Beach Energy has signed binding agreements to acquire equity in North West Shelf exploration permits WA-359-P and WA-409-P in the Carnarvon Basin, located off the shore of Western Australia, from oil and gas production company Cue Exploration.
The two adjoining permits host the giant Ironbark gas condensate prospect, which is a Mungaroo Formation structural closure covering an area of approximately 400km2.
The Ironbark prospect is estimated to contain reservoirs of similar age to those in nearby giant fields such as Gorgon and Goodwyn.
It is also situated less than 50km from the North West Shelf LNG’s Rankin platform, near to Pluto and Wheatstone LNG infrastructure.
Beach has agreed to acquire a 21% equity interest in WA-359-P in exchange for a one-off payment of $900,000 to Cue.
The acquisition is subject to multiple conditions, including BP exercising its option to acquire a 42.5% equity interest in WA-359-P, as well as the signing of a joint operating agreement with full funding for the Ironbark-1 exploration well.
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Beach Energy CEO Matt Kay said: “For some time, Beach has been seeking high-impact exploration opportunities in Australia and New Zealand to add to its growth portfolio.
“We have taken a disciplined approach and the Ironbark prospect is an exciting, high-impact exploration prospect.
“With favourable Western Australia LNG market dynamics over the coming decade, successful development of Ironbark may align with expected shortfalls in LNG feedstock.”
The stipulations also include the acquisition of an extension to the current permit expiry date of 25 April 2018, which will be required in order to conduct exploration activities.
Beach has also been granted a call option over a 7.5% equity interest in WA-409-P against a nominal consideration that can be exercised until 31 July 2019.
If exercised, Beach is expected to make future payments equating to 7.5% of Cue’s cost of drilling an exploration well within the permit, as well as a 10% royalty on all future revenue earned from the location.