Public sector energy firm HPCL, through its wholly owned arm Prize Petroleum Company Ltd (Prize), has reached an agreement with Australian Worldwide Exploration Ltd (AWE) to buy 11.25 per cent stake in T/L1 (BassGas infrastructure & Yolla field) and 9.75 per cent in stake in T/18P (Trefoil field) in the Bass Basin, Australia to for A$85 million ($74.1 million).
At the completion of the deal, Australian oil and gas exploration and production company AWE will hold 35 per cent stake each in T/L1 and T/18P and the sale is expected to generate an estimated unaudited after tax loss of approximately $8.76 million (A$10 million) to AWE, subject to the completion date and subsequent adjustments it disclosed.
AWE will receive the payment in two tranches- first A$80 million upon completion of the sale and remaining A$5 million upon meeting the two conditions of the buyer. Prize will pay the remaining amount in two tranches - A$2.5 million on completion of the BassGas Mid Life Enhancement (MLE) project and second will be paid only if the MLE project costs do not exceed an agreed threshold.
“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 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," said Bruce Clement, MD of AWE.
“The majority of AWE’s existing east coast gas supply contracts expire in 2017 and 2018 and we expect to commence marketing our uncontracted gas in the near future,” he added.
AWE holds a portfolio of production, exploration and development assets across the Otway and Bass Basins with direct access to the east coast gas market.
In December 2011, AWE sold its 11.25 per cent stake in T/L1 and 2.75 per cent stake in T/18P in the Bass Basin to Toyota Tsusho Gas E&P Trefoil Pty Ltd for A$80.125 million.
Established in 1997, ASX-listed AWE is headquartered in Sydney and currently has oil and gas interests in Australia, New Zealand, Indonesia and the USA. The firm employs around 100 people.
Prize is focused on the appraisal and development of hydrocarbon accumulations in the onshore and offshore projects by conducting exploration, development and production of petroleum and other activities. It previously counted ICICI Bank, HDFC and ICICI Venture among its shareholders before HPCL acquired the stake held by the financial institutions to make it a wholly owned arm.