AWE has agreed to sell an 11.25 percent interest in T/L1 and 2.75 percent interest in T/18P in the Bass Basin to Toyota Tsusho Gas E&P Trefoil Pty Ltd (Toyota Tsusho) for a cash consideration of A$80.125 million.
The transaction provides AWE with a more balanced asset portfolio, a very strong balance sheet, and considerable flexibility to fund its future growth projects.
As well as injecting cash into the balance sheet, the transaction also reduces the risk-exposure to the capital expenditure requirements for the BassGas Mid-Life Enhancement project (an additional saving of approximately A$40 million). After completion, AWE will retain a strong cash position (which was $140 million at end September, 2011), with no debt, and will have excellent long term cash flows from five cornerstone assets.
Based on the Company's strong financial position, AWE also announced the payment to shareholders of a fully franked special dividend of 5 cents per share.
Bass Basin Sale
Under the terms of the binding sale and purchase agreement executed by AWE and Toyota Tsusho, AWE will sell an 11.25 percent interest in T/L1 (which includes the Yolla gas and condensate field and its associated production infrastructure) and a 2.75 percent interest in T/18P (which includes the Trefoil gas and condensate discovery) for a cash consideration of A$80.125 million (plus working capital adjustments at completion).
At completion, AWE will hold a 46.25 percent interest in T/L1 and a 44.75 percent interest in T/18P. These changes provide a better balance in the joint venture interests, whilst maintaining AWE's strong voting position in the operation of the assets.
The sale price is equivalent to approximately A$7 million per percentage point interest in T/L1, valuing AWE's remaining 46.25 percent interest at A$324 million (62 cents per share) and supporting AWE's carrying value for the asset. The sale will have an effective date of November 1, 2011, and is subject to standard approvals for a transaction of this type, including joint venture and governmental approvals. Foreign Investment Review Board approval has already been received for the transaction.
Commenting on the sale, AWE Managing Director Bruce Clement said, "Following the recently completed strategic review of its assets, the Company made a decision to reduce its equity interest in the Bass Basin to manage near term capital requirements, to better balance its asset portfolio, and to free up capital for investment in future growth projects.
"The resulting sale price agreed with Toyota Tsusho reflects the strength and quality of the Bass Basin portfolio and highlights the significant value of AWE's core business.
"The last two major transactions completed by AWE (the Adelphi takeover and the CalEnergy/Toyota Tsusho purchase and sale) have delivered very positive outcomes for AWE and its shareholders.
"The immediate payment of a 5 cent per share fully franked Special Dividend will be important to many investors in what have been difficult recent global economic times. The payment will be made to shareholders early in 2012 and confirms the board's commitment to the creation of shareholder wealth.
"The BassGas sale proceeds are ear-marked for investment in future growth projects in the event of success in the Company's exciting Tight Gas and Shale Gas opportunities in Western Australia and its conventional gas targets in Indonesia, and in potential selective acquisitions.
"In the meantime, we look forward to working with Toyota Tsusho and Origin Energy to successfully complete the major investment phase of the BassGas Mid Life Enhancement Project over the next 18 months and to benefitting from the future long term production of gas and condensate from the project."
The participants in T/L1 after completion of the transaction will be:
The participants in T/18P after completion of the transaction will be:
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