Mitsui Farms-in to BassGas Project

AWE Petroleum has entered into a conditional agreement with Wandoo Petroleum Pty Ltd, a subsidiary of Mitsui, to sell a portion of AWE's petroleum exploration assets in the Bass Basin, offshore Victoria.

Mitsui will acquire from AWE a 7.5% interest in T/RL1 (containing the Yolla gas and condensate field) and a 12.5% interest in T/18P (containing the White Ibis gas and condensate field), collectively termed the "BassGas Project."

The transaction involves a cash consideration and a financial carry on an exploration well that will provide AWE with capital savings of approximately A$55.3 million (including the cash consideration, an exploration carry and reduced capital expenditure on the BassGas facilities based on an effective date of November 30, 2002). The transaction is subject to the normal regulatory approval process.

From AWE's perspective, this agreement provides a number of important benefits, including: Aligning the commercial interests of parties in the entire BassGas Project (i.e. T/RL1 and T/18P) for the first time, facilitating a co-operative development of the petroleum resources of the Bass Basin in the future. This will also strengthen AWE's balance sheet and in particular its cash reserves allowing the company the flexibility to fund the development of its recent oil discoveries at Cliff Head (AWE 27.5%) and Jingemia (AWE 15.245%). Commenting on the announcement, AWE's Managing Director, Mr. Bruce Phillips, said: "This transaction strengthens AWE's financial position and still allows us to retain a substantial 30% interest in the Yolla development and the associated regional infrastructure.

"In addition, having a company of the caliber of Mitsui buying into BassGas is a significant vote of confidence in the project. AWE is already involved in joint ventures with Mitsui in the Carnarvon and Perth (Cliff Head oil field) Basins, where we have enjoyed an excellent working relationship. We look forward to continuing that collaboration on the BassGas Project."

The BassGas Project involves the commercial development of the petroleum resources of the Bass Basin, offshore Victoria. The initial stage of the project involves the development of the Yolla gas and condensate field in the T/RL1 area. Based on the contracted gas reserves of up to 260 petajoules (PJ), the first stage Yolla development plans to initially produce a minimum 20 PJ of gas per annum, representing approximately 10% of Victoria's current consumption. The project would also produce approximately 13.5 million barrels of condensate and 1,000 kilotons of LPG over a 15-year period. There is also considerable potential for additional gas (and liquids) reserves in T/RL1 and the adjacent T/18P area should larger gas demand profiles be required in the future. BassGas Interest holders in the various lease and permit areas are: T/RL1: AWE with 30%; Origin Energy with 37.5%; CalEnergy with 20% and Mitsui with 12.5%. T/18P: AWE with 22.6%; Origin Energy with 41.4%; CalEnergy with 23.5% and Mitsui with 12.%.