AWE Sells BassGas Stake

AWE Limited said it has agreed to sell an 11.25%interest in T/L1 (BassGas infrastructure & Yolla field) and a 9.75% interest in T/18P (Trefoil field) in Australia to Prize Petroleum Company Limited, a subsidiary of Hindustan Petroleum Corporation Limited, for a total cash consideration of AUD85 million.

AWE will receive AUD80 million upon completion of the sale with a further AUD5 million deferred payment payable upon meeting the following conditions:

• AUD2.5 million on completion of the BassGas Mid Life Enhancement (MLE) project (drilling of two development wells and installation of gas compression);
• AUD2.5 million if the MLE project costs do not exceed an agreed threshold.

The sale is subject to standard joint venture and government approvals for a transaction of this nature including the Australian Foreign Investment Review Board and the Reserve Bank of India. The effective date for the sale is 1 July 2013 and is subject to completion adjustments. At completion, AWE will hold 35% in T/L1 (BassGas/Yolla) and 35% in T/18P (Trefoil). Upon completion, the sale is expected to generate an estimated unaudited after tax loss of approximately AUD10 million, subject to the completion date and subsequent adjustments.

AWE’s Managing Director, Bruce Clement, said: “The sale of an 11.25% interest in BassGas is another successful strategic initiative for the company and is an excellent outcome for AWE. Whilst recording a non-cash loss on the sale, the release of capital from the BassGas asset will further strengthen our financial position and reduce AWE’s exposure to capital commitments for the final stages of the MLE project. Our remaining 35% interest in BassGas is an appropriate holding in this nonoperated asset and, importantly, maintains our voting rights at a level that provides control over major investment decisions.”

Press Release, January 28, 2014; Image: AWE