Cue Energy Resources’ subsidiary Cue Exploration has signed an agreement with BP Developments, Beach Energy and New Zealand Oil & Gas (NZOG) to form a joint venture (JV) to undertake drilling operations at the Ironbark-1 exploration well in WA-359-P, off the Western Australian coast.
The Ironbark prospect is estimated to contain 15Tcf of prospective recoverable gas.
In a separate transaction, New Zealand Oil & Gas reached an agreement to buy a 15% equity in WA-359-P from Cue.
Under the terms of the JV agreement, Cue, BP, Beach and NZOG will fund the drilling programme. The deal will see BP assume operatorship of the JV.
Before the official title transfers and creation of a formal JV, which are slated for completion during the second quarter of next year subject to certain conditions, including regulatory approvals, BP will begin work on the Ironbark-1 exploration well.
Until the formation of the JV, Cue will continue to hold a 100% equity in WA-359-P.
Cue Energy Resources CEO Matthew Boyall said: “This agreement sets out a pathway for Cue, BP, Beach and NZOG to immediately commence detailed well planning work and form a fully funded joint venture to drill the Ironbark-1 exploration well.”
Once the deal is closed, Cue will hold a 21.5% interest in the permit. BP (42.5%), Beach (21%) and NZOG (15%) will hold the remaining stake.
Around $11.3m of Cue’s share of the Ironbark-1 exploration well costs will be jointly financed by BP, Beach and NZOG.
Cue will use its current cash reserves to fund its remaining share of the well cost.
Located less than 50km from the North Rankin platform, the Ironbark prospect is a Mungaroo Formation prospect.
Meanwhile, BP will now have until 25 April next year to exercise its option to acquire a 42.5% equity in WA-359-P.