PERTH (miningweekly.com) – ASX-listed oil and gas company AWE has signed an A$85-million deal to sell an 11.25% stake in the BassGas project and the Yolla field, in Victoria, as well as a 9.75% interest in the Trefoil field to Prize Petroleum.

AWE would receive an initial A$80-million for its interest in the project and oil fields, with a further A$5-million in deferred payments, once a number of conditions had been met.

The first A$2.5-million would be payable on the completion of the BassGas mid-life enhancement (MLE) project, and the balance would be payable if the MLE project did not exceed cost expectations.

The MLE project cost the BassGas joint venture (JV) partners about A$490-million, with Phase 1 involving the upgrade of the Yolla platform from an unmanned offshore platform to a manned platform, and installing export compression and condensate pumping models.

The JV partners, which include Toyota Tsusho and Origin Energy, would also drill further development wells during 2014.

“The sale of an 11.25% interest in BassGas is another successful strategic initiative for the company and is an excellent outcome for AWE,” said MD Bruce Clement.

He noted that while recording a noncash loss on the sale, the release of capital from the BassGas asset would further strengthen AWE’s financial position and reduce the company’s exposure to capital commitments for the final stages of the MLE project.

“Our remaining 35% interest in BassGas is an appropriate holding in this non-operated asset and, importantly, maintains our voting rights at a level that provides control over major investment decisions.”

Clement added that AWE remained well positioned to take advantage of rising East Coast gas prices, where a number of gas supply contracts were renegotiated towards the end of 2013 with oil-linked pricing mechanisms and at higher base rates.

“The majority of AWE’s existing East Coast gas supply contracts expire in 2017 and 2018, and we expect to commence marketing our uncontracted gas in the near future,” Clement said.

Over the next few years, AWE was expected to deliver its Ande Ande Lumut oil project, in Indonesia, the Sugarloaf unconventional oil and gas project, in the US, and the remainder of the MLE project at BassGas.