PERTH (miningweekly.com) –  Continuing with its strategy of divesting noncore assets, ASX-listed AWE announced on Thursday that it was selling its 42.5% interest in the Bulu production sharing contract (PSC) for A$27.5-million in cash.

Located offshore east Java, the Bulu PSC included the undeveloped Lengo gas project.

The transaction, with a subsidiary of HyOil Pte, would be structured in two tranches, with the first A$15-million upfront cash payment due following Indonesian government approval.

An additional A$5-million cash payment was due on the execution of a gas sales agreement, while a further A$7.5-million was due if the contract price was recorded at, or exceeded, $7.65/million British thermal units.

AWE MD and CEO David Biggs said on Thursday that the sale of the Bulu PSC was another important step in reshaping AWE to deliver sustainable growth in a low-oil-price environment.

“We recently completed the sale of Sugarloaf in the US, at a price that exceeded market expectations and, at the end of the March quarter, AWE was cash positive with no drawn debt. The sale of Lengo, when completed, will further reduce capital commitments and strengthen the company’s balance sheet,” said Biggs.

He added that in the current low-oil-price environment, AWE was focused on achieving near-term growth through the delivery of valuable domestic gas projects.

“We have started construction on Stage 1A of the Waitsia gas project - a A$18-million development that will supply gas to the historically strong Western Australian domestic gas market from the third quarter of this calendar year.

“The Waitsia joint venture is already considering options for the next phase of development to deliver up to 100 TJ/day. Gas marketing is well under way.”

In addition, AWE would, over the next 12 to 24 months, recontract gas from its East coast production assets in the hope of achieving gas prices substantially higher than historic contracts.

In Indonesia, the company’s focus was on progressing the Ande Ande Lamut oil project, which would provide AWE with exposure to any rises in the oil price.

The project is currently estimated to have some 101-million barrels of gross recoverable oil, but the joint venture partners were hoping to increase this by a further 30-million to 40-million barrels before the end of the current financial year.