COTT Oil & Gas will sell its stake in the Pandora gas field for $8 million after giving up on its plans for a floating liquefied natural gas (FLNG) development option.
Privately owned company Twinza Oil will be the buyer of Cott’s 40 per cent interest in PRL 38, subject to the approval of Cott shareholders.
Covering 76,500 hectares in the offshore Papuan basin, 235 kilometres west of Port Moresby, PRL 38 is operated by Spanish giant Repsol, which holds a 25% stake, alongside Kina Petroleum (25%) and Barracuda, a subsidiary of Santos.
In a notice of general meeting sent to shareholders, Cott said it had aimed to demonstrate the potential of the licence as either a small scale FLNG facility or as an important part of a gas and liquids aggregation strategy in the western foreland region of PNG.
“The company approached numerous FLNG industry participants including producers, technology providers and off-takers, in an effort to garner support for the development of PRL 38 as a stand-alone FLNG project,” the company said.
“Ultimately, no credible offer was forthcoming which would have provided the company with the opportunity to develop PRL 38 and as a result the directors have determined that the disposal is in the best interests of the company.”
Cott added that its work commitments over the assets for the next two years would be significant, including the drilling of a well in two years’ time.
“It is the directors’ view that there is considerable uncertainty that the company would be able to meet its share of such funding obligations, particularly in light of the difficult conditions for smaller natural resource companies generally and the lower price environment within the oil and gas industry,” the company said.
“The disposal is the only realistic transaction currently available to the company which will result in reasonable value being realised for PRL 38.”
If approved, Cott would receive about $4.3 million from the sale after discharging liabilities to International Exploration Services and other parties, allowing it to consider new opportunities in Australia and overseas.
The proposal was passed by a show of hands at the company’s general meeting, held in Perth on 15 February.