Beach Energy Ltd. has entered into binding agreements with Cue Exploration Pty. Ltd. to acquire equity in North West Shelf exploration permits WA-359-P and WA-409-P in the Carnarvon Basin, offshore Western Australia.
WA-359-P and WA-409-P are adjoining exploration permits which contain the giant Ironbark gas-condensate prospect. Ironbark is a Mungaroo Formation structural closure that covers an area of approximately 400 sq km (about 154 sq miles), and is defined by high-quality 3-D seismic data. The Ironbark prospect is interpreted to have reservoirs of similar age to nearby giant fields such as Gorgon and Goodwyn.
The farm-in agreement for WA-359-P and call option for WA-409-P gives Beach exposure to a potentially significant gas-condensate discovery, which may extend across both permits. Exploration success at Ironbark could provide significant, long-term gas volumes to feed nearby LNG plants in the coming decade.
Ironbark is located less than 50 km (31 miles) from the North West Shelf LNG’s Rankin platform, near the Pluto and Wheatstone LNG infrastructure. Ironbark’s location provides significant optionality for commercialization and marketing.
Beach will acquire a 21% equity interest in WA-359-P in exchange for a one-off payment to Cue of $900,000 for past costs, and future payments equating to 4% of Cue’s cost of drilling the Ironbark-1 exploration well within the permit. The agreement is subject to the following conditions precedent.
Beach has acquired for nominal consideration a call option over a 7.5% equity interest in WA-409-P. If exercised, Beach will make future payments equating to 7.5% of Cue’s cost of drilling an exploration well within the permit and pay Cue a 10% royalty on all future revenue earned by Beach from the permit.
The option may be exercised until July 31, 2019. Assuming exercise of the call option, ownership interests in WA-409-P would be BP Plc (NYSE: BP) with 80%, Cue with 12.5% and Beach holding 7.5%.