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Sundance Energy Australia sells 75% of Twister to Noble Energy

Published: 03:51 16 Sep 2010 AEST

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US based oil and gas developer Sundance Energy Australia (ASX: SEA) has sold 75% of its Twister Prospect acreage in Colorado’s DJ Basin, to Noble Energy (NYSE: NBL). The deal will enable Sundance to gain cash while retaining a working interest and royalty in the Basin.

Sundance joint venture partner McElvain Energy Fund 2010 has also joined in the sale.

For consideration, Sundance will receive US$8.1 Million in cash and US$600,000 in carry in future drilling, which includes overriding royalty interest reserved by Sundance.

Interestingly, the Company said the transaction that was struck results in an implied value that exceeds recent transactions in the Basin.

Noble will become the Twister prospect operator.

Sundance, McElvain and Noble also agreed on an Area of Mutual Interest (AMI) which will allow the Company to participate in any future acreage acquisitions made by either Noble or McElvain within the AMI.

Jayme McCoy, managing director for Sundance, said, “This is a fabulous transaction for Sundance shareholders."

"Taking into account the cash and carry values in addition to Sundance’s retained working interest, the overriding royalty and the AMI, the Company is of the view that this transaction results in an implied value that exceeds recent transactions in the Basin."

"Further, Noble is the largest operator in the DJ, and has some of the lowest per well capital expenditures in the Basin."

"This partial sale allows our shareholders to benefit from Noble’s technical expertise while deploying the proceeds into our next exciting areas of interest targeting near-term conventional oil production with long term oil shale potential.”

The sale leaves Sundance with approximately 45,000 net acres still in hand across the DJ Basin, approximately 12,000 of which (14,747.15 gross acres) are focused on the Niobrara Shale.

The transaction is a continuation of Sundance’s strategy of entering shale plays at a low cost and bringing in a top operating partner to develop the prospects as the plays mature.

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