Esso Australia puts Cooper Basin up for sale

Jan 24, 2003 01:00 AM

Esso Australia has shocked the energy market by putting its multi-billion-dollar Cooper Basin assets up for sale, in what will be the biggest ownership change in the industry for almost three decades. The move, which would result in gas reserves worth up to $ 2 bn changing hands, could see one of the basin's smaller foreign players emerge with a significant stake in Australia's biggest onshore gas reservoir.
Esso, the Australian subsidiary of US-based ExxonMobil, said it wanted to sell Delhi Australia, which owns 20.2 % of the South Australian part of the Cooper-Eromanga Basin and 23.2 % of the Queensland block. The sale is one of the biggest in the Australian gas sector since failed British group Burmah Oil was forced to sell its stake in the North West Shelf in the 1970s.

The Cooper Basin, which stretches from north-east South Australia into Queensland, has been the major supplier to the Sydney, Brisbane and Adelaide industrial and residential gas markets since the 1970s. ExxonMobil said it wasn't considering selling other Australian assets, which include a 50 % stake in the Bass Strait oil and gas fields and the Wandoo oil project offshore Western Australia. ExxonMobil is expected to press for a premium price, given the importance of the basin to the domestic market.
Only last month, Australia's biggest energy retailer AGL signed a $ 2 bn contract to buy as much as 505 PetaJoules of extra Cooper Basin gas, underpinning the future of the region until at least 2015. Esso chairman Robert Olsen said ExxonMobil continually assessed its worldwide portfolio of oil and gas producing assets. But its decision to sell has been interpreted as a sign that the company has more faith in the long-term future of other assets, such as Bass Strait.

The announcement sparked immediate speculation that the stake would be picked up by Santos, the Cooper Basin operator, or Woodside Petroleum, which has been trying to expand its revenue base. But sources last night suggested that giant Japanese group Mitsui, a partner to fellow Cooper Basin venturer Novus Petroleum, might be interested because of the strength of the Cooper Basin order book.
Mitsui subsidiary Wandoo Petroleum has increased its activities in Australia in recent years. Another foreign partner in the Cooper Basin is fast-growing Austrian group OMV, which now owns Basin Oil.

Esso Australia said Delhi last year averaged production of about 28,000 bpd of oil equivalent, including 113 mm cfpd of gas. As joint venturer, Delhi also shares ownership of Australia's major gas distribution hub at Moomba in South Australia and the Cooper Basin production facilities.
Analysts said that, once the Cooper Basin had extended its life by securing major new contracts (in competition with Bass Strait and the stalled PNG gas project managed by ExxonMobil), there was probably no better time to sell. Novus Petroleum has announced the sale to Indonesia interests some of its assets there it doesn't believe will add further value for shareholders. The deal will raise $ 13.1 mm (A$ 22.3 mm), which will be used to retire debt.

Source: The Australian
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