AWE has finalised the sale of its 10 per cent stake in the Sugarloaf area of mutual interest (AMI) to US-based Carrier Energy Partners II for US$190 million.
Sugarloaf is part of the unconventional Eagle Ford play in Texas, part of an area operated by US-based Marathon Oil.
In an announcement, AWE said it had received an initial US$14 million deposit in January and the remaining US$176 million later.
The company also received US$16 million for purchase price adjustments, including US$9 million for drilling costs incurred prior to the effective date of 1 January 2016.
AWE said sale proceeds will be used to repay all debt, resulting in an estimated net cash position of A$50 million at the end of the March quarter – though the company expects to lose about A$44 million in tax, payable in the June quarter.
AWE managing director Bruce Clement said the sale of Sugarloaf was a major step in reshaping AWE to grow sustainably in the low oil price environment currently experienced across the industry.
“We have removed significant recurring capex and strengthened the company’s balance sheet through the Sugarloaf sale. We will repay all debt and anticipate being positive net cash at the end of March,” he said.
“In the short to medium term, AWE will be more focused on low cost, high value gas assets with CPI-linked contracts. We are developing the first stage of the Waitsia gas field in Western Australia’s northern Perth basin where AWE will become a low cost producer.”