PERTH (miningweekly.com) – ASX-listed Central Petroleum has inked a sales agreement with fellow listed New Zealand Oil and Gas and Cue Energy Resources to divest of half of its current working interests in its producing assets in the Amadeus basin, in the Northern Territory, for A$85-million.

The assets covered under the sales agreement include the Mereenie oil- and gasfield, the Palm Valley gasfield and the Dingo gasfield.

Under the terms of the agreement, Central will receive A$29-million in cash up front, while a further A$40-million will be made in payment by way of carried funding for Central's share of near-term development, appraisal and exploration activities, including a committed two-well exploration programme at Palm Valley and Dingo, which will start this year.

A further A$23-million of the transaction value will be covered by New Zealand Oil and Gas assuming the obligation to supply up to 4.9 PJ of gas which has been previously paid for but not delivered under pre-sale or take-or-pay arrangements.

A completion adjustment for net cash flows generated between the effective date and the completion date will also be accounted for.

The project interests will be held 70% by New Zealand Oil and Gas and 30% by ASX-listed Cue Energy, in which New Zealand Oil and Gas holds a 50.04% interest.

Central told shareholders on Tuesday that the transaction would result in an after-tax accounting profit of some A$35-million to A$40-million on the sale.

The company noted the transaction was a major step in executing the company’s strategic objectives, and would underwrite further exploration and development in the Amadeus basin and released a portion of the inherent value in its operating assets.

“Having been so closely involved in the acquisition of our operating assets, I am now excited to see the value, created over what have been difficult market conditions, partially realised,” Central MD and CEO Leon Devaney said.

“Not only are we paying down debt and reducing our liabilities, but our remaining interests will have significant near-term growth upside without funding from Central, with circa A$100-million of joint venture (JV) investment in development, appraisal and exploration in our Amadeus basin assets.”

“I am also very excited to be working with New Zealand Oil and Gas and Cue to extract full value from our Amadeus basin operating assets. New Zealand Oil and Gas, through their major shareholder the Ofer Global Group, has strong financial capacity and a similar approach to Central to maximise shareholder value and create growth from a strong operating foundation,” said Devaney.

“Emerging from the 2020 downturn, we set an aggressive growth strategy for the business, and with today’s announcement we continue to deliver on that strategy. With our Range pilot programme under way and a final investment decision targeted for 2022, significant development activities across our operating assets, and two significant exploration wells now funded for commencement in 2021, this is an exciting time for Central’s shareholders.”

New Zealand Oil and Gas on Tuesday said that the acquisition would increase its 2P reserves by some 14.5-million barrels of oil equivalent, a near five-fold increase, with further exploration upside potential.

The company’s board has urged shareholders to approve the transaction.

The transaction is also subject to Central financier, gas sales customer and JV consent, as well as regulatory and Foreign Investment Review Board approvals.