October 31, 2008

AGL Energy to Divest Oil and Gas Interests in Papua New Guinea

Australia-based AGL Energy has executed sale and purchase agreements for all of its oil and gas exploration and production interests in Papua New Guinea, which include a 3.6% interest in the PNG LNG project.

Net proceeds as a result of the sale, after closing out oil hedges, will be approximately A$1.1 billion. No capital gains tax will be payable in either Papua New Guinea (PNG) or Australia on proceeds from the sale.

The agreed sale price under the sale and purchase agreements (SPA) is $800 million. The buyer, whose identity is confidential at this stage, is an international oil and gas company. The SPA is unconditional, other than government approvals, and is subject to the pre-emptive rights process.

Michael Fraser, managing director of AGL, said: "This is an excellent outcome for AGL, particularly in light of current global market conditions. Importantly, the PNG sale is a milestone for us as it finalizes the non-core asset sale program we commenced late last year and again demonstrates the company's ability to deliver on its strategy."