ConocoPhillips Co. said May 27 it had completed the sale of its northern Australian business to partner Santos Ltd., which included a restructuring of the originally agreed upon upfront cash payment.
The pair had previously announced the deal in October 2019 with Santos agreeing to pay $1.39 billion in cash for ConocoPhillips’ subsidiaries that hold its Australia-West assets and operations. The sale includes interest in the Athena, Bayu-Undan, Bayu-Undan and Poseidon fields, Barossa project and Darwin LNG facility.
On May 27, ConocoPhillips said while the total consideration for the sale remains unchanged upon closing, it had reached an agreement with Santos so that $125 million of the original upfront cash payment would be allocated toward a payment due upon final investment decision (FID) of the proposed Barossa development project. As a result, the total due to ConocoPhillips upon an FID of the Barossa project increased to $200 million from $75 million.
Based on an effective date of Jan. 1, customary closing adjustments and the increased allocation to the final investment decision payment, ConocoPhillips has received net cash proceeds of about $765 million in the current quarter. Proceeds from the transaction are expected to be used by the Houston-based independent for general corporate purposes.
While quitting the Darwin LNG plant, which it opened in 2006, and gas fields off northern Australia, ConocoPhillips plans to hold onto its stake in Australia Pacific LNG located in the state of Queensland.
According to a Reuters report from October 2019, the sale came as the Bayu-Undan gas field that feeds Darwin LNG, the second-oldest of Australia's 10 LNG plants, is set to run dry in 2022. The project's owners are nearing a decision on developing the Barossa field to keep the plant running, however.
Production associated with the assets being sold averaged about 46,000 boe/d during first-quarter 2020. Proved reserves were roughly 17 million boe at year-end 2019.
The transactions with the undisclosed buyers are expected to close within the next 45 days, the company said in a news release.
ConocoPhillips has reached an agreement with 3D Oil to take a 75% interest and operatorship of an exploration permit offshore Australia in the Otway Basin, the U.S. major said Dec. 18.
Santos has signed a binding letter of intent to acquire a 14.3% interest in in Petroleum Retention License 3 (PRL 3), which contains the P’nyang natural gas field in Papua New Guinea, the company said in a news release May 16.