AJ Lucas Group Limited and Molopo Limited announced today an unconditional agreement to sell PEL285, the Gloucester Gas Project, to AGL Energy Limited.

The total sale is worth $370 million, with Lucas' 70% share worth $259 million which will be paid in cash.

Approximately 20% of the proceeds will be used to retire existing debt, with the balance kept in the business.

Allan Campbell, Lucas' executive chairman, said "This is a great result for AJ Lucas. The cash from the sale will give us significant financial flexibility to grow our drilling and pipelines business and develop our coal seam gas, unconventional gas and water asset base. We are delighted with the outcome of the sale process, which recognises the high asset quality and strategic value of the Gloucester Basin to the NSW gas market."

"As the operator, Lucas has provided the expertise to explore and develop the Gloucester Basin, delivering initial reserves certification in February. We've now developed the asset to a mature project which is expected to deliver a significant gas supply to the NSW market. This is an opportune time for us to divest this business and allow its development to production by a major integrated energy company in NSW.

"We are delighted AGL will be the new owner of this strategic asset. We have a longstanding relationship with AGL and they are without peer in domestic gas sale and distribution.