acquired interests in the Galilee Basin, Gloucester Basin, Innamincka and Sydney Gas Limited (SGL).

AGL managing director Michael Fraser said the company was comfortable that the group’s medium term strategic target of securing 2,000 PJ of equity gas could be achieved from recent acquisitions without the need for Lacerta/Polaris in our portfolio.

“AGL has also concluded that its existing 400MW of despatch rights over the Yabulu and Oakey Power stations in Queensland together with rights held over various Queensland sites to develop up to a further 1,870MW of gas fired generation, delivered a superior economic and strategic outcome than exercise of the Condamine Power Station option,” the company added.

“AGL’s decision not to exercise either option has no impact on previous financial guidance provided in conjunction with AGL’s interim FY09 result announced on 25 February 2009.”

Yesterday, AGL Energy shares were down 7c to $15.13.