ConocoPhillips (NYSE: COP) has compeleted the sale of its subsidiaries that hold its Australia-West assets and operations to Santos, said the company yesterday (05/27) - Photo by the Company

JAKARTA (TheInsiderStories) ConocoPhillips (NYSE: COP) has completed the sale of its subsidiaries that hold its Australia-West assets and operations to Santos, said the company yesterday (05/27). Both companies agreed to restructure the payments such that US$125 million of the originally announced $1.39 billion upfront cash payment.

The funds would be allocated toward a payment due upon final investment decision of the proposed Barossa development project. This brings the total due to the oil and gas producer upon a final investment decision to $200 million.

Last March, ConocoPhillips has awarded engineering, procurement and construction contracts for the Barossa field development offshore Australia’ Northern Territory to Aker Solutions and National Oilwell Varco Denmark. Barossa will provide a new source of natural gas to the Darwin LNG liquefaction facility to replace depleting supply from the Bayu-Undan gas-condensate field offshore Timor-Leste.

The company has received net cash proceeds of approximately $765 million in the current quarter. Proceeds from the transaction are expected to be used for general corporate purposes.

“Santos has a strong presence in the Australian oil and gas industry and is already a co-venturer in the Bayu-Undan, Darwin LNG and Barossa projects. We are pleased to close this sale with an Australian company that will help continue the development of Australia’s oil and gas resources,” said Matt Fox, EVP and COO.

The production capacity approximately 46 thousand barrels of oil equivalent per day (MBOED) for the first three months of 2020, and proved reserves were approximately 17 million barrels of oil equivalent at end of last year. In Indonesia, ConocoPhillips, PT Pertamina Hulu Energy, and Talisman Ltd., had signed a contract extension for the gross split of the Corridor block in South Sumatra, which will be valid for 20 years, effective from 2023 to 2043.

The natural gas block contract is an extension contract with interest participation holders of  46 percent for the company, state-owned holding company Pertamina 30 percent and Talisman by 24 percent. ConocoPhillips acted as the operator for the projetc.

The investment value from implementing the first five-year work commitment is $250 million and the signature bonus of $250 million. Participation interests owned by the contractor include 10 percent that will be offered to regionally owned enterprises in accordance with the energy minister regulation Number 37 of 2016.

“We have instructed contractors to maintain and increase production rates in the Corridor block, carry out the commitments contained in the contract and growing exploration activities to increase oil and gas reserves,” said energy and mineral resources minister Arifin Tasrif who witness the contract signing on Nov. 11,2019.

The producer will operate the block until 2026 before starting to transfer operatorship to state-owned Pertamina, the minister said, adding there was no set timeframe for the transfer. The Corridor natural gas block is Indonesia’ second-largest gas-producing block, with 827 million standard cubic feet per day (MMSCFD) of gas lifting in the first semester this year, according to upstream oil and gas regulator, higher than the 810 MMSCFD targets.

Under the new contract, the contractors will have 53.5 percent of the gas produced from the block and 48.5 percent of the oil, Tasrif said, adding the government is aiming to sign the production sharing contract, which will be under a gross split scheme, within a month, following payments of financial obligations to the government.

Headquartered in Houston, Texas, ConocoPhillips had operations and activities in 17 countries and $65 billion of total assets. Production excluding Libya averaged 1,278 MBOED for the three months ended March 31, 2020, and proved reserves were 5.3 BBOE as of Dec. 31, 2019.

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