PowerGen Gas Cntrct - Details
BROKEN HILL PROPRIETARY COMPANY LIMITED
19 October 1999
Further cash payment to BHP in Liverpool Bay
The Broken Hill Proprietary Company Limited today announced it has reached
agreement with PowerGen UK plc over a further re-negotiation of the gas
contractual arrangements for the Liverpool Bay development in the UK Irish Sea.
In return for a cash consideration of UK£90.8 million (A$ 235 million) to BHP,
the gas contract price will be reduced by around one third for a five year
period having effect from 1 June 1999. At the end of the five year term of the
new agreement, the contract will either return to the previous price basis or be
succeeded by a new mutually acceptable arrangement. Proceeds from the deal,
which is conditional upon approval from taxation authorities, will be amortised
on a unit of production basis over the five years of the agreement.
This agreement follows a similar re-negotiation of the Gas Sales Contract last
December when the company was paid UK£270 million for a permanent base price
reduction of around 35%. As on that occasion, the payment represents full value
for gas revenues being foregone.
The transaction marks further progress by BHP in its efforts to extract value
from its portfolio of assets, in this case by bringing forward the value of the
future income stream. It releases significant early value from the Liverpool Bay
asset, whilst maintaining a long term gas contract at market competitive rates.
BHP Petroleum owns a 46.1% operating interest in Liverpool Bay. LASMO (ULX) and
Centrica Resources - BHPP's joint venture partners in the development - have
also agreed amendments to the terms of their Gas Sales Agreements with PowerGen.
The new arrangement is viewed by all parties - including PowerGen - as extremely
attractive.
The Gas Contract relating to Liverpool Bay was signed in August 1991, providing
PowerGen with dedicated access to the gas contained within five Liverpool Bay
fields on a life of field, take or pay basis. The initial price for the gas was
agreed in 1991 and has been adjusted every quarter according to a predetermined
indexation formula.
Liverpool Bay's gas fields have estimated initial (P50) recoverable reserves of
1.2 trillion cubic feet of gas, in addition to more than 160 million barrels of
oil. Gas production commenced in December 1995 with oil production following one
month later.
Partners in the Liverpool Bay development are: BHP Petroleum Great Britain PLC
46.1% (operator), LASMO (ULX) Limited 45% and Centrica Resources Limited 8.9%.
For further information please contact:
London: Melbourne - investor enquiries: Melbourne - media enquiries:
Chris Huntley Andrew Nairn Dr Malcolm Garratt
+44 20 7802 7331 +61 3 9609 3952 +61 3 9652 6872
Latest directors dealings
- 1 day ago Savannah Energy
- 1 day ago Buccaneer Energy PLC
- 1 day ago Savannah Energy
- 1 day ago Carclo
- 1 day ago Schroder Japan Growth Fund