AWE to sell its share in Tui Area Oil Fields to Tamarind Management for $2.08m

Wednesday, 14 December 2016

The Gas Flare on the FPSO Umuroa burning off natural gas as the oil is pumped out of the Tui oil field.

Australian oil and gas company AWE has struck a deal to sell its share of the Tui Area Oil Fields off the coast of Taranaki.

Under the terms of the agreement Tamarind Management will acquire all of AWE New Zealand Pty Ltd and AWE Taranaki Limited's shares - which together own 57.5 per cent of the fields - for US$1.5 million (NZD$2.08m).

The sale, which is subject to customary consents from the New Zealand Government and Tui Joint Venture, has an effective date of November 30, 2016, and is subject to purchase price adjustments at completion, which is anticipated in the first quarter of 2017.

* Tui oilfield reserves smaller than thought

* Tui oil field expect to yield another 5m barrels**

The oil fields, which sit 50 kilometres off the coast, comprise the Tui, Amokura and Pateke fields and the other partners in the Tui fields are New Zealand Oil & Gas, with 27.5 per cent, and Pan Pacific Petroleum with 15 percent.

Subject to joint venture consent, this includes operatorship, assets and inventory, AWE's oil hedge book, and a working capital cash balance of $10.8 million, the company's Australian Stock Exchange announcement said.

AWE CEO and Managing Director David Biggs said Tui was a landmark project that cemented its position as an offshore operator.

'Tui has been an excellent production asset generating significant returns for AWE and our Joint Venture partners as well as substantial taxes and royalties for the New Zealand government,' Biggs said in the announcement.

AWE opted to sell its interest in Tui to Tamarind because of its ability to maximise value from late life assets and their experience in decommissioning offshore oil projects, he said.

'With Tamarind's expertise, and further improvement in the oil price, Tui could potentially continue operating beyond 2019 which would benefit all stakeholders,' Biggs said.

The sale of Tui is expected to generate noncash profits after tax of around A$28-million, subject to purchase price adjustments, and will reduce AWE's provisions by around 33 per cent.

'The Tui sale is another important step in AWE's transition from legacy production assets to new growth assets,' Biggs said.

'Although we have sold the Tui project, New Zealand remains a component of AWE's geographic strategy and we continue to evaluate opportunities in New Zealand,' he said.

Tamarind managing director Ian Angell said the project represented a foundational asset in the development of Tamarind and as an oil producer and partner in New Zealand.

'We are incredibly pleased with the existing AWE team in New Plymouth and look forward to working with this capable and professional unit.

'The employees and management in New Plymouth and the ongoing support of BW Offshore, as the owner and operator of the FPSO, assures continuity and consistency of operations and performance,' Angell said.