WA-359-P and WA-409-P are adjoining exploration permits that contain the giant Ironbark gas-condensate prospect, which covers approximately 400 square kilometres and is believed to be a multi-Tcf gas field.
“We have taken a disciplined approach and the Ironbark prospect is an exciting, high impact exploration prospect,”? said Beach CEO Matt Kay.
“With favourable Western Australia LNG market dynamics over the coming decade, successful development of Ironbark may align with expected shortfalls in LNG feedstock.”?
Beach will acquire a 21 per cent 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 per cent of Cue’s cost of drilling the Ironbark-1 exploration well.
The agreement is subject to the following conditions:
- BP exercising its option to acquire a 42.5 per cent interest in the permit before the deadline of 11 December 2017
- Formation of a Joint Venture and associated Joint Operating Agreement with full funding for the Ironbark-1 exploration well
- Permit holders obtaining an extension to the current permit expiry date of 25 April 2018, to allow planning and drilling of Ironbark-1.
Assuming that all these conditions are approved, the ownership of WA-359-P would be BP (42.5 per cent), Cue (36.5 per cent) and Beach (21 per cent).
Beach has acquired a nominal consideration for a call option over a 7.5 per cent interest in WA-409-P.
If exercised, Beach will make future payments equating to 7.5 per cent of Cue’s cost of drilling an exploration well, as well as paying Cue a 10 per cent royalty on all future revenue earned by Beach from the permit.
The option may be exercised until 31 July 2019, with the ownership interest being BP (80 per cent), Cue (12.5 per cent) and Beach (7.5 per cent).
Ironbark is located less than 50 km from the North West Shelf LNG Project’s Rankin platform, and is in close proximity to Pluto and Wheatstone LNG infrastructure.