AWE, Innamincka Take Bigger Bite of BassGas Project

Australian Worldwide Exploration and CalEnergy Gas have entered into arrangements under which CalEnergy will sell its 15% equity interest in the BassGas Project (T/L1 and T/RL 1) for a total consideration of A$80m.

Separately, AWE and Innamincka Petroleum have entered into arrangements that will result in Innamincka acquiring 7.5% of the CalEnergy equity.

The CalEnergy and Innamincka arrangements mean that AWE's share of the project will increase by 7.5%, from 42.5% to 50%.

The transaction will not complete until after February 28, 2010 but the effective date of the acquisition will be July 1, 2009. The purchase consideration will be adjusted as necessary to reflect the effective date. The transaction will add to gas and condensate production and will also add approximately 5.2 million barrels of oil equivalent ("BOE") proved and probable reserves to AWE.

If Innamincka Petroleum is unable to complete the transaction, AWE will acquire all of CalEnergy's 15% equity interest. The transaction will be subject to usual conditions including necessary joint venture and regulatory approvals.

BassGas background

The BassGas Project consists of an offshore, unmanned wellhead platform connected by pipeline to the gas processing facility onshore at Lang Lang in south eastern Victoria. The Yolla platform is located approximately147 kilometers offshore in a water depth of 80 meters. The project commenced gas sales in 2006, and has delivered consistent results since its commissioning. AWE increased its equity in the BassGas Project from 30% to 42.5% during the year, through the merger with Arc Energy Limited.

In 2009, the BassGas Project delivered a gross 17.6 PJ of sales gas, 726,000 barrels of associated condensate and 50,000 tonnes of LPG. Returns in this Project are enhanced due to the high liquids component of the gas, with approximately 62% of sales revenue in the past year being derived from the associated liquids.

AWE managing director, Bruce Wood, said, "BassGas is a cornerstone asset for AWE. It has both existing infrastructure nearby to Melbourne and ready access to some exciting exploration opportunities. The adjacent T/18 P joint venture is currently drilling the Trefoil-2 well, to confirm additional gas reserves for the project. The Lang Lang gas plant will become a focal point for added gas reserves in the Bass Basin. AWE will continue to seek value-accretive opportunities in and around our existing cornerstone assets."

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."