Australian oil and gas production and exploration company Triangle Energy has executed a share sale agreement with AWE for the purchase of its 57.5% participating interest in the Cliff Head oil field, located in the offshore Perth Basin, Western Australia.
Roc Oil, the operator of the Cliff Head field with the remaining 42.5% interest, will remain the operator of the field.
AWE last week announced the agreement to sell its Cliff Head stake but, at the time, the company did not reveal the buyer. AWE initially planned to sell the stake to Elixir Petroleum, an international oil and gas exploration company.
Under the share sale agreement, the total upfront consideration is A$3.2 million ($2.4M) of which Triangle has paid a deposit of A$819,777. In addition, Triangle will pay AWE a royalty of US$5/bbl for oil sales in excess of $US70/bbl.
The effective date of the transaction is January 1, 2016. The cash benefits accrued and payable to Triangle since the effective date total A$1,670,786 up to the end of May 2016 and is subject to final adjustments at completion. Settlement of the acquisition is expected to occur on or before June 30, 2016. Importantly, the company will fund the acquisition from current cash reserves, Triangle said.
Triangle Managing Director, Robert Towner, stated: “Oil prices are at the lowest that we have seen for many years but the price volatility in the commodity markets is a constant factor and periods of uncertainty can present short to medium term opportunity.”
Towner added, “The acquisition of a majority stake in the Cliff Head project is a major milestone for Triangle. The low up-front acquisition cost and positive provides exceptional leverage to Triangle shareholders.”
The Cliff Head oil field is located 10 kilometres off the coast of Western Australia at a water depth of 15-20 meters. The field covers 6km² in the Commonwealth exploration permit WA-286-P and was the first commercial oil discovery developed in the offshore Perth Basin.
First oil production from the field started in May 2006. Oil production from the Cliff Head field is produced via an unmanned offshore platform connected to the Arrowsmith onshore processing plant by twin 14 kilometre production and injection pipelines. Crude oil is trucked to BP at their Kwinana refinery south of Perth.