Beach farms into Cue Energy’s Ironbark prospect

Beach Energy Ltd., Adelaide, has signed a binding agreement with Cue Energy Resources Ltd. of Melbourne to farm into two exploration permits in the Carnarvon basin offshore Western Australia that contain the large Ironbark gas and condensate prospect.

Beach Energy Ltd., Adelaide, has signed a binding agreement with Cue Energy Resources Ltd. of Melbourne to farm into two exploration permits in the Carnarvon basin offshore Western Australia that contain the large Ironbark gas and condensate prospect.

The permits—WA-359-P and WA-409-P—are adjoining and lie 50 km due north of the North West Shelf gas project fields of Goodwyn and North Rankin. It is also close to the Wheatstone and Pluto production facilities.

Under the agreement, Beach will acquire a 21% equity interest in WA-539-P in exchange for a one-off payment to Cue of $900,000 (Aus.) for past costs, and future payments equating to 4% of Cue’s cost of drilling the Ironbark-1 wildcat in the permit.

Ironbark prospect is a Mungaroo formation structural closure with an aerial extent of 400 sq km and is defined by high-quality 3D seismic data. The prospect is interpreted to have reservoirs of similar age to the nearby fields of Goodwyn and Gorgon and could contain multitrillions of cubic feet of gas.

The deal comes with conditions, including that BP exercise its option to acquire a 42% equity interest in WA-539-P. BP has until Dec. 11 to exercise this option, unless it is extended. The option has already been extended twice as BP takes its time to contemplate the move.

Other conditions include the formation of a joint venture and associated joint operating agreement with full funding for the Ironbark-1 well and that Cue obtains an extension to the current permit expiry date of Apr. 25, 2018, to enable time for planning and drilling of the well.

If all conditions are met the interest holders in WA-539-P will be BP 42.5%, Cue 36.5%, and Beach 21%.

In the deal involving WA-409-P, Beach has acquired for a nominal consideration a call option over a 7.5% equity interest in the permit. If exercised beach will make future payments equating to 7.5% of Cue’s cost of drilling an exploration well in 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.

If the option is exercised interests in WA-409-P would be BP 80%, Cue 12.5%, and Beach 7.5%.

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