Innamincka enters into arrangement to acquire an interest in BassGas Project
The Directors of Innamincka Petroleum Limited ("Innamincka") are pleased to
announce that the company has entered into an arrangement to acquire a 7.5% equity interest in the BassGas Project (T/L1 and T/RL 1) which contains the producing Yolla gas and condensate field. The purchase price of the interest is A$40m.
The acquisition is consistent with the Company’s growth strategy of building an asset portfolio to provide immediate and long-term cash flow, and complements Innamincka's recent acquisition of a 5% equity interest in permit T/18P.
BassGas Highlights
The well known BassGas Project is a quality producing Australian asset. Key
features are:
• The BassGas Project includes the Yolla production platform, the Yolla gas
and condensate field, and all associated offshore and onshore infrastructure.
• The project will provide immediate and long-term earnings and cashflow for
Innamincka.
• Long field life expected to be at least 20-30 years.
• Expansion plans are being considered by the Operator and joint venture
partners to increase production from 2011 and improve efficiency.
• The Area of Interest contains an extensive exploration portfolio which includes gas, gas liquids and oil opportunities, most of which are in relatively shallow
water depths.
• Price reopeners exist in current gas contracts. Additionally there is potential
for sale of uncontracted gas reserves and resources at prices higher than
those existing contracts
• The Yolla infrastructure may be utilised for the commercialisation of nearby
discovered but undeveloped resources in T/18P. These resources include
Trefoil, White Ibis and potentially Rockhopper (to be drilled next month).
The Transaction
The transaction is in the form of:
• An option arrangement for Australian Worldwide Exploration Limited (“AWE”)
to acquire CalEnergy Gas (Australia) Limited’s (“CalEnergy”) 15% equity interest in the Project for $80m; and
• A participation agreement between AWE and Innamincka for Innamincka to
purchase half of the 15% equity interest (i.e. 7.5% equity interest) for $40m, on substantially the same terms as AWE's acquisition from CalEnergy.
The transaction is subject to usual conditions including necessary joint venture and regulatory approvals. Completion of the transaction is unlikely to take place until after 28 February 2010 but the effective date of the acquisition will be July 1, 2009.
Following completion of the transaction, the participating interests in the Project will be:
• Origin Energy Limited (Operator) 42.5%
• Australian Worldwide Exploration Limited 50.0%
• Innamincka Petroleum Limited 7.5%
As communicated by AWE in its announcement today, the transaction will add approximately 5.2 million barrels of oil equivalent (“BOE”) reserves for a 7.5% interest.
BassGas Background
The BassGas Project consists of an offshore, unmanned wellhead platform
connected by pipeline to the gas processing facility onshore at Lang Lang in south eastern Victoria. The Yolla platform is located approximately 147 kilometres offshore in a water depth of 80 metres. The project commenced gas sales in 2006, and has delivered consistent results since its commissioning.
In FY09, the BassGas Project delivered 17.6 PJ of gross sales gas, 726,000
barrels of associated condensate and 50,000 tonnes of LPG. Returns from the
project are enhanced due to the high liquids component of the gas, with
approximately 62% of sales revenue in FY09 derived from liquids.