AED said the execution of this agreement has concluded the strategic review process initiated in January for the underperforming Puffin project.

"The Strategic Review has achieved its objectives - significant reduction in debt levels; independent technical review of existing production; and financial capability and asset ownership structure which will facilitate the exploration, development and production from the Puffin and Talbot oil fields expeditiously," AED said.

Under the agreement, Sinopec subsidiary, Sinopec International Petroleum Exploration and Production Corporation (SIPC) will pay $US561 million ($A617 million) to acquire a 60% joint venture interest in the AC/P22, AC/L6 and AC/RL1 permits, which include the Puffin and Talbot fields.

The transaction therefore values 100% of the assets in excess of A$1 billion. AED will retain the remaining 40%.

Part of the cash received will be used to repay all of AED's bank debt (leaving only convertible bonds in place) and settle trade creditors which will result in AED having a cash balance of about $A350 million after completion.

The available funding will be used to expedite and fund the significant future development of the assets in conjunction with SIPC.

Sinopec and AED will develop the assets through an unincorporated joint venture in which SIPC will be the operator.