ConocoPhillips has taken a step forward in assuming a controlling interest in offshore Tasmanian permit T/49P in the Otway basin with the execution of a joint operating agreement with 3D Oil Ltd., Melbourne. The companies signed a farmout agreement in December 2019 (OGJ Online, Dec. 18, 2019).
Upon farmout completion and following government approvals, 3D will receive a $5 million (Aus.) cash payment for previous permit expenditure and ConocoPhillips will carry the company through acquisition of a 3D seismic survey of not less than 1,580 sq km within T/49P.
Under the original farmout agreement, 3D was to retain a 25% equity in the permit. After further negotiations, the company decided to reduce its interest to 20% in exchange for a reduction in exposure to joint operation expenses. 3D will contribute 10% of the joint operation expenses until ConocoPhillips completes an exploration well or spends at least US$30 million towards drilling of the well.
On completion of the seismic acquisition, ConocoPhillips may elect to drill the exploration well to fulfill the current Year 6 work commitment in the permit. If ConocoPhillips elects to drill the well, 3D Oil will be carried for up to US$30 million in drilling costs after which it will contribute 20% of ongoing costs.