AWE Limited (“AWE”) has agreed to sell an 11.25% interest in T/L1 and 2.75% interest in T/18P in the Bass Basin to Toyota Tsusho Gas E&P Trefoil Pty Ltd (“Toyota Tsusho”) for a cash consideration of A$80.125 million.
The transaction provides AWE with a more balanced asset portfolio, a very strong balance sheet, and considerable flexibility to fund its future growth projects.
As well as injecting cash into the balance sheet, the transaction also reduces the risk-exposure to the capital expenditure requirements for the BassGas Mid-Life Enhancement project (an additional saving of approximately A$40 million). After completion, AWE will retain a strong cash position (which was $140 million at end September, 2011), with no debt, and will have excellent long term cash flows from five cornerstone assets.
Bass Basin Sale
Under the terms of the binding sale and purchase agreement executed by AWE and Toyota Tsusho, AWE will sell an 11.25% interest in T/L1 (which includes the Yolla gas and condensate field and its associated production infrastructure) and a 2.75% interest in T/18P (which includes the Trefoil gas and condensate discovery) for a cash consideration of A$80.125 million (plus working capital adjustments at completion).
At completion, AWE will hold a 46.25% interest in T/L1 and a 44.75% interest in T/18P. These changes provide a better balance in the joint venture interests, whilst maintaining AWE’s strong voting position in the operation of the assets. The sale price is equivalent to approximately A$7 million per percentage point interest in T/L1, valuing AWE’s remaining 46.25% interest at A$324 million (62 cents per share) and supporting AWE’s carrying value for the asset.
Commenting on the sale, AWE Managing Director Bruce Clement said:
“The BassGas sale proceeds are ear-marked for investment in future growth projects in the event of success in the Company’s exciting Tight Gas and Shale Gas opportunities in Western Australia and its conventional gas targets in Indonesia, and in potential selective acquisitions. In the meantime, we look forward to working with Toyota Tsusho and Origin Energy to successfully complete the major investment phase of the BassGas Mid Life Enhancement Project over the next 18 months and to benefitting from the future long term production of gas and condensate from the project.”
[mappress] Offshore Energy Today Staff , December 8, 2011