Melbana Energy has concluded a sale and purchase agreement (SPA) with Houston-based Fortune 500 company EOG Resources to sell its WA-488-P permit which comprises the Beehive prospect.
The deals marks EOG Resources first venture in Australia after a sale that was conducted by Melbana subsidiary Finniss Offshore Exploration and EOG’s Australian arm.
Beehive, located in around 40 metres of depth, is one of the largest undrilled hydrocarbon prospects in Australia with prospective resources ranging from 416MMboe to 1.4 billion boe. The prospect is located close to existing facilities, including the Ichthys project and the Blacktip field and includes nearly 700km² of 3D survey and an extensive amount of 2D seismic coverage.
Under the agreement EOG will make an upfront payment of US$7.5m to acquire a 100% stake in the permit, subject to conditions encompassing regulatory clearances, approval to suspend and extend the remaining permit obligations and no objection from the Foreign Investment Review Board.
Finniss will receive an additional US$5 million in contingent payments, subject to EOG entering the final year of the exploration permit and obtaining a production license.
In addition, EOG will make future payments of US$10 million for every 25MMboe equivalent produced, sold, and delivered from the permit area.
Melbana Energy executive chairman Andrew Purcell said: “We are very pleased to have reached this agreement with a company of the calibre of EOG and look forward with great enthusiasm to the drilling of the first exploration well into the exciting Beehive Prospect.
“This transaction allows Melbana to retain significant exposure to the upside of a potential Beehive discovery without being exposed to the costs of offshore appraisal and development, which can be expensive and challenging for a junior oil and gas company.
“We are also appreciative of the time and energy invested by our friends at Moyes & Co., an oil and gas upstream advisory firm, who helped with this transaction”.
EOG is set to start work on the Beehive prospect relatively soon and has plans to drill an exploration well on the prospect in 2022.
Beehive is analogous to the giant Tengiz field in the Caspian Sea, both a Carboniferous age carbonate build-up. The Tengiz field has estimated recoverable reserves of between six and nine billion barrels of oil.
Melbana still has two more petroleum exploration permits nearby with WA544-P and NT/P87 adjacent to the Beehive permit.