AWE HAS sold portions of its interest in the BassGas project and the nearby Trefoil field to Prize Petroleum, a wholly-owned subsidiary of Hindustan Petroleum Corporation.

AWE sold an 11.25 per cent stake of T L1, containing the Yolla field and BassGas infrastructure, and a 9.75% interest in the Trefoil field on T 18P to the company.

AWE will retain a 35% interest in both the Origin Energy-operated assets, located in the Bass Strait offshore Tasmania.

AWE managing director Bruce Clement said 35% was an appropriate level of ownership for a non-operated asset – saying it represented a good balance between risk and return.

“Importantly, with a 35% interest, AWE’s voting rights remain at a level that provides good control over major investment decisions,” he said.

The company had previously received joint venture and government approval for the transaction.

Total consideration for the sale was $85 million with payment structured in three tranches including a $16 million deposit, a payment of $64 million received on completion of the sale and further $5 million as a deferred payment.

Proceeds of the $64 million completion funds will be used to repay drawn debt and fund development projects, AWE said.

The final payment is split into two $2.5 million payments, the first amount paid on completion of the BassGas Mid Life Enhancement (MLE) project and the final amount paid if the MLE project costs do not exceed an agreed threshold.

Work on the MLE is proceeding apace, with the installation of the export compression and condensate pumping modules onto the Yolla offshore platform completed in December.

Tie-in and commissioning of the modules is scheduled to commence in mid-2015, after planned development drilling of the Yolla 5 and Yolla 6 wells is completed.

“These wells should increase production from BassGas to between 60 terajoules and 70 TJ per day, up from the 40 TJ average acheived over the September quarter,” he said.

The modules are expected to be commissioned in the 2016-2017 financial year.