Australia-listed Molopo Energy is selling its Bowen Basin coalbed methane (CBM) assets in Queensland to a wholly-owned subsidiary of PetroChina for $43 million (A$41 million), the company said Wednesday. The sale includes an adjustment of $2.5 million (A$2.4 million) for working capital.
Under the terms of the sale agreement, Molopo will sell its CBM exploration permits covering 529 square miles (1,370 square kilometers) over five project areas.
The transaction is subject to review by the Australian Foreign Investment Review Board (FIRB). In addition, PetroChina has to obtain approval from the Chinese National Development Reform Commission (NRDC) within 60 days, unless otherwise extended.
Settlement of the transaction is expected to be completed within 30 days after the conditions are satisfied.
For Molopo, the sale of its CBM assets in Queensland will help the company to fund the field development projects at its Wolfcamp oil acreage in Texas.
"The sale proceeds, combined with our existing strong cash position, will be used to fund our 2013 capital program as we enter a period of intensive development of our Texas Wolfcamp oil acreage," Molopo's CEO Tim Granger said in a statement. "We have conducted a very thorough sales process for these CBM assets and are confident that this transaction is the optimal outcome for our shareholders," Granger added.
Molopo's Wolfcamp acreage is located in the Midland sub-basin of the Permian basin in West Texas. The company holds approximately 26,000 acres in two project areas: the 24,600 acre Fiesta project and the 1,400 acre Barnhart project, data from its July operational updates released on Tuesday shows. Molopo is targeting the Wolfcamp A and B benches with 7,500 foot long horizontal wells at a vertical depth of 5,000 and 7,500 feet.