The permit contains the undeveloped Jahal and Kuda Tasi oil fields and is in the Joint Petroleum Development Area between Australia and East Timor, 575km north-west of Darwin.
Under the terms of the agreement, Santos will receive 3.5 million Paladin shares valued at about US$19.5 million at the current share price and exchange rates.
Santos will also be reimbursed for exploration expenditure in the permit between July 1 2005 and completion of the transaction. This is expected to be about US$2.5 million.
In addition, Santos will receive US$3 million in cash under certain circumstances following any future oil field development in the permit.
“This divestment is in line with Santos’ strategy to rationalise its portfolio and realise value by selling non core assets,” said Santos managing director John Ellice-Flint.
The other partners in JPDA 03-01 are Woodside (operator and 40%), and Inpex Timor Sea (35%).
Woodside has been wanting to tieback the Jahal and Kuda Tasi fields in JPDA 03-01 to the Northern Endeavour floating production storage and offloading (FPSO) vessel as a means of offsetting declining natural production in the nearby Laminaria and Corallina fields.
Paladin, a British oil and gas exploration and production company based in London and listed on the London Stock Exchange, is also a partner in Laminaria and Corrallina.
Paladin first moved into Australian waters late last year when it announced it intended to buy BHP Billiton’s stake in Laminaria and Corallina. The sale was finalised in January this year, then in March Woodside and Paladin went on to buy out Shell’s interest in these fields, leaving these two companies as the sole remaining partners in those fields.
Woodside now owns 66.67% of the Corallina field and the Northern Endeavour floating production storage and offloading vessel as well as a 59.9% interest in the Laminaria field, which is unitised over production licences AC/L5 and WA-18-L.
Paladin holds the remaining 33.3% of both the Corallina field and Northern Endeavour and the remaining 41.1% of the unitised Laminaria field.
Paladin has said it intended to buy other Australian assets and to set up a Perth office.
