By OGJ editors
HOUSTON, July 14 -- A ConocoPhillips unit has signed a nonbinding heads of agreement with New Standard Energy Ltd., Perth, for an exclusive negotiating period that could lead to joint exploration of NSE’s Goldwyer shale project in the Canning basin onshore Western Australia.
The project is focused on the exploration and development of shale gas and liquids in the target Ordovician Goldwyer and Lower Devonian Bongabinni shales, NSE said. The Goldwyer is a proven source rock interval with liquids potential in the basin, which is the size of the US Appalachian basin with only five small oil fields discovered onshore (see map, OGJ, May 23, 2005, p. 41).
The project area covers more than 11 million acres including EP 443, 450, 451, and 456. NSE has applied for more permits.
Under core commercial principles of the agreement, ConocoPhillips would fund up to (US) $109.5 million in four phases of unconventional hydrocarbon exploration work, including the drilling, coring, and evaluation of multiple wells. In return for that funding, ConocoPhillips will have the right to earn up to a 75% working interest in the Goldwyer project, reducing NSE’s working interest to 25% from 100%.
ConocoPhillips must complete all four phases of work to earn and retain the 75% working interest. In the event that ConocoPhillips elects not to complete all four proposed phases of work a 100% operated working interest in the project will revert to NSE.
ConocoPhillips will also make an upfront payment of $1 million (Aus.) to NSE in consideration of prior costs.
NSE foresees that Phase 1 work would be carried out in 2012 assuming binding agreements are successfully executed, as soon as possible but no later than Sept. 30, 2011. The heads of agreement contemplates that NSE will remain as operator, although ConocoPhillips would have the right to assume operatorship at its election.
An integral part of the proposed arrangement is the proposed provision of technical support by ConocoPhillips to NSE to enhance the operating arrangement. NSE believes that ConocoPhillips’ participation will inject invaluable and world class technical knowledge and resources to ensure that Goldwyer is explored and appraised in conjunction with a world leader in global shale plays.