Central buys out Magellan Australia

Brisbane-based Central Petroleum Ltd. has purchased the onshore assets of Magellan Petroleum Australia for $35 million (Aus.).

The interests include the producing Palm Valley gas field and the yet-to-be-developed Dingo gas field, both of which lie in the Amadeus Basin west and southwest of Alice Springs in the Northern Territory.

The acquisition also includes in-place compression, processing and pipeline transportation infrastructure plus six producible wells—4 in Palm Valley and 2 at Dingo.

Payment to Magellan will comprise $20 million (Aus.) in cash and 39.5 million shares in Central Petroleum—$15 million plus the shares will be paid on completion of the deal in March. The remaining $5 million is due for payment on Apr. 15.

The move enables Central to step up from being an explorer to a multi-field oil and gas producer.

Palm Valley field was originally discovered in 1965 and was brought on stream via a pipeline through the Northern Territory north to Darwin in 1983. Magellan signed a new 17-year gas contract for supply of gas to Darwin customers and some mining operations along the pipeline route in 2013.

Dingo field was found in 1981. In September last year Magellan signed a further contract with Northern Territory Power and Water Corporation for the long-term sale of up to 31 petajoules of gas from Dingo on a take-or-pay basis for 20 years (OGJ Online, Sept. 18, 2013).

Development of the field is to begin this year and first gas delivered in early 2015. Development includes construction of a new 50 km pipeline to Alice Springs to hook up with the existing line to Darwin.

Central will continue this program, which includes 100% ownership of the Dingo pipeline. This means it will be available for transporting future gas reserves that Central hopes will stem from its current exploration activity in other permits in the Amadeus Basin.

Central also has a promising oil discovery at the Surprise field further to the west of Palm Valley as well as exploration permits in the Georgina Basin to the north of Alice Springs adjoining the Northern Territory/Queensland border.

For Magellan, a company that has been in Australia since the early 1960s, it is not a total exit from the country. Magellan still has 100% interest in an offshore permit in the Timor Sea immediately south of the Evans Shoal gas field. It will also retain an indirect interest in the Northern Territory gas through its new shareholding in Central Petroleum through the sales agreement.

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