Surge Puts Awe On The Gas

The Age

Tuesday September 13, 2005

BARRY FitzGERALD, RESOURCES EDITOR

AUSTRALIAN Worldwide Exploration is to take advantage of the oil price-inspired surge in its share price to near record levels by pulling in $120 million from a share placement.

The raising will ease the funding pressure from its development projects while allowing the fast-growing Sydney-based group to acquire a gas processing business in Indonesia.

Final pricing of the placement - tipped to be about $2.05 a share - will be determined by a book-build process to be finalised today. Shares in the group were trading at $2.17 before the trading halt imposed before yesterday's announcement.

The Indonesian deal involves AWE acquiring a 90 per cent interest in the Kilang liquefied petroleum gas extraction plant near Palembang in South Sumatra by picking up 100 per cent of the project's completion cost.

AWE has budgeted $30 million (up until first production at the end of 2006) for the completion cost. The remaining 10 per cent equity will be held by an Indonesian partner that has already contributed 10 per cent of the total capital expenditure on the project.

"Participation in the Indonesian LPG project is AWE's first significant investment outside our traditional Australian and New Zealand core asset area and comes after rigorous evaluation of the risks versus reward scenarios," AWE said.

Based on the contracted daily input flow rate of 60 million cubic feet of raw feed-gas over the 15-year project life, gross liquid sales from the LPG plant have been forecast at more than 1.6 million barrels of condensate and more than 500,000 tonnes of LPG.

"On the assumed product prices, the project will generate gross revenues for AWE in excess of $US230 million ($A298 million) over the life of the project."

The company did not announce it, but brokers reported that AWE was expecting annual earnings before interest, tax, depreciation and amortisation from the $30 million investment of $9 million at long-run prices.

At current prices, EBITDA of $14 million was forecast.

The rest of the placement funds will go to existing growth projects and an accelerated exploration program and "future" growth projects.