Tap said Sunday that it has executed an agreement to sell its wholly owned subsidiary, Tap (Harriet) Pty Ltd, to a subsidiary of Apache Corporation (Apache) for US$10 million. Tap (Harriet) Pty Ltd holds a 12.2229% interest in the Harriet Joint Venture (HJV) as well as a 10% interest in WA-45-R, WA-46-R and a 20% interest in WA-334-P.
Importantly for Tap, following completion of the sale, Apache will assume all the liabilities and benefits of Tap (Harriet) Pty Ltd from an effective date of 1 January 2012, including the legal actions.
The transaction has clear strategic rationale for both parties, according to Tap. Through this transaction, Tap is able to eliminate the uncertainty for shareholders introduced by litigation, and devote more time to the development and growth of assets which will underpin the Company in years to come. Apache has significant gas reserves in the region beyond the HJV and will be able to extract substantially more value from the facilities on Varanus Island beyond the depletion of the HJV reserves, estimated to be in the next few years.
Tap’s Managing Director/CEO, Troy Hayden said, “This is a great outcome at every level for Tap, our shareholders and potential investors. Removing the legal issues associated with the Harriet Joint Venture allows Tap management to focus on our development projects and exploration activities and enables potential investors to now assess Tap’s value without the uncertainty associated with outstanding protracted legal cases.”
According to Hayden, “The reserve life of the Harriet Joint Venture is approaching its end and Tap’s production will be more than replaced by the commencement of new production from the Manora field in early 2014.”
Tap has executed an agreement to sell its wholly owned subsidiary, Tap (Harriet) Pty Ltd, to Apache for US$10 million. The transaction is subject to Foreign Investment Review Board (FIRB) approval and other approvals as are standard for a transaction of this type. Subject to these approvals, the effective date of the transaction is 1 January 2012.
Tap will retain its interests in the third party gas business. This business will generate approximately $30 million of revenue per year until the end of 2016.
Tap (Harriet) Pty Ltd holds a 12.2229% interest in the HJV as well as a 10% interest in WA-45-R, WA-46-R and a 20% interest in WA-334-P.
Liquids production rates at the HJV, averaged 412 bopd (Tap share) and sales gas production averaged approximately 8.9 TJ per day (Tap share) for the quarter to 31 December 2011. Production has been declining over the last few years thus the production costs per barrel have increased, making production less profitable.