BHP Billiton sold its 32.61% stake in Laminaria and 25% in Corallina to independent UK-based explorer Paladin, which normally sticks to the North Sea region.
The deal also includes the purpose-built Northern Endeavour floating production, storage and offloading vessel. The two fields are about 550km from west-north-west of Darwin in water depths of between 350 and 400 metres.
The Laminaria and neighbouring Corallina oil fields were discovered in 1994 and 1995 respectively. Production peaked at 180,000 bopd in 2000, but the fields have since been in natural decline and have been averaging 30,900 bopd for 2004.
The sale to Paladin is subject to the pre-emptive rights of the other joint venture participants – Woodside and Royal Dutch/Shell – and formal government approvals.
The transaction is expected to be completed in early 2005. The purchase price is effective as at 1 July 2004, and is subject to adjustments for working capital and cash flow movements between 1 July 2004 and completion.
BHP Billiton said the sale of its interests in the Laminaria and Corallina oil fields was part of the company’s active portfolio management strategy. Following a review, its interests in the fields were identified as being non-core to the corporation’s future petroleum strategy.
The acquisition is one of Paladin’s largest to date. Paladin currently has assets in the North Sea in the UK, Denmark and Norway, as well as in Gabon, Indonesia, Romania and Tunisia.
“This is of an ideal size as a first deal for Paladin in Australia,” said Paladin chief executive Roy Franklin.
“There is plenty of scope for added value through further investment in both Laminaria and Corallina. In addition we see the opportunity for follow-on deals in the country.”
The deal would add about 13 million barrels 10% to Paladin’s reserves base and increase its production by between 12 per cent and 15 per cent, according to Franklin.
Paladin will initially run its Australian operations from London but intends to set up an office in Perth within the next six months. Franklin said he was not ruling out further acquisitions in Australia.
Meanwhile, BHP Billiton has announced the results of its second appraisal well on the Shenzi discovery in the deepwater Gulf of Mexico.
Shenzi-3 successfully encountered hydrocarbons in lower Miocene-aged reservoirs with approximately 100 metres (330 feet) of net oil pay in a 125-metre (410 feet) gross hydrocarbon column, said BHP Billiton’s energy group president Philip Aiken.
“This is further evidence of the Gulf of Mexico becoming the third core business for our Petroleum Customer Sector Group," Aiken said.
"We’ve been very pleased with the results we have thus far from drilling at Shenzi-3, and the indications are that we could have a commercial field with a multi-hundred million barrel hydrocarbon resource. We are planning further appraisal drilling to more fully delineate the reservoir.”
An updip sidetrack well subsequently drilled from the initial wellbore confirmed the presence of a hydrocarbon column. Drilling is currently underway on another sidetrack well to collect additional reservoir data and verify the results from the first two penetrations at Shenzi-3.
Shenzi-1, drilled in 2002, encountered a gross hydrocarbon column of 142 metres (465 feet) with a net pay of 42.5 metres (140 feet), and Shenzi-2, drilled in 2003, encountered a 381-metre (1,250 feet) gross hydrocarbon column and 152 metres (500 feet) of net oil pay in lower Miocene sandstones.
The discovery is located approximately 14km northwest of the company’s Atlantis field, which is currently in development. BHPB is the operator of Shenzi with a 44 percent interest with Amerada Hess and BP each holding a 28 percent interest.
BHP Billiton closed down 2c to $14.27 last Friday.
