AWE has signed a conditional heads of agreement to acquire 90% of PT Ogspiras Basya Pratama (OBP), which is developing the Kilang LPG Extraction Plant, near Palembang, south Sumatra.

Subject to completion of final due diligence and regulatory approvals, AWE will make its acquistion by funding 100% of the remaining capital expenditure in the project, which is currently under construction.

AWE will fund the OBP purchase through a placement of ordinary shares, which will raise about A$120 million.

$30 million of this has been budgeted for the Indonesian project.

Another $37 million has been ear-marked for the much-delayed Bass Gas project.

The remainder will help fund the Cliff Head and Tui Area projects, as well as exploration activity in the Otway and Perth basins in Australia and the Taranaki and Canterbury basins in New Zealand.

“Our participation in the Indonesian LPG Project is AWE’s first significant investment outside our trasional ustralia and New Zealand core assset area and comes after rigorous evaluation of the risks versus reward scenarios,” said AWE managing director Bruce Phillips.

“The LPG project and its potential for further expansion beyond the initial base may provide AWE with a fifth cornerstone asset area.

The LPG Extraction Plant is expected to generate more than 1.6 million barrels of liquid sales and over 500,000 tonnes of LPG, which would generate more than US$230 million for the company over the life of the 15-year project.

The remaining 10% equity in OBP will be held by an Indonesian partner, which AWE has declined to name at this stage. AWE and its Indonesian partner have agreed to pursue further transactions in Indonesia.

Current shareholders will also be able to subscribe for up to $5000 worth of ordinary shares under a Share Purchase Plan, the details of which are yet to be released.