Indian subsidiary snaps up Bass Basin stakes

indianAUSTRALIAN-based oil and gas company AWE will sell an 11.25 per cent interest in the BassGas joint venture and a 9.75 per cent interest in the Trefoil field to a wholly-owned subsidiary of Indian giant Hindustan Petroleum for $85 million.
The sale will reduce AWE’s stake in the two Bass Basin projects to 35 per cent each, allowing it to retain full voting rights in both.
Prize Petroleum will pay AWE $80 million on completion of the sale, which is subject to standard approvals.
The company will pay a further $2.5 million at the end of the BassGas Mid Life Enhancement (MLE) project, which involves drilling two development wells and installing gas compression equipment at the Yolla field. The final $2.5 million will be paid only if MLE project costs stay under an agreed threshold.
AWE expects the sale to generate an unaudited after tax loss of about $10 million.
Despite the loss, AWE managing director Bruce Clement said the sale would strengthen the company’s financial position and reduce its exposure to capital commitments for the final stages of the MLE project.
“Our remaining 35 per cent interest in BassGas is an appropriate holding in this non-operated asset and, importantly, maintains our voting rights at a level that provides control over major investment decisions,” he said.
“AWE’s growth outlook is excellent and this sale helps to ensure our future is well funded.”
BassGas was launched in 2006 and is operated by Origin Energy, which holds a 42.5 per cent stake in the project. AWE revealed its year to date production was up 28 per cent on the corresponding period in 2012 in its December quarter report, despite a drop of 6 per cent on the September quarter.
The company’s sales revenue for the quarter reached $86 million, bringing its year to date revenue to $175 million – up 21 per cent on the year before.