Australian oil and gas company Cue Energy Resources has agreed to extend BP’s option to acquire equity in a permit offshore Australia, which contains the Ironbark gas prospect.
The extension of the 42.5% equity option for exploration permit WA- 359-P was agreed through Cue’s 100% owned subsidiary, Cue Exploration. BP’s previous extension expired on December 11.
The option has now been extended until April 25, 2018, with a further six month extension available under certain circumstances, Cue said on Wednesday.
The exploration permit term of WA-359-P also expires on the same day, April 28, 2018. Cue said it intends to submit a suspension and extension application to the National Offshore Petroleum Titles Administrator (NOPTA) to allow new technical information to be incorporated into the Ironbark-1 well planning process.
On November 29 Cue announced an agreement with Beach Energy to farm-out 21% equity in WA-359-P. Under the terms of the agreement, Beach will acquire 21% equity and free carry Cue for 4% of the cost of drilling the Ironbark-1 exploration well in the permit. Beach will also reimburse Cue $900,000 for past costs. The agreement is conditional on BP exercising its option to acquire 42.5% equity in WA-359-P, Cue obtaining an extension to the current permit end date and other customary approvals.
Through the BP and Beach agreements, 75% funding for the Ironbark-1 well has been conditionally secured.
Ironbark is a giant Mungaroo Formation prospect that is mapped with an area of up to 400km2 and a best technical estimate of 15 Trillion cubic feet (Tcf) of prospective recoverable gas resource based on an internal assessment performed by Cue. Wood Mackenzie estimates that the North West Shelf LNG plant and infrastructure will have spare capacity from 2021. The Ironbark prospect is less than 50km from the North Rankin platform (North West Shelf LNG) and in close proximity to Pluto and Wheatstone LNG infrastructure, providing cost effective commercialization options.
Cue CEO, Matthew Boyall, said: “The extension of the option with BP and the recent announcement of the farm-out agreement with Beach Energy shows the degree of continuing interest that two major companies have in the Ironbark prospect. Cue currently retains 36.5% uncommitted equity in WA-359-P and we continue to talk to companies interested in forming a Joint Venture together with BP and Beach to share in this high impact opportunity.”