AWE Ltd., Sydney, has signed an agreement to sell its 42.5% interest in the undeveloped Lengo natural gas project offshore Indonesia to HyOil Pte. Ltd. for as much as $26.5 million (Aus.). Lengo lies in the Bulu production-sharing contract offshore east Java.
The cash transaction has been structured in two tranches. The first is a $15-million (Aus.) up-front payment following receipt of Indonesian government approval for the transfer of ownership. This will be followed by an additional two-part cash payment following execution of a gas sales agreement for Lengo. It comprises $5 million (Aus.) if the contract gas price is at, or exceeds, $5.50 (US)/MMbtu and a further $7.5 million (Aus.) if the contract gas price is at, or exceeds, $7.65 (US)/MMbtu.
The transaction has an effective date Apr. 1.
David Biggs, the new chief executive officer of AWE, said the sale was in line with the company’s strategy of divesting noncore assets so that it can recycle capital into high-value growth projects, such as the Waitsia gas development in the onshore North Perth basin in Western Australia.
HyOil is an upstream oil and gas company recently incorporated in Singapore specifically to invest in, acquire and operate near-term production assets as well as to undertake delineation and appraisal of discoveries.
Other interest holders in the Bulu PSC are operator KrisEnergy with 42.5%, PT Satria Energindo with 10%, and PT Satria Wijayakusuma with 5%.
The Lengo sale follows completion of sale of AWE’s interest in the Sugarloaf project in the US.
AWE has not quit Indonesia altogether. The company is continuing with the Ande Ande Lumut oil project and plans an appraisal well in the next 2 months. This has potential to add 30-40 million bbl of oil to the project’s current estimate of 101 million bbl recoverable.
In Western Australia AWE has begun construction of Stage 1A of the Waitsia project, an $18 million (Aus.) development that will supply gas to the Western Australian domestic market starting in the third quarter of this year. Planning is already under way for development of the next phases at Waitsia to deliver as much as 100 terajoules/day of gas.