Phillips, who farewelled AWE at today's AGM to make way for his deputy Kenneth Williams, took the opportunity to reflect on his time at the company, exactly 20 years since it floated in 1997.

 

He leaves the company in better shape than three years ago when it invested heavily in growth that promised a bright future while oil prices were over US$110/bbl but in the process reached the highest debt level in its history.

 

It was forced to conduct some "major surgery", selling one of its best assets in the US' Sugarloaf area to repay debt and embarked on a severe cost-cutting program, and today announced a 40% improvement in net losses to A$217.5 million for FY217 including impairments and writedowns of $209.8 million.

 

Its production assets performed as expected with net production totalling 2.8MMboe, though sales revenue was down 49% to $103.6 million, also expected due to reduced revenue from selling its late-life and non-core oil producing assets over the past two financial years. 

 

The company's asset sales included its interest in the Tui oil project in February for a book profit of $36.3 million.

 

Low oil prices also contributed to the further delay of the Ande Ande Lumut oil project in Indonesia, triggering an impairment to its carrying value and a write down of the associated US$88 million (A$115 million) carry, though that has not been relinquished and remains payable upon sanctioning.

 

AWE CEO David Biggs said AAL was still a "valuable option" for the oiler should oil prices improve, which they are widely expected to, albeit glacially after the recent surge.

 

This was backed up by Phillips' observation that the Indonesian government recently said it would be exercising its rights for an appointee to take a 10% interest in the production sharing contract, with a commitment to repay associated past costs out of production.

 

Phillips called that an "independent positive indicator" that there is indeed value in the project.

 

Reflecting on matters closer to home, he said the Waitsia field which promises to produce natural gas for Western Australians for more than 30 years was but a foretaste of what is to come, and in some ways replicates what the company did for the east coast market.

 

"In the first decade AWE's championing of the Kipper, Yolla and Casino gas fields offshore Victoria provided competition to Esso/BHPB's near monopoly on gas supply to Victoria," he said. 

 

"It is arguable that the current high gas prices experienced by customers today would have occurred much earlier if not for AWE's participation in the market." 

 

Biggs said today that Casino, in the Otway Basin offshore Victoria, was still important for AWE (25%), particularly as gas sales contracts are set to expire early next year. 

 

Marketing of the uncontracted gas is underway and AWE believes realised prices will "substantially exceed" historic contract rates. 

 

It is also working with operator Cooper Energy (50%) to assess further development potential within the field over coming years. 

 

The Casino-5 well was shut in to address an anomalous annulus pressure reading which impacted FY17 production, and Cooper is planning a work over on the well in early 2018.

 

Now, at the end of AWE's second decade, Phillips said the oiler was again championing gas competition, this time in WA. 

 

"Gas customers in the west are benefiting as AWE enters the market against LNG export pricing," he said. 

 

"If AWE is successful, it will defer expensive energy for homes and industry we will provide more employment in regional areas and pay royalties that flow directly to the WA government for investment in the likes of schools and hospitals."

 

AWE  was trading at 56.7c this morning.