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BHP plans to sell Timor Sea assets

MELBOURNE, June 11 (Reuters) - The Broken Hill Pty Co Ltd said on Thursday it has signed a memorandum of understanding with Gulf Canada Resources Ltd for the sale of its Timor Sea assets off the northern coast of western Australia.

The sale, which includes BHP's 50 percent interests in the Jabiru and Challis fields, was expected to be finalised at the end of June, and should provide a small contribution to BHP's profit in the 1999 financial year, ending May 30, it said.

A BHP spokesman said terms of the sale would not be disclosed due to a confidentiality clause.

BHP said the sale agreement related to its interests in production licences AC/L1, 2 and 3, in which BHP Petroleum (Cartier) Pty Ltd has a 50 percent interest, and AC/L4, which contains the abandoned Skua field and in which it has a 43.0295 percent interest.

BHP Petroleum is the operator of the fields.

BHP said the sale was part of consolidating its businesses around its best performing assets, and continued a programme to upgrade the quality of BHP Petroleum's portfolio.

``In the case of the maturing Jabiru and Challis oilfields, BHP's decision to sell was based on the low production contribution of these assets within the wider Petroleum portfolio, and the commensurate resource commitment relative to higher value potential opportuntities elsewhere in Australia and internationally,'' BHP said in a statement.

BHP said Gulf Australia had indicated it wanted to enhance economically recoverable reserves through operating efficiencies and by extending field life.

Since April 1997, Gulf had aquired four blocks in the Timor Sea region in order to develop a core area for exploration, and the acquisition of the Jabiru and Challis facilties and permits would allow for a three-year exploration programme, it added.

Other owners of Jabiru are Cultus Petroleum NL (CLR.AX) with 18.75 percent; Norcen International (NCN.TO - news) with 14.6875 percent, Santos Ltd (STO.AX) with 10.3125 percent and the Ampolex division of Mobil Corp (MOB - news) with 6.25 percent.

BHP said in its investors bulletin earlier this month that asset sales in the past three years had raised A$4 billion, and further divestments were planned.

BHP, which controls global mining and steel assets, in March reported a 67 percent fall in quarter net profit to A$125 million which it blamed on poorly performing copper and oil markets.

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