Tap Oil divests Australia and New Zealand portfolio

Tap Oil has signed a sale and purchase agreement (SPA) with Kensington Energy, a privately-owned Australian oil and gas investment company, to sell its residual Australian and New Zealand portfolio.

The transaction involves Tap selling a 20% participating interest in the BHP-operated WA-72-R, which contains the Tallaganda gas discovery and for which Tap has booked 49 PJ of net 2C gas resources.

It also includes a 15% participating interest in the Eni-operated WA-25-L including the shut-in Woollybutt Oil Field where abandonment activities are tentatively scheduled between 2020 & 2021. Tap has a $6.46 million provision for Woollybutt field abandonment in its 2019 half year accounts.

Finally, the deal includes a 5% oil, gas, and condensate overriding royalty interest over 66.67% of NZ PMP 38748 that includes the producing Sidewinder oil and gas field. Tap recorded revenue in 2018 of $0.15 million.

Tap said on Monday that this move is consistent with its strategy of focusing capital and capability on Manora reinvestment opportunities, rationalizing, and commercializing the Australian portfolio, and reducing capital, operating, and corporate costs.

The effective date of the sale is March 31, 2019, with the economic benefit and burden passing as at that date.

As a result of the sale, Tap has passed on any field abandonment costs associated with Woollybutt and will therefore no longer have that future liability.

The agreement does not contain any conditions precedent, no government approvals are required and no joint venture partners have exercised their pre-emptive rights over WA-72-R. Accordingly, it is anticipated that completion of the transaction will occur in the next few days.

The transaction will result in Tap booking a profit on the sale of $2.58 million after tax reflecting the difference in the consideration and fully written down value of WA-72-R and the WA-25-L provisions.

Focus on Manora

The transaction means that Tap’s only remaining interest outside of Manora is WA-34-R, which contains the Prometheus and Rubicon gas fields (Tap 12%) where Tap has booked net 2C gas resources of 45 PJ. Tap is actively working on exiting this block and expects to do so before year end 2019.

Tap’s Executive Chairman, Chris Newton, noted that the transaction was entirely consistent with the company’s previously disclosed strategy of delivering shareholders value from the existing Tap portfolio by simplifying and re-positioning Tap as a Thailand oil producer focused on Manora reinvestment opportunities.

“Tap now looks forward to an exciting Manora infrastructure led exploration program, expected to spud in November 2019,” the company concluded.