Santos sells Evans Shoal gas assets to Megallan for $182 million

Australia's third-largest oil and gas company, Santos Limited, today said that that it had signed a deal to sell its entire working interest in Evans Shoal offshore gas field to Magellan Petroleum Australia Limited (Magellan) for approximately A$200 million ($182 million).

The undeveloped Evans Shoal gas field is located in the Bonaparte basin in Timor Sea, off Northern Australia, about 250km north of Darwin.

Santos holds 40 per cent in Evans Shoal while Malaysia's Petronas owns 25 per cent, Shell 25 per cent and Osaka Gas 10 per cent.

Santos said in a statement that the transaction is a continuation of the company's ongoing review of  ''commercialisation options'' for its gas assets in the Banaparte basin and follows the sale of 60 per cent stake in Petrel, Tern and Frigate fields in August 2009 to France's GdF Suez for around A$370 million.

Under the terms, Magellan will pay Santos A$100 million for its interest in Evans Shoal and an additonal A$50 million on any final investment decision to develop the feild and a further A$50 million on commencement of gas production from there.

''The sale of Evans Shoal is consistent with Santos' ongoing programme to monetise certain non-core assets in its expanding business in Western Australia and Northern Territory,'' said John Anderson, Santos vice president for the region.

''Santos remains well positioned in its Northern Australia LNG business through its interest in Darwin LNG (supplied from Bayu Undan) operated by ConocoPhillips and the Bonaparte floating LNG project in partnership with GdF Suez,'' Anderson further said.

Santos also holds a 40-per cent working interest in the nearby Caldita and Barossa / Lynedoch blocks in the Bonaparte basin, operated by oil major ConocoPhillips.

The transaction is expected to close in the second half of 2010, subject to customary consents and regulatory approvals.

In January, the oil major said that it intends to sell stake in its Gladstone liquefied natural gas projct in Queensland to improve the company's liquidity position and fund the development of Gladstone and Papua New Guinea LNG projects. (See: Santos to sell Gladstone LNG stake to fund growth projects)

Last week, the company's prestigious joint venture project in Papua New Guinea cleared final hurdles paving the way for its implementation. Santos holds 13.5 per cent stake in the venure led by global oil giant Exxon Mobil. (See: Exxon's $15-billion Papua LNG project clears final snags)