The deal leaves Santos (operator) with 50%, the Mitsui subsidiary Peedamullah Petroleum Pty Ltd 25% and AWE reducing to 25%, and with a vastly reduced risk profile to the project.

The Casino-3 appraisal well is due to be drilled in Vic P/44 late this year.

AWE chief Bruce Phillips said the deal involved Mitsui providing assistance to AWE in the project financing of the development of the Casino gas field, which partially removes the funding risk and will save considerable management time for AWE.

Phillips said at the conclusion of this transaction, AWE will be participating in five Australian joint ventures (covering four basins) with Mitsui, including their development operations in the Bass Basin, the upcoming development decision at Cliff Head, the exploration program in the Carnarvon Basin and now the appraisal of the Casino gas field.

The terms of the deal are split into three stages.

1. Mitsui to make a cash payment of A$500,000 (plus interest adjustments) to AWE upon today's deal.

2. Mitsui will fund a 25% share of the expenditure for the drilling of the Casino-3 appraisal well, 500 kilometres of seismic and some added geological, geophysical and engineering work in the permit.

3. Make an optional cash payment of A$11.25 million, payable up to 90 days from the rig release from the Casino-3 well. If Mitsui elects not to make the optional payment, Mitsui will earn a 10% participating interest only in Vic P/44 (rather than the 25% interest being assigned up front).