Elixir Energy has agreed to farm out half of its working interests in most of its Taroom Trough permits in Queensland, Australia, to Beach Energy in a transaction valued at A$205m ($143.8m).
The agreement excludes Elixir’s Diona joint venture (JV) sub-block. Beach will also assume operatorship where applicable under the arrangement.
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Beach will provide A$25m in cash and fund A$180m of exploration, appraisal and operating activities over four years.
The carried expenditure covers drilling, well completion and testing, geological and geophysical studies, seismic acquisition and reprocessing, and preparation for development work.
Elixir said it would keep 1,193km² of net acreage across its Taroom Trough portfolio, including its operated interest in the Diona-JV area.
The companies have signed definitive agreements following a process in which Elixir said it received proposals from several parties. The transaction remains subject to conditions precedent outlined in the underlying agreements.
Elixir managing director and CEO Stuart Nicholls said: “This is a transformational transaction for Elixir and a significant validation of the inherent value of the quality and scale of our Taroom Trough portfolio. This farmout is one of the highest valued exploration and appraisal deals in recent Australian oil and gas history and values the Company’s resources 3x higher than their current trading value.
“Beach has committed A$205m of cash and gross carried expenditure to secure half of our strategic position across our core Taroom assets. Importantly, this provides Elixir with a clear funding pathway through the next four years while substantially reducing the capital required from our shareholders.
“The agreed work programme will put the wells and testing in place to accelerate the conversion of our substantial resource base into Reserves, while simultaneously building the production fleet and operating knowledge required to move towards production.”
Beach’s four-year programme may include lateral well drilling and testing, along with 2D and 3D seismic work.
Elixir expects to assess Shell 3D seismic data covering ATP2056 and ATP2077A to select appraisal locations. Potential wells identified include Lorelle-4H and Daydream-3/3H.
The companies have also established an area of mutual interest. New acreage acquired by either party may be bought by the other on a 50:50 basis, with Beach as operator.
For future acreage bids, the non-bidding party may participate, with ownership set at 65% for Beach and 35% for Elixir.
Sternship Advisers acted as Elixir’s financial adviser and Hamilton Locke served as legal adviser.
In July this year, Elixir Energy’s Lorelle-3H well began transitioning from fluid to gas production in the ATP2056 prospect within Queensland’s Taroom Trough, after recording sustained gas breakthrough five days into clean-up operations.
