Australian energy company AWE has entered into an agreement to sell its 57.5% interest in the Tui Area Oil Fields located in the offshore Taranaki basin in New Zealand, to Kuala Lumpur-based Tamarind Management.
Subject to approvals from the New Zealand government and the Tui joint venture, Tamarind will acquire all of the outstanding shares of AWE New Zealand and AWE Taranaki, which together own 57.5% of Tui, for US$1.5 million.
The deal includes operatorship, assets and inventory, AWE’s oil hedge book, and a working capital cash balance of $10.8 million.
The Tui Area Oil Fields comprise the Tui, Amokura and Pateke fields which are located approximately 50km off the coast of Taranaki, in PMP 38158.
Production from each field is fed into the Tui gathering system and then into the Umuroa floating, production, storage and offloading vessel.
Partnering New Zealand Oil & Gas (27.50%) and Pan Pacific Petroleum (15%), AWE is the operator of this venture.
David Biggs, CEO and managing director of AWE said Tui is a landmark project for the company that cemented its position as an offshore operator.
“Tui has been an excellent production asset generating significant returns for AWE and our joint venture partners as well as substantial taxes and royalties for the New Zealand government,” he said.
“Following expressions of interest from a number of parties, AWE has opted to sell its interest in Tui to Tamarind because of their ability to maximize value from late life assets and their experience in decommissioning offshore oil projects.
“With Tamarind’s expertise, and further improvement in the oil price, Tui could potentially continue operating beyond 2019 which would benefit all stakeholders.”
The sale of Tui is expected to generate a non-cash profit after tax of approximately AU$28 million, subject to purchase price adjustments, and will reduce AWE’s provisions by approximately 33%.
“The Tui sale is another important step in AWE’s transition from legacy production assets to new growth assets,” Biggs said.
“Although we have sold the Tui project, New Zealand remains a component of AWE’s geographic strategy and we continue to evaluate opportunities in New Zealand.”
This transaction marks the end of AWE’s program of divesting non-core and late life assets, to focus on ground floor developments, such as the Waitsia gas project in the onshore Perth basin of Western Australia.
In May 2016, the firm agreed to sell its 42.5% interest in the Bulu production-sharing contract (PSC) to Singapore’s HyOil for up to AU$27.5 million.
Located offshore Indonesia in the East Java Sea, the Bulu PSC includes the undeveloped Lengo gas project, where KrisEnergy (42.5%) is operator, and PT. Satria Energindo (10%) and PT. Satria Wijayakusuma (5%) are project partners.
This comes after the Waitsia project operator in January 2016 sold its 10% working interest in the US Sugarloaf Area of Mutual Interest (AMI) to Carrier Energy Partners II, LLC (CEP II), for $190 million.
Waitsia is a 50:50 joint venture between AWE and Origin Energy. In December 2016, the duo approved the 2017 development activities budget which will include drilling the final two appraisal wells required for Stage 2 of the project.
According to Biggs, Waitsia Stage 2 could supply 10% of Western Australia’s domestic gas demand, some 100 TJ per day for up to 10 years. Although, Origin is currently planning to divest its conventional upstream business via an Initial Public Offering, Biggs said, a new entity should be positive for Waitsia and the group does not anticipate any delays in schedule.
Image: Offshore Tui Area Oil Fields / AWE
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