Energy firm ERM Power has agreed to sell its interests in West Australian gas assets to Empire Oil & Gas for $16.34m.
The agreement will give Empire control of the largest acreage package in the Perth Basin.
The transaction includes ERM Power’s interests in eight exploration permits in the Perth Basin, covering more than 12,000km², including exploration permit 389, featuring Red Gully-1 and Gingin West-1 wells.
Empire will purchase ERM’s 23.61% interest in EP 389 and 30.87% stake in EP 4262, which includes the North Erregulla prospect.
The acquisition also includes 13.88% share in EP 4322, which includes the Black Arrow prospect, and 5.56% in EP 4162, featuring the Leschenault prospect.
Empire will also acquire ERM’s 12.5% stake in EP 440, 50% interest in EP 454, which includes the Charger and Garibaldi prospects, 60% share in EP 480 and 100% in EP 467.
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By GlobalDataFinally, Empire will acquire ERM’s 21.25% stake in Cattamarra Farms, which owns the land that houses the Red Gully facility and Gingin West-1 and Red Gully-1 wells.
Under the deal, ERM Power will take part in a recapitalisation for up to $7.5m to increase its stake in Empire Oil & Gas to 19.99%.
ERM Power has also agreed to commit to underwrite a part of the rights issue under several conditions.
Empire Oil & Gas chief executive Ken Aitken said: "This deal will mean that Empire will receive 100% of all the cash from selling condensate and the additional cash from selling gas to Alcoa under Tranche 2 of the gas supply agreement, which we expect to commence in about a year’s time."
"Based on the current production rates of 8 TJ and 360 barrels of condensate per day, this is more than $25m a year."
