Santos Ltd. has farmed in to certain existing permits as well as permit applications held by Brisbane-based Armour Energy Ltd. in the South Nicholson basin onshore Northern territory and northern Queensland.
Under the $95-million (Aus.) deal, Santos will farm in to Queensland permit ATP1087 and Queensland permit applications ATP1107, ATP 192, and ATP1193 as well as Northern Territory permit applications EP172 and EP177.
Santos and Armour already separately hold extensive acreage positions in the region that are excluded from the deal.
Santos will pay Armour $15 million (Aus.) in cash within 10 days of execution of the formal farm-in agreement and further cash payments of up to $15 million (Aus.) will be payable by Santos subject to certain conditions being satisfied with respect to the application permits.
Santos will also carry 100% of Armour’s share of expenditure for the work programs within the farm-in areas up to a combined total expenditure of $65 million (Aus.).
For its part Armour will transfer a 70% working interest and operatorship of the farm-in areas to Santos on a phased approach beginning with ATP1087 as the immediate exploration target.
Interest and operation of the remaining farm-in permits will be transferred to Santos when the formal grant of tenure has been made by the Queensland and Northern territory governments.
Execution of the full farm-in agreement is scheduled for Oct. 31 with the two parties intending to establish a joint operating agreement within 3 months.
To date, the South Nicholson basin has been virtually unexplored for oil and gas.