Adelaide Energy Limited has agreed to acquire gas production assets owned by Origin Energy in South Australia’s South East.
The change in ownership of the Katnook facilities near Penola will immediately deliver Adelaide Energy its maiden petroleum production and revenue.
The terms of the sale agreement with Origin Energy Resources and SAGASCO South East Inc. mean a total acquisition cost to Adelaide Energy of $A 2.175 million. As the transaction has an effective date of 1st October 2007, the net cost to the Company will be around $A1.5 million.
The Company has accepted future decommissioning liabilities for the production assets and 15 existing wells around Katnook acquired in the transaction.
The acquisition will allow Adelaide Energy engineering scope to boost processed volumes and sales from the existing drilled wells and plant, which currently service regional domestic and industrial consumers.
It brings into Adelaide Energy three discoveries within 30 kilometres of the processing plant, including opportunity within a year to commercialise gas from its key Jacaranda Ridge-2 gas discovery, just west of Penola.
Assets to be acquired from Origin Energy Resources Limited and other Origin Energy group companies, include:-
• The Katnook gas processing plant which has a capacity of up to 10 terajoules a day (10 TJ/d equivalent to around 10 million cubic feet of gas per day)
• The 15TJ/d Ladbroke Grove processing plant, shut-in since December 2006 but operated for six years prior to this
• Gas gathering grids between the plants, existing wells and fields
• 100% interest in three Petroleum Production Licences, (PPLs 62, 168 & 202)
• 100% interest in two Petroleum Retention Licences (PRLs 1 & 2)
• Subject to rights of pre-emption, a 50% interest in PRL 13 which encompasses the 1998 Killanoola oil discovery.
“The development of enhanced energy production in the South East will not be at the expense of our ongoing and long-term petroleum objectives in South Australia’s Cooper Basin or in Colorado in the United States,” Adelaide Energy’s Managing Director, Mr Carl Dorsch, said today.
“However, the Katnook assets will take on flagship status in the short-term, as they deliver a revenue stream, we know the province extremely well and can move quickly to extract greater synergies and outputs,” Mr Dorsch said.
“The nature and location of the assets means they offer considerable further exploration and development potential,” Mr Dorsch said.
The contract terms announced today provide for Adelaide Energy to sell gas from Katnook into existing markets at commercial rates. The Katnook plant is currently producing between1.5 - 4.5 TJ/d, processing gas from the Redman, Katnook, Haselgrove and Haselgrove South fields.
Mr Dorsch said the Ladbroke Grove facility, if recommissioned, provided “a second potential revenue stream from the acquisition.”
The PRL acreage includes the 1994 Wynn-1 gas and condensate field, now cased and suspended, and the second Wynn-2 delineation well, also cased and suspended as a future gas producer, with mapped mean gas-in-place of 3.5 bcf. In PRL 2, the Limestone Ridge-1 gas discovery of July 2001 tested at around 6TJ/d of gas but was not tied in.
The Jacaranda Ridge-2 gas discovery well in PEL 255 produced condensate-rich gas at flow rates up to 2.5 MMCFD with up to 100 barrels of condensate per million cubic feet of gas produced. Recent work on the well has confirmed the existence of an oil accumulation above the gas zone which will be further tested in mid July to establish the relative flow rates.
Subject to satisfaction of conditions and receiving all necessary approvals, the parties expect to complete the transaction within two months.
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