Sept. 6 (Bloomberg) -- AWE Ltd., the Australian explorer planning a $600 million oil project off Indonesia, said it has been approached by Asian companies interested in a partnership to help fund and develop the venture.
The company plans to sell as much as 50 percent of the Ande Ande Lumut project to a partner late in the first half of 2013, Bruce Clement, managing director of Sydney-based AWE, said in a phone interview. An investment decision is targeted by the third quarter of next year, he said.
AWE is developing shale gas prospects in the Perth Basin of Western Australia and planning expansion in Asia and New Zealand. The company in January acquired from Malaysia’s Genting Bhd. two Indonesian oil blocks, including Ande Ande Lumut, which has an estimated 76 million barrels of recoverable oil.
“We’ve had a number of companies approach us and there’s a lot of interest from regional players, both Australian and Asian-based companies,” Clement said in an interview yesterday. “There aren’t that many undeveloped oil fields like this with an opportunity to get in at a very early stage of development.”
The shares rose 6.3 percent to A$1.53 in Sydney, compared with a 0.8 percent gain for the S&P/ASX 200 Index. AWE has risen 17 percent this year, while the benchmark index has increased 6.3 percent.
AWE said in January that it expected a final investment decision at the end of 2012 on development of Ande Ande Lumut after agreeing to pay $39 million to buy output-sharing contracts from Kuala Lumpur-based Genting and assume $100 million in loans and receivables.
Need for Partner
A decision to go ahead with the oil project in the middle of 2013 or early in the third quarter of next year will allow time to carry out engineering and design work and get regulatory approvals, Clement said.
AWE and partner Origin Energy Ltd. increased the estimated cost to upgrade their BassGas project off the coast of Australia’s Victoria state to A$600 million ($613 million), AWE said Aug. 27. The companies in July increased the cost estimate as much as 26 percent to A$550 million to A$580 million.
With AWE’s additional BassGas spending, accelerated drilling in the U.S. and shale gas campaign, it will probably need to sell a stake in the Indonesian oil project before approving the development, James Bullen, a Sydney-based analyst at Bank of America Corp., said in an Aug. 28 report.
“While the oil price is supportive of a deal, longer term we still have a number of reservations regarding this project,” Bullen said.
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