Cue Energy Resources has farmed out a part of its interest in the North West Shelf exploration permits WA-409-P and WA-359-P in the Carnarvon Basin, offshore Western Australia, to the oil giant BP.
Cue owns 100% interest in both North West Shelf permits and it entered the deal with BP through its 100% owned subsidiary Cue Exploration. Cue said on Thursday that the deal is subject to government approval and completion of standard due diligence.
BP’s equity acquisition offshore Australia comes only days after the company decided to abandon its Great Australian Bight drilling program.
Through this deal with Cue, BP acquired 80 percent equity and the operatorship of WA-409-P, which contains the giant Ironbark prospect, and will fund 100 percent of the work program required under the permit for the first three years of the license renewal.
After the transaction is completed, BP will own 80 percent and Cue Exploration will own the other 20 percent of the license.
In a separate press release on Wednesday, Cue said the company was given a license renewal for the WA-409-P exploration permit by the National Offshore Petroleum Titles Administrator (NOPTA) for a period of 5 years.
The renewal terms include a primary term (Years 1-3) minimum work requirement of 325 square kilometers of seismic reprocessing and associated geotechnical studies to further define the Ironbark prospect within the license.
The second part of the deal between Cue and BP entails an option through to May 2017 for BP to acquire 42.5 percent equity in WA-359-P.
If BP exercises this option, the British oil major will fund 50 percent of the cost of drilling a well in the permit, scheduled for the first half of 2018.
The Ironbark prospect, which straddles the WA-359-P and WA-409-P permits, is a giant Mungaroo Formation prospect that is mapped in an area of up to 400 square kilometers with a best technical estimate of 15 Trillion cubic feet (Tcf) of prospective recoverable gas resource based on an internal technical assessment performed by Cue.
Cue Executive Chairman, Grant Worner, said: “If Cue’s assessment is proven to be correct, Ironbark would be three times the size of the Scarborough, Wheatstone, or Pluto fields.
“Cue welcomes BP’s technical expertise and knowledge of the Carnarvon Basin through their long participation in the North West Shelf Joint Venture and we look forward to working with them to attract an operating Partner to drill the Ironbark-1 well.”