Australia?s AWE cancels S. Sumatra?s LPG project acquisition plan

Australian Worldwide Exploration Ltd (AWE) announced on Wednesday that it had decided not to proceed with the plan to acquire a 90 percent equity interest in PT Ogspiras Basya Pratama (OBP) due to the prolonged period of due diligence.

OBP is developing a liquid petroleum gas (LPG) extraction project near Palembang in South Sumatra with gross liquid sales of 1.6 million barrels plus over 500,000 tons of LPG throughout the 15-year project life.

Last September AWE signed a conditional Heads of Agreement for the acquisition of OBP. The transaction, however, was subject to the completion of final due diligence on OBP and the Indonesian LPG Project.

AWE said OBP owners can not provide critical documents regarding the current ownership of the company and uncertainty over some of its historical financial records.

?We are very disappointed that the OBP deal could not be consummated. However, AWE is committed to its due diligence processes and corporate governance principles, and these will not be compromised,? AWE?s Managing Director Bruce Phillips commented.

AWE also said the funds allocated to the OBP investment, raised from the share placement in September 2005, will be utilised for other oil and gas investments in "our broader existing portfolio or in new ventures".

"The issues associated with the completion of the due diligence on the transaction are specific to OBP do not alter our view that Indonesia is an attractive destination for future investment by AWE,? the company added. (Robert)