ROC said it had entered into agreements with WINGAS, a subsidiary of the German and Russian companies Wintershall AG and OAO Gazprom respectively to sell licence area PEDL 005 for a total of A$111 million,. The deal is expected to be finalised next month.
WINGAS, a joint venture between Wintershall (65%) and Gazprom (35%), has been active in the gas supply industry since 1990. It supplies natural gas to public utilities, major industrial enterprises and regional gas distribution companies in Germany and other European countries.
The deal will leave ROC debt-free and with A$180 million in cash, equivalent to just over A$1.00 per share.
“The development and production of the Saltfleetby Gas Field has been a wonderful - and very profitable - experience for ROC, managing director John Doran said."
"The proposed sale provides ROC with an opportunity to immediately realise, on a no risk basis, a value for the field that, on a forward price curve basis, would take a very long time to replicate in terms of net operating cash flow from pure gas and condensate production.
“During 2004, it became increasingly clear that any value maximisation exercise would be enhanced if it contained an element of gas storage. However, after reviewing gas storage in a UK context, ROC decided that it did not want to become a gas storage company because its upstream skill set and corporate strategy were inappropriate for life as an owner and operator of a gas storage facility.”
Saltfleetby is currently producing about 15 million cubic feet per day from three wells.
It has also produced almost a million barrels of condensate. Current condensate production is about 240 bpd.
ROC’s production will reduce by about 2,750 barrels of oil equivalent to 50 bopd.
ROC said the reduction in production was expected to be more than offset in just over a year’s time if the Chinguetti Oil Field in Mauritania and the Cliff Head Oil Field were brought onto production as currently scheduled. ROC’s net initial production from these two fields is expected to total more than 7,500 bopd.
