PERTH (miningweekly.com) – ASX-listed AWE has agreed to sell its 10% working interest in the Sugarloaf project, in Texas, for $190-million.
The company said on Wednesday that it had received a $14-million deposit from buyer Carrier Energy Partners II, with the transaction likely to be completed by the end of March.
AWE MD and CEO Bruce Clement told shareholders that the sale of Sugarloaf was consistent with the company’s strategy of divesting assets in order to recycle capital into ground-floor developments, such as its Waitsia gas project, in Western Australia.
“The sale of the Sugarloaf asset for $190-million is an excellent outcome for AWE and demonstrates the company’s proactive approach to portfolio management and its ability to consistently deliver significant value, even in a low oil price environment.”
The sale proceeds would be used to repay debt drawn under AWE’s debt facility, and would substantially strengthen the company’s balance sheet, leaving AWE with a net cash position of some A$60-million.
Earlier this month, AWE achieved a final investment decision for the first stage of development for the Waitsia gas project. The A$17.5-million project would comprise the installation of new infrastructure and upgrades to existing assets, which would connect the recently flow-tested Waitsia 1 and Senecio 3 gas wells to the Xyris production facility.
Production from Waitsia was expected to provide AWE with early cash flow in mid-2016.
“Post the sale of Sugarloaf, AWE will continue to focus on maintaining a balanced and diverse portfolio with a range of gas assets, such as Waitsia, BassGas and Casino, weighted to near-term production, and other undeveloped assets, such as the Ande Ande Lumut oil project, weighted towards the medium- to long-term, with potential for future upside in oil prices,” Clement said.