Australia-based AWE has agreed to sell its 42.5% stake in the Bulu production-sharing contract (PSC) in Indonesia to a wholly owned subsidiary of HyOil for up to A$27.5 million (US$20.3 million) in cash.
The agreement is in line with AWE’s strategy of divesting non-core assets in order to recycle capital into “high value growth projects” such as the Waitsia gas project in Western Australia, the company said in a May 5 filing to the Australian Securities Exchange (ASX).
Singapore-based KrisEnergy operates the Bulu PSC, which covers 697 square km offshore East Java, with a 42.5% stake. Indonesia’s Satria Energindo and Satria Wijayakusuma also hold stakes of 10% and 5% respectively.
“The sale of the Bulu PSC [stake], including the undeveloped Lengo gas project, is another important step in reshaping AWE to deliver sustainable growth in a low oil price environment,” AWE’s managing director and CEO, David Biggs, said. “We recently completed the sale of Sugarloaf in the USA, at a price that exceeded market expectations, and at the end of the March quarter AWE was cash positive with no drawn debt.”
He added that the Bulu PSC sale would reduce capital commitments, strengthening the company’s balance sheet. He said: “In the current low oil price environment, we are focused on achieving near-term growth through the delivery of valuable domestic gas projects.”
In addition to its Bulu stake, AWE’s assets offshore East Java include a 40% interest in the Titan PSC, a 100% stake in the Terumbu PSC and 50% stakes in both the North Madura and the East Muriah PSCs. In the Natuna Sea it owns a 50% stake in the North West Natuna PSC (NWN PSC), which contains the undeveloped Ande Ande Lumut (AAL) oilfield.
AWE acquired 100% stakes in and operatorship of the NWN PSC from Malaysia’s Genting in early 2012. In November 2013, AWE sold a 50% stake in the NWN PSC to Australian peer Santos, which also took over the block’s operatorship.
“In Indonesia, we remain focused on progressing the [AAL] oil project, which will provide AWE with exposure to any rise in oil prices,” Biggs said. “The joint venture is planning to drill an appraisal well on the underlying G-sand reservoir before the end of the current financial year (on June 30), which has the potential to increase the AAL project’s total gross recoverable oil by a further 30 to 40 [million barrels].”