Nov 09 - Innamincka Enters Into Arrangement to Acquire an Interest in BassGas Project

Source Press Release
Company Acer Energy LimitedAWE Limited 
Tags Deals, Upstream Activities
Date November 11, 2009

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.

Innamincka Chairman, Adam Johnson said, “This opportunity continues the Company’s evolution into a diversified oil and gas company with a range of exploration and producing assets in some of Australia’s most prospective basins. The Innamincka Directors are excited by this opportunity and the potential to enhance value for Innamincka shareholders. The transaction, when coupled with Innamincka’s interest in T/18P (White Ibis, Trefoil and Rockhopper) will substantially change the Company into a producer with long term cash flow and a diversified portfolio of assets setting the foundation for continued growth."

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